Episode summary
A16Z's Partner on Real Estate, Taxes, and Building Wealth
How I Invest With David Weisburd
· · Hosts: David Weisburd · Guests: Jeff Bramel
Summary
Jeff Bramel argues that real estate and broader real assets are compelling for wealthy and taxable investors because they can provide diversification, cash flow, and structural uncorrelation from public markets and tech-heavy balance sheets. He emphasizes that private real estate is not just another exposure bucket: different subtypes, from section 8 housing to trophy Manhattan assets, can behave very differently and should be evaluated on their own economics.
A major theme is tax efficiency. Jeff says depreciation can shelter ordinary rental income, cash-out refinancings can unlock liquidity without a taxable sale, and long holding periods can defer gains and improve the after-tax outcome. He contrasts that with private credit, where a high headline return can shrink sharply after carry, ordinary income tax, and non-deductible fees.
He also defends an opportunistic style of investing over rigid allocation models. In his view, the best investors should be flexible, willing to wait for mispricings, and focused on after-tax return per unit of risk. He argues that over long horizons, higher-return assets can become safer because compounding eventually dominates volatility.
Key takeaways
- Jeff Bramel says private real estate can be structurally uncorrelated with public markets because many properties produce contracted cash flow that is not tied to daily market sentiment.
- Jeff argues depreciation can make a rental property cash-flow positive while showing little or no taxable income, which is the core of real estate’s tax advantage.
- Jeff estimates a private credit fund with a 15% gross return can fall to about 4.5% after carry, ordinary income taxes, and fees for a taxable investor.
- Jeff says an opportunistic real estate investor can add “several hundred basis points” of annual value by staying flexible instead of following rigid allocation targets.
- Jeff argues the right question is not maximizing tax benefits, but maximizing after-tax return on the full investment.
- Jeff says real assets can diversify a tech-heavy portfolio, but only if the investor avoids buying correlated assets like San Francisco real estate or data centers.
Notable quotes
“I think the main reason is real estate and real assets at least the way we do it and the way a lot of large institutions do it is a private asset class”
“you have consistent contracted long-term cash flows. That means in sort of a financial theory sense you have a much lower financial duration”
“I think if you're Joe Average or Jane Average off the street and you own a small apartment building and you're thinking about doing a 1031 exchange, try to be thoughtful”
How the episode opens
So Jeff, your partner at A16Z perennial, Andre Horowitz Family Office Group, and you run real assets. Family office is heavily investing in real estate. Why? — As people's wealth grows and people's balance sheets grow, diversification to uh a lot of asset classes that they may not already have exposure to becomes a really important uh way that build meaningful portfolios.
And have you run that math? the public markets, let's say the S&P 500, what's the correlation between that and real estate?
That's a good question and I'm going to take the fifth on that a little bit and I think the main reason is real estate and real assets at least the way we do it and the way a lot of large institutions do it is a private asset class. It's not marked to market very frequently. If if you look at REITs uh and listed securities, you probably would find a higher correlation because those things are being buffeted and driven by public market phenomena.
But for the private markets, I think you have to take a step back and think structurally about whether they're correlated or not. And and I would argue that uh in many cases they're they're quite structurally uncorrelated.
So in preparation for this interview, I did the research. Private real estate is roughly correlated 02 to 0.5 depending on the type of real estate versus the public markets. Why is real estate such a great diversifier? Maybe you could unpack that intuition.
It's a great diversifier, David, because you have consistent contracted long-term cash flows. That means in sort of a financial theory sense you have a much lower financial duration than an asset like something in the stock market which even if it's got a little dividend stream typically doesn't distribute much in the way of cash flows not relative to what private real estate uh often does and that shortening of the financial duration gives you a lot of insulation from the ups and downs in the market.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- after-tax investing
- private real estate
- tax efficiency
- structural diversification
- opportunistic real estate investing
Companies and tickers mentioned
- a16z Perennial
Watch the episode
Watch “A16Z's Partner on Real Estate, Taxes, and Building Wealth” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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How I Invest With David Weisburd, this episode and its artwork belong to David Weisburd. Octagon is not affiliated with the show; this page is an independent summary.
