Ok, so it’s actually Cinco de Mayo and not Star Wars Day, but I wasn’t going to let a little thing like the calendar get in my way. There are quite a few forces at work and play in the market and world today that are grabbing most people’s attention, even without the use of star destroyers or stormtroopers (yet). Matthias and I discuss the current market situation and how some financial Jedis might pivot to real estate (not on Tatooine) to withstand and perhaps even triumph in this volatile market. We also dive into some current issues in the real estate market and a particular move some sponsors use that people should be aware of.
Meanwhile, Matthias is working on his daily habits to deal with stress, and I have many thoughts about Wrexham’s third consecutive promotion. It’s an all-new Get Invested.
Key Takeaways
The current market situation presents a great opportunity to trim holdings in the stock market and increase investments in real estate.
It’s a great time to pivot because during this volatility it’s clearly not a good time to invest in the stock market, yet even so, levels have remained steady enough to exit without huge losses, which is not typical in situations where it’s clearly best to exit.
2025 will be a multifamily real estate buyer’s year, and we’re seeing indications that the buying window could be widening.
Real estate investing done well and in properties that mitigate risk offers a safe harbor for cash from the market’s volatility because existing real estate is affected by numerous factors outside of the markets.
Financially distressed properties are those that worked and operated with income when interest rates were low but are now dealing with or facing higher debt service and/or impossible refinancing (or both) and a soft market to sell.
Preferred equity is offered when a property needs to recapitalize in order to cash-flow properly, and those who provide this capital receive a higher percentage return and are also in the front of the line to receive equity payouts, leaving the original investors at the back of the line.
Conservative underwriting that mitigates negative potentialities is the best way, and CVI’s way, to avoid using preferred equity that requires an imbalanced return.
Topic and Time Breakdown
02:31 - Personal Updates and Stress Management
05:12 - Wrexham's Historic Promotion and Its Implications
10:55 - Investment Insights from Wrexham's Success
13:26 - Market Volatility and Economic Uncertainty
18:50 - Real Estate as a Safe Investment Strategy
24:33 - Navigating Market Risks and Opportunities
28:32 - Understanding Distressed Properties
39:12 - The Role of Preferred Equity in Real Estate
49:48 - Wrapping Up: Key Takeaways and Insights
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