CrowdStreet’s Brent Hieggelke is joined once again by Townsend Baldwin, a CrowdStreet investor, to discuss why he thinks real estate is the place to be, why it’s important for investors to have humility, and how COVID might be an accelerator of trends that were already in place.
Brent Hieggelke, Chief Marketing Officer
CrowdStreet
CrowdStreet
Brent is a high-growth tech marketing executive focused on start-up and early category innovators and disrupters. He is a seasoned evangelist, and public speaker across a wide-range of topics.
He is a former CMO of several leading SaaS companies such as Urban Airship (mobile), Brandlive (video), Webtrends (data and analytics) and Touch Clarity (AI, machine learning), which sold to Omniture. In 2009, Brent co-founded a real estate start-up, Second Porch, which built the first sharing vacation rental site and ultimately exited to HomeAway, now Expedia. Brent has keynoted and led panels at global events like SXSW, Mobile World Congress, Cannes Lions, Advertising Week, Adtech, and hundreds of other conferences. Brent has been featured or quoted in The Wall Street Journal, Forbes, Advertising Age, and hundreds of other publications.
Brent holds a BA in Economics with honors from the University of Chicago.
00:00:04 Hello, I'm Brent Hieggelke, key with CrowdStreet Chief Marketing Officer. Welcome back to StreetBeats our video series to keep the community engaged and uh, we're excited to welcome back Townsend Baldwin, one of our uh, repeat investors and good friend of CrowdStreet. Uh, Townsend was back, uh, with us for a second time on StreetBeats. He was with us at the very beginning of the pandemic, uh, talking about how he was feeling about things. So we thought it'd be great to circle back and hear an update. So Townsend welcome back and uh, tell us how are you feeling about things?
00:00:38 Thank you. Uh, I'm feeling very good in that real estate I think continues to be a great asset and especially with regards to the stimulus that's taking place. You know that the US dollar is going to go down over time as the dollar goes down. You really can't go wrong in real estate, assuming that you're picking the right real estate asset classes and specifically finding the very good investments that have steady cash flow and a good future looking forward given that the government is taking on so much debt. I think that real assets like real estate are really the place to be, especially in the context of the lower interest rates and the fact that the Fed has lowered rates so much that even at these rates, if your property value is just going up with inflation and you have steady cash flow, you're still gonna do well over the long run.
00:01:44 Well I think we're certainly seeing, uh, you know, yeah, new lessons learned. You probably didn't think about a global pandemic, uh, when you were making those investments, but um, do you care to share a little bit about, uh, you know, kind of what you've learned?
00:01:57 So one of the most important things to do to become successful in real estate or in investing or really in anything is to have humility and have the ability to review your reasoning and your logic for why you actually made the investment. I have gone and reviewed all 16 of my deals and I've garnered lessons from the deals and one of my major tenants of investing is location because I want to find locations that have incredible, uh, dynamics such that there's no more supply coming online. And so if you can find a great real estate investment without supply coming on, you'd think that the deal would be a no-brainer. However, what I've really learned during this pandemic is that you really, really need to also look at the demand side and make sure that nothing can hit that. And obviously we see retail, hotel and other asset classes have been hit very hard office have noticed that people's habits are changing. And so when I look at Covid in the context of real estate, you can think of Covid as an accelerator of what was gonna happen 5, 10, 15 years from now. But now it's just happening very rapidly. And so as we think about real estate going forward, we want to think about those trends cuz they're probably going to continue.
00:03:29 Yeah, I think you're right On the accelerator, uh, factor, what are the trends that you think are being impacted by that acceleration?
00:03:36 I mean, look at Amazon, the stock continues to go higher and so clearly people are buying online and if you look at the warehouse market, it's going to continue to do well. So any distribution centers and warehouse, I've noticed that a lot of people really feel that they can be effective at home working. I think that clearly, uh, office has changed and the mentality of the millennials and the new workforce is that they can get the job done at home, especially if they have that option.
00:04:10 Yeah, I think it's interesting, right? Cuz there are certain retail categories that are doing really well, like grocery, you know, essential services, right? Are off the charts. Uh, but uh, some of those optional, like sort of the experience retail struggles because they're, a lot of them, they're closed.
00:04:26 But, you know, as I look at some of my, uh, investments, for instance, there's a project in Wisconsin which is, uh, construction, ground up development, multi-family with retail that's experiential and I think that's going to be important going forward as well because there's four or five storefronts at the bottom of the building plus a dining hall. And so I think people still will wanna go to the dining hall and will wanna get that smoothie and go to the, uh, yoga studio or spin because that adds a lot of lifestyle to a place and it adds charm to a place and livability. So I don't think it's going out completely, it just kind of depends on the scenario. So once again, each deal stands on its own and you really have to look at that deal and its merits and, uh, assess the cash flow and the probability of success going forward.
00:05:22 Yeah. Are are there, uh, you had mentioned, uh, as we were kind of just chatting about, um, class B multi-family being interesting to you. Do you wanna speak a little bit more about what, what your thoughts are there?
00:05:34 Yeah, I think that, uh, as I look at demand and the importance of demand and investing in real estate, I think that you wanna find consistent demand where you're always gonna have a tenant that pays. And so one of the spots is class B multi-family. It's a great place to be because you know, the tenants are gonna pay. And so that is the, the type of asset that I really like and I'm looking for other assets, uh, that have that consistency. So for instance, storage may be that as well because I believe the millennials are really storing their things while they travel. If you're not fixed in one place and you're traveling and you need to put your things into place, you can basically put them in a storage facility. So I still think that's a very good investment going forward.
00:06:26 So it sounds like you're still actively reviewing the new deals that we're launching and still
00:06:32 Yes, absolutely those opportunities and uh, you know, I think it really depends, uh, for every investor obviously on their portfolio. And so I have a diverse portfolio across the stock market, across private equity, real estate, direct real estate, you know, commercial real estate. There's another type of diversification, which is diversification of time. If you're listening to this and you're new to the CrowdStreet platform, you don't want to just plunge right in to several deals. I think the best way to do it is think about a timeframe of how you want to invest. So let's just say 10, 10 years and you want to be in, uh, let's say, uh, 70 deals. So maybe you're doing seven small deals a year and therefore you've diversified over that timeframe.
00:07:25 I think you're taking a healthy approach of, you know, learning, learning along the way and, and I think a lot of our investors are gonna benefit from, you know, kind of the lessons you're sharing with us. So as we, uh, close out here, what, what are you gonna be watching for next? What's, what's kind of, uh, you know, what are you anticipating, you know, the next thing to happen?
00:07:44 So I think, uh, the next thing that will happen is I think the dollar will depreciate. So again, you want to be in real assets that kick off cash flow. So real estate is an excellent place to be. I also think that, uh, COVID will pick back up in the fall. You can see how the stock market, for instance, is reacting. Uh, you can look at the cruise stocks and you can see they're going down. Again. I don't think that should stop one from investing in real estate, but I think one needs to continue to be wise and really assess each deal on a deal, deal basis. And then going forward, I think one needs to be defensive and really think in two contexts, not just supply, obviously you want supply constraint in real estate with a great location, but secondly, you really want to have consistent demand on your properties. So go and find those deals. There's tons of 'em out there and hopefully I've been able to be helpful to you all. Hopefully you can take some of these lessons to heart. But I'd say the most important lesson from today in my mind is that success really takes studying your errors and then not repeating them in the future.
00:09:00 Wow. Well that's, uh, yeah, you've definitely shared a lot with us council, so we really appreciate it. Thanks for taking time to, uh, share this with us and our community and, uh, we'll be checking back with you, uh, in a little while and see how you're faring. So
00:09:15 Appreciate it. Sounds good, Brent. Thanks so much for your time. I appreciate it.
00:09:18 Okay. And for the community, just a reminder, you can sign up via email for the street updates and we'll send them directly to your inbox. So.
00:00:38 Thank you. Uh, I'm feeling very good in that real estate I think continues to be a great asset and especially with regards to the stimulus that's taking place. You know that the US dollar is going to go down over time as the dollar goes down. You really can't go wrong in real estate, assuming that you're picking the right real estate asset classes and specifically finding the very good investments that have steady cash flow and a good future looking forward given that the government is taking on so much debt. I think that real assets like real estate are really the place to be, especially in the context of the lower interest rates and the fact that the Fed has lowered rates so much that even at these rates, if your property value is just going up with inflation and you have steady cash flow, you're still gonna do well over the long run.
00:01:44 Well I think we're certainly seeing, uh, you know, yeah, new lessons learned. You probably didn't think about a global pandemic, uh, when you were making those investments, but um, do you care to share a little bit about, uh, you know, kind of what you've learned?
00:01:57 So one of the most important things to do to become successful in real estate or in investing or really in anything is to have humility and have the ability to review your reasoning and your logic for why you actually made the investment. I have gone and reviewed all 16 of my deals and I've garnered lessons from the deals and one of my major tenants of investing is location because I want to find locations that have incredible, uh, dynamics such that there's no more supply coming online. And so if you can find a great real estate investment without supply coming on, you'd think that the deal would be a no-brainer. However, what I've really learned during this pandemic is that you really, really need to also look at the demand side and make sure that nothing can hit that. And obviously we see retail, hotel and other asset classes have been hit very hard office have noticed that people's habits are changing. And so when I look at Covid in the context of real estate, you can think of Covid as an accelerator of what was gonna happen 5, 10, 15 years from now. But now it's just happening very rapidly. And so as we think about real estate going forward, we want to think about those trends cuz they're probably going to continue.
00:03:29 Yeah, I think you're right On the accelerator, uh, factor, what are the trends that you think are being impacted by that acceleration?
00:03:36 I mean, look at Amazon, the stock continues to go higher and so clearly people are buying online and if you look at the warehouse market, it's going to continue to do well. So any distribution centers and warehouse, I've noticed that a lot of people really feel that they can be effective at home working. I think that clearly, uh, office has changed and the mentality of the millennials and the new workforce is that they can get the job done at home, especially if they have that option.
00:04:10 Yeah, I think it's interesting, right? Cuz there are certain retail categories that are doing really well, like grocery, you know, essential services, right? Are off the charts. Uh, but uh, some of those optional, like sort of the experience retail struggles because they're, a lot of them, they're closed.
00:04:26 But, you know, as I look at some of my, uh, investments, for instance, there's a project in Wisconsin which is, uh, construction, ground up development, multi-family with retail that's experiential and I think that's going to be important going forward as well because there's four or five storefronts at the bottom of the building plus a dining hall. And so I think people still will wanna go to the dining hall and will wanna get that smoothie and go to the, uh, yoga studio or spin because that adds a lot of lifestyle to a place and it adds charm to a place and livability. So I don't think it's going out completely, it just kind of depends on the scenario. So once again, each deal stands on its own and you really have to look at that deal and its merits and, uh, assess the cash flow and the probability of success going forward.
00:05:22 Yeah. Are are there, uh, you had mentioned, uh, as we were kind of just chatting about, um, class B multi-family being interesting to you. Do you wanna speak a little bit more about what, what your thoughts are there?
00:05:34 Yeah, I think that, uh, as I look at demand and the importance of demand and investing in real estate, I think that you wanna find consistent demand where you're always gonna have a tenant that pays. And so one of the spots is class B multi-family. It's a great place to be because you know, the tenants are gonna pay. And so that is the, the type of asset that I really like and I'm looking for other assets, uh, that have that consistency. So for instance, storage may be that as well because I believe the millennials are really storing their things while they travel. If you're not fixed in one place and you're traveling and you need to put your things into place, you can basically put them in a storage facility. So I still think that's a very good investment going forward.
00:06:26 So it sounds like you're still actively reviewing the new deals that we're launching and still
00:06:32 Yes, absolutely those opportunities and uh, you know, I think it really depends, uh, for every investor obviously on their portfolio. And so I have a diverse portfolio across the stock market, across private equity, real estate, direct real estate, you know, commercial real estate. There's another type of diversification, which is diversification of time. If you're listening to this and you're new to the CrowdStreet platform, you don't want to just plunge right in to several deals. I think the best way to do it is think about a timeframe of how you want to invest. So let's just say 10, 10 years and you want to be in, uh, let's say, uh, 70 deals. So maybe you're doing seven small deals a year and therefore you've diversified over that timeframe.
00:07:25 I think you're taking a healthy approach of, you know, learning, learning along the way and, and I think a lot of our investors are gonna benefit from, you know, kind of the lessons you're sharing with us. So as we, uh, close out here, what, what are you gonna be watching for next? What's, what's kind of, uh, you know, what are you anticipating, you know, the next thing to happen?
00:07:44 So I think, uh, the next thing that will happen is I think the dollar will depreciate. So again, you want to be in real assets that kick off cash flow. So real estate is an excellent place to be. I also think that, uh, COVID will pick back up in the fall. You can see how the stock market, for instance, is reacting. Uh, you can look at the cruise stocks and you can see they're going down. Again. I don't think that should stop one from investing in real estate, but I think one needs to continue to be wise and really assess each deal on a deal, deal basis. And then going forward, I think one needs to be defensive and really think in two contexts, not just supply, obviously you want supply constraint in real estate with a great location, but secondly, you really want to have consistent demand on your properties. So go and find those deals. There's tons of 'em out there and hopefully I've been able to be helpful to you all. Hopefully you can take some of these lessons to heart. But I'd say the most important lesson from today in my mind is that success really takes studying your errors and then not repeating them in the future.
00:09:00 Wow. Well that's, uh, yeah, you've definitely shared a lot with us council, so we really appreciate it. Thanks for taking time to, uh, share this with us and our community and, uh, we'll be checking back with you, uh, in a little while and see how you're faring. So
00:09:15 Appreciate it. Sounds good, Brent. Thanks so much for your time. I appreciate it.
00:09:18 Okay. And for the community, just a reminder, you can sign up via email for the street updates and we'll send them directly to your inbox. So.