#348 - Omar Morales - Investment Sales @ Berkadia - The $3.3B Broker Taking Over Miami

Chris Powers: Omar, Thanks for joining me today. I appreciate you taking the time. 

Omar Morales: Chris, I appreciate you reaching out. 

Chris Powers: I have been impressed watching and studying you this week. I thought you were more impressive. I wanted to start the show by telling you how you grew up and how your family got to Miami.

It's not you; it's the American dream story. Let's just put it that way. 

Omar Morales: Yeah, thank you. My father was born in Miami but subsequently moved to Honduras when he was a young teenager, a kid, and he met my mom, who was not just from Honduras. And pretty much they decided that they would rather be, call it, the lower middle class in the United States, for my brother and I to have better opportunities in life than to be in the top 1%, 10 percent of Honduras with the businesses and relationships that we had there.

Most of my family is still over there. But, my parents, when I was ten years old, decided to pack their bags and come over with really no plan, no money, and no anything. They didn't go to college. And I grew up with the best teacher's life could have ever given me, which is like, hey, if you want something, go for it.

The world will work in your favor, so that's the context of how I got here. I got into Miami with no connections, no money, no anything, and I have done well for myself, fortunately. 

Chris Powers: What did your parents do when they got to Miami?

Omar Morales: Anything. My dad was shipping used car parts and other stuff back and forth between here and Honduras. There was an arbitrage: Hey, I can buy it here for X, and I could sell it over there for Y. So, at first, there were still connections and business for him to make ends meet that way.

Then, my mom started working as an aesthetician. She would do skin care, such as facials, massages, etc. Now, she owns a medical spa that does laser hair removal. So, she started her own business. And that was, as I'm sure many of your listeners have heard my mom saying, Hey, I can do this better than the people I'm working for are doing it.

My dad was like, all right, go for it. And she opened Dermalazer in 2008 as the world was falling apart. I was too young to notice. And now Dermalazer is still up and running. She's pleased and has made her own life. And now we have investors reaching out and trying to expand the business.

And my mom's like, no, I'm good making the money I'm making. I'm happy serving my clients. And that's her take. And then, my father ended up getting into residential real estate. And we'll talk about that. I got my real estate license when I was 18 in high school, and I would help him.

Well, growing up, I would go on tours with him and see him pitch a house and a condo, and how it works in Honduras, and how I realize it works across the country when one wealthy individual buys something in Miami and does very well for himself he tells his friends. Then, all those wealthy individuals start wanting to buy something here and don't want to miss the boat.

So, my father started selling many houses and condos that started trending toward the luxury end of the spectrum while I was growing up. And Saturdays were like, come in the car with me, or we've got seven showings. And when I would complain that it's 2 p.m. and I haven't eaten and I'm hungry, he would say, you don't eat while you work.

You eat once you're done working. That mentality served me well, so that was the background for getting into real estate. And I'm sure we'll get into it, but in working and selling some larger luxury homes with my father, I realized that I wanted more intellectual stimulation from sales. When I was in college, I wanted to be like an investment banker and do a lot more analytics than a home sale or a condo sale.

Chris Powers: Well, they say that Miami is the capital of South and Central America. Your family came up. Was Miami the only place they wanted to go? And is that same dynamic probably at your house 30 years ago when they moved here or 20 years ago? Is that same dynamic still in play today? It is where people from those countries still want to be, whether they're wealthy or want to come in and build a better life for their families.

Omar Morales: I'll answer the second part of the question, which will be shorter, which is that Miami is one of many places people, Latin Americans, want to go to build better opportunities because it's gotten so expensive. If they only speak Spanish, then it's probably Miami, but now, there are opportunities in other parts of Florida, and Miami has become expensive over the last 10 or 20 years. To answer the original part of your question, yeah, Miami is still, I think in large part, if you can afford it, the only place you want to go if you are Latin American, not that there aren't people in California, New York and things like that.

But I read that seven out of 10 people in Miami identify as Hispanic or Latino. One way to put it, which may be this, is to talk a little bit about Miami and where it is in the global spectrum just in the past week and a half. I've had dinners and spoken with very wealthy individuals who are all considering moving to Miami. I'm not in residential real estate but could make much money selling expensive homes.

But, two nights ago, I had a dinner with the CEO and founder of one of the largest co-living apartment managers in the world, and he lives. I don't want to; I don't know if he wants this to be public, but he lives internationally and says, " Hey, I want to move to Miami. And then, just yesterday, we were trying to do a deal with one of the wealthiest Turkish families in Turkey.

He said that one of the board members of the family said something exciting, which he said for the first time in my life. Someone asked me whether they should buy property in London or Miami for wealth preservation. And he said I thought they would have said London and New York, right, London and LA, London and another super city.

And they said London or Miami. And it speaks to the shift that it's not all that has not only happened but has continued to happen, not to go away from my upbringing and how I got to where I am today. 

Chris Powers: All right, let's talk about Miami. You are right in the middle of it.

You made a great point. It's a market that the world is starting to see differently, but let's begin with. I understand the last few years. Things have been excellent there, and we can talk about that. But as you look at the market today, and we're going to pick apart this market in different ways, generally speaking, what's happening in Miami right now?

Omar Morales: Generally speaking, what's happening outside Miami? There is way too much oversupply coming into the market, and there will be negative rank growth and many negative things. Once you look at the interested players, what's happening is that in every market, rent, development, supply, and demand are sub-market specific.

Some pockets are seeing a lot of supply, and those pockets will probably see flat to slightly negative rent growth, but those buildings will still need to get fully leased or stabilized. If you look at Miami in total, there are different numbers. Our number is 23,934 units under construction in Miami-Dade County.

That's only 7 percent of the existing inventory. It's not that much. And if you break apart that number, those units will be under construction for over two to three years. So annually, it's called 2 percent of inventory that gets delivered right last year. We saw 7300 units get delivered.

Let's call it 2 percent of inventory. So, big numbers get thrown around about how much supply is coming. When you break it down, some submarkets will struggle in the short term. The macro view or the macro of what's happening in Miami will lift all boats and the people that may get in trouble. It is around the country; they are just the sponsors overleveraged with floating-rate debt and poorly financed acquisitions.

If I sold you an asset at a three-cap in 2000 and late 2021 or early 2022 but put a 10-year fixed-rate loan on it at 2. 6% by 2032, you will be all right on that asset personally. We'll see, we'll see where the cards lay, but that's my view. 

Chris Powers: So, much of what you're seeing, and it's across the country, is sponsor-specific.

It's more of a, when did you buy and how did you finance it type of recession rather than everybody just getting crushed. 

Omar Morales: That's exactly right. Many people who have sold assets over the last 9 to 12 months are people whose funds, the fund life was ending or people who financed it poorly. Nobody who owns an asset that doesn't have to sell is selling.

And for a good reason: cap rates are up.v

Chris Powers: okay, I will pick three submarkets from being an out-of-state or Texan. Let me start by saying I love Miami. I've been there once or twice a year for the last four years and love it every time I go. I will pick three, and if you want to talk about more, we can.

Let me know your view of them. Let's start with Brickell. What's going on there is like an act of God. There's just tower after tower and land sites selling for hundreds of millions. When I say Brickell, what do you think about? 

Omar Morales: There is no better place to live in Florida than Brickell.

It is the cleaner version of New York. And I don't mean that by office square feet. But what I mean is that there's somewhere to work, somewhere to live, places to eat, walk around, and have a good time late at night—all within a pretty short, pretty small neighborhood.

As you mentioned, there's probably no better place to live than Brickell. Some significant developments are going on. The biggest one is Stephen Ross, at Related Companies and Swire, looking to lease and break ground on one Brickell City Centre. What we're seeing is a lot of office activity.

Right now, office leasing brokers are working to the bone to try to convince these big Fortune 100 companies to make long-term decisions in a challenging macroeconomic environment. So, I'm not an office leasing broker. I know those conversations are happening. I know they're not easy, just as any long-term decision in this environment takes work.

Butt yeah, I'm a big bull in Brickell. Something to mention is that it's so expensive to buy land and build in Brickell today that all the new deliveries are asking for 2,000 a square foot plus. Right? The recently financed were asking for 1 300 to 1 500 a square foot plus.

I bought my condo for 400 square feet, and now it's probably worth 800 square feet. So, I think on a relative basis, it's going to end up being like the hub of finance in Florida, and things are so expensive that you're not going to see the amount of supply that you're seeing in markets like downtown Miami, Wynnewood, and some other pockets.

Chris Powers: You posted a site on Twitter the other day. It was a four-and-a-half acre site, AIMCO, for 650 million. Is that in Brickell? 

Omar Morales: That is in Brickell. It's across, so if you go to our kitchen in Bracadia's office, it's overlooking those two buildings. To the right of our view is Ken Griffin's 363 million acquisition.

So it's an exciting location to be officed out of, and I live a block away from those two pockets.

Chris Powers: Okay, but it's not just a site. There are two towers on that site. So, will the buyer of that site probably tear those towers down and take them back to the dirt, or will they keep those towers in play and build around them?

Omar Morales: If I had, it's a redevelopment play, right? It's, I don't want to talk about information that I can't share, but I do know that the buyer is seeing this as a long-term land value play, and how I would envision it would work He, the apartment building that's half of the site and the office tower, which is the other half of the site, cash flows very well.

They're both fully occupied. The office buildings in the '90s and the apartment complex are 97 98 percent occupied. So someone will buy them, have the carrying costs paid for, and then, in the future, be able to make condo sales or raise a lot of money and equity to do a long-term redevelopment play.

To AIMCO's credit, and there was a gentleman there that I was friendly with when they were buying those buildings—the apartment building they bought over ten years ago and the office building purchased in 2018 if I'm not mistaken—they were saying, Hey, this is a 20-year covered land play.

I'm like, wow, that is very smart for us or someone else. What ended up happening is that the office that they bought in 2018 just became so lucrative because of the post-COVID trends in Miami. It made sense to renovate it and keep it as an office. But it doesn't hurt them to go and try to find a Ken Griffin or another Ken Griffin-esque buyer to buy a unique piece of real estate in Miami.

Chris Powers: That's his office site. Isn't he also building a billion-dollar house in Miami or something like that? 

Omar Morales: In Palm Beach, yeah, on Ocean Boulevard, he's building a billion-dollar residence. Jeff Bezos has bought three houses in the last two years. Just last week or two weeks ago, he bought a third 90-million-dollar residence in Billionaire's Bunker in Indian Creek, next to Carl Icahn, Tom Brady, and other wealthy individuals.

Chris Powers: All right. I want to take a sidebar for a second because we're already in; we're 10, 15 minutes into this conversation. You mentioned that you're friendly with AIMCO. You're talking to a Turkish, one of the most wealthy families, and just researching you, you've made connections with, call it the global elite.

I want to know how old you are. You're 30? 

Omar Morales: Yeah, I turned 30 a couple of months ago. 

Chris Powers: So, how are these connections being formed? Are these people calling into the market, and you are on the phone? Are you going after them? How are you bridging the gap and building this world-class network?

Omar Morales: I couldn't do this without my team. What I want to get into, if we can take a quick tangent, because it answers your question, is how I got to this position of where I'm at, right? So, my luckiest break in my life, of which I have many, but my biggest one was when I was a senior in college.

My prom date from high school went to Harvard and ended up going to Harvard and was working at a hedge fund in Miami that had just opened up, and she was interning there for a summer. And when she was leaving, she said, Hey, I'm sure they could still use the help if you want to go and see if they Want to take you in to help them.

When I showed up, there was actually. It would be like a shoo-in, like, Hey, I'm going to work for free. Why would you say no? When I showed up, people from Stanford and Penn were trying to get that internship. It wasn't just me. And I leveled with the partners there and said, listen, I live here.

I'm not looking for this to be a three-month internship. I will be here for as long as you need me. I'm learning a lot. I will work very hard. And they gave me a fortunate break to work for them. So they introduced me to the world of finance, where people make money and look at the stock market and things like that.

After being there for about a year and a half, and we were investing in public stocks worldwide, I decided to break into real estate and private equity. I did that because, seeing them be successful as hedge fund owners, I realized that what makes them good at their jobs is not my strength.

My strengths are my social skills, and I love Miami, which is what I'm interested in doing. So, I contacted every firm or person I saw, bought a building, or did anything in South Florida through news articles like The Real Deal and the South Florida Business Journal.

If your name were on there, like Chris Powers at Ford Capital, who just bought an industrial building for 27 million, you would have received a call from me. What steps should I take to work for you in the future? It works for you if you have some openings now.

After doing that for about six months, I got an internship at a company called Lloyd Jones Capital. There were a few things in between, but I landed a job at Lloyd Jones Capital, where I worked for free again. So, I was making 60,000 a year. I didn't think I would break into real estate after six months.

So when I got in front of, basically, someone like you on the way out of the interview, when I realized I didn't think I was going to get the role, which they weren't even hiring for, I said, who's sitting in that empty, cubicle over there? And they said, nobody. And I'm like, I will leave my job and work there for free.

If you give me the opportunity, I'll take it. The CEO loved that it gave me the opportunity. Two weeks later, I was working for free again for a real estate private equity shop that bought value-added multifamily apartments across the Southeast United States. That's how I cut my teeth into things. When I was there, I realized that there wasn't a path.

In that shop and other shops, to make 500 000 a year plus, in the private equity world, right? We didn't have these substantial name shops down here. So when I started contacting investment sales brokers and growing relationships with them to have them sell us buildings, I started asking them, how's your day-to-day life? What conversations are you having?

Who do you get to know? Who do you meet? How much money do you make? Very quickly, I was like, man, I like the brokerage community within that selling 50 million plus buildings like institutional assets. So what I did, and I know it's a long-winded way to answer your question, but anybody could do this in the country right now.

I mapped out through publications and resources who are the most active brokers in my market. Then, I researched that asked or answered the question, How big are their teams? I mapped the highest-volume brokerage shop with the fewest people and said they probably needed help.

So I would reach out to those two companies, and this was eight years, seven, eight years ago now, I reached out to those two companies, one of them being HFF, if you remember the name before the JLL acquisition, and Chris Drew, which, still a mentor and friend, that I cold reached out to basically said, we're not hiring.

And I said, that's fine. You're going to hire eventually and grow a team; what can I do today to ensure that the next person you hire is me? He liked that type of response and said, you should go to New York and try to take this financial modeling exam with Joshua Carr.

So I emailed Joshua Carr and said here's my story. I need money to fly to New York and take your 5,000 course. Joshua Carr replied. It's an in-person course, and there are always empty seats. If you can get to New York, I'm happy to have you join the class for free.

So, I flew out there and tried to sell myself into these brokerage shops. The two shops that I went to were HFF and Walker and Dunlop. I got offers from both, and I ended up choosing Walker and Dunlop again, just on supply and demand. They had only two senior partners.

And their analyst had just taken a job on the principal side. So, I was going to be the only analyst. And I said, great, I'd rather be there than one of 15 analysts at HFF. And what I very quickly realized was Walker and Dunlop were receiving all these opportunities, suitable, inbounds from the senior partners.

And I was the only guy outside of the senior partners. So very quickly, they started giving me a lot of rope to run, and very quickly, they started putting me in front of clients, I think more so because they had to, they're like, Hey, I can't make it to this tour. Can you make it to the tour? And I'm like, Sure.

When I showed up for this tour, Michael Safransky represented the Kushner family. And I was like, hi. And at the time, whatever. I was 25, and you get thrown into the deep end, but you learn quickly. I ended up working at Walker and Dunlop for two, almost three years, and then I got recruited to come over to Berkadia and answer your question, obviously in a long-winded way.

Conversation, opportunities that came to my team's plate, where I was the next man in line to take the call, have the tour, I would show up to these opportunities highly prepared, and then that person, whoever it may be, I would follow up with and stay in touch with. Then, you extrapolate that over 50 deals with very reputable players.

And when we sell one deal, we have 20, 30 offers from your Avalon Bays, Black Stones, and Harbour Group Internationals. So I'm growing relationships with all of them. And little by little, they're like, wow, this Omar guy is accommodating. This Omar guy is super responsive and on the ball, helping me immensely.

So those relationships grow. And then Twitter is the other side of the coin, which has brought my best friend, brand, and industry, I guess, expertise has made it national or and sometimes even global, so it's just been a bunch of inbounds, a bunch of inbounds, the only people that I reach out to specifically that I say, Hey, I got to get in front of this guy is if they're actively building something in South Florida. My partners or I don't know who that person is, then I'm like, okay, well, let's get in front of them.

Chris Powers: Omar, it's hard not to root for you.

Okay, real quick on. You mentioned Blackstone. Do you have anything to say about their recent acquisition of the Air Reet? I know a lot of those assets were in South Florida. 

Omar Morales: Yeah, I have two things to say. One is that people need to learn the implied cap rate. Yesterday, I met more intelligent people than me who said it was 4.6%. And then last night, I was on Twitter and saw some anonymous account that looked very smart, saying it was 7.2 percent or something like that. So, I have yet to learn. I can't speak to that. That's one thing. 

Blackstone's making such a big bet in the multifamily will spur activity and give institutions much more confidence in buying deals at prices we haven't seen in four or five years.

In some of these assets, we've seen, at least locally, and this, I think, translates nationally, that typically, when there's a significant dip in pricing and dislocation, the first movers that come into the market are private capital people who are either wealthy themselves or have sponsored wealthy individuals and families.

They're not the institutions. The institutions have a lot of IC and red tape to clear. So, over the last 12 months, we've seen many of these private capital buyers buy deals because they're orienting their time horizons for these investments to be 7, 10, or 15 years instead of 3 to 5.

With Blackstone being the largest institution in the space, it will allow them, Blackstone's peers, to start becoming more active. 

Chris Powers: Okay, back to where we were a second ago. I'm assuming you're not working for free anymore. You get paid now. There is no more accessible work for Omar.

You've mentioned that you know many players and how you've gotten to know them. One of the things I think about when I think about Miami is that these dominant developers are already in the market. The relations of the world, how hard is it for an incumbent to get into the market when it seems like Tara-related folks like that dominate three or four?

Is there room for more, or do they have a stranglehold? 

Omar Morales: I tweeted that we sold an acre of land for 40 million in downtown Miami to the John Buck companies out of Chicago. It's huge. People will be shocked to hear this, but I had no idea who they were. And they've built 7 billion worth of developments.

So they're big players, and that's someone that we help break into the market. But to answer your question, yes, most deals, the land deals, and the opportunities thrown around in South Florida are related. Tara, all these guys have a first look at them. And that means somebody can come in still, pay a higher price, or put forward more aggressive terms and not make money, right?

In many of these deals, someone related might say, Hey, I'm happy to buy this deal for 20 million. Then we find an out-of-state player who has been dying to be in Miami and is okay with buying it at 22 million. All else being equal, we've done a lot of transactions with the local players.

So, if your terms and pricing are the same, we will typically vouch for the group we know can close and deliver an excellent product for the community. But that's not to say you can't break in. Over the last 24 months, many groups have come to South Florida brand new and are building.

Part of the reason I've had the success, you know, the relative amount of success that I've had is that I learned this from one of my senior partners, Jared Turkel, who is also on Twitter. He told me, " Omar, I've been doing this for 20 years, " he said, for the first 10, 15 years of my career.

When I saw a bid list of people offering our deals, I knew every single one. In 2021 and 2022, I would show up and put together a bid list of 50 people. Here are the 50 offers that are interested in this deal. And Jared would be like, I don't know any of these. Who are these people?

They were people from Chicago, New York, New Jersey, San Francisco, Canada, and Germany. And I was like, I don't know people who called and are interested in Miami. He was like, I know five out of these 30 people, so for me, being young in the industry and being the young partner in the team, Jared and Roberto are in their mid-40s, and I'm 30.

It allowed me to start and grow these relationships with all these new players, so it's very fortunate. I had somebody tell me his name is Kyle Wade. So, shout out to Kyle. I'm a big fan. Chris, he's in the industrial space and looks up to you frequently. He told me that one of his mentors is like, Hey, the key to being successful in brokering is timing, timing, talent, and territory.

He says you'll make much money if you have all three. You will do well for yourself if you have two out of three. When he told me that, I thought about it and said, okay, talent, I hope I have. Timing has been in the 1 percent of landmass globally and has risen exceptionally fast, right?

I couldn't have gotten a better time. The other one was territory. And so Miami, when I started working as a broker, they said, Hey, you're geographically constrained to South Florida and selling multifamily and land in South Florida. And I said, That is more than enough for me, sir. I will happily take that territory. 

So, I think a lot of success in life is luck, and that doesn't mean that you don't have to work hard, but, yeah, I think there's still a lot of developers and new incumbents that are breaking into the space and, they have to underwrite twice as many deals and in some cases probably, go non-refundable more quickly than they'd like to or pay a little bit of a premium. But if they come with it and look at it from a long-term orientation, it typically pays off to have a deal on the books down here if you want to grow here and if your investors want to be here.

Chris Powers: Are there noticeable differences between domestic and foreign buyers? 

Omar Morales: I will tell you the biggest misconception of foreign buyers, like non-U.S. buyers. They are very sophisticated and ask even more questions than domestic institutions. Right. So, for example, in the deal that we're trying to do with one of these Turkish billionaire families, they have asked us hundreds of questions.

They've flown in from London and Monaco to look at various sites and sponsors and all these things. So the most significant thing to point out is that I don't say there's no buy and hefty. If you're talking about institutionally sized assets, the international players looking to break in here are highly sophisticated and do a lot of diligence before making a bet.

That doesn't mean that there aren't cowboys we all know locally. They're the best buyers if you can get their attention. But by and large, no unsophisticated buyer will buy your deal twice as expensive as the next guy, even though many people think they exist.

Chris Powers: Okay, what's your activity like this year? Are things trading in the market this year? Or is it like the rest of the country? It's pretty down, if not flat, from 2023. 

Omar Morales: Yeah, I start every meeting with a client or prospect this year by saying, you know, I'm busy working but not busy closing.

I mean, to give you a sense of the activity that we had in 2021 and 2022, or I'll tell you about the market in general, between Miami Dade, Broward, and Palm Beach County, South Florida saw about three to four billion dollars of transactions in the multifamily space. It includes deals priced above five million dollars.

There are three to four billion dollars of transaction activity annually. In 2021, that transaction activity went up close to fifteen billion dollars. Right, so we're talking about four 5X. As you can imagine, our activity in 2021 went up four or five times. Then, in 2022, it went down to $8 billion, which was still two to three times what we were initially used to historically.

In 2023, the last calendar year I can speak to, there was $3.2 billion worth of sales. And in 2019, there were about 3.1 billion worth of sales. So we're back to the historical average. That'll creep up as the markets open up. But it feels slower than ever because our frame of reference is a month when we closed five 100 million deals, right?

And in 2021, I'll always remember. It’s wild, but this goes back to timing. There was a month. I'll never forget October 30th of 2021. We closed a 132.5 billion three-property portfolio in October. It was a Friday in October. Right. 132 million. On Monday, we closed a 108 million deal. You know, the next business day.

And then, on Thursday of that week, we closed a 133 million deal with Avalon Bay later that week. So we just did three nine-figure deals within a week. Then, the next month, we closed a 355 million-dollar portfolio that we sold to Grant Cardone. And then that same week, we closed a 110 million deal in Sunny Isles.

So, wherever we are today feels much slower than 24 months ago. But to answer your question more specifically, this year, we've done about 2.9 billion proposals, like listing proposals. About 75 percent is multifamily listings, and 25 percent is land listings.

80, 90 percent of those proposals Turn into the client owner saying, Hey, I'm not a seller at these numbers. And we say we agree that you shouldn't be if you don't have to. And then the other 10%, we have a 10, we have a 25 percent chance of winning listings relative to our the other competitors in the market.

So, in this deal, we've closed an acre of land for 20 million. Billionaire's Bunker is where Jeff Bezos and all these guys live and have bought deals. We closed a 24 million townhome deal in Fort Lauderdale. Outside of that, we've marketed about 200 million worth of properties. And, you know, unfortunately, all of those have gone away from us with a three to 7 percent Delta on pricing where the seller's just saying, Hey, I'm not a seller under I'm going to make up a number to not speak about any deal specifically. Still, the seller says, I'm not a seller under 89 million, and we've got offers at 86 million, and it's just like, hey, we get it.

It is what it is. So it's a tough market, but I think it's a huge opportunity right now for everyone, like yourself included, Chris, to double down on marketing, branding, meetings, and clients so that when the market does open up, you're that much more prepared to take advantage of the next cycle, which is the reason why you see me on this podcast.

I've started a podcast to chat with clients, and I'm not busy cold-calling and closing deals. So, let me continue branding and marketing myself and having clients. In life, you have to understand where you are in the market, what the best thing is, and how you can add value to yourself and your people in the future.

Right now, that's marketing for my team, the brokerage community, and us.

Chris Powers: Are you seeing a wave of activity? You said that the bid-ask is off, and you guys have put forth a lot of proposals. Is there light at the end of the tunnel where you see activity where people say, look, we do want to start moving product from the sales side, or is that still flat right now? Because nobody needs to sell. 

Omar Morales: If you don't need to sell, you still need to be today of sale. It is perhaps the best way to answer your question: 12 months ago, when we would put valuations in front of clients, right? We would call them first and say, " Hey, are you sure you want us to turn this into you physically?

Let us tell you where the pricing came in, and when they saw the price, they would fall off their chairs and say; You guys don't know what you're talking about. It's not worth this. That was 12, 18 months ago today. We submit valuations where we can transact on these deals.

And they're like, yeah, I figured it was around that price point, which makes me believe that the bid-ask spread and the expectations are narrowing. I think Jerome Powell, the Fed, is confirming that they're still looking for rate hikes on the market. And the end of this year has given sellers some hope that there's a reason why they should hold out for those rate hikes to come.

And then buyers are interested. People talk about how much money has been raised to buy deals to buy the stress, but I can run around and raise 500 million. I want to find you 25 percent levered returns on existing multifamily assets. Do I need help finding those types of deals?

Right now, deals are trading between a 12 to 15 percent levered return so that you can raise all the money in the world. But if the expectation is off from where deals are transacting, you won't deploy it, right? Like is it dehydrated powder? 

Chris Powers: You said rate hikes. Do you mean rate cuts? Are Sellers waiting for rate cuts? 

Omar Morales: Yeah, yeah, yeah. 

Chris Powers: I want to talk about insurance for a second. One of the most significant words surrounding South Florida in general is insurance. And so, how are people dealing with insurance? Have you seen any creative ways? I'm assuming the much larger companies have advantages that the smaller companies don't have, but when I say insurance, do you? What do you say?

Omar Morales: Yeah, you hit the nail on the head. So it's a massive opportunity for institutions and more prominent, more sophisticated players with portfolio and umbrella policies to buy deals in South Florida, where private buyers get an insurance quote of 2, 500 per unit per year. You have it at 1 700 per unit per year across your master policy.

So, it's an opportunity for the more prominent players to buy deals at a comparatively better price for them. That's one thing. Creative things that I've heard and seen are two. One is that Florida has flood zone maps with FEMA, and a vast shop has successfully made the case that these flood zone maps were done 50-plus years ago and need to be updated relative to the elevation and how this specific deal was built.

If they can change the flood zone rating of the area where their asset is from X to A, the insurance will be much lighter than it was. So, some of my larger clients have had creative success in talking with flood zone and FEMA experts to change how that piece of land is designated for insurers.

That's one exciting thing I've seen. The other one is just lowering insurance requirements for assets that they have bought historically. Whether self-insuring it or saying, hey, we need this much insurance to get Fannie and Freddie. We don't need that much insurance. 

So, let's do as much as the lenders require. But from a macro perspective, I've heard this year that we aren't receiving, my clients aren't receiving, 30, 40 percent hikes in insurance, and it's leveling off to 3 to 5%, which is still high. You can't say that in a vacuum because everybody's deal and portfolio are different, but it's starting to stabilize.

It's a vast question and issue that will create opportunities. When there's a dislocation in the market, there are more opportunities. So it's exciting to be on top of, and if you are fortunate as a buyer to have a relative advantage in the insurance world, there are ways to capitalize on that in Florida.

Chris Powers: Okay. What about the condo crisis? You've talked quite a bit about it. What’s going on there?

Omar Morales: The condo crisis in Florida, and specifically in South Florida, is the most significant macroeconomic, secular trend in the state. It is a huge problem. To give everyone the context so they can quickly understand what's going on, in the 1940s, 50s, 60s, and 70s, people were building tiny condos, right?

On the ocean, 8-story, 12-story, and 15-story condos use surface parking lots, not garage parking. So, we've got condos on three acres of land on the ocean with 50 units. And those units, people are buying for 300 000 to 400 000 because it's a 60-year-old building that's not looking so hot, right?

Developers are coming in and saying, hey, those three acres of land are worth, let's say, 100 million to keep the math simple. There are 50 units in this building, and each is selling for $500,000. So, the units individually total 25 million, but the land is worth a hundred million dollars.

So let's offer these unit owners 30, 40, 50, 60 million and tap into the land under it. What's been happening over the last 50 years in South Florida is these condo boards have delayed and deferred capital expenditures. Obviously, to cash flow the asset in their buildings, the building is better if you can pay 1,000 a month in HOA fees or 500 a month in HOA fees. Many people will need help understanding, and give me the 500 a month.

Over the past 50 years, there has been a lot of deferred maintenance on these buildings, and some buildings are being hit with 2, 3, 4, and 5 million dollar capital expenditures, whether it's plumbing issues, structural repairs, concrete restorations, or roofs that need to be replaced. What's happening is that unit owners are being met with special assessments of $50,000, $100,000, and $150,000.

And a lot of these people, because I've now met them, talked to them, and done a condo termination deal, are not wealthy, even though they're living in great pockets of South Florida. They bought this unit, or their father bought it in the '60s for 50 grand or 80 grand, and they need help to afford a 200,000 assessment.

But if I, or a developer, call them and say, Hey, we'll give you 1. 2 million for your unit that you would sell on the market for 400 grand, they listen. What's happening in South Florida is land-constrained? And this isn't to knock on Texas. I'm a big bull and believer in Texas. I love it.

But I point out Texas because when people looked at population migration, like inflows, Florida and Texas were neck and neck. Texas was always ahead. But I believe in 2021, Texas saw 470,000 new net migrants, and Florida saw 420,000.

So, they're very comparable. The difference is that Texas has 286,000 square miles of land, while Florida has 65,000 square miles. If you look at South Florida specifically, you only have a 13-mile stretch from the Everglades to the ocean. And a lot of that is the Everglades, so there's minimal land.

Those are two points: landmass and population migration. The third point is wealth migration. Texas was also a massive beneficiary of wealthy individuals who moved into the state. In 2021, the net adjusted gross income of taxpayer money that moved into Texas was 6. 3 billion of net adjusted gross income and taxpayer money.

6. 3 billion, Florida had 21 billion of net adjusted gross income moving into Florida. New York lost 20 billion, and California lost 19 billion. Those trends have obviously slowed down, but they're still going; they're still moving forward. That's why I mentioned that.

It's because a lot of wealthy people are coming to South Florida. Developers need more land to build on. The land that's available, to your point, is now sometimes worth 100 million an acre. All these condo buildings were built 50 or 60 years ago, up and down the coast, and they can tap into them.

And if you've been a unit owner in these condo buildings for the last 20 years, if anybody ever approached you, you said, no, beat it. I don't want to sell. I want to live here forever. Well, now those unit owners are being met with 200,000 special assessments. Do you want to pay 200 000 or a 1. 5 million check for your unit?

A lot of people start listening. So, I'm busiest with an absolute flurry of condo unit owners calling me. Whether through Twitter or Instagram, cold calls, and emails saying my buildings are falling apart, our HOA is fighting. We have no reserves. Can you help us sell our land?

I need to focus on the opportunities that are most likely to transact. I do that by saying, okay, I think your land is worth X. So if your land is worth X, I think the average unit will trans, receive a, let's say, 2 million checks, and make up a number, right?

What do these units individually sell for? If these units sell for 500,000, and I can get them a, let's say 1 million check, I will be able to convince many of these people to want to sell their building. If these units sell for 1 million, the land will translate to them getting paid 1. 2 million. There's not much of a spread, and I won't go and do a year's worth of work with my whole team to uncover that land value. 

Chris Powers: What do you do with the holdouts? 

Omar Morales: The first thing you have to do is look at the condo docks. Every building is different, so we've formed good relationships with the condo lawyers in South Florida And told them about the building.

They look at the condo docs, and some condo docs say hey, you need a 75 majority. Some say 85 majority. Some say 95 majority if you're me; if you're a developer, you want to focus on the 75 majority condos. There was a situation recently that I don't want to give too many details just for the client's sake, but it's online.

Everything's online, so it's nothing confidential, but they didn't have the 85, or they didn't have the 95 percent majority. So what they did was they got a majority of call it 60 percent, and they needed to amend the condo docks to lower the 95 percent number. So they said, Hey, if we get to 60 percent of the building, we have a majority to amend the condo docks to make it a lower threshold to tear down the building.

And when all that came to light, and those condo Unit owners were fighting and suing them and making a big deal out of it as they should, the court ended up ruling in their favor and said, hey, you can't do this, right? That's not ethical.

And they said, no, you, you still need 95 percent to tear down this building. And it's a huge issue because, if you're this developer, you've now spent a bunch of legal, marketing, and time trying to buy this building. So there are holdouts. There are different ways to work with them.

At the end of the day, if you're looking to foot a big bill, you'll listen more and more to somebody trying to give you a check, a big check for your building, but every case is unique. And I'll give you an example. I have people on my team telling me, Omar, that you're going to end up just doing a bunch of wild goose chases on 90 percent of these, and you're going to waste a lot of time.

Let's go back to selling multifamily. Again, right now, the market is slow. It is a vast, secular trend that I want to be in, well, that I am in front of, but every case is unique. 

Chris Powers: Is there something on the? You've already touched on it.

But if you say there's something I can spot in the first 30 days, I know I would be wasting my time. Is it 95%? Everybody has to agree. Ninety-five percent of people think that the deal is not worth it. The spread of what it's worth today versus what a developer will pay might not make it worth it. Is there anything else that comes to mind when you look at one of these that immediately you could say, yeah, this is probably worth working on?

Omar Morales: Well, definitely if the building's too new and isn't going to have these extensive structural repairs and capex issues. But outside of the spread between what these units are worth and what I think could get them, what are recently built new construction condos in this pocket selling for?

If you call me about a deal in Boynton Beach that you've never heard of, there are probably no condo units sold north of 1,500 a foot. So, the land value will be lower and pricey. If you send me a condo redevelopment opportunity next to the Amman and next to the one hotel in Miami Beach, the Amman sold units for 5,000 a square foot.

Those units averaged 5,000 square feet. There were 25 million condo units, and they're all sold out. There's a lot of land value in those units. 

Chris Powers: Who buys those? Are those all international buyers, or are they big US corporate guys? 

Omar Morales: It's a great question.

So, the latest thing I heard from one of the biggest condo sales brokers, like individual condo development brokers, is that 20 percent of the condo sales are domestic. Many are from New York, 20% Are Mexican from Mexico, and 10 to 15 percent are from LATAM.

The remaining is specifically international right now. And this is like a very new trend: we're seeing a massive influx of Turkish capital and Turkish migrants. And again, with this Turkish family that we're speaking to, the gentleman said, I took the direct flight from Turkey to Miami last week.

And I knew 75 percent of the plane. And they were all other families, family offices, and investors I know, and they're all talking about, Oh, I'm going down to Miami to look at something. And they're like, Yeah, me too. You know? So, that's Miami's big macro trend.

 I have clients looking to buy in Orlando Jac, Jacksonville, Tampa, and St. Pete. Because over there, you can buy a deal with neutral or positive leverage from day one. There's still enough demand in Miami for deals trading 50 to 75 percent or 50 to 75 basis points negative leverage, right? So if your debt's at 6%, the deal's trading at a five and a quarter; when your debt's at 575, the deal's trading out of five; a lot of people don't want to make those bets cause the cash on cash returns aren't there for them, but there's enough demand. Some people with a longer-term time horizon are still buying those deals.

Chris Powers: Okay. A buddy of mine sent me this question, but it's a good one. If you had 20 million to invest in Miami, where would you invest it? And if you had $200 million to invest in Miami, where would you invest $ it? 

Omar Morales: So, $20 million. I would go by land. I've sold many land and multifamily properties, and the people who make the most money, like equity multiple, buy land.

The most innovative game to play in a place like Miami, where land values are skyrocketing, is doing land entitlement plays or covered land plays. For example, you could buy a strip mall or an office building that will eventually become a condo or multifamily building. You don't need to be the developer.

You don't need to be related. You can go and get that land, entitle it, and sell it to Mill Creek, Trammell Crow, or any of these guys. So, for 20 million, I would be buying land for 200 million. Right now, the best opportunity in South Florida from the multifamily perspective is buying brand-new construction core deals.

They are trading 30 percent below replacement costs and are a screaming good opportunity that institutions are not jumping on because they're selling at a five-cap when the debt's at a 575 and saying it's not meeting our cash-on-cash return. It must meet our 12 percent levered returns, but buying a brand new asset in a primary neighborhood in South Florida for 300 a door is a good investment.

When they used to sell at 500 a door, you'll be pleased that you made that acquisition.

Chris Powers: Let's return to our initial point of discussion. I want to delve into two more markets, starting with Wynnewood. This market is significant to our real estate industry. What's the current situation in Wynnewood? 

Omar Morales: Oh, man. The amount of supply coming into Wynnewood is scary to me.

And don't make this a highlight in your podcast reel. When you send 30-second blurbs, make this like the nugget that somebody finds two hours into this conversation. Wynnewood’s seeing a ton of supply, and it will all be absorbed. It's all going to get stabilized. The question is, at what price?

At what rental rates? What I've seen in Miami—I've been living here for 20 years—is that you might struggle to lease units at, let's say, 2 500 a month, but if you lower that rent to 2 200 a month, your leasing velocity goes from 15 to 30 overnight. It's a very liquid market. Many people are moving in here, and obviously, there's a lot of turnover in existing buildings.

So, it will stabilize, but a tremendous amount of supply is coming into Wynnewood. Many owners there are institutional, and they will weather the storm. Whether it means giving out two months of concessions to lease up their units, they will do it, and it will stabilize. This resilience is a testament to the strength of the Wynnewood market.

Once it's stabilized and the concessions are out of the rent roll, they will look to refire and sell it. But I'm a fan of Wynnewood. There's a lot of walkability, a lot of retail, a lot of stores, and some office buildings, but there's those. That's one of the markets where, in short, a lot of supply is coming in.

Chris Powers: Is the design district different than Wynnewood? 

Omar Morales: Design district. They're about ten blocks away from each other. They're different markets. The design district needs to see a ton of supply. They've been, all the things in the design district are retail and office. There were two projects, and they were condo projects, not apartment projects.

So, there are a few thoughts on the design district outside of the fact that foot traffic has been up almost two times in the last three years, and it's a place that many people visit. It indicates potential growth and development in the Design District, making it an exciting prospect for real estate professionals. 

Chris Powers: Okay, a couple more. You've had the opportunity because of where you've been.

I love what you said. I think the clip will just be—you talked about the 30-cent clip. It's the timing, talent, and territory. That's super important. 

Omar Morales: Ooh, Kyle's going to love that. He texted me last night, like, Yes, there you go. It was so true. 

Chris Powers: Because you've nailed those three, I keep returning to this.

If there's one aspect of your career I genuinely admire, it's the network you've built. Your talent, likability, and expertise have played a crucial role. Moreover, the audience you've cultivated is a testament to your success. It was only possible because you were in a more favorable location like Alpine, Texas. You've managed to connect with the right people, and that's essential to building a personal brand in our industry.

If I just said, what are the things? If I said, what's this? You don't have to say who your most innovative clients are. What characteristics do they have that separate themselves from the pack? Why are they so great based on how you deal with them as an intermediary? 

Omar Morales: They are foaming at the mouth for their next deal 24-seven.

Even I can speak to being relatively let. I wouldn't go to work for free again today. At 21 or 22, I would. I have a job for you right now that is free. No, I'm kidding. Yeah, I'm like, alright, guys, I'm packing my bags. So, I meet them, and they're at the top of their game. They've done tens of deals right now.

They're doing tens of deals. And if I call them, text them, or email them with a potential opportunity, they say, when can I see it? And it's, I'll text them at 11 p.m. And it's not surprising, if they like it, that they will be there at 11 a.m. the following day. And you can imagine these busy people make the time for deals.

They set everything aside to understand and be on top of the next deal. So, if you think of someone like Elon Musk or Michael Jordan, you can hear when people talk about them that they may be tough to work for because they're just on 24/7, that it's relentless and overwhelming. But if you do that over 40 or 50 years, you will be at the top of your game. This dedication and success should inspire all of us in the real estate industry.

As a broker, I see that, and I'm like, wow, I commend that. I respect that. And in the broker-aging world, just a slight tangent allows you to capitalize on that grit more so than on the principal side and other parts of the real estate industry because I'll give you a perfect example.

I was in that event last night, right? And the event that I went to, they sent emails like, Hey, looking forward to seeing all of you guys tomorrow. And that email had 50 people on it. I went one by one before the event, searching who these people were to see which one owned or trafficked in land or multifamily opportunities. I set 45 minutes aside to look up all these people.

And then when I show up at this event,99 percent of those people are like, hi, how are you? Like, what do you do? Hi. And I walk in there, and I'm like, there's Chris Bowers. There's Moses Kagan. There's Don Tetman. And I go right for them. And I'm like, hi, how are you? Yeah. No, you're involved with this deal over there.

And they're like, yeah, I am. And I'm like, we sold the deal across the street. Oh, amazing. And that turns into a coffee; it turns into a lunch, a dinner, a deal—nine months from now. And if you do that for 30 years, you become at the top of your game.

Chris Powers: Let's bring it home on this, then go to the game's top. And you've already highlighted this throughout the conversation. People are sitting there right now. The market's slow; no matter where you are, you're in the hottest market in the world. And it's slow. And you said, I'm spending a lot of my time building my brand, but you were doing that even when the market was hot.

So, the question is, what has building a brand online done for you, and why did you choose to do it?

Omar Morales: We can talk for 30 minutes about this. It's the most critical thing when I look back on my life, and I will have looked at it as the most crucial thing I invested in. And it started. I fell upon it through Twitter. Twitter was a more casual medium for me to discuss live opportunities, deals, and market commentary.

When Miami came to the spotlight, Mayor Francis Suarez and Keith Roboy, a prominent tech investor, picked up many of my tweets. Quite frankly, now I am inundated. Opportunities, whether in brokering or outside of brokerage, are inspiring. And for me specifically, I'm very, and I got to credit the strip mall guy for this.

By talking to him and other players, focus on your craft, focus on multifamily, focus in South Florida, focus on land. Stay focused on all the shiny objects people contact you with. But the brand is very, very beneficial. And to bring it more to the audience, I guess I would say that You can be a very, very impressive person, but if nobody knows who you are and what you're doing, I don't leave it to chance for someone who owns multifamily or land to stumble upon a deal that I closed.

By yelling into a microphone and repeating, I sell land. I sell multifamily in South Florida for the highest market price. People are calling me, whether you are a plumber, an electrician, or a chef, and if you continue to brand yourself. Sharing that identity with folks and the exponential number of opportunities opening up for you is mind-boggling.

The people I've been fortunate enough to break bread with are wild to me because of the social media platform. So it's something that I recommend to everyone, not everyone. Still, if you're, if you want to grow in that direction for you to invest some time in, and I think, Chris, you're an excellent example where you're sitting across the table from Barry Sternlicht and other players like that because of Twitter.

And obviously, you've had to work at that. Still, had you not logged into Twitter or anything, just put your head down and call the next industrial owner; the chances are you wouldn't be in front of Barry, and whatever opportunities come from that wouldn't have been open to you.

The best analogy I received early in my life is that life happens serendipitously. And by being this lighthouse, In a dark sea of information that says, this is what I do. If you like it, come towards me. The surface area of luck you're maximizing will translate into opportunities.

Today, I received calls from a guy I met at a gym whose friend and brother are connected. I recently found out that the code is GP equity in a development that I've been trying to get in front of, and I'm like, wait, you're the money behind this deal. The only reason is that he saw an actual Instagram post of mine.

He clicked on my profile. It said that one of his friends was following me, so he contacted that friend and asked if he knew Omar. That guy said I used to work out with him at five in the morning, like seven years ago. And now I'm talking to the guy who was the money behind a developer I'm trying to get in front of.

And that will multiply if you have an online presence. 

Chris Powers: Omar, you're the man. Thank you for joining me today. It is awesome.

Omar Morales: Chris, I can't thank you enough for reaching out. I said it initially: I've caught a lucky wave, and it's still going somehow. And I'm thrilled that the wave is continuing.

So, territory, timing, and talent. You'll be well on your way if you can acquire those three.