In the past decade, particularly after the recovery of the previous 2008 recession, the U.S. real estate industry has seen a surge in new success stories. Now, as the 2022 slowdown commences in some parts of the U.S. real estate market, we speak to an expert in the field who shared his insights.
Rob Depaoli, the #1 producing agent by sales volume under 35 in California (2019-2021 – Wall Street Journal/Real Trends). In an interview, Depaoli had the following to say:
Why did you decide to get into real estate?
My first job out of college was at a large marketing firm in Los Angeles, while it was a great opportunity I didn’t see a future there long term. My family has been in real estate in California since the early 1900s, mainly in real estate law and development- it’s always been something I’ve been interested in. Being a real estate agent I saw a lot of opportunity owning my own business and building a career that I was passionate about.
What has been your biggest success?
Biggest success in my view is getting to a point in my career where 100% of my business is referral based, whether it be through friends, past clients, or people in my network. It means a lot that I have built something that now runs on it’s own. I also take pride in helping the people that help me succeed at a high level- I have a group of agents that I partner with depending on the client to make my business more efficient so I am able to scale the business. Helping them grow their business and sharing any success that I have has been really rewarding.
How would you describe the real estate market at the moment?
The market has been great really since about 2011- if you’ve bought anything since then, you’ve done really well and likely have an attractive interest rate if you have debt on your property. With rates and prices high, we’re seeing demand slow a bit however inventory remains low which is keeping the prices level in most areas. Should we start to see some more inventory in the high end neighborhood there’s a good chance we see prices adjust/normalize a bit. In the next 2-3 years it’s unlikely we’ll see the 10-30% appreciation we have seen in some years in the past decade. If inventory opens up a bit, we may see more opportunity for buyers.
What advice would you give to someone interested in real estate investing?
If we’re talking about rental property – start small and start as early as possible. If we’re talking about buying a property for yourself, don’t buy a property to live in unless you actually want to live in it- I see so many people buy small starter homes that don’t fit their lifestyle just for the sake of “owning” something. I started buying rental property well before I bought anything that I lived in myself. It’s OK to rent and build equity through investment properties prior to buying a primary residence. For many real estate investors like myself, that is actually what I recommend as an option to first time home buyers. The rent where you live and accumulate investment property is a concept often pushed by Grant Cardone, a popular real estate investor/social media personality.
What challenges have you faced in your career and how have you overcome them?
When I started as an agent at the age of 23, being young in a luxury market where most homes were at the time $2-10M it was sometimes difficult to compete with the agents who have been around longer with more experience. As I started to get some sales going I realized that being young in the business was one of my best advantages in the market- many buyers and sellers were actually looking for someone with a lot of energy that was excited to work and up to speed with social media and able to communicate quickly, on weekends etc.
How long have you been investing in real estate?
I started investing at the age of 26 back in 2016. My first property was a townhome, since then I’ve grown that side of the business to apartments, industrial, vacation rentals, and new development projects.
What type of clients do you work with?
We work with all kinds of clients from first time home buyers, athletes, executives, investors etc. I’ve been lucky to have a pretty extensive athlete client base that is all over the country- when they get traded or need to sell their home in a different state, I help them put that together with a local agent in our office depending on the price point and location. In many cases, I oversee the buying process to make sure everything goes smoothly.
Where do you see yourself in the future?
I hope to get more into educating kids in high school and college about their options in real estate and why investing in real estate is important at a young age. I’m not sure why it’s not taught more in school but there are a ton of opportunities for people to create their own business and be financially free in their 30s and 40s if they start in their 20s. For myself I’m planning on really focusing my time on giving back in the next decade or so- whether it’s through education/charity work I’d really like to focus my time on helping other people.
Final take and commentary:
Whereas the NABH stated a 6% reduction in asking prices from builders, the U.S. remains in a sellers market with reasonably tight supply. Many other factors are in the making, for example politicians are wrangling about the border policy in Texas – which in itself may have an impact on construction labor, the cost of construction and inevitably the cost of maintaining tight supply.
When economies have solid fundamentals, as we have seen in the last decade in countries like Canada, Australia and the U.K – it is possible for house prices to plateau rather than to crash. As for the United States, where rapid hikes in the interest rates and high levels of personal debt remain at play, it is certainly an interesting space to observe.