💡 Summary: The internal rate of return (IRR) is a key metric that measures the expected return on an investment, accounting for the time value of money. While a higher IRR typically indicates a better investment, it doesn’t consider risk factors, so a higher IRR doesn’t always mean a better investment if the risk is … Read more
💡 Summary Bonus depreciation in multifamily investing lets investors take large upfront tax deductions by accelerating property depreciation through cost segregation. While depreciation recapture applies when a property sells, the initial savings usually outweigh the later taxes owed. By using tools like a 1031 exchange or reinvesting in new syndications, investors can often defer or … Read more
💡 Summary: The announced end of Fannie Mae and Freddie Mac’s federal conservatorship could reshape multifamily lending by introducing higher mortgage rates and tighter credit. This may keep more households renting, strengthen rent growth, and favor well-managed existing assets. Passive investors should focus on sponsors with proven track records, resilient markets, and strategies that mitigate … Read more
💡 Summary: Kathy Fettke believes the next 6–12 months of the economy will largely depend on Federal Reserve actions, which remain unpredictable. While high interest rates have slowed housing, she sees strong long-term demand driven by millennial household formation and limited housing supply. For multifamily investing, Fettke views current uncertainty as an opportunity to find … Read more
In our last blog, Evaluating the Sponsor, we mentioned that there will likely be syndicators who will be forced to leave the business. Unfortunately, it has started with the recent announcement of the $229MM multifamily foreclosure in Houston, TX, and there will likely be more to come. While details are still coming out, we believe … Read more
💡 Summary: Rising rates and recession risk mean investors should expect lower projected returns and longer holds in multifamily investing—think low-to-mid-teens IRR for Class B & C value-add deals. Prudent operators are de-risking with higher exit cap rates, modest rent growth, lower leverage, fixed agency debt, and larger reserves. Be wary of sponsors touting outsized … Read more
💡 Summary: Gary Lipsky, CEO of Break of Day Capital, outlines five key strategies for successful real estate investing in 2023: be conservative with underwriting, understand your local market, manage debt wisely, invest in workforce housing, and partner with experienced professionals. By focusing on risk management, informed decision-making, and long-term stability, investors can navigate a … Read more
