How to Invest in Real Estate, From Blackstone’s Jon Gray

How to Invest in Real Estate, From Blackstone’s Jon Gray

  • Blackstone COO Jon Gray told Bloomberg his investing advice would be to bet on real estate.
  • Gray, who has the No. 2 job at Blackstone, singled out real-estate investment trusts.
  • He also said to invest in areas where “the creative and technology types are,” like Austin, Texas.
  • See more stories on Insider’s business page.

The man who helped turn the $600 billion alternative-asset manager Blackstone into one of the largest landlords has declared that it’s still a good time to invest in real estate.

Jon Gray, Blackstone’s president and chief operating officer, gave his investing tips in the first episode of “Bloomberg Wealth with David Rubenstein.”

Gray, who built Blackstone into a behemoth landlord, said that if you had $100,000 to invest right now, you should put it in real estate — despite the wild market.

He singled out real-estate investment trusts (REITs) as a solid bet: “You can invest in a good basket of public REITs,” he said. REITs allow people to invest in real estate without having to buy or manage property themselves.

People can buy individual shares of public REITs, like Gray recommended, or they can invest in a mutual fund or exchange-traded fund that holds REITs through a brokerage firm, individual retirement account, or 401(k). Insider’s Tara Mastroeni previously reported that REITs round out portfolios because they “combine the ease and

of investing in stocks with the opportunity to own, and profit, from real estate,” without the hassle of being a landlord. Another upside, she said, is that REITs are “geared toward regular returns and higher-than-usual dividends.”

There are even crowdfunding investment platforms for real estate that can help you ease your way into the world of REITs — especially if you can part with only a small sum of money, since many of these online platforms have lower minimums than big firms or brokerages.

As far as other investment advice goes, Gray said “you want to focus on the future.” For real-estate buys, in particular, he said, “Go where the creative and technology types are because those are the markets where there will be the most economic activity.” He went on to list some areas of note, like Austin, Texas, and Cambridge, Massachusetts — both big college towns — along with London, Amsterdam, and Tel Aviv, Israel.

The important part, he added, is to know how to play the waiting game. When making any kind of real-estate investment, he said, you need to ask yourself: “Is this a good piece of real estate, where supply is limited, demand is favorable?” If yes, “hold it for a long period of time,” he said. “Find those right neighborhoods to invest in, deploy your capital, and then be patient,” he added.

The best investment advice Gray himself ever received, he said, was to “be a high-conviction investor.” He added: “When you dabble, and just put a bunch of money here on things you don’t know or understand, it tends to work out badly. But when you see something — single-family housing, global logistics, the movement of everything online, and you lean into that — that’s when you have the best outcomes.”

Gray’s rise in real estate

Gray started at Blackstone shortly after graduating college in 1992. He rose to prominence in the company’s real-estate investment group, where he helped build a $325 billion real-estate portfolio, Insider’s Casey Sullivan and Dan Geiger reported.

At Blackstone, Gray has helped spearhead the division of the company that buys single-family homes to rent out to tenants. The single-family-rental business has boomed over the past year because people who can’t afford to buy homes because of record-low inventory and high prices have been forced to rent instead. That helps line the coffers of Wall Street firms that own the houses, like Blackstone.

“There’s been a surge in people wanting to own homes,” Gray told Bloomberg’s Rubenstein. “Our investment in rental housing is based on the fact that we just haven’t built a lot of housing since 2008-09. So that has created support for single-family values but also rental values.”

In an April earnings call, Gray said Blackstone owned and managed industrial, residential, and retail properties across the country but that rental housing represented the bulk of Blackstone’s portfolio.

He said on the call that he was considering preparing for inflation by raising rents on the thousands of apartments and homes the private-equity giant owns. While the firm does not disclose how many multifamily units it owns in total, a fact sheet for its Blackstone Real Estate Income Trust showed the company had at least 89,000 multifamily units.

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