David Pittman has seen a lot in 35 years of real estate.
Enough booms and busts to gain valuable experience when it comes to developing successful real estate projects across southern California with his company Acacia Real Estate Group.
Mr. Pittman is now researching how real estate crowdfunding would fit into his existing business. He will share his findings as a featured speaker at IMN’s Second Annual Crowdfunding Forum for Real Estate West in Santa Monica on Sept. 16 and 17.
Based in nearby Newport Beach, Acacia focuses on demand-driven, industrial development.
Mr. Pittman says that means Acacia looks for mostly in-fill opportunities where demand is high but supply is low.
“We are very good at sourcing deals based on that particular criteria,” he said of his company’s vast network.
“We speak with brokers, private owners, cities and municipalities. We watch the trends and look for opportunities that might arise from properties that might be overlooked.”
Mr. Pittman relies on his experience and intuition.
“In 2005 we were in the midst of a successful run, but I began to feel uncomfortable about the marketplace,” Mr. Pittman recalled as the recession took hold. “We pulled back in 2006 and let some deals go.”
Now, he says, the ratio of risks to rewards has started to shift. Buyers have to be good at forecasting, he insists, because the process with entitlements and other preparations means they have up to 18 months lead-in time.
Mr. Pittman describes Acacia as more of a boutique developer than a big one. This keeps his team nimble and able to easily react to market shifts. For example, they believe now is the best time to be in real estate, with the beginning of a new cycle of risk and caution.
“That is what you want,” Mr. Pittman said. “When you see no fear, that is when there’s trouble.”
Mr. Pittman follows key economists for additional perspective.
“You have to know when to throttle back. Now is the time to throttle down.”
Something else he knows about is expansion and how to prepare for it. He says research is key.
“They’re all local markets, but every one is different. You have to drill down to look at demand. And then build to that market.”
Remember, he’s seen a lot. And more than one case of inexperienced developers making the mistake of exporting a concept that was successful in their initial markets into completely different ones.
One thing that has stood the test of time, he notes, is customer service and, ultimately, customer satisfaction. Acacia sees that through by managing many of the properties it develops.
“Even if we sell it, I want the quality of the architecture and landscaping to transcend the purchase. I want it to look as good 15 years from now as it does today.”
Mr. Pittman is looking forward to attending the second annual Crowdfunding Forum for Real Estate West to hear more about the industry.
“I got involved with crowdfunding as an experiment to see if it fits into our business plan. It reminds me of the old syndication business.”
He believes it has plenty of merit but is keeping his eye out for an equity platform for ground-up development projects.
“Crowdfunding, in general, is a great vehicle for smaller projects and ones with existing incomes,” Mr. Pittman said. “Those developments looking for a little extra juice and flips are well served.”
So far he has seen an informal cap on the sizes of projects that best benefit from real estate crowdfunding.
“Hundreds of thousands of dollars? For sure. Several millions of dollars? It has some way to go to evolve.”