Jacob is a Senior Real Estate Associate at Fundrise where he works on the underwriting, due diligence, and closing of real estate transactions.
1. What’s your background?
I’m originally from Lexington, Kentucky and went to the University of Pennsylvania’s Wharton School where I studied finance and real estate.
Prior to joining Fundrise in the spring, I spent 5+ years working for two large real estate private equity companies - Spear Street Capital in New York and Federal Capital Partners in DC - underwriting and investing in hundreds of commercial and residential projects valued at several billion dollars.
2. What are the most important factors you look at when underwriting a real estate investment?
At Fundrise, we look at more than 100 different factors when underwriting a project and spend time digging into every possible scenario that could potentially impact performance.
We believe that the “jockey” is as important as the “horse” when investing in real estate. For this reason, we begin by underwriting the real estate company’s previous experience and track record.
We focus on working with those groups that are well-capitalized and have a strong ability to succeed in top US markets.
If a company passes the background review, we begin initial due diligence on the project itself to be sure it fits within our guidelines. This involves looking carefully at location, market, risk / reward profile, and, most importantly, downside.
By the end of the underwriting process, less than 1% of all submitted projects will end up on the platform for investment.
3. You’ve worked at two multi-billion dollar real estate investment companies. How is Fundrise’s underwriting process different than theirs?
Overall the fundamentals of the process are very similar but there are a few key differences like:
- Partners - Fundrise places a greater emphasis on building partnerships with the best sponsors in each market, and then working with them over the long term.
- Collaboration - Our real estate team meets twice a week which is more than double what I’ve seen at other firms. Constant communication makes it easier to leverage the entire team’s knowledge and lets us move faster to close deals.
- Field Originators - It’s extremely rare to have originators in almost every major market. I’ve found their intimate market knowledge to be invaluable (plus they can visit sites early on in the underwriting process so we don’t waste time evaluating deals that aren’t smart).
4. What’s your favorite deal that you’ve underwritten? Why?
Late last year we closed a multifamily deal in Denver with East West Partners - one of the country’s top developers. Home prices in Denver are up 15%, and supply can’t keep up with demand. Our whole team felt strongly about both the neighborhood and the price point.
It’s hard not to love your job when you get to work with a best-in-class developer on an exciting project in a rapidly growing market.