Snapchat Real Estate and the Future of the Market w/Aaron Rocha
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Episode Description
Welcome to the Freedom Point Real Estate podcast! Today's guest, Aaron Rocha, covers his journey from commercial operator to investor, thoughts on taking advantage market cycles, vision for his company (Multivestors Group), and criteria for potential sponsors.
Aaron is a commercial real estate broker and operator turned investor. Previously employed at two of the three largest CRE service providers globally, Aaron's first big job was as the Global Head of Real Estate at Snapchat during its hyper-growth phase between 2014 and 2019. He has worked on more than 10 million sqft of lease and sales transactions on 4 continents. Aaron co-founded Multivestors Group in 2021 with his partner Ben Frelka, where they specialize in connecting capital with opportunity. Aaron's role at Multivestors Group is to lead the charge from a real estate perspective and use his deep knowledge as both a broker and operator to help investors navigate the complex landscape of commercial real estate investing across all asset classes. He lives in Arizona with his wife, two young children, and his dog Beau. When he's not working, he loves to golf, ski, hike, fish, and generally spend his time in the sunshine with family and friends.
CONNECT WITH AARON ROCHA!
Website: https://multivestorsgroup.com/
LinkedIn: https://www.linkedin.com/in/aaron-rocha-77b03937/
CONNECT WITH JEREMY DYER!
Website: https://startingpointcapital.com/
Instagram: https://www.instagram.com/startingpointcapital/
LinkedIn: https://www.linkedin.com/in/jeremydyer
Facebook: https://www.facebook.com/startingpointcapital
Book a Call! https://calendly.com/startingpointcapital/discuss-investing-with-jeremy-dyer?month=2023-12
Summary
Tip #1: Vet the Operator, Not Just the Deal
"You can make an underwriting say almost anything... what you really want to know is did an honest person put this pitch deck together."
Aaron emphasizes the importance of focusing on the integrity and track record of the operator rather than getting too caught up in the numbers of a deal. An operator with a solid reputation and experience will handle challenges better and protect your investment. Trust in the operator’s judgment and history is key to long-term success.
Tip #2: Compare Investments to Similar Opportunities
"You probably shouldn't compare your passive real estate investments to your savings account... you should be comparing passive real estate investments to other passive real estate investments."
This highlights the importance of evaluating real estate deals within the same asset class. Comparing multifamily syndications to other multifamily opportunities provides a more accurate understanding of potential returns and risks. Apples-to-apples comparisons yield better-informed decisions.
Tip #3: Don’t Rush to Deploy Capital
"Their money is burning a hole in their pocket... they just feel like they have to deploy it."
Aaron warns against the urgency to invest without proper due diligence. Many first-time investors rush into deals, driven by excitement or fear of missing out. Take the time to evaluate numerous deals to ensure you don’t compromise on quality.
Tip #4: Leverage Experienced Sponsors
"Passive investing in real estate is effectively leveraging somebody else's time, experience, network, knowledge, etc."
Aaron points out the core advantage of passive investing—tapping into the expertise of seasoned sponsors. This allows investors to benefit from real estate without managing the day-to-day operations. Choose sponsors with established networks and track records for the best results.
Tip #5: Understand the Waterfall Structure
"You want to find that beautiful middle ground where someone is savvy enough to create a slightly complex waterfall but simplifies it enough for the LP to benefit."
The waterfall structure determines how profits are distributed. Aaron advises investors to favor sponsors whose waterfall models ensure limited partners (LPs) receive returns before general partners (GPs). This alignment of interests safeguards investor profits.
Tip #6: Network and Ask for Referrals
"I heard your name a hundred times before I ever met you... this is a small world."
Aaron stresses the value of networking and gathering referrals when vetting sponsors. The real estate investment community is tightly knit, and reputations spread quickly. Leverage this by asking others in the industry about their experiences with potential sponsors.
Tip #7: Diversify Across Asset Classes
"We want to meet [investors] where they are and say here's something else that's not influenced by the same economic conditions as multifamily."
Aaron suggests diversifying investments to reduce exposure to a single asset class. As market cycles shift, having investments in different real estate categories (e.g., industrial, commercial) can mitigate risk and improve portfolio resilience.
Tip #8: Focus on Communication and Transparency
"How did you adapt and communicate when the market wasn't hot?"
A trustworthy sponsor is one who keeps investors informed during difficult times. Aaron underlines the need to evaluate how sponsors handle market downturns and how openly they share challenges and successes. Good communication is vital for long-term partnerships.
Tip #9: Take Time to Learn the Fundamentals
"If you don't have a command of that NOI formula, you're asking the wrong questions."
Aaron advises investors to understand key real estate metrics like Net Operating Income (NOI) and cap rates. This foundational knowledge empowers investors to ask the right questions and avoid being misled by surface-level data.
Tip #10: Be Patient and Selective
"You should be evaluating hundreds to thousands of opportunities before making your first investment."
Patience is critical in real estate investing. Aaron recommends a thorough evaluation process before making decisions. High-quality deals come to those who wait and scrutinize every detail, ensuring a strong return on investment.
