How to Pivot in Real Estate? Lessons Learned in The Last Year

How to decide what to invest in next? Is it ok to pivot to another asset class in real estate? How to look for and create opportunities where disaster strikes, and lessons learned in the real estate business over the last year. Bronson Hill, Managing Member at Bronson Equity, shares his insights.

Read the entire interview here: https://tinyurl.com/ymukzsfn

How do you decide what to invest in next, and what are you working on right now?

The biggest factor for me is that I’ve had over 25 one-on-one phone calls with high-net-worth investors. A lot of times on these calls, I’ll ask, “What are your goals? What are you trying to accomplish?” And most investors don’t know. Then, I’ll ask, “Do you want cash flow? Do you want tax benefits? Do you want appreciation?” And they’ll usually say, “Yes, I want all of them.” And I get that; I want all of them too. But the real question is, what’s most important right now? The challenge for many of us is that we don’t know what we want. For investors, it’s really important to get a clear idea.

Today, a lot of people say, “Real estate used to produce cash flow, but it’s really hard to find now.” So, the question becomes: what assets are producing cash flow today? Once I identify that my main goal is cash flow, there are a few areas I look at.

Real estate debt funds. There are partners and funds out there that typically provide monthly cash flow, and these days we’re seeing annual returns in the 10–15% range, paid monthly. This is usually a lower-risk position, especially when you’re in the first position or senior debt, meaning there are no other creditors ahead of you. Low leverage makes it even better—around 50–60% loan-to-value. That makes a very safe, real-estate-backed asset where you’re basically becoming the bank, or part of a pool of loans providing lending for people buying properties.

What's something that you learned in the last year, maybe in real estate or in owning your own business, that you think is important for people to also learn from your experience, not their own?

Reinvention is really important to be able and willing to learn and try new things. As a passive investor, sometimes it's great to be a certain type of investor, and other times it's great to do something different. Like in our business, we've continued to reinvent where this multifamily worked well for us for a while, and then we were raising capital and doing deals, and then we just realized that we're just not seeing the cash flow there. And also, a lot of investors have lost their appetite for doing lots of family stuff. We're doing different things that actually we find exciting, and that we feel like a lot of investors are there just wanting to try to find ways to make it work.

Being willing to look at new things like the chat GPT is amazing just to ideate, to come up with ideas. Somebody said, if you were to write down what the biggest goals are in your life? Personally, your legacy with your kids, with your spiritual life, your health, and then you had somebody sitting right next to you that had a one in 10,000 person IQ, and they were helping you to solve these problems. That's what ChatGPT is. It doesn't always get it right. It does hallucinate. You've got to filter everything. But in a way, I get that the ideation is huge. A lot of times, we fail because we're not willing to keep coming up with new ideas and keep trying new things, and I think Chad is really great at helping with that.

Bronson Hill

Bronson Equity

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