The rise of national real estate investment requires a new level of hyper-local market knowledge that can’t be gained through data alone, according to a leading commercial mortgage executive who advocates for intensive on-site research.
“I have a client who taught me this many years ago, when they buy a new property, they make sure to spend the weekend in that area,” says Abraham Bergman, President of Eastern Union. “Saturday night at a property looks different than Monday night at a property.”
According to Bergman, investors accustomed to major urban markets often miss crucial nuances when expanding to new territories. “In some neighborhoods you’ll never get more than $900 a unit, even though a block away there’s somebody getting $1,100, but that’s a different neighborhood,” he notes.
This granular understanding becomes especially critical outside major metros, Bergman argues. “When we get used to New York or Los Angeles, it’s not the same. You can have on one block someone paying $6,000 a month rent, and then you have an $1,800 month Section 8 unit on the same block.”
Bergman says his firm frequently counsels clients to dig deeper into local market dynamics before making investment decisions. “I’ve had a lot of clients who have said ‘thank you, we’ve looked more into it and you’re right, we’re going to stay away from this deal or lower our offer.'”
He recounts how one lender won committee approval for a hotel deal by personally staying at the property. “He got up and said ‘Have you seen this picture? This is me staying in the hotel and letting them know what’s good and what’s bad about it.'”
“The world has changed over the last 25 years,” Bergman observes. “You don’t have to be the biggest owner in the country to be national. A lot of our clients have gone national for good reason, you have to chase the yield.”
However, he cautions that this geographic expansion requires more intensive research than ever. “When that first started, not everybody understood the need of really learning the particular submarket that you’re in,” Bergman says. “I think the market has learned that itself.”
Explore similar articles from Our Team of Experts.
Major institutional investors are increasingly targeting Southeast agricultural properties, driven by growing concerns over food security and the region’s abundant natural resources, a...
