We recently touched on an important shift we’re beginning to see in the market: distress is emerging, and with it, opportunity.
That said, timing matters. Trying to catch falling knives rarely ends well. While distress is building, it’s still early in the cycle. In markets like this, patient capital tends to win.
What is changing is the gap between buyers and sellers. Bid-ask spreads are narrowing. Sellers who were holding out for 6-cap pricing are now being forced to accept 7s. And in some cases, 8s. We haven’t seen 8-cap multifamily pricing in decades. That creates real opportunity.
Even unlevered, an 8-cap represents an 8% cash yield, and with appreciation, total returns can move into the mid-to-high teens. An attractive return profile in any market.
What if those returns could be generated in a tax-efficient and tax-deferred way?
Receive a 7% annualized distribution while compounding toward a 14% total return. All without paying taxes while you’re investing. A 7% return post-tax beats your 3% money market return pre-tax every day of the week, Sundays included.
Over the coming notes, we’ll outline several themes investors should be aware of. Opportunities available today and themes that position portfolios for cash flow now and appreciation tomorrow.
Patient money, structured correctly, has a powerful advantage in markets like this.
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