Table of Contents
- Jilliene Helman is the CEO of the real estate investing and crowdfunding platform RealtyMogul.
- Helman lays out five high-growth markets and two contrarian picks to watch amid high inflation.
- She also shares why investors shouldn’t play with dinner table money when it comes to real estate.
As US inflation hits a nearly 40-year high, real estate, which has been historically pitched as a hedge against high inflation, is top of mind for investors again.
But it has always occupied Jilliene Helman’s mind. As the child of parents and a grandparent working in various sub-sectors of the real estate industry, she grew up talking about property values at the dinner table. Later, as Helman went to work in the wealth management industry, she couldn’t help but notice the overarching theme that all her wealthiest clients were real-estate investors.
“Either they made their money in real estate or they kept their money and avoided things like inflation with real estate,” Helman, the chief executive of RealtyMogul, said in an interview. “And it was really that insight that led me to leave my day job and become an entrepreneur.”
Today, RealtyMogul, a real-estate investing and crowdfunding platform, has been used by investors to invest over $800 million in capital into over $4 billion of property deals, according to the firm.
Why and how to get started with $5,000
The digital platform provides two main ways for investors to access real-estate transactions: (1) invest in specific properties including apartments, office buildings, shopping centers, industrial self-storage, or even ground-up development deals; (2) gain exposure to the firm’s diversified pool of properties via its two public non-traded real estate investment trusts.
Due to their legal structure, the firm’s individual property investment opportunities are restricted to accredited investors who put up a minimum of between $25,000 and $35,000. Its apartment growth
and income REIT are open to all investors, with a minimum requirement of $5,000.
The $5,000 minimum for REITs is on the higher end of the spectrum among similar real-estate investing platforms. For example, Fundrise allows investors to acquire shares of properties with as little as $10 in a bid to attract younger, first-time investors who are interested in stable, long-term investments.
In Helman’s view, the higher requirement is to illustrate her investment philosophy that real-estate investments are long-term plays that can often be illiquid and risky in the short term.
“We don’t want people investing with dinner table money,” she said. “For investors who don’t have $5,000 to invest, they are probably not the right investors to be investing into a completely illiquid asset class.”
5 markets that could see double-digit growth in 2022
Ultra-low interest rates and the pandemic-driven departure from crowded cities have fueled a red-hot housing market where prices rose sharply amid low inventory.
penciling in three rate hikes this year to rein in inflation, US mortgage rates have jumped to the highest level since March 2020. The average rate for a 30-year loan was 3.45%, up from 3.22% a week ago.
Housing experts, including Ivy Zelman who called the real estate bubble in the 2000s, have warned that the market is vulnerable and prices could tank sooner than expected.
While there are risks and uncertainties, Helman believes that “not all markets are created equal” and “the supply and demand in all markets are also not created equal.” For the year ahead, she is looking at high-growth markets where the combination of strong demand, low supply, and rapid job gains could lead to double-digit growth.
Take Austin, Texas, for example. Companies from Tesla to Google are going on a hiring spree there for high earners who make anywhere from $200,000 to $1 million a year. With a limited supply of homes and high demand, significant price increases for single-family, multi-family, and commercial properties are inevitable, Helman said.
San Diego is another market on her list. The city, which is running at a tight vacancy rate of 3%, has seen a big uptick in venture capital investments into life sciences. It is building a life science hub via the IQHQ development project, which aims to build the largest urban commercial waterfront along California’s coast.
Helman also likes Miami and Tampa, Florida, which have both seen a growing number of tech and finance jobs. She is keeping a close eye on Water Street Tampa, which is a $3.5 billion development project jointly financed by billionaire Bill Gates and Tampa Bay Lightning owner Jeff Vinik.
Nashville is also on her radar for its $84 billion a year healthcare economy and relative affordability, Helman said.
“When we think about the new trends of working from home, I think there’s a big draw to tech markets that are affordable for tech workers who aren’t constrained by geography,” she said. “So we are excited about Nashville.”
Besides high-growth markets, Helman is betting on the comeback of New York City and the San Francisco Bay Area. Despite the pandemic-era exodus of workers from the two cities, the impact of the existing tech and finance footprint in these two geographies should not be underestimated, she said.
For example, Google said in September that it plans to buy a $2.1 billion New York office building even as many of its employees still work remotely. Meanwhile, the largest tech companies from Meta and Twitter to Apple and Airbnb remain in Silicon Valley.
“New York is just so established and it’s a similar story in the Bay Area,” she said. “We expect over time that they will bounce back to pre-pandemic levels and beyond. It’s going to take some time but we don’t think that those are markets to write off.”