I recall hearing Warren Buffett say something interesting many years ago: If he had to start over with a $1M portfolio, he would be able to generate 50% annual returns. As time goes on, and portfolio values grow, your universe of investments will shrink. A CRE fund deploying $1 Billion in capital simply cannot pursue that $1M value-add strip center. Even if they can triple its value, a $2M profit is meaningless to the Fund, and they need to pursue the largest investments (e.g. portfolio sales). Based on my estimation - 'Smaller' entrepreneurs have the structural advantage of making excess-returns in good, and bad, markets. Even when the markets are inflated, it is possible to find off-market distressed deals. In bad markets, 'smaller' entrepreneurs can make an absolute killing. I have seen it time and time again. Larger funds are restricted in their ability to generate excess-returns, even if they are skilled investors. In inflated markets, they are competing with other funds to pursue portfolio sales. These larger funds are simply meeting the market, and paying market prices to win deals. Some players have created expertise in niche fields (e.g. Sale-Leasebacks), which help them achieve these above-market returns, but these are rare opportunities. This investment strategy has a limited market size, which is why Realty Income has transitioned to non-retail assets (e.g. Casinos). From my perspective, it appears the large funds need to deploy a different strategy if they want to generate excess-returns. Reduce leverage across your portfolios during market booms, while maintaining lines of credit and cash reserves. Utilize the liquidity during market busts to pick up the pieces. Hard strategy to pull-off for funds that generate fees based on short-term performance. They are structurally unable to position themselves to truly create value during market distress. Ultra high net-worth CRE investors (typically families led by 1-2 decision makers) tend to employ the strategy I noted above. They can implement a 10-30 year plan and hold to it, without being fired for short-term performance.

I receive so many DMs from aspiring Developers that it is unbelievable. To the maximum extent possible, I give feedback and advice to set them on the right path. Some people have 'it' in them, and have been putting together deals with major nationals. I have my eye on an aspiring developer in Chile, who has certainly caught my attention. I wish you the best of luck @chilean_lawyer