Podcast Summary:

Exchanges – The Future of Real Estate Investing: Pretium’s Don Mullen on the Rapidly Changing Asset Class
Goldman Sachs | Hosted by Alison Mass | Released March 21, 2025

Overview

This episode features a conversation between Alison Mass, Chairman of Investment Banking at Goldman Sachs, and Don Mullen, Founder and CEO of Pretium, a major real estate investment firm. The discussion dives into the transformation of the U.S. housing market since the global financial crisis, the shift from homeownership to rentership, institutional investment opportunities in real estate, and Don Mullen’s personal journey as an investor, leader, and art enthusiast. The episode is rich with insights on real estate as an asset class and broader reflections on investment strategy, industry evolution, and organizational culture.

Key Discussion Points & Insights

Don Mullen’s Genesis of Pretium (01:11–03:19)

• Motivation:
  Mullen left Goldman Sachs in 2012 recognizing a "generational event" in single-family homes and mortgages after the financial crisis. He observed the U.S. shifting millions from homeownership to rentership and noted the discount at which assets were trading.

• Influence of Market Crises:
  Having witnessed markets through the S&L crisis, dot-com crash, and GFC, Mullen saw each crisis reshape financial regulation and capitalism itself.

  "My view about that [the financial crisis] was that we were going to change the manner in which we lent money for mortgages, that we would be in a position that we had to move 10 million Americans out of home ownership into rentership, and that the assets themselves were trading at a material discount." — Don Mullen, (01:24)

Housing Market Transformation Post-GFC (03:32–05:19)

• Regulatory Response:
  Introduction of "qualified mortgages" improving safety but narrowing underwriting.

• Industry Rationalization:
  A significant reduction in home construction has led to a persistent shortage, exacerbated by demographic trends (aging millennials).

• Enduring Shortage:
  Mullen projects this housing shortage to last until at least 2040.

  "We have a massive demographic imbalance between housing volume and prospective homeowners and home renters ... we should expect a persistent and continued shortage of homes." — Don Mullen, (04:39)

Pretium’s Unique Business Model & Market Edge (05:24–08:14)

• Range of Activities:
  Pretium is the largest private owner-operator of single-family homes in the U.S., a top lender for home renovations (fix-and-flip) and non-qualified mortgages, and a major player in distressed mortgage acquisition.

• Operator and Asset Manager:
  Owning the operating company allows control over focus, tech investment, and efficiency gains — essential when managing $60B in granular, fragmented assets.

• Institutionalization Trend:
  Single-family rentals are only ~3–4% institutionally owned, vs. multifamily where institutional ownership is the norm.

  "We take highly fragmented asset classes and are able to roll them up into investable scale global institutions. And that's relatively unique." — Don Mullen, (07:54)

Single Family Housing as an Investable Asset Class (08:26–11:40)

• Resident Benefits:
  Institutional landlords can offer more services at similar costs and place families in better communities.

• Impact on Social Mobility:
  Renting homes in ownership communities, particularly in good school districts, can help break intergenerational poverty.

• Market Liquidity:
  Though improving, real estate remains illiquid, especially during periods of rate volatility and policy uncertainty.

• COVID-19 Impacts:
  Pandemic-related pressures caused many “mom and pop” landlords to exit, reducing single-family rental inventory.

  "The most important thing to break intergenerational poverty is, yes, owning a house. But the second best thing is renting a house in an ownership community." — Don Mullen, (09:40)

The Outlook for Homeownership and Rentership (11:40–13:36)

• International Perspective:
  Countries with high rentership, like Germany and Denmark, still have strong economies.
• Labor Mobility:
  Renting enhances worker mobility, which is critical for GDP growth.
• Cost Dynamics:
  Currently, it’s cheaper to rent than own, due to rate hikes and changes in tax code.
• Policy Implications:
  Large segments of Americans (with lower credit scores or substantial debt) need robust rental options.

Interest Rates and Market Dynamics (13:36–16:01)

• Surprising Outcomes:
  Contrary to expectations, the pandemic and rapid rate hikes drove up house prices (due to constraining supply more than demand).

• Rate Normalization:
  Higher rates may not hurt prices long-term — they reduce mobility, further tightening supply.

  "Higher interest rates actually caused some increase in home prices, very unexpected by the Fed and everyone overall, just like a pandemic caused an increase in prices. And no one expected that." — Don Mullen, (15:51)

Personal Journey: From New Jersey to Wall Street (16:14–19:06)

• Humble Beginnings:
  Raised in a blue-collar family with no prior exposure to finance.

• Education Path:
  Entered Yale (after being rejected by Rutgers), began as an English major, pivoted to economics after realizing the financial realities.

• Early Career:
  Started at First Boston doing research by hand — before spreadsheets — leading to a skillset focused on cash flow analysis.

  "I think I'm the only person ever in the history of the university system in the United States who was rejected at Rutgers and accepted at Yale." — Don Mullen, (17:47)

Lessons From Drexel Burnham & Building Organizations (19:16–22:57)

• Cash Flow Over Everything:
  Deep dive into cash flow and liquidity (inspired by early experiences in utilities and stressed assets).

• Leadership & Culture:
  Observed the role of optimism, work ethic, and risk-taking culture from various Wall Street institutions. Growth orientation keeps teams motivated.

  "Pessimism is an important thing to be aware of ... but it can't be a dominant factor in the culture. Bear Stearns had a little excess pessimism ... Goldman Sachs was filled with optimism and confidence." — Don Mullen, (22:23)

Work & Life Balance (23:00–25:04)

• Personal Rule:
  On joint custody weeks, home every night for dinner — established upfront on joining Goldman Sachs.

• Cultural Shift:
  Ironically became an internal figurehead for work-life balance.

  "Every other week, I am home for dinner every single night ... and it doesn't matter. ... The most joyful moments are being with your children and having them have joy in accomplishing or doing something." — Don Mullen, (24:18)

Parenting Philosophy (25:04–26:32)

• Parental Rules:
  Controlled curfews and no tattoos before college (with mixed compliance), focus on academics, and attempted screen-free evenings.
• Universal Theme:
  "Nothing good happens after midnight."

Art, Philanthropy, and The High Line (26:32–31:01)

• Art Involvement:
  Developed a passion for art in college and became a contemporary art collector.

• High Line Contribution:
  Instrumental in establishing and funding the High Line Art Program after initially being relegated to "garbage collection sponsorship."

  "You're running one of the great public parks in the world ... you have to have an art program." — Don Mullen, (28:14)
  "The money is irrelevant. It was wonderful, still wonderful." — Don Mullen, (29:49)

Pretium’s Future & Industry Trends (31:01–34:14)

• Construction & Renovation Lending:
  Pretium is expanding as a lender to homebuilders because traditional banks are pulling back.
• International Expansion:
  Pretium plans to emulate its U.S. model in other developed countries facing similar housing market dynamics.
• Addressing Old Housing Stock:
  There’s a pressing need for mass renovation in U.S. housing due to aging properties.
• Growth in Distressed Credit:
  Mullen sees ongoing opportunities in residential credit, particularly distressed mortgage assets.

Notable Quotes & Memorable Moments

• On Opportunity Post-GFC:
  "I thought the investment moment was all about single family homes and mortgages, and it would be an investment event, one of the greatest ones of my lifetime." — Don Mullen, (02:56)

• On Social Mobility Through Rentership:
  "If you look at the Harvard Housing study ... the most important thing to break intergenerational poverty is, yes, owning a house. But the second best thing is renting a house in an ownership community in a good school district." — Don Mullen, (09:40)

• On Building Organizations:
  "Optimism is critically important. Pessimism is an important thing to be aware of ... but it can't be a dominant factor in the culture." — Don Mullen, (22:23)

• On Work-Life Balance:
  "Every other week, I am home for dinner every single night ... The most joyful moments are being with your children and having them have joy in accomplishing or doing something." — Don Mullen, (24:18)

• On Rate Surprises:
  "Higher interest rates actually caused some increase in home prices, very unexpected by the Fed and everyone overall, just like a pandemic caused an increase in prices. And no one expected that." — Don Mullen, (15:51)

Timestamps for Key Segments

| Timestamp | Topic | |-------------|------------------------------------------------------------| | 01:11 | Genesis of Pretium, Post-GFC Opportunity | | 03:32 | Regulatory/market transformation and housing shortage | | 05:24 | Pretium’s business model and ecosystem | | 06:56 | Advantages of being both asset manager and operator | | 08:26 | Institutionalization of single-family rentals | | 11:40 | The future: homeownership vs. rentership | | 13:36 | Impact of interest rates and covid-era surprises | | 16:14 | Don’s personal background and early career | | 19:16 | Lessons from Drexel Burnham; building organizations | | 23:00 | Work-life balance philosophy | | 26:32 | Parenting rules and anecdotes | | 26:57 | The High Line art program involvement | | 31:01 | Pretium’s future; market/lending trends | | 34:20 | Lightning round: first investments, strengths, advice | | 36:34 | Investing approach: pattern recognition | | 38:03 | Best advice and admired investors | | 40:28 | How Don spends his time outside work, books, and family |

Lightning Round Highlights

• First investment: Studio apartment at 77 Bleecker Street; also long bonds at 14% yield (34:25)
• Favorite musicians: Currently a chaperone and Charlie XCX fan; classic favorites include Blondie, Psychedelic Furs, Talking Heads (35:00–36:14)
• Investing strength: Long-arc pattern recognition of macro trends (36:34)
• Best advice received: Outwork others if you cannot outsmart them; and have confidence in your pattern recognition (38:03)
• Most admired investor/business builder: David Tepper as investor, Mark Rowan as business builder (39:15)
• Current reading: Focused on AI and its productivity impact; believes AI will drive unprecedented economic productivity (40:46)

Takeaways

This episode provides a thorough look at the lasting effects of the global financial crisis on U.S. real estate, the evolving structure of rental and ownership markets, and the growing role of institutional investors. Mullen’s journey adds depth, highlighting the importance of adaptability, optimism, and seizing generational opportunities—all underpinned by personal stories and philosophical reflections. The industry is poised for continued transformation, both domestically and globally, driven by demographic pressures, technology, and evolving lending markets.

For listeners in real estate, institutional investing, or those seeking leadership lessons, this episode delivers practical insights and compelling personal stories, directly from one of the key innovators in modern housing finance.