The Real Estate Market Watch - current events through a real estate lens.

A shifting economic order. Rising geopolitical risk. Capital on edge. In The Real Estate Market Watch, Dr. Adam Gower, author, academic, and commercial real estate veteran with over 40 years of experience, examines the macroeconomic signals reshaping the real estate investment landscape. This isn’t a show about deal hype or trend-chasing. It’s about what happens when confidence meets correction - and how investors and sponsors can respond with clarity, discipline, and a focus on downside protection. Each episode features candid conversations with economists, multi-cycle real estate professionals, and respected market thinkers. The aim: to make sense of fast-moving events without partisan noise or clickbait headlines - only the real implications for real estate. There’s no fixed release schedule. Episodes are published in response to market conditions, not calendars. If you're trying to navigate uncertainty with a clear-eyed, capital-first approach, this podcast is for you. Newsletter: GowerCrowd.com/subscribe Email: [email protected] Call: 213-761-1000

The Crash You Won’t See Coming — Because It’s Already Started 06/05/2025

The Crash You Won’t See Coming — Because It’s Already Started The Real Estate Cycle: A Warning for 2026 Insights from Phil Anderson on the Coming Real Estate Market Crash In my conversation with renowned economist Phil Anderson, you will gain unprecedented insight into the mechanics of real estate cycles and why we are right on the precipice of the next major real estate market crash. Anderson, author of "The Secret Life of Real Estate and Banking," presents a compelling case that combines economic theory with historical precedent to paint a picture of where we stand today – and where we’re headed tomorrow. The Foundation: Understanding Economic Rent The Law That Economics Forgot To understand the thesis, here’s a powerful analogy: just as we accept the law of gravity dictates that a dropped pencil will fall to the ground, there exists an equally immutable economic law that has been largely forgotten. Anderson calls this the "law of economic rent" and it’s the principle that all of society's gains and benefits will ultimately gravitate toward land prices. This fundamental concept explains why we experience predictable real estate cycles. When society allows land earnings to capitalize into prices (typically representing 20 years of earnings), and banks are permitted to extend credit based on those inflated prices, a real estate cycle crash becomes inevitable. It's not a possibility – it's a mathematical certainty. The Erasure of Land from Economics Anderson reveals a crucial historical shift that occurred after World War I. Prior to 1907, economists universally recognized three factors of production: labor, capital, and land. However, as land reform movements gained momentum and threatened established interests, there was a deliberate effort to remove land from economic textbooks entirely. Today's economists learn only about labor and capital, treating land as merely another form of capital. This fundamental misunderstanding, Anderson argues, is why virtually no mainstream economists saw the 2008 financial crisis coming, nor will they recognize the signs of the coming downturn. The Cycle Mechanics: Why 18-20 Years? Historical Reliability The 18-20 year real estate cycle has been remarkably consistent throughout American history, documented back to 1800. Anderson traces this pattern through every major economic downturn: the 1920s, early 1970s, 1991, and 2008. In each case, the proximate cause wasn't what most economists claimed – it was the deflation of land prices. The current cycle began in 2012, marking the bottom of the last downturn. We are now in year 13 of the cycle, approaching the critical 14-year mark that historically signals the beginning of the end. Here’s how it works: The Anatomy of a Cycle Anderson explains that real estate cycles run like this: The cycle is 18.6 years on average - "14 years up and 4 years down" 2012 was the bottom - Land prices peaked in 2006-2007, then had approximately 4 years down to the 2012 bottom 2026 is the projected peak - As Anderson states: "14 years up from there [2012] takes you to 2026. It really is that simple." We're currently in year 13 - From 2012 bottom + 13 years = 2025, approaching the 14-year peak in 2026 Years 13-14 are the "Winner's Curse" - The final speculative phase when "animal spirits are truly unleashed." Current Position in the Cycle This precise timing explains why Anderson identifies us as being in "the last couple of years of the cycle." All the current signals he observes - housing stocks rolling over, banking deregulation beginning, frenzied speculation in Bitcoin and cryptocurrency - point to our approach toward the 2026 peak rather than suggesting we've already arrived there. The critical insight is that we're in the dangerous final speculation phase right now. We're experiencing what Anderson calls the "Winner's Curse" period of years 13-14, when speculation reaches fever pitch and "animal spirits are truly unleashed." The peak is expected in 2026, which would then trigger the inevitable 4-year down phase running from 2026-2030. This timeline explains why Anderson emphasizes the urgency of preparation - we're not looking at some distant future event, but rather a cyclical turning point that's rapidly approaching and may have already begun. Presidential Patterns: The Republican Connection A Striking Historical Correlation One of Anderson's most intriguing observations concerns presidential politics. Since Abraham Lincoln's era, every final phase of a real estate cycle has coincided with a Republican president taking office. These aren't coincidences but reflect the political dynamics that emerge during speculative bubbles. Anderson notes the historical bookend: George Washington, the first president and America's largest landowner at the time, and now Donald Trump, the 47th president and a prominent real estate developer, both representing the connection between land ownership and political power. The Deregulation Imperative Following a predictable pattern, Republican administrations at cycle peaks immediately begin dismantling banking regulations. Anderson emphasizes this isn't partisan commentary but historical observation: "The very first thing they do is get rid of all bank regulation." This deregulation serves a specific function in the cycle – it allows banks to engage in the aggressive lending that characterizes the final speculative phase, ultimately setting the stage for the inevitable crash. Current Signals: Reading the Tea Leaves Housing Stocks as Leading Indicators Anderson employs the analytical methods of legendary trader W.D. Gann to read market signals. Housing stocks – companies like Lennar, Toll Brothers, and D.R. Horton – serve as the canary in the coal mine. These stocks historically peak 1-2 years before the broader market, as analysts recognize that rising land costs will eventually squeeze builder profits. During a brief banking scare in early 2023, while some worried about contagion, housing stocks actually made new highs - but have since peaked and rolled over and are now trending downward – a classic signal that the cycle is approaching its peak. The Dollar Dilemma For the first time in American history, we may face a scenario where the Federal Reserve cannot lower interest rates during a recession. This stems from growing concerns about the U.S. federal deficit and potential challenges to the dollar's reserve currency status. Anderson explains that while other countries have often faced this constraint – they cannot simply print money to solve problems – America has enjoyed "exorbitant privilege" of the dollar. However, current policies may be eroding international confidence in U.S. fiscal responsibility. The Speculation Frenzy: Bitcoin and Beyond Modern Manifestations of Ancient Patterns Every cycle's final phase features a speculative vehicle that captures public imagination. In the 1960s, it was oil and Boeing 747s. In the 1980s, real estate itself. In 2005-2007, it was mortgage-backed securities and subprime lending. Today's vehicle appears to be cryptocurrency, particularly Bitcoin. Anderson points to concerning developments like MicroStrategy's strategy of borrowing money to buy Bitcoin, which supports the stock price, enabling more borrowing for more Bitcoin – a classic pyramid structure. The involvement of political figures in similar cryptocurrency ventures only amplifies the speculative fervor that characterizes cycle peaks. The Psychology of Peaks Anderson describes the cycle as behaving like "a living entity" that must draw absolutely everyone in before it can peak. The market cannot top until there's no more money or credit available – until everyone is "all in." This psychological dynamic explains why peaks often coincide with maximum optimism and minimum skepticism. Strategic Positioning: Preparing for the Inevitable The Million-Dollar Question When asked how he would deploy $1 million today, Anderson's advice reflects the cycle's current stage: Immediate Actions: Keep funds liquid and in banks rather than rushing into investments Avoid taking on additional debt, especially at potentially rising interest rates Prepare for property values to decline 20% or more Positioning for Opportunity: Maintain an exemplary financial profile to secure credit during the downturn Prepare to be a buyer when others are forced sellers Focus on cash preservation and credit access rather than current yields Timeline Expectations Based on historical patterns, Anderson expects the downturn to begin around 2026, with the bottom likely occurring around 2031-2032 (years ending in "1" have historically marked recession bottoms in America). This suggests a 4-6 year period of adjustment, similar to the 2008-2012 cycle, presenting significant opportunities for those positioned correctly. Implications for Commercial Real Estate Reading Between the Lines For commercial real estate professionals, Anderson's analysis suggests several critical considerations: Traditional metrics like cap rates, rent projections, and employment growth may be misleading at this cycle stage. The fundamental driver – land values – is approaching a cyclical peak that transcends these conventional indicators. The deregulation of banking, combined with potential Federal Reserve constraints, could create a uniquely challenging environment for real estate financing. Unlike previous cycles, the usual monetary policy responses may not be available. The Contrarian Opportunity While Anderson's analysis paints a sobering picture of the near-term outlook, it also illuminates tremendous opportunity for those who understand and prepare for the cycle. The next 2-3 years may offer the last chances to position defensively before the inevitable adjustment. The key insight is that real estate cycles are not random events but predictable phenomena driven by fundamental economic laws. Those who understand these patterns can navigate them successfully, while those who ignore them risk being caught unprepared when the cycle turns. Anderson's message is ultimately one of empowerment through knowledge: understand the cycle, respect its power, and position accordingly. The pencil will fall – the only question is whether you'll be ready when it does. *** In this series, I cut through the noise to examine how shifting macroeconomic forces and rising geopolitical risk are reshaping real estate investing. With insights from economists, academics, and seasoned professionals, this show helps investors respond to market uncertainty with clarity, discipline, and a focus on downside protection. Subscribe to my free newsletter for timely updates, insights, and tools to help you navigate today’s volatile real estate landscape. You’ll get: Straight talk on what happens when confidence meets correction - no hype, no spin, no fluff. Real implications of macro trends for investors and sponsors with actionable guidance. Insights from real estate professionals who’ve been through it all before. Visit GowerCrowd.com/subscribe Email: Call: 213-761-1000 /episode/index/show/nreforum/id/36740695

Real Estate's Margin for Error is Gone 06/04/2025

Real Estate's Margin for Error is Gone The Margin of Error Has Vanished: What CRE Investors Should Be Watching Now Commentary on a conversation with John Chang, Senior Vice President and National Director, Research and Advisory Services, Marcus & Millichap The New CRE Investment Mandate: Survive First, Then Thrive “The margin of error has narrowed to virtually zero.” This was John Chang’s stark assessment of today’s commercial real estate environment – an era marked by fragile capital markets, rising Treasury yields, policy instability, and speculative hangovers from a decade of cheap money. According to Chang, the headline playbook hasn’t changed: keep leverage low, maintain reserves, underwrite for downside. But the stakes have changed. What used to be prudent is now required. Those who forget that, particularly those lulled by the long post-GFC bull run, risk extinction. Cap Rates, Treasury Yields, and the Compressed Spread A central theme of our conversation is the vanishing spread between borrowing costs and asset yields. Cap rates have risen 100–200 bps depending on asset class and geography, but Treasury rates have risen more. That’s compressed spreads, rendering most acquisitions reliant on a value-creation story or an eventual rate reversal. Investors are still transacting, says Chang, but only if they believe they can bridge the spread gap through operational improvements i.e. leasing, renovation, management upgrades. Passive cap-rate arbitrage is no longer viable. “The potential for something to go wrong is high,” Chang warns, especially in a policy environment that remains erratic. The Treasury Market’s Imminent Supply Shock Chang outlines why he expects upward pressure on Treasury yields for the balance of the year – contrary to the market's general expectations of rate cuts. Key reasons: Federal Deficits: With a delayed budget, Treasury issuance has been running below historical norms. That’s about to reverse, with $1–1.5 trillion in supply expected by October. Shrinking Buyer Base: The Fed is reducing its balance sheet. Foreign holders, especially China and Japan, are net sellers. Even traditional allies are showing less appetite, driven partly by frictions over U.S. trade policy. Trade Tensions: Tariffs of up to 145% on imports from China, EU saber-rattling, and a broad retreat from globalization are alienating the very buyers of U.S. debt. “People don’t want to do us any favors right now,” Chang says. “That uncertainty alone elevates risk premiums.” Normalcy Bias and the Myth of the Perpetual Up Cycle Chang pulls no punches on the market psychology underpinning risky underwriting in recent years. He describes a bifurcated investor landscape: Those who entered post-GFC and think 2–3% interest rates and infinite rent growth are normal. Veterans of the 1990s S&L crisis, the dot-com bust, or the GFC, who know better. What’s striking is the lack of long-term data. Even Marcus & Millichap, he notes, only has robust CRE data going back to 2000. Without context, many have mistaken the tailwind-fueled 2010s as a standard baseline. “We’re back to old-world real estate,” Chang says. “Where you have to actually understand the property, the tenant mix, the microeconomics of location. The era of pure financial engineering is over.” Lessons from the Pandemic and GFC: Underwrite for Downside, Not for Hype Chang recounts closing on an investment in April 2020 at the very onset of pandemic uncertainty. “What if we rent at breakeven?” he asked. If the answer was yes, he proceeded. That conservative approach worked then and still applies today. The biggest blow-ups, he says, came from sponsors who: Modeled double-digit rent growth. Over-leveraged. Used floating-rate debt without hedges. Ignored capex and reserves. By contrast, Chang praises sponsors who locked in fixed debt, kept leverage under 65%, and stayed humble. “They’re embarrassed to be earning 7% IRRs,” he jokes, “but in this climate, that’s a win.” Washout in the Syndication Space: Good Riddance? Perhaps most damning is Chang’s commentary on the wave of underqualified syndicators who entered during the boom years. “Thousands came in with no operating experience,” he says, pointing to the proliferation of coaching programs offering checklists instead of expertise. These new entrants mimicked industry language – AUM figures, fund manager titles – but often had no institutional track record or risk management skills. Many of them, Chang believes, are now out or on their way out. And while some may return with hard-earned wisdom, he expects the flow of “tourists” into the syndication world to dry up for the foreseeable future. Tailwinds Still Exist: But Only for the Well-Prepared Despite the short-term risks, Chang sees multiple long-term tailwinds: Demographics: Millennials are delaying homeownership, renting into their 40s and fueling demand for multifamily. Inflation Resistance: Assets like multifamily, self-storage, and even select retail have pricing power in inflationary environments. Constrained Supply: Rising costs (e.g., lumber, steel tariffs) are slowing new construction, which will support existing asset values over time. He also flags tax policy as a positive surprise: The “BBB” tax bill, now working its way through the House, offers accelerated depreciation and expansion of Opportunity Zones particularly in rural areas. This could buoy returns in an otherwise challenging environment. On the Aging of America: A Selective Case for Healthcare-Adjacent Assets Chang views medical office and senior housing through a bifurcated lens: Medical office: Attractive if tenants are stable, young, or anchored by heavy equipment. Long leases. Minimal turnover. Durable income. Assisted living: Demographic tailwinds are real, but operators matter more than ever. The Achilles heel? Labor. “About 30% of healthcare workers in the U.S. are foreign-born,” he warns. “And immigration policy, especially under restrictive regimes, will constrain the labor supply.” No staff, no NOI. Final Signals: What He’s Watching Closely If you want to forecast CRE performance, Chang suggests watching: University of Michigan Consumer Sentiment: A leading indicator of retail sales and housing trends. Currently falling. Inflation-adjusted Retail Sales: Shows how real consumption is holding up. Trade Policy & Supreme Court Rulings: The potential invalidation of Trump-era tariffs could reset inflation and Treasury outlooks but introduces a new kind of uncertainty. “We’re not facing one black swan,” he concludes. “We’re facing a whole flock. Pick your bird.” Bottom Line This is not a time for heroic assumptions. It's a time for competence, humility, and discipline. If you must deploy capital, do so with sponsors who have been through a major downturn GFC style, and focus on those who didn’t make capital calls, who still generate yield, and who underwrite to reality, not to hope. The next 2–3 years may be rocky. But the long term still belongs to those who survive the short term. *** In this series, I cut through the noise to examine how shifting macroeconomic forces and rising geopolitical risk are reshaping real estate investing. With insights from economists, academics, and seasoned professionals, this show helps investors respond to market uncertainty with clarity, discipline, and a focus on downside protection. Subscribe to my free newsletter for timely updates, insights, and tools to help you navigate today’s volatile real estate landscape. You’ll get: Straight talk on what happens when confidence meets correction - no hype, no spin, no fluff. Real implications of macro trends for investors and sponsors with actionable guidance. Insights from real estate professionals who’ve been through it all before. Visit GowerCrowd.com/subscribe Email: Call: 213-761-1000 /episode/index/show/nreforum/id/36793990

Real Estate's #1 Rule: Don't Lose Money! 06/02/2025

Real Estate's #1 Rule: Don't Lose Money! Leyla Kunimoto brings a rare and unfiltered perspective to today’s commercial real estate conversation: that of a full-time individual LP who writes publicly about her investment decisions. She’s not a sponsor, a capital raiser, or a fund manager; she’s an investor allocating her own capital and speaking candidly about what she sees in the market. Through her newsletter Accredited Investor Insights, Leyla connects with hundreds of other LPs and GPs, giving her a uniquely well-informed view of how sentiment is shifting, how sponsors are adapting (or not), and why many individual investors, herself included, are taking a more cautious, capital-preserving stance in the current environment. Track Records Are the New Credentials Leyla made one thing immediately clear in my conversation with her: experience across market cycles matters more than ever. Sponsors who lived through the Global Financial Crisis (GFC), and made it out intact, view the world differently. “There’s a certain level of conservatism they develop,” she said, that translates into more disciplined underwriting, more thoughtful pacing, and fewer emotionally driven decisions. This stands in sharp contrast to what Leyla observed in 2020, when billboards at Dallas airports advertised real estate masterminds promising to teach people how to raise capital fast. She watched sponsors pile into deals with razor-thin margins, driven more by optimism than fundamentals. Some of those same players are now facing tough questions from investors. Tariffs Are Already Affecting CRE in Two Big Ways While many LPs focus on interest rates, Leyla highlighted tariffs as a macro driver that’s beginning to affect commercial real estate, particularly in development. First, tariffs are raising costs on imported materials, like lumber, pushing construction budgets higher. Second, she’s watching what tariffs could mean for demand in the industrial sector. “If trade with Mexico declines, what happens to logistics facilities near the border?” she asked. Conversely, if reshoring takes off, we may see demand rise for inland warehouse space. It’s a nuanced picture and one that sponsors in ground-up deals can’t afford to ignore. Equity Is Cautious. Retail Capital Is Now in Play. Another shift Leyla is tracking is on the capital side. Institutional equity has pulled back in many corners of the market, and some sponsors are turning to retail LPs for the first time. But this isn’t an easy pivot. “Retail investors are expensive to reach,” she said. They also tend to ask more questions – and now, they’re more skeptical. Many LPs are sitting on deals that aren’t performing. As a result, the bar for new allocations is much higher. “There’s a sense of caution,” she noted. “LPs aren’t allocating blindly anymore.” Floating Rate Debt Divides the Market Leyla sees a bifurcated sponsor landscape: those who are still dealing with the aftermath of floating-rate debt, and those who have the capital and flexibility to transact but can’t find deals that pencil. Sponsors with legacy floating-rate loans are focused on rate caps and marginal cash flow. They’re rooting for the Fed to cut rates. Others are hunting for acquisitions, but the math isn’t working. “Without aggressive assumptions, most deals don’t pencil,” she said. The IRR Illusion: What LPs Should Actually Be Watching Many sponsors still lead with IRR projections, but Leyla has shifted her mindset. “I don’t screen for how much money I’m going to make. I don’t screen for the IRR probability,” she told me, “the only thing I’m laser beam focused on when I evaluate private placement deals is the probability of losing money.” That loss-aversion lens changes everything. She believes LPs are better off compounding modest, positive returns over time than chasing double-digit IRRs that come with a real chance of loss. “Making 3-4% positive IRR for 10 years straight outperforms hitting 20% on some deals and going to zero on others,” she said. Stress Tests Are Private. Optimism Is Public. Behind closed doors, sponsors are more conservative than they let on, she says. The real pros run multiple models – best, worst, and most likely scenarios. “I always ask for stress test scenarios underwritten to the GFC,” she says, continuing that she used to hear sponsors saying such scenarios were never going to play out because the underwriting is too stringent. “I’m hearing a little bit less of that now,” she says. Still, she’s skeptical of any deck that doesn’t acknowledge the possibility of a rent decline. Of course deals won’t pencil if you underwrite to a 10% rent drop but, in some markets, that’s exactly what’s happening. Cash Is a Position. Waiting Is a Strategy. When I asked what she’d do if handed a $1 million windfall today, Leyla didn’t hesitate: “I’d keep it in cash and I would try to get very narrow on what my buy box is,” not because she’s fearful but because she wants to be surgical when she deploys. She encourages LPs to be patient and wait for opportunities that fit tight criteria. In an environment where you can make 4.5%+ tax and risk-free, “there’s no harm in waiting,” she says. She also shared stories of seasoned sponsors that sold early, sat in cash through the entire 2021 run-up, and are still waiting because they can’t find deals that pencil – that are still too expensive for prudent investors. What Leyla’s Watching Now Leyla doesn’t try to predict markets. But she does monitor signals: The 10-Year Treasury yield Local supply pipelines Investor sentiment from her network of LPs And her biggest piece of advice? Focus on not losing money. That alone will make you a better investor. *** In this series, I cut through the noise to examine how shifting macroeconomic forces and rising geopolitical risk are reshaping real estate investing. With insights from economists, academics, and seasoned professionals, this show helps investors respond to market uncertainty with clarity, discipline, and a focus on downside protection. Subscribe to my free newsletter for timely updates, insights, and tools to help you navigate today’s volatile real estate landscape. You’ll get: Straight talk on what happens when confidence meets correction - no hype, no spin, no fluff. Real implications of macro trends for investors and sponsors with actionable guidance. Insights from real estate professionals who’ve been through it all before. Visit GowerCrowd.com/subscribe Email: Call: 213-761-1000 /episode/index/show/nreforum/id/36587060

How to Survive the Coming Real Estate Storm 05/30/2025

How to Survive the Coming Real Estate Storm How to Survive the Coming Real Estate Storm – What Sean Kelly-Rand Learned at Lehman For the experienced real estate investor or sponsor, this is a masterclass in what really matters. When Lehman Brothers unraveled in 2008, it exposed a truth that many in the real estate world still prefer to ignore: even the most sophisticated capital structures can implode when the cost of capital and access to liquidity are misunderstood – or worse, taken for granted. My podcast/YouTube show guest today, Sean Kelly-Rand, didn’t just watch that collapse unfold; he lived through it from inside and the playbook he uses today as the managing partner of RD Advisors is shaped, in part, by that early, formative experience. His approach offers a deeply pragmatic framework for anyone navigating real estate in today’s uncertain climate. In an era of overpromised alpha and fragile capital stacks, Kelly-Rand's doctrine is a study in restraint, structure, and staying power. From the Heart of Lehman to the Edges of Risk Kelly-Rand joined Lehman Brothers in 2006, just before the implosion, drawn by its dominance in the bond markets which he saw, even then, as the true engine behind real estate. While most looked to equity investment banks for leadership, he understood that the debt markets were where real decisions were made. His work centered on real estate financing and syndication, with a front-row view of a business model that was, in hindsight, structurally doomed. Lehman’s capital stack had been stretched too far – built on short-term funding to support long-term positions. As the firm accumulated assets, expanding its real estate exposure from $5 billion to over $36 billion, it did so with virtually no cushion. Liquidity was cheap and ubiquitous, but inherently unstable. When securitization markets seized up, those long-term assets could not be offloaded without catastrophic discounts to book value. And because any sale would have forced a full repricing of the entire book, no sale could be tolerated. Lehman was stuck – and the system broke. That lesson remains central to Kelly-Rand’s thinking today. The real issue wasn’t the quality of the assets; it was the fragility of the structure behind them. Risk wasn’t in the deal. It was in the funding. Rebuilding from the Ground Up In the years that followed, Kelly-Rand transitioned from the institutional capital markets to operating in the private lending space. He co-founded RD Advisors not just to chase yield, but also to build a firm capable of weathering downside scenarios – starting with a clean-sheet design of its capital strategy. The fund today focuses exclusively on senior secured debt, kept short in duration and conservatively underwritten. The business avoids the artificial stability of interest reserves or payment-in-kind structures that mask actual performance. Instead, it emphasizes cash-paying borrowers and short-term duration to preserve optionality and liquidity. Leverage is kept modest by design, with loan-to-value ratios structured around exit values that tolerate declining markets. Crucially, every deal is evaluated with a focus on capital preservation. Underwriting is done not with optimism, but with contingency: would the fund be comfortable owning the asset if they had to should a borrower walk? If the answer is anything but a clear yes, the deal doesn’t proceed. This mentality isn’t just prudent, it’s essential. The goal is to never rely on someone else’s execution for one’s own capital security. And that institutional memory from the GFC sits the core of the process. Avoiding the Illusion of Alpha Much of what passes for outperformance in today’s real estate environment is simply leverage in disguise. Sponsors show high IRRs, but beneath them is a capital structure dependent on favorable refis or asset appreciation that may no longer be achievable. That’s not skill, it’s exposure. Kelly-Rand’s fund’s returns, by contrast, are deliberately boring. They are stable, predictable, and quarterly. It’s a feature, not a bug. In fact, Kelly-Rand views volatility as a symptom of poor underwriting or misaligned structure, not a badge of aggressive performance. He’s wary, too, of the growing interest in ‘loan-to-own’ strategies, particularly among opportunistic capital looking to buy defaulted notes in the hopes of acquiring assets at a discount. While technically accurate – private credit can convert into equity when things go wrong – he emphasizes that building a business around that premise introduces operational complexity, execution risk, and volatility that neither he nor his investors are seeking. Today’s Market Echoes the Last Crisis What concerns Kelly-Rand most now is how little has changed in institutional behavior since the last crisis – and how closely today’s market echoes that of 2007. There is the same creeping complacency in the banking system. Institutions are holding loans at par that would clear far below face value if sold today. Marking one loan down would trigger writedowns across the portfolio, and many banks simply can’t handle that. Instead, they hold and wait, even as rates rise and deposits become more expensive than the loans on their books. This, too, is unsustainable and, like last time, it's a question not of credit risk, but of duration mismatch and funding fragility. Depositors have not yet realized en masse that their money could be earning 4.5% elsewhere. But when they do, the cost of capital for banks could spike rapidly and the system isn’t ready. Worse still, foreign capital, the marginal buyer that has helped sustain U.S. real estate valuations for decades, may be losing interest. If geopolitical or currency instability weakens demand for U.S. treasuries or assets, long-term rates could drift higher, even if the Fed cuts short-term rates. That shift would have a profound impact on real estate pricing, permanently resetting cap-rate expectations – and values. A Framework for the Informed Investor The takeaway for sponsors and investors is stark but empowering: you don’t need to predict the next crash, but you must be structurally prepared for it. Kelly-Rand’s fund is an expression of that principle. It’s structured to be resilient, not just profitable. Its margins are modest but consistent. Its leverage is low by design. And its underwriting focuses on the downside – not because of fear, but because of discipline. His experience at Lehman Brothers gave him a visceral understanding of how quickly capital evaporates when confidence is lost. What makes his insights so valuable today is not just that he’s survived a cycle but that he’s operationalized that survival into a repeatable, durable framework. In a world where risk is increasingly hidden behind optimism and spreadsheets, Sean Kelly-Rand offers a different kind of edge: memory. *** In this series, I cut through the noise to examine how shifting macroeconomic forces and rising geopolitical risk are reshaping real estate investing. With insights from economists, academics, and seasoned professionals, this show helps investors respond to market uncertainty with clarity, discipline, and a focus on downside protection. Subscribe to my free newsletter for timely updates, insights, and tools to help you navigate today’s volatile real estate landscape. You’ll get: Straight talk on what happens when confidence meets correction - no hype, no spin, no fluff. Real implications of macro trends for investors and sponsors with actionable guidance. Insights from real estate professionals who’ve been through it all before. Visit GowerCrowd.com/subscribe Email: Call: 213-761-1000 /episode/index/show/nreforum/id/36656560

Navigating Multifamily CRE in a Volatile Environment 05/27/2025

Navigating Multifamily CRE in a Volatile Environment Navigating Multifamily CRE in a Volatile Environment Insights from Paul Fiorilla, Director of U.S. Research at Yardi Matrix Paul Fiorilla offers a data-driven view of today’s commercial real estate (CRE) landscape using the vast resources he has at his disposal at Yardi. While market sentiment may be growing more optimistic, Fiorilla acknowledges investors should separate short-term mood from long-term fundamentals. His perspective, rooted in close analysis of multifamily data and macro conditions, is both pragmatic and cautionary: yes, there’s capital on the sidelines and deals are getting done but many investors may be misreading the durability of recent tailwinds and underestimating latent risks. Short-Term Confidence, Long-Term Industry Real estate is an inherently long-term, illiquid asset class yet, much of the current market behavior appears to be anchored in short-term confidence (and short term memories). That dissonance should give investors pause. While macroeconomic shocks like tariffs, interest rate hikes, and political uncertainty do not immediately register in quarterly CRE data, their effects compound over time. Investor sentiment, meanwhile, remains buoyant. Debt markets have resumed activity, stock indices are back near prior highs, and many assume the worst is behind us. But the lagging nature of real estate data means we're still months away from fully seeing the impacts of recent fiscal and geopolitical developments. Multifamily Fundamentals: A Shifting Landscape Fiorilla addresses the fundamentals of the multifamily sector, noting that demand has remained strong in recent years, but the distribution of that demand is shifting. Rent growth is no longer universal. Over the past 15 months, metros in the Midwest and Northeast, markets like Chicago and New York, have consistently posted moderate, steady rent growth. In contrast, high-growth Sunbelt cities such as Austin, Atlanta, Nashville, and Salt Lake City are experiencing flat to negative rent trends. What’s driving this bifurcation is primarily supply. In oversupplied markets, absorption hasn’t kept pace with new deliveries. Despite a sharp national decline in starts, down approximately 40% year-over-year, the existing pipeline remains heavy. Nationally, over 1.2 million units are either in lease-up or under construction. In high-growth markets, deliveries will continue at elevated levels for the next several years. Some cities may see 12–15% added to their multifamily inventory by 2027. Fiorilla underscores that while national numbers suggest a tapering of supply, the local realities are more complex. Markets that arguably need more housing, Los Angeles, New York, and Chicago for example, are seeing similar slowdowns in new development as oversaturated markets. The result is a continued misalignment between where capital is building and where it’s most needed. The Waning Tailwinds of Demand Fiorilla also points to softening demand drivers that may soon undermine current assumptions. Over the past several years, demand has been supported by several powerful tailwinds: robust job growth, high immigration, and pandemic-era trends such as household formation and suburban relocation. But these are now tapering. Net immigration, while still meaningful, is slowing. Job growth has begun to decelerate. Moreover, federal employment cuts and delays in private-sector hiring – driven by political and fiscal uncertainty – are contributing to a weakening outlook for household formation. These are not necessarily signs of imminent distress, but they do suggest that the extraordinary absorption rates of 2021–2022 will be difficult to sustain. As Fiorilla puts it, “the risks are to the downside.” He’s not forecasting a collapse but cautions against overreliance on recent performance when underwriting future deals, particularly in light of ongoing supply pressure. Policy Risk and the Fragility of Subsidized Housing Among the more underappreciated risks in the market, Fiorilla emphasizes policy risk, especially in affordable and subsidized housing. He notes that while programs like LIHTC and Opportunity Zones appear safe, others such as Section 8 are under pressure. Of particular concern are proposals to convert these programs into state-administered block grants. While this may seem like a technocratic shift, it would represent a material change for property owners. Federal guarantees would be replaced by varying state-level funding regimes, increasing payment risk and reducing the predictability that underpins underwriting in the subsidized housing sector. For owners reliant on these programs, even modest payment disruptions could be “catastrophic,” he notes. Interest Rate Volatility: The Real Pain Point Turning to capital markets, Fiorilla distinguishes between the level of interest rates and the pace at which they change. Today’s rates, he argues, are not historically high. Pre-GFC, rates were often at similar levels. What’s destabilizing is the speed of change. A sharp increase from near-zero to 4–5% within a single year has impaired refinancing feasibility and upended underwriting assumptions. This volatility, not the rates themselves, has created most of the current distress. Borrowers facing refinancing at double or triple the prior coupon are under strain. And yet, transaction activity persists, with many deals still pricing at thin or even negative leverage. Why? Because the #1 driver of compressed cap rates is investor confidence in future cash flows. The belief that rents will continue to rise justifies aggressive pricing – until it doesn’t. This mindset echoes pre-GFC sentiment, where rent growth was taken as a given. Fiorilla is quick to clarify that today’s market is not nearly as reckless. Still, elevated pricing in an environment of cooling fundamentals could leave investors dangerously exposed to even mild shocks. Quiet Distress and the Maturity Wall Another issue masked by short-term optimism is the growing volume of loan maturities. These include both regularly scheduled maturities and loans previously extended during 2021–2023 that are now reaching their end. Fiorilla notes that many of these are being addressed quietly. Lenders, reluctant to force asset sales, are working with borrowers on a case-by-case basis. The result: distress is real, but it’s largely invisible. There’s little evidence of forced portfolio liquidations or widespread delinquencies – yet. The availability of capital, particularly for multifamily, is helping to buffer these pressures. There’s no shortage of dry powder. But absent a sharp rate reversal or improved clarity from policymakers, the sector could see a slow bleed of marginal deals rather than a systemic reset. Underappreciated Geopolitical Risk One of the most thought-provoking parts of the conversation concerns CRE’s growing sensitivity to global and political dynamics. This is a structural change. The U.S. has long benefited from its role as a stable, rule-of-law jurisdiction. But shifts in foreign policy, trade restrictions, and political dysfunction are beginning to weigh on foreign investment. Declining Canadian cross-border investment and tighter restrictions on visa travel are, in part, evidence of this shift. These aren’t headline stories but they are meaningful. If the U.S. loses its perception as a reliable haven for capital, CRE pricing could face downward pressure from shrinking foreign demand. This is a long-term trend worth monitoring closely, not a transitory blip. What He’s Watching When asked what indicators he watches most closely, Fiorilla points to three primary metrics: Occupancy Rates – Particularly in high-supply markets. Stabilized occupancy below 94% would be an early warning sign. Absorption Trends – A sustained drop in household formation or leasing activity could signal weakening demand. Employment Data – Job losses, especially if broad-based, would ripple into rent growth and occupancy. He also monitors transaction volume as a proxy for investor confidence. If deal flow freezes again, that would signal a recalibration of forward expectations. Final Reflection While Fiorilla resists giving investment advice, his closing thoughts reflect a conservative posture. He’s not sitting on the sidelines entirely but he’s not rushing in either. Caution, portfolio balance, and realistic expectations are the guiding principles. For CRE professionals, this conversation is a reminder to look past sentiment and dig into the data and the fundamentals: local supply pipelines, policy shifts, interest rate trends, and the fragility of assumptions underpinning future rent growth. The macro backdrop is far from stable and the margin for error, even in multifamily, may be thinner than it appears. *** In this series, I cut through the noise to examine how shifting macroeconomic forces and rising geopolitical risk are reshaping real estate investing. With insights from economists, academics, and seasoned professionals, this show helps investors respond to market uncertainty with clarity, discipline, and a focus on downside protection. Subscribe to my free newsletter for timely updates, insights, and tools to help you navigate today’s volatile real estate landscape. You’ll get: Straight talk on what happens when confidence meets correction - no hype, no spin, no fluff. Real implications of macro trends for investors and sponsors with actionable guidance. Insights from real estate professionals who’ve been through it all before. Visit GowerCrowd.com/subscribe Email: Call: 213-761-1000 /episode/index/show/nreforum/id/36683990

The Real Risk to Real Estate Today 05/21/2025

The Real Risk to Real Estate Today The Dollar Standard, Global Liquidity, and the Coming Economic Reckoning In my expansive and highly accessible conversation with renowned economist Richard Duncan, we discuss the logic behind his long-running critique of the international monetary system, a system Richard calls the Dollar Standard where he explains why current U.S. policy moves, the system could come crashing down. The Origins of the Dollar Standard and America’s “Exorbitant Privilege” The Dollar Standard, Duncan explains, evolved out of the collapse of the Bretton Woods system (implemented after WWII) in 1971. Under Bretton Woods, currencies were pegged to the U.S. dollar, and the dollar was pegged to gold. But when other countries accumulated more dollars than the U.S. had gold, President Nixon suspended dollar convertibility, effectively ending the gold standard. What replaced it was a floating currency regime and the birth of the Dollar Standard. Crucially, the U.S. began running persistent trade deficits, importing goods and sending dollars abroad. These dollars, in turn, were recycled by foreign central banks, especially in trade surplus countries like China and Japan, into U.S. dollar-denominated assets, primarily Treasuries, but also equities and real estate. This loop, Duncan argues, created America’s “exorbitant privilege”: the ability to fund government spending and consumer imports at artificially low interest rates, because foreign buyers are constantly reinvesting in U.S. debt and assets. The phrase "exorbitant privilege" was first coined by Valéry Giscard d’Estaing, who later became President of France, but at the time was serving as France’s Minister of Finance under President Charles de Gaulle in the 1960s. He used the term to criticize the unique advantages enjoyed by the United States under the Bretton Woods system, particularly the ability to run persistent deficits by issuing debt in its own currency (the U.S. dollar), while foreign nations had to hold and use those dollars to trade and build reserves. Giscard and de Gaulle saw this as an unfair financial hegemony that allowed the U.S. to “live beyond its means” at the expense of others. The phrase was intended as a critique but, ironically, it's now often used in a neutral or even admiring tone by economists. How Global Credit Became a Bubble Machine Duncan makes the case that this system, while benefiting the U.S. enormously, has been fundamentally destabilizing for the rest of the world. As surplus countries absorb dollar inflows, their central banks convert them into local currency, often by printing their own money. That liquidity ends up in domestic banking systems, fueling excessive credit growth, asset bubbles, and financial crises. It happened in Japan in the late 1980s. It triggered the Asian Financial Crisis in the late 1990s. And it helped fuel China’s real estate boom and the global credit bubble that preceded the 2008 collapse. Notably, Duncan predicted the 2008 financial crisis in his 2003 book, The Dollar Crisis, warning that runaway global imbalances would eventually lead to a systemic shock. He now argues that post-2008 bailouts and quantitative easing (QE) only expanded the bubble rather than fixing the problem. Trump’s Trade Doctrine: Potential to Destabilize the System Fast forward to 2025: Trump is back in office, and his administration is moving quickly to reshape global trade. Duncan’s concern is that the Trump administration’s effort to eliminate the U.S. trade deficit by imposing high tariffs and pursuing a strategic devaluation of the dollar, undermines the very structure that has sustained U.S. prosperity and global financial stability for decades. Why? Because every U.S. trade deficit is matched by a capital inflow. It’s a balance-of-payments identity: if the U.S. runs a $1.1 trillion current account deficit, there must be a $1.1 trillion capital surplus (i.e., inflows) to finance it. Take that away and you choke off the supply of global liquidity that props up asset prices worldwide. The Doom Loop: What Happens If Capital Stops Flowing In Duncan walks through the scenario: If tariffs succeed in shrinking the trade deficit, dollars stop flowing abroad. Without those dollars, foreign central banks have fewer reserves to recycle into U.S. assets. This reduces demand for Treasuries, pushing interest rates up. Rising rates crush real estate, stocks, and credit-dependent sectors. Simultaneously, trade-surplus economies face a liquidity crunch, leading to job losses, bankruptcies, and potential financial crises. The result? A global depression triggered not by market excess this time, but by deliberate government policy. Duncan notes that the Trump administration has already blinked once in rolling back tariffs on China after markets began to seize. But the damage to global confidence in the dollar’s stability and America’s reliability as a trading partner may already be done. CRE-Specific Risks For CRE professionals, Duncan’s framework suggests several key risks: Interest Rate Volatility: If capital inflows decline, Treasury demand will fall and rates may rise, increasing financing costs and repricing assets downward. Foreign Capital Flight: A weakening dollar and escalating trade tensions could lead to foreign divestment from U.S. real estate, especially in coastal gateway cities where foreign investors are dominant. Liquidity Shock: Reduced global liquidity may tighten credit markets, making debt financing harder to access for new acquisitions or refis. Wealth Effect Reversal: Falling stock prices and higher rates could curb consumer spending and investor confidence, affecting retail, hospitality, and housing-linked CRE. Is There a Way Out? Despite the dire tone, Duncan offers a constructive alternative. In his more recent book, The Money Revolution, he advocates using the U.S. government’s borrowing capacity, enabled by dollar dominance and low rates, to invest aggressively in future-focused industries: AI, biotech, quantum computing, green energy. In short: inflate productively, not destructively. Use fiat-financed public investment to grow out of the debt bubble, rather than letting it implode through austerity or protectionism. But he acknowledges that political will may be lacking and that, without it, the only other option will be another round of massive QE when the next crisis hits. Final Thought Duncan’s message is clear: we are not playing by gold standard rules anymore. The U.S. economy, and the world’s, runs on confidence, liquidity, and the flow of capital. Disrupt that system and we may find ourselves testing whether the Fed and Treasury can reflate the bubble one more time. *** You may not agree with Richard’s perspective but, as a real estate investor, understanding differing points of view helps in underwriting investment risk by incorporating possible downsides into exit strategies. This is a fascinating and accessible discussion. Tune in if you want to understand the real risks underpinning your real estate investment decisions in the coming months. *** In this series, I cut through the noise to examine how shifting macroeconomic forces and rising geopolitical risk are reshaping real estate investing. With insights from economists, academics, and seasoned professionals, this show helps investors respond to market uncertainty with clarity, discipline, and a focus on downside protection. Subscribe to my free newsletter for timely updates, insights, and tools to help you navigate today’s volatile real estate landscape. You’ll get: Straight talk on what happens when confidence meets correction - no hype, no spin, no fluff. Real implications of macro trends for investors and sponsors with actionable guidance. Insights from real estate professionals who’ve been through it all before. Visit GowerCrowd.com/subscribe Email: Call: 213-761-1000 /episode/index/show/nreforum/id/36580510

Where Are We in the Real Estate Cycle? 05/19/2025

Where Are We in the Real Estate Cycle? When it comes to understanding real estate cycles, few voices carry as much weight as Prof. Glenn Mueller, of Denver University. With over 40 years in the real estate industry and more than three decades of publishing the Market Cycle Monitor – used by institutional investors, developers, and academics alike – his data-driven framework is one of the most respected in commercial real estate. In my conversation with Prof. Mueller, he shared where each property type stands today, what signals matter most, and how CRE professionals should be thinking about the road ahead. Market Cycle: Where We Are Now Most Property Sectors Still in Growth Phase Despite headlines, the underlying fundamentals in many sectors are still solid. Industrial and retail are at or near peak occupancy, with retail benefiting from a decade of underbuilding. Hotels and some apartments are in expansion phases, while office remains in recession. Office: Structural Downshift, Not Just a Cycle Post-COVID remote work has fundamentally reshaped office demand. Class A in prime markets (e.g., NYC) is thriving; B/C assets and suburban offices are struggling. Adaptive reuse (e.g., office-to-resi conversions) is being explored but not yet widespread. Apartments: Strong Demand, But Misaligned Supply There's a 6.5 million unit housing shortfall, yet high-end, urban supply has overshot demand. Affordable and workforce housing remain undersupplied and present the most attractive opportunities. What CRE Pros Should Track Employment > GDP Mueller emphasizes employment growth as the single most reliable predictor of real estate demand. Despite economic noise, job growth remains positive, indicating continued underlying support for real estate fundamentals. Occupancy Drives Rent, Not Price Mueller’s cycle model is based on physical occupancy, not asset pricing. Price movements are driven by capital flows, but true performance comes from rent and income growth – especially critical in today’s higher-rate environment. Supply Trends by Sector Retail: Nationally at peak occupancy. Almost all new space is pre-leased. Over a decade of cautious development has created a tight market. Industrial: Slight oversupply after a COVID-era building spree but expected to correct by 2026. Multifamily: Select markets are overbuilt (e.g., downtown Class A), but suburbs and affordable housing show structural undersupply. Hotels: Bifurcated; leisure and conference travel rebounding; business travel still lagging. Capital Markets Insights Prices Are Down, and May Not Drop Further Higher interest rates have cooled pricing, but a wave of dry powder is still waiting. Institutional investors are sitting on capital and may deploy if prices stabilize rather than fall further. Cap Rates Are Rising – But Slowly Cap rates haven’t adjusted upward as fast as borrowing costs, leading to negative leverage. Cash buyers dominate today’s market. Defaults Without Distress? High-profile institutional owners (e.g., Brookfield) are handing back keys on offices; a sign of strategic exit, not systemic distress. Geopolitics and Macro Outlook Tariffs and Reshoring Could Reshape Demand Mueller sees Trump’s industrial policy (tariffs, reshoring) as a potential long-term positive for U.S. real estate, especially industrial. Global Capital Still Engaged, But Cautious Foreign investors remain active, but currency shifts and geopolitical risk are reshaping cross-border flows. Bottom Line for CRE Sponsors Know Your Local Cycle – Even in national downturns, markets like Norfolk, VA, Honolulu, HI, and Riverside, CA, are peaking. Prioritize Income Stability – Focus on tenants who weathered COVID and economic shocks. Watch Employment, Not Noise – Labor market data remains the clearest leading indicator for demand. Cash is King (for now) – With interest rates high and spreads compressed, unlevered buyers have the advantage. Position for Affordability – Whether in retail or multifamily, demand is strongest at the middle and lower price tiers. I’m sure you’ll find Glenn’s insights as valuable as I did – and be sure to watch the episode as he guides us through slides of his latest report. As always, the goal is to help you make better-informed investment decisions by understanding where we are – and where we might be headed. *** In this series, I cut through the noise to examine how shifting macroeconomic forces and rising geopolitical risk are reshaping real estate investing. With insights from economists, academics, and seasoned professionals, this show helps investors respond to market uncertainty with clarity, discipline, and a focus on downside protection. Subscribe to my free newsletter for timely updates, insights, and tools to help you navigate today’s volatile real estate landscape. You’ll get: Straight talk on what happens when confidence meets correction - no hype, no spin, no fluff. Real implications of macro trends for investors and sponsors with actionable guidance. Insights from real estate professionals who’ve been through it all before. Visit GowerCrowd.com/subscribe Email: Call: 213-761-1000 /episode/index/show/nreforum/id/36567695

The Illusion of Diversification 05/16/2025

The Illusion of Diversification Unlocking Private Market Potential: Key Insights from Jim Dowd of North Capital Jim Dowd, CEO of North Capital, brings four decades of experience across the sell-side and buy-side to my discussion with him on a topic top of mind for commercial real estate sponsors and investors: how to navigate a rapidly shifting capital landscape where regulation, liquidity, investor behavior, and macro volatility collide. Here are the key insights from our conversation – designed specifically to you make better, more informed investment decisions in today’s market. 1. Private Markets Are Growing — But Liquidity is the Blind Spot Jim sees a long-term, secular shift from public to private markets. This trend has been driven by: Rising regulatory costs of public capital raises Falling costs and barriers to entry in private placements Broader investor access due to reduced minimums (from $250K+ to $10K–$20K) But here’s the warning: private securities still lack liquidity. Investors participating in these syndicated deals should recognize that they are locked in, sometimes for years, with no clear exit. “It’s like three guys trying to run through a door at the same time – when everyone wants out, they can’t.” Solution: Jim’s firm has built an Alternative Trading System (ATS) to create secondary markets for private securities, a concept CRE sponsors might want to look at. While not yet equivalent to public exchanges, these platforms offer an emerging way to address investor liquidity concerns and could give forward-thinking sponsors a competitive edge. 2. Don’t Be Fooled by the Illusion of Diversification Many sponsors pitch private equity real estate as an uncorrelated asset class, perfect for diversifying out of stocks and bonds. Dowd challenges this narrative. “In a crisis, all risk assets tend to correlate. The illusion of diversification is mostly due to slow re-pricing in private markets.” Takeaway: Sponsors should be transparent with LPs. While real estate is a solid long-term asset, it’s not immune to systemic shocks. Treating it as a diversification tool must come with proper liquidity and risk disclosures. 3. Risk Has Moved From Banks to Private Markets Jim argues that the risk which once destabilized the banking sector during the GFC has now migrated to private markets. The positive spin: these markets are mostly backed by equity, not federally insured deposits, reducing systemic risk. Investors (LPs) should understand that the margin for error in private real estate has shrunk. Mispricing risk in this environment is more likely to catch up with you, especially in a rising rate context. 4. The 10-Year Treasury: The Most Important Metric in CRE Jim highlights the 10-year Treasury yield as the single most important signal CRE sponsors should track. Why? “A 6% cap rate in a 2% Treasury environment is fundamentally different than the same cap rate in a 4.5% Treasury world. That delta blows up every underwriting model.” Cap rate spreads are compressing. And yet, many sponsors haven’t recalibrated assumptions. Jim’s advice: treat macro indicators like interest rates and liquidity conditions as core components of your investment thesis, not just afterthoughts. 5. Investor Behavior Has Changed: Active Risk is Now in Private Markets Jim sees a structural shift in how investors approach risk: Liquid portfolios (ETFs, mutual funds) are increasingly passive and macro-driven. Private investments, including real estate, are now where most investors take active risk. For sponsors, this has profound implications: Investor trust and manager selection matter more than ever. Sponsors must demonstrate operational excellence and a clear, differentiated strategy. Geographic proximity still matters. Many large managers raise capital locally. Relationships built within a 100-mile radius still drive much of the private capital flow. 6. On Crypto and Tokenization: Don’t Confuse the Two North Capital does not allocate to crypto but Jim is bullish on blockchain infrastructure for private markets, especially tokenization. “Blockchain could enable scalable, transparent, and low-cost transactions for private securities – if regulators allow it.” Tokenization may hold long-term promise for CRE sponsors looking to expand liquidity, access global investors, and reduce friction. But the infrastructure and regulatory frameworks are still evolving. 7. Investor Advice: Time in the Market Beats Timing the Market Jim’s advice to investors (including his own son) is simple: don’t try to time the market. Instead: Keep short-term money in treasuries or cash equivalents Deploy long-term capital systematically over a 3–12 month window Accept volatility as the price of long-term outperformance For sponsors, this means messaging matters. Emphasize long-term fundamentals over short-term fear. Help investors contextualize volatility and maintain confidence in your strategy. 8. Watch for These Signals: What Could Change the Outlook Jim tracks two key macro indicators to signal inflection points: The 10-Year Treasury yield (as mentioned above) Capital flows in public markets – a pullback here could foreshadow slower fundraising in private markets. Beyond markets, two external shocks could force sponsors to reevaluate assumptions: A geopolitical crisis (India–Pakistan tensions, Middle East escalation, Ukraine/Russia fallout) A surprise inflation spike, particularly driven by tariffs, energy, or trade policy shocks Investors need to ask: “Can my portfolio withstand a 30–40% drawdown without breaking my long term plans?” If the answer is no, you have too much exposure to risk and should dial back. Final Takeaway for CRE Sponsors Jim Dowd’s insights are a timely reminder that capital formation in private real estate markets is entering a new phase – defined by rising macro uncertainty, evolving liquidity expectations, and heightened investor scrutiny. Sponsors who embrace transparency, align offerings with institutional risk frameworks, and prepare for greater regulatory and market sophistication will be best positioned to lead, and raise, in this new environment. *** In this series, I cut through the noise to examine how shifting macroeconomic forces and rising geopolitical risk are reshaping real estate investing. With insights from economists, academics, and seasoned professionals, this show helps investors respond to market uncertainty with clarity, discipline, and a focus on downside protection. Subscribe to my free newsletter for timely updates, insights, and tools to help you navigate today’s volatile real estate landscape. You’ll get: Straight talk on what happens when confidence meets correction - no hype, no spin, no fluff. Real implications of macro trends for investors and sponsors with actionable guidance. Insights from real estate professionals who’ve been through it all before. Visit GowerCrowd.com/subscribe Email: Call: 213-761-1000 /episode/index/show/nreforum/id/36508315

What the Debt Markets are Telling Us Now 05/13/2025

What the Debt Markets are Telling Us Now The Pulse of the Debt Markets — with Orest Mandzy, CRE Direct Capital market confidence is cautiously returning, but undercurrents of risk remain. In my wide-ranging conversation with Orest Mandzy, Managing Editor of Commercial Real Estate Direct, we discuss what recent CMBS issuance tells us about liquidity, why delinquency headlines may be misleading, and how sponsors can position themselves amid policy shocks and structural market shifts. Liquidity Is Back — But Driven by Giants CMBS issuance jumped 110% in Q1 2025, totaling nearly $37 billion. While that headline suggests a resurgence of confidence, Orest clarifies that most of that growth comes from SASB (Single Asset, Single Borrower) deals – large trophy assets being financed and securitized by institutional players. These are not indicative of broad-based confidence in middle-market real estate. To gauge true liquidity, he says, focus on conduit deals – pools of smaller $10M–$25M loans originated by banks and institutional lenders and repackaged into +/- $1B bond offerings. Robust conduit activity reflects a healthier market for everyday sponsors. “If you’ve got solid conduit issuance,” says Orest, “that tells you there’s liquidity in the market – not just for trophy deals.” Rising Delinquencies: Real or a Red Herring? Recent headlines warned that CMBS delinquency rates exceeded 7%, the highest since 2021. But Orest has looked deeper into the data and sees it is far from being systemic. A handful of large, troubled multifamily loans, such as the $1.5B Park Merced in San Francisco and a floating-rate New York portfolio, together make up nearly 60% of those delinquencies. The common thread? These loans were made pre-COVID or in 2021 with floating-rate debt and now can’t refinance in today’s rate environment. But they’re outliers, not bellwethers. Fannie and Freddie multifamily delinquencies remain under 1%, and even in CMBS, the average LTVs have been conservative. “Multifamily looks worse than it is. Strip out the outliers and the market’s still performing.” CLOs, Banks, and the Competitive Landscape CMBS is just one lane in the broader lending freeway. Orest distinguishes it from CLOs, which are floating-rate, short-term loans used by debt funds for leverage, and from agencies like Fannie and Freddie, which underwrite more conservatively. In 2024: Agencies originated ~$60B each CMBS did ~$40B CLOs only ~$8B – down sharply from peak years Debt funds relying on CLOs are now facing stiff competition from banks, which are back in the market after a cautious 2023. With banks accounting for 40% of CRE loan volume annually, this shift matters. For sponsors, it means a broader set of options but also a new underwriting reality. Orest notes that while leverage is available, it's on tighter terms: LTVs in the low 60s and debt service coverage ratios near 2.0x are now standard for institutional-quality debt. The Tariff Shock and Bond Market Jitters One of the most important takeaways: macro events like tariffs are now exerting real-time pressure on the capital stack. In early April, CMBS bond spreads spiked from 80bps to 108bps over Treasuries as the market braced for a new round of tariffs. That spread spike pushed borrowing costs up and froze CMBS issuance for nearly 10 days – a signal of how fragile the system remains to policy volatility. Although bond spreads have since tightened, Orest warns that risk repricing is now a function of policy headlines, not just economic fundamentals. “Uncertainty is risk. And when investors sense more of it, they demand more yield. That makes loans more expensive and deal volume drops.” Positive Leverage or No Leverage: Sponsor Guidance Asked what CRE sponsors and investors should be doing in the next 3–12 months, Orest’s answer is clear: Seek positive leverage from Day One – don’t rely on NOI lifts growth to bail you out. Consider no leverage at all if you’re sitting on cash and don’t want to risk default. Underwrite conservatively and turn over every rock. The deal you don’t do may save you. “If you buy with positive leverage, great. If not, maybe don’t borrow at all.” Special Servicing > Delinquencies For investors and borrowers watching for cracks in the market, Orest recommends a lesser-known but more reliable signal: the special servicing rate in CMBS. Loans enter special servicing before they go delinquent, usually triggered by pending lease expirations, tenant loss, or anticipated refinance trouble. This metric has been rising and, unlike delinquencies, tends to stay elevated longer. Sponsors should watch this closely. Local Policy Risk: The Property Tax Squeeze Orest flags an emerging risk with local governments under fiscal stress. Cities like San Francisco, where office values have cratered, still rely on CRE for a large share of tax revenue. If values fall but municipalities resist cutting spending, expect tax rates to rise, eroding asset value further. “Where do cities go when they need money? To the deep pockets. And that’s commercial real estate.” Industrial and Insurance: Still in the Crosshairs While multifamily has absorbed most of the press, Orest highlights risk building in other sectors: Industrial may face headwinds from tariffs disrupting trade flows and warehouse demand. Insurance costs, especially in hurricane-prone areas, continue to rise, sometimes outpacing rent growth. In one example, he cited an apartment property in Tampa where gross revenue rose 50% in five years, but expenses outpaced it, limiting refinance options. Geopolitics, De-Dollarization, and Exorbitant Privilege One of my concerns is about broader macro risks – de-dollarization, loss of U.S. financial credibility, and capital flight from Treasuries. Orest acknowledged these as tail risks but noted they’re not front of mind for most market participants… yet. Still, if foreign buyers ever pull back on U.S. Treasuries, that could cause a spike in long-term rates, forcing CRE valuations down and capital costs up. It’s not imminent, but it’s worth tracking. “If China and Japan stop buying Treasuries, we’ve got a real problem. All bets are off.” Final Thought The key insight from this episode: the market is functioning but only just. Liquidity is back, but it’s conditional. Optimism exists, but it’s fragile. And sponsors must walk a tightrope between opportunity and overextension. Orest’s advice? Borrow smart. Underwrite for today’s risks – not yesterday’s assumptions. And remember: your best defense in uncertain times is positive leverage and deep diligence. *** In this series, I cut through the noise to examine how shifting macroeconomic forces and rising geopolitical risk are reshaping real estate investing. With insights from economists, academics, and seasoned professionals, this show helps investors respond to market uncertainty with clarity, discipline, and a focus on downside protection. Subscribe to my free newsletter for timely updates, insights, and tools to help you navigate today’s volatile real estate landscape. You’ll get: Straight talk on what happens when confidence meets correction - no hype, no spin, no fluff. Real implications of macro trends for investors and sponsors with actionable guidance. Insights from real estate professionals who’ve been through it all before. Visit GowerCrowd.com/subscribe Email: Call: 213-761-1000 /episode/index/show/nreforum/id/36488190

Rates, Risk, and the Return of Discipline 05/07/2025

Rates, Risk, and the Return of Discipline What the Debt Markets Are Telling Us — and Why Sponsors Should Listen Insights from Lisa Pendergast, Executive Director, CREFC In today’s capital markets, where debt is more expensive, less available, and slower to move, understanding how credit flows work has become just as important as understanding your deal. That’s why I sat down with Lisa Pendergast, Executive Director of the Commercial Real Estate Finance Council (CREFC) – a central figure in the $5 trillion CRE debt markets – to ask what the institutions upstream are seeing, and what that means for those of us operating on the front lines of equity, operations, and acquisitions. A Market in Holding Pattern Lisa noted that while Q4 2024 sentiment among debt market participants had turned unexpectedly upbeat, that optimism collapsed in Q1 2025. The cause? Policy uncertainty, rate volatility, and a reemergence of geopolitical and trade risks, most notably the return of tariffs under the Trump administration. The result is hesitation. From the largest bond desks to the average sponsor refinancing a stabilized deal, participants are stuck in wait-and-see mode. "When there's uncertainty," Lisa explained, "things just stop." The Math Has Changed Lisa pointed to a roughly 300-400 basis point gap between legacy loan coupons and current market rates. Even where property fundamentals are stable, that rate delta is making refinancings difficult, especially when higher cap rates have also eroded asset valuations. The implication: more equity must be written into every deal, or the loan won’t pencil. This is the backdrop to rising CMBS delinquencies, particularly in office and, increasingly, multifamily markets where excess supply and rent softening have converged. Lenders aren’t panicking, but they are requiring more diligence, more equity, and more confidence in borrowers. Why Sponsors Should Watch the CMBS Market For sponsors who don't interact directly with capital markets, Lisa offered a critical point: trends in CMBS spreads and issuance are leading indicators. When investors demand higher spreads (i.e., more compensation for risk), lenders raise rates, reduce proceeds, or pull back altogether. She explained the distinction between conduit deals (pools of smaller loans) and SASB structures (large, single-sponsor or single-asset bonds). The conduit market, a lifeline for mid-sized deals, has slowed dramatically. That signals tightening liquidity for smaller sponsors or niche asset classes. Meanwhile, large SASB deals continue but only with strong assets, strong borrowers, and deep-pocketed equity partners. The Regulatory Horizon Lisa also addressed deregulation under Trump 2.0. While she hasn't seen core rules like Dodd-Frank or the Volcker Rule reversed outright, she’s watching how new leadership at key agencies may soften enforcement. Dodd-Frank was enacted after the 2008 financial crisis to rein in excessive risk-taking by lenders and increase transparency in financial markets. The Volcker Rule, a key provision, restricts banks from making speculative bets with their own capital, especially in risky vehicles like real estate-backed securities. For sponsors, the concern isn't just about policy in Washington, it’s about what happens to lending standards and capital stability when those policies shift. Lisa’s concern is practical: regulatory whiplash, rules swinging left, then right, then back again, as we’ve seen with tariffs, undermines confidence and can freeze the flow of capital. When lenders aren’t sure what rules they’ll be operating under next quarter, they hesitate and that caution trickles down to your loan terms. Sponsors should pay attention here. When policy becomes unpredictable, capital becomes cautious and that shows up in the terms you’re offered, or whether your deal gets financed at all. Final Takeaway: The Debt Market Has Grown Up Lisa struck a cautiously optimistic tone. Compared to the run-up to the 2008 crash, today’s market is more disciplined. Underwriting remains sound, even in a difficult environment. But that doesn’t mean lenders will stretch. If you’re a sponsor today, her message is clear: capital is out there—but it’s selective, it’s expensive, and it’s scrutinizing every deal. You need to understand the market forces upstream to be able to compete downstream. *** In this series, I cut through the noise to examine how shifting macroeconomic forces and rising geopolitical risk are reshaping real estate investing. With insights from economists, academics, and seasoned professionals, this show helps investors respond to market uncertainty with clarity, discipline, and a focus on downside protection. Subscribe to my free newsletter for timely updates, insights, and tools to help you navigate today’s volatile real estate landscape. You’ll get: Straight talk on what happens when confidence meets correction - no hype, no spin, no fluff. Real implications of macro trends for investors and sponsors with actionable guidance. Insights from real estate professionals who’ve been through it all before. Visit GowerCrowd.com/subscribe Email: Call: 213-761-1000 /episode/index/show/nreforum/id/36471040

The Fed, the Fallout, and CRE 04/23/2025

The Fed, the Fallout, and CRE Debt-Driven Reality: Understanding CRE’s Structural Fragility Cracks Beneath the Surface In this episode of The Real Estate Market Watch, I sit down with Jon Winick, CEO of Clark Street Capital, to explore the increasingly fragile foundation of the commercial real estate (CRE) market. Winick draws on decades of experience in loan portfolio sales, banking, CMBS investing, and student housing to deliver a sobering, detail-rich assessment of what’s coming next — and what’s already hiding in plain sight. The Fed, Interest Rates, and the “Nuclear Option” Trump vs. Powell: Market Implications Winick opens with a sharp critique of political interference in Federal Reserve policy. While the idea of firing Fed Chair Jerome Powell may feel remote, he warns that even sustained political pressure has consequences. Removing Powell — the so-called "nuclear option" — would spark chaos in capital markets, undermining global confidence in the U.S. dollar and Treasury markets. “You cannot find an industry in which debt matters more than commercial real estate,” Winick says. A destabilized bond market affects CRE indirectly but profoundly by tightening liquidity and depressing investor confidence. CRE’s Dependency on Debt: Liquidity as Lifeblood Why CRE Suffers When Capital Tightens With rates elevated and uncertainty rising, Winick highlights the outsized role debt plays in CRE. Unlike most industries, capital structure is everything in real estate. Higher interest rates are more than a cost issue—they erode the viability of deals outright. His analogy lands hard: “Low rates are like tequila on a first date. High rates are like a glass of warm milk.” Banking Behavior: The Art of Delay Defaults, Loan Maturities, and Creative Accounting Despite rising delinquencies in CMBS, bank-reported CRE loan delinquencies remain surprisingly low. Why? Banks, Winick argues, are benefiting from regulatory changes that let them defer the recognition of problem loans. “The delinquencies that you're seeing in CMBS and bank loans will inevitably converge. Banks have been able to use some new rules to hide problem loans. And eventually that [runway] runs out.” he says. Bank defaults may not be catastrophic, but their opacity clouds the picture for investors trying to assess real risk. Creative Destruction Denied Why Bailouts Delay the Inevitable Winick argues the post-COVID economy is still “wrapped up by actual or indirect fraud.” From subsidized mortgages to suspended student loan collections, unsustainable federal programs have kept weak assets and businesses afloat. He makes a provocative case for embracing creative destruction. “We’ve basically decided as a society that we won’t let businesses fail… but that’s ultimately bad economics.” Policy, Regulation, and the Supply-Demand Trap Deregulation and its Unintended Consequences Dodd-Frank’s unintended effect was to choke off consumer credit, particularly in regions with few lenders. Winick compares Puerto Rico, with just three banks, to Iowa, with the same size population as Puerto Rico, with 246. The result? Higher interest rates, limited options, and an underfinanced economy. He calls for “smart, effective regulation,” warning that over-regulation concentrates power while under-regulation invites asset bubbles. The Signals to Watch Now What CRE Investors Should Be Monitoring Winick identifies several canaries in the coal mine for CRE investors: Widening CMBS credit spreads: These are leading indicators of borrowing cost pressures. Corporate bankruptcies and retail closures: Especially among large tenants like Walgreens or government departments exiting leases. Shifts in political winds: Regulatory reversals could radically alter CRE's operating environment. Strategy: What Should CRE Investors Be Doing? Be Patient, but Be Realistic For investors sitting on cash, Winick’s advice is pragmatic: “Be patient… [but] waiting for a home run often means you miss out on a lot of great opportunities.” He urges caution and downside awareness in every negotiation, pointing out that real movement in the market won’t occur until lenders are forced to act or borrowers are out of options. Final Thought: The Bond Vigilantes Will Win A System Bound by Market Forces Winick closes with a sharp reminder that the bond market, not politicians, sets the true limits: “The bond vigilantes always get their way.” In a world dependent on debt, real estate investors should watch not just interest rates — but who controls the levers behind them. *** In this series, I cut through the noise to examine how shifting macroeconomic forces and rising geopolitical risk are reshaping real estate investing. With insights from economists, academics, and seasoned professionals, this show helps investors respond to market uncertainty with clarity, discipline, and a focus on downside protection. Subscribe to my free newsletter for timely updates, insights, and tools to help you navigate today’s volatile real estate landscape. You’ll get: Straight talk on what happens when confidence meets correction - no hype, no spin, no fluff. Real implications of macro trends for investors and sponsors with actionable guidance. Insights from real estate professionals who’ve been through it all before. Visit GowerCrowd.com/subscribe Email: Call: 213-761-1000 /episode/index/show/nreforum/id/36280400

The Truth About Capital Raising 04/22/2025

The Truth About Capital Raising When you listen in to this week's podcast/YouTube show guest, Elijah Iung, you’ll love hearing about his journey from farmhand to capital raiser. Before he was investing in multifamily deals, he was knee-deep in… well, let’s just say a much messier kind of asset management. But that dirty work paid off. Elijah built a multi-seven-figure business in cattle waste management, which set the stage for his transition into farmland investing and, eventually, multifamily syndication. His journey from tractor-driving farmhand to capital allocator is as unconventional as it is insightful. Betting Big on Multifamily After selling his waste management business, Elijah discovered that much of his wealth was actually growing through his farmland investments, not from his business itself. That realization led him to multifamily real estate, where he quickly learned the ropes by investing as an LP, joining masterminds, and building key sponsor relationships. Raising His First Million Elijah’s first capital raise wasn’t a walk in the park. Tasked with raising $1M for a $39M multifamily deal in Savannah, GA, he hustled hard, digging through his contacts, cold calling, and leveraging LinkedIn to bring investors into the fold. As a co-GP with Lake City Equity, he put up his own capital, structured investor incentives, and navigated the complexities of syndication. Lessons from the Frontlines Raising capital might sound like a simple process; build an email list, send a few messages, and watch the money roll in. The reality? It’s anything but that and Elijah quickly learned that trust is everything – and that trust isn’t built overnight. It takes time, persistence, and a thick skin to handle the inevitable rejections. His first raise was a grind. Cold calls were brutal, follow-ups felt endless, and convincing investors to part with six figures took more than just a good pitch; it required credibility and relationships. Then came the complexities of syndication: structuring equity splits, managing fees, and balancing the interests of both sponsors and investors. Despite the hurdles, Elijah delivered. He raised the full $1M, became the largest LP in his own deal, and walked away with something even more valuable – experience. Now, he’s doubling down on building his investor network through LinkedIn, masterminds, and in-person connections, ensuring that his next raise won’t be nearly as uphill. *** This episode is a real, unfiltered look at what it takes to break into capital raising, the myths that get shattered along the way, and the strategies that actually work. If you’ve ever thought about raising money for real estate deals or just want to hear how a former farmhand turned syndicator made his first million-dollar raise, you’ll want to hit play on this one. *** Explore the world of real estate capital allocators—a fresh approach to financing that’s reshaping the industry. In this series, I talk with allocators, investors, sponsors, and service providers to give you an inside look at this fast-growing space. PLUS, subscribe to my free newsletter for real estate investors and gain access to: * Introductions to sponsors, allocators, and investment opportunities. * Insights drawn from my 30+ years of experience in real estate investing. * Hacks and tactics for raising capital to help you scale your real estate portfolio. Visit GowerCrowd.com/subscribe /episode/index/show/nreforum/id/35724340

Think You’re Diversified? Think Again! 04/21/2025

Think You’re Diversified? Think Again! Please welcome my guest today, dentist Josh Cochran, who didn’t just build the largest general dental group in the Inland Northwest, he built a real estate empire while he was at it. After selling a stake in his thriving dental practice, he set his sights on commercial real estate, starting with medical retail development before getting involved in ground-up multifamily projects worth over $125 million. The Accidental Developer Josh has an interesting background in that he didn’t just lease space for his dental offices, he built them and, in the process, he discovered he had a knack for development. What started as a necessity quickly became a passion, leading him to acquire land, structure deals, and transform raw dirt into ground up developments. Scaling Up to Multifamily Retail development had its challenges, but Josh knew where the market was heading. He pivoted to multifamily, securing land, entitling projects, and working with institutional capital partners to develop over 450 units across five projects. Along the way, he raised millions from investors, balancing capital allocation with active development. Raising Millions While Protecting Investors With a network of high-net-worth investors, many from his dental background, Josh built a capital-raising system. He is hyper-focused on due diligence, personally vetting deals, sponsors, and market fundamentals before committing capital. His slow and steady approach has helped him safeguard investors from the risky, overleveraged deals that have sunk others. Lessons from the Trenches Josh shares the hard-earned lessons from his transition, including: Why development takes longer than you think—but is worth the wait The biggest fundraising mistakes investors make (and how to avoid them) How he structures deals to align incentives and mitigate risk The power of relationships in CRE and why “going deep” is better than broad diversification. *** From running a successful dental practice to structuring nine-figure real estate deals, Josh’s journey proves that the right mindset and strategic partnerships can open the door to CRE success. If you’re looking to break into development, master capital raising, or scale a real estate business, this episode is full of real-world lessons and advice. *** Explore the world of real estate capital allocators—a fresh approach to financing that’s reshaping the industry. In this series, I talk with allocators, investors, sponsors, and service providers to give you an inside look at this fast-growing space. PLUS, subscribe to my free newsletter for real estate investors and gain access to: * Introductions to sponsors, allocators, and investment opportunities. * Insights drawn from my 30+ years of experience in real estate investing. * Hacks and tactics for raising capital to help you scale your real estate portfolio. Visit GowerCrowd.com/subscribe /episode/index/show/nreforum/id/35725635

Why Most Capital Raisers Fail (And How to Succeed) 04/20/2025

Why Most Capital Raisers Fail (And How to Succeed) Meet capital allocator, Flint Jamison, Vestus Capital, who took an unconventional route into real estate transitioning from aerospace engineering to structuring multimillion-dollar investment funds. After spending years modifying aircraft, he turned his analytical mind toward real estate, quickly carving out a niche as a capital allocator and fund-of-funds manager. Through Vestus Capital, Flint has raised millions in investor capital, deploying it across diversified real estate assets, including multifamily, medical office buildings, and specialized fund structures. He’s helped investors access opportunities while working to ensure compliance with SEC regulations, something often misunderstood by others. Decoding the Fund of Funds Model Flint explains how he structures his fund-of-funds investments, allowing his investors to access preferential terms. With a $30M portfolio that spans multiple markets, he’s seen firsthand how to negotiate with operators, structure fee agreements, and optimize capital allocation to maximize returns. Navigating a Shifting Market Raising capital today isn’t the same as it was a few years ago. Flint is forthright about the hardest lessons learned, including why “if you build it, they won’t necessarily come.” We talk about how his deals have performed in the face of rising interest rates and market fluctuations, as well as the creative financing strategies he’s deploying to future-proof investments. How to Stand Out in a Crowded Investor Market With countless syndicators and allocators chasing the same investors, how do you differentiate yourself? Flint shares why most capital raisers fail, the biggest mistakes they make, and the LinkedIn strategy that’s been his most powerful tool for attracting accredited investors. Spoiler: It’s not about templates or AI-generated pitches; it’s about speaking the right language to the right audience. **** Flint’s insights are a must-hear for anyone navigating the complex world of real estate capital allocation. If you want to crack the fund of funds model or scale your capital-raising game, this episode is packed with real-world lessons, actionable strategies, and no-BS advice you won’t hear anywhere else. You're going to rethink everything you know about raising capital! *** Explore the world of real estate capital allocators—a fresh approach to financing that’s reshaping the industry. In this series, I talk with allocators, investors, sponsors, and service providers to give you an inside look at this fast-growing space. PLUS, subscribe to my free newsletter for real estate investors and gain access to: * Introductions to sponsors, allocators, and investment opportunities. * Insights drawn from my 30+ years of experience in real estate investing. * Hacks and tactics for raising capital to help you scale your real estate portfolio. Visit GowerCrowd.com/subscribe /episode/index/show/nreforum/id/35671845

Stop! Watch This Before Investing in Real Estate 04/19/2025

Stop! Watch This Before Investing in Real Estate Today on the podcast, we unravel the complexities of passive investing with Kurt Novak, an experienced investor who’s navigated nearly 50 syndications and uncovered some surprising truths on his journey. When Kurt sold his entire real estate portfolio - rental properties, a self-storage facility, and a thriving brokerage - he thought he was settling into early retirement. Instead, he found himself deep in the world of passive investing, syndications, and allocators. What started with crowdfunding platforms like CrowdStreet quickly expanded into direct investments, allocator-led funds, and a portfolio spanning nearly 50 syndications. But along the way, he discovered something surprising - many passive investors (including himself at first) had no idea what an allocator really is… or how they make money. Syndications, Allocators, and the Fine Print Kurt breaks down the differences between investing directly with sponsors and going through allocators (a.k.a. fund managers, middlemen, capital raisers - pick your term). Spoiler alert: it’s not always as transparent as you’d hope. In fact, many allocators present deals in a way that makes them look like sponsors, leaving investors unaware of the extra layer of fees, the loss of direct ownership, and who’s really calling the shots. Where’s the Real Money? With nearly five years in the passive investing game, Kurt has seen it all - stellar returns, underperforming projections, and even outright fraud. He shares which asset classes have been the biggest winners and which ones have fallen short. Plus, he reveals what happens when an allocator steps up and fights for investors after a deal goes sideways. What Every Passive Investor Needs to Know This episode is a masterclass in cutting through the noise, avoiding common pitfalls, and making smarter investment decisions. Whether you’re a seasoned investor or just dipping your toes into the syndication business, Kurt’s insights will challenge the way you think about allocators, fund structures, and who’s really working in your best interest. *** If you’ve ever wondered where your money actually goes in a syndicated deal—how the fees break down, who’s making the decisions, and whether you’re really getting the best deal possible—this episode is a must-listen. Kurt pulls back the curtain on the hidden layers of passive investing, helping you understand what to look for, what to avoid, and how to make sure your money is truly working for you. *** Explore the world of real estate capital allocators—a fresh approach to financing that’s reshaping the industry. In this series, I talk with allocators, investors, sponsors, and service providers to give you an inside look at this fast-growing space. PLUS, subscribe to my free newsletter for real estate investors and gain access to: * Introductions to sponsors, allocators, and investment opportunities. * Insights drawn from my 30+ years of experience in real estate investing. * Hacks and tactics for raising capital to help you scale your real estate portfolio. Visit GowerCrowd.com/subscribe /episode/index/show/nreforum/id/35582395

A Smarter Way to Invest in CRE 04/15/2025

A Smarter Way to Invest in CRE When you think of a capital allocator, "former physical therapist" probably isn’t the first thing that comes to mind but Kent Leach isn’t your typical investor. From flipping houses to launching a customizable fund that raised nearly $2M in its first year, Kent’s journey into commercial real estate is as unconventional as it is impressive. In this episode, Kent discusses how he transitioned from hands-on rehab work to structuring an innovative investment model for his investors. His Smart Flex Fund offers an alternative to the traditional blind-pool structure, allowing investors to handpick deals across multiple asset classes, including affordable housing, self-storage, and beyond. Mastering the Fund of Funds Model Kent discusses how he leverages his network, industry insights, and due diligence practices to negotiate preferential terms with sponsors. Avoiding the Multifamily Hype Trap While many investors were all-in on multifamily over the past decade, Kent’s diversification strategy helped him avoid the turbulence that’s hitting the market today. His approach? Uncorrelated asset classes, disciplined underwriting, and a commitment to transparency. The Future of Real Estate Investing With sponsors facing tighter lending conditions and rising rates shaking up the industry, Kent shares his predictions for where capital allocators should be focusing next. Plus, he reveals the biggest misconceptions about fund-of-funds investing and how the right allocator can enhance returns, not dilute them. *** If you’ve ever wondered how to invest with a capital allocator, this episode is your backstage pass to learning more. *** Explore the world of real estate capital allocators—a fresh approach to financing that’s reshaping the industry. In this series, I talk with allocators, investors, sponsors, and service providers to give you an inside look at this fast-growing space. PLUS, subscribe to my free newsletter for real estate investors and gain access to: * Introductions to sponsors, allocators, and investment opportunities. * Insights drawn from my 30+ years of experience in real estate investing. * Hacks and tactics for raising capital to help you scale your real estate portfolio. Visit GowerCrowd.com/subscribe /episode/index/show/nreforum/id/35577165

The Fastest Way to Build an Investor Network 04/08/2025

The Fastest Way to Build an Investor Network Randy Smith, my guest this week, didn’t start out in real estate—he was a high-performing sales executive in the corporate world. But after seeing the potential of passive investing, he made pivoted, leaving behind the W-2 grind to become a full-time capital allocator. Since then, Randy has raised over $13 million, partnering with sponsors to help investors secure better terms and stronger returns. The Allocator Advantage: Negotiating Better Terms for Investors Unlike a typical LP, Randy doesn’t just invest, he uses his position as an allocator to structure deals that benefit his investors. By pooling capital and leveraging his network, he’s able to negotiate better preferred returns, improved splits, and reduced fees - terms that individual investors couldn’t get on their own. In our conversation, you’ll hear how he evaluates opportunities, why he prioritizes fixed over floating-rate debt, and the strategic moves he’s making to protect investor capital in an uncertain market. Lessons from a Shifting Market Starting out in real estate right before the market turned has given Randy a crash course (if you’ll forgive the pun) in what works and what doesn’t. With some deals pausing distributions and others facing capital calls, he’s had to navigate a rapidly changing landscape while keeping investor returns top of mind. We talk about what he’s learned from deals that have struggled, why he’s more selective than ever about the sponsors he works with, and the red flags he watches for when evaluating a new opportunity. Building a High-Performing Investor Network Randy shares his approach to building an investor base, why he focuses on high-income sales professionals, and how he’s leveraged LinkedIn, masterminds, and podcast guest appearances to grow his network. He also talks about the common mistakes new allocators make and how he’s refining his outreach strategy to attract larger investors who are ready to deploy capital. *** If you want to get smarter about investing, learn how allocators negotiate better deals, or just hear some real talk about what’s working in today’s market, make sure to check out this episode. *** Explore the world of real estate capital allocators—a fresh approach to financing that’s reshaping the industry. In this series, I talk with allocators, investors, sponsors, and service providers to give you an inside look at this fast-growing space. PLUS, subscribe to my free newsletter for real estate investors and gain access to: * Introductions to sponsors, allocators, and investment opportunities. * Insights drawn from my 30+ years of experience in real estate investing. * Hacks and tactics for raising capital to help you scale your real estate portfolio. Visit GowerCrowd.com/subscribe /episode/index/show/nreforum/id/35533335

SEC Rules You Must Know 04/01/2025

SEC Rules You Must Know My guest this week, Franklin Spees, has worn just about every hat in the real estate game - lawyer, city planner, broker, property manager, investor, and now, a capital allocator. His path into commercial real estate syndications started with managing properties, evolved into structuring deals, and ultimately landed him in the allocator space, where he’s raised and deployed over $30 million into real estate deals across the country. The Capital Allocator Model – Friend or Foe? If you’ve ever wondered how the co-GP model really works (or why it’s under increasing scrutiny from regulators), Franklin breaks it all down. He explains the compliance challenges capital allocators face, why fund-to-fund structures are becoming the preferred model for institutional and retail investors alike, and the biggest mistakes new allocators make when structuring deals. With firsthand experience in fundraising, due diligence, and asset management, Franklin reveals the key metrics he looks for in a sponsor, how he negotiates better splits, and why transparency is crucial - especially in uncertain markets like today’s. Building an Investor Network Without Cold Calls Unlike many in the industry, Franklin didn’t build his investor base through paid ads or cold outreach. Instead, he leveraged his property management company and legal clients, many of whom were already real estate investors looking for smarter opportunities. He shares how anyone with an existing network can turn relationships into capital without the need for expensive marketing. Lessons from Market Cycles and Long-Term Investing Franklin’s seen the market at its peak and in its downturns, and he’s learned that patience and communication are everything. He discusses how investor expectations have shifted, why some deals are extending their hold periods, and how sponsors with strong operational teams will weather the storm. *** If you’re looking to understand the inner workings of capital allocation, this episode is a must-watch. Franklin’s insights could change the way you think about raising and deploying capital. *** Explore the world of real estate capital allocators—a fresh approach to financing that’s reshaping the industry. In this series, I talk with allocators, investors, sponsors, and service providers to give you an inside look at this fast-growing space. PLUS, subscribe to my free newsletter for real estate investors and gain access to: * Introductions to sponsors, allocators, and investment opportunities. * Insights drawn from my 30+ years of experience in real estate investing. * Hacks and tactics for raising capital to help you scale your real estate portfolio. Visit GowerCrowd.com/subscribe /episode/index/show/nreforum/id/35439145

From Medical Devices to $2B in Real Estate 03/25/2025

From Medical Devices to $2B in Real Estate What happens when a former medical device professional takes his precision, risk management skills, and analytical mindset into the world of real estate investing? You get Chris Larsen, the founder of Next-Level Income and this week’s podcast/YouTube show guest, who has placed $120M+ in equity across $2B in acquisitions as a capital allocator. Mastering the Capital Allocator Model Chris started as an active investor, acquiring multifamily, self-storage, and mobile home parks directly. As his network and experience grew, so did his role, evolving into a capital allocator who partners with sponsors to raise capital for them. By negotiating preferential terms and structuring his investments through funds, he helps investors access deals with higher returns than they would be able to investing directly with the sponsor. Navigating Risk, Reward, and Market Challenges With interest rate volatility and shifting market conditions, Chris has seen both wins and losses. Some deals have outperformed, while others have faced capital calls and suspended distributions - a reality many sponsors are dealing with today. His approach? Absolute transparency and strong relationships, the same principles that guided his career in the world of medical devices. The Power of Investor Relationships Chris has built a 300+ investor network largely through referrals, podcasts, and his book funnel. His ability to bridge his expertise from one high-risk industry to another makes his insights invaluable for anyone looking to navigate real estate investing like a seasoned pro. *** Explore the world of real estate capital allocators—a fresh approach to financing that’s reshaping the industry. In this series, I talk with allocators, investors, sponsors, and service providers to give you an inside look at this fast-growing space. PLUS, subscribe to my free newsletter for real estate investors and gain access to: * Introductions to sponsors, allocators, and investment opportunities. * Insights drawn from my 30+ years of experience in real estate investing. * Hacks and tactics for raising capital to help you scale your real estate portfolio. Visit GowerCrowd.com/subscribe /episode/index/show/nreforum/id/35438180

The #1 Mistake Investors Make in CRE 03/18/2025

The #1 Mistake Investors Make in CRE My guest this week, Chris Borden, thought he was heading for a quiet retirement after stepping down as CEO of a multi-billion-dollar grocery chain. Instead, he found himself on a fast track to becoming a real estate investor and capital allocator. What started as a few rental properties evolved into capital deployment, including a $5M+ debt fund and co-GP positions across thousands of multifamily units. Through Rise Capital Investments, he’s working with investors to generate steady returns while navigating the complexities of debt and equity investments. Building a Debt-Focused Investment Model Chris structured his fund to prioritize debt, specifically first-lien lending. His looks to provide a steady income stream for investors with reduced volatility. By carefully selecting borrowers and structuring loans with conservative loan-to-value ratios, he’s built a resilient portfolio that has successfully been generating consistent returns. The Art of Capital Allocation Chris has also established partnerships with sponsors he has co-GP’d with on multifamily and commercial real estate opportunities, leveraging his investment club model that allows investors to pool capital and participate in opportunities he sources. Lessons from a Shifting Market The past year has been a test for many investors, and Chris’s experience is no exception. With several equity deals pausing distributions due to rising interest rates, he’s seen firsthand the importance of working with strong sponsors, maintaining liquidity, and ensuring portfolio diversification. His biggest takeaway? Relationships matter more than ever - especially when times get tough. Mastering the Investor Game So where does Chris find investors? Forget paid advertising on social media, Chris’s most successful networking for investors come from LinkedIn, local real estate meetups, and other in-person groups. *** Chris’s journey is a masterclass in adapting to market conditions, mitigating risk, and making real estate work on your own terms. If you want to learn how to navigate debt, equity, and capital allocation like a pro, this is an episode you won’t want to miss. *** Explore the world of real estate capital allocators—a fresh approach to financing that’s reshaping the industry. In this series, I talk with allocators, investors, sponsors, and service providers to give you an inside look at this fast-growing space. PLUS, subscribe to my free newsletter for real estate investors and gain access to: * Introductions to sponsors, allocators, and investment opportunities. * Insights drawn from my 30+ years of experience in real estate investing. * Hacks and tactics for raising capital to help you scale your real estate portfolio. Visit GowerCrowd.com/subscribe /episode/index/show/nreforum/id/35423395

When Capital Raisers Get It Right 03/11/2025

When Capital Raisers Get It Right Capital Raising and Deal Structure Amanda Larson, founder of AMA X Equity, has raised roughly $2 million in investor capital since going full-time as a real estate capital allocator a little over a year ago. She specializes in multifamily syndications, sourcing deals, conducting due diligence, and structuring investments. In one of her largest transactions, the $31M acquisition of The Darby at Steeplechase, she played a key role in securing the deal, structuring the business plan, and signing on the loan. The total equity raise was just under $20M, with multiple sponsors contributing capital. Role in Deal Execution Amanda’s process starts with sourcing deals through broker relationships, conducting due diligence, underwriting, and assembling a sponsor team. In the case of The Darby, she worked with Disrupt Equity, a Houston-based sponsor group, to close the acquisition. Although Disrupt Equity led the project, Amanda was part of the GP team, securing a share of the 20% GP split rather than participating in a fund-of-funds model where capital allocators typically take a cut of investor returns. Underwriting Rigor and Risk Management A key differentiator in Amanda’s approach is her engineering mindset, which she applies to underwriting. Unlike some capital allocators who simply rebrand and distribute sponsor pitch decks, she conducts independent underwriting and due diligence, verifying financial assumptions before bringing investors into a deal. She has learned to be particularly cautious about floating-rate debt, having seen firsthand how misplaced confidence in interest rate stability led to market turbulence. Raising Capital and Investor Relations Amanda primarily sources investors through LinkedIn and business networking events, leveraging her background in the oil and gas industry to connect with engineers and professionals seeking diversification. While she initially focused on operations and underwriting, she has recognized the importance of marketing and investor education, adapting her LinkedIn content to be more personal and engaging. Lessons Learned and Market Outlook Her biggest lesson? Don’t blindly trust the smartest person in the room. She observed many seasoned operators confidently taking on floating-rate debt, despite clear risks, because the consensus among experienced sponsors was that rates would stay low. Additionally, she remains skeptical about the fund-of-funds model, noting that while it provides flexibility, it may be flooding the market with underqualified capital allocators who lack real estate expertise. *** Explore the world of real estate capital allocators—a fresh approach to financing that’s reshaping the industry. In this series, I talk with allocators, investors, sponsors, and service providers to give you an inside look at this fast-growing space. PLUS, subscribe to my free newsletter for real estate investors and gain access to: * Introductions to sponsors, allocators, and investment opportunities. * Insights drawn from my 30+ years of experience in real estate investing. * Hacks and tactics for raising capital to help you scale your real estate portfolio. Visit GowerCrowd.com/subscribe /episode/index/show/nreforum/id/35319760

$20 Million Raised on LinkedIn! 03/04/2025

$20 Million Raised on LinkedIn! Capital Raised and Deal Structure Dr. Raj Venkatramani, a pediatric oncologist turned real estate capital allocator, has raised approximately $20 million from investors, 95% of whom are doctors, since launching REIDOC Capital in 2021. His typical deal size ranges from $10 million to $30 million, and on average he raises $2 million per deal. His primary focus is on multifamily properties of at least 100 units, targeting Class A and B assets and new construction projects, rather than Class C properties, following hard-earned lessons from the market peak in 2021. Leveraging Group Capital for Better Returns Dr. Raj secures better economics for his investors by leveraging group capital. While a typical syndication might offer a 15% IRR with a 6-7% preferred return, Raj pools investors together to negotiate, for example, an 80/20 split (instead of 70/30) and an 8% preferred return, effectively increasing investor returns without requiring larger individual commitments. Underwriting and Market Lessons His underwriting philosophy is focused on analyzing sponsor assumptions, particularly around rent growth projections, occupancy expectations, expense growth, and debt structure. He talks about how bad assumptions can make a weak deal look good, citing an early investment in a Class C Florida asset where insurance costs doubled (from $196K to $400K in one year) and variable rate debt wiped out NOI. Transition to Ground-Up Development Raj expanded the kinds of deal he invests in from value-add to ground-up development and now partners on new construction projects in Sioux Falls, South Dakota, a market he believes is undervalued. His due diligence process before partnering with a sponsor involves a multi-year vetting process, meeting them at conferences, reviewing past deals, and even visiting completed projects before committing capital. LinkedIn as a Primary Investor Source Perhaps most surprising is how he sources capital: 90% of his investors have never met him in person, and nearly all were acquired through LinkedIn and referrals. His LinkedIn strategy? Post consistently for two years, even when people don’t engage, until they reach out ready to invest. Key Takeaway: Trust but Verify His biggest lesson? Trust but verify—real estate is not medicine, where all parties have the same goal. Misalignment of incentives is real, and capital allocators must be rigorous in due diligence to avoid costly mistakes. *** Explore the world of real estate capital allocators—a fresh approach to financing that’s reshaping the industry. In this series, I talk with allocators, investors, sponsors, and service providers to give you an inside look at this fast-growing space. PLUS, subscribe to my free newsletter for real estate investors and gain access to: * Introductions to sponsors, allocators, and investment opportunities. * Insights drawn from my 30+ years of experience in real estate investing. * Hacks and tactics for raising capital to help you scale your real estate portfolio. Visit GowerCrowd.com/subscribe /episode/index/show/nreforum/id/35263665

From Aerospace to Real Estate: An Allocator's Tale 02/25/2025

From Aerospace to Real Estate: An Allocator's Tale The growing complexity of US real estate investment has led to the emergence of a new class of capital allocators, yet many struggle to differentiate themselves in an increasingly crowded marketplace, as a candid conversation in my latest podcast reveals. Philippe Schulligen, co-founder of Boost Capital Group, which has raised $2m since 2022, exemplifies both the opportunities and challenges facing new entrants in the space. A former aerospace engineer, Philippe’s firm positions itself as an intermediary between sophisticated property operators and retail investors, offering what he terms ‘wholesale access to institutional-quality deals.’ Business Model and Deal Structure The business model is straightforward: Boost aggregates smaller investment checks into larger commitments, negotiating preferential terms with sponsors. A typical arrangement might see the sponsor offering a 90-10 profit split versus the standard 80-20, with Boost taking a portion of the enhanced returns while still delivering better terms to its investors than they could access directly. Structural Challenges Yet the conversation revealed deeper structural challenges facing the sector. Despite Philippe’s technical background in risk management and complex systems, potentially valuable skills in real estate investment, his firm's marketing emphasizes generic wealth-building messaging that has become ubiquitous in the space. Investment Criteria The firm maintains strict sponsor requirements: Minimum seven-year operational track record Portfolio of at least 2,000 units Three full-cycle deals completed Vertical integration preferred Philippe says that these standards, developed during the post-2018 property boom, may need reassessment given current market conditions. Capital Formation Hurdles "It's hard to raise money," Philippe acknowledged, highlighting the persistent challenge of attracting investment despite examining some 60 potential deals in 2024, of which only four were deemed suitable for investors. Industry-Wide Implications The discussion highlighted a broader industry challenge: as real estate investment becomes more accessible to retail investors, capital allocators must work harder to distinguish themselves. Many default to similar marketing language about passive income and wealth building, overlooking their unique value propositions. This democratization of real estate investment, while opening new opportunities for retail investors, also raises questions about how effectively these newer intermediaries can compete with established players in an increasingly sophisticated market. The conversation suggests that success in this evolving landscape may depend less on standard industry practices and more on allocators' ability to leverage their distinctive expertise and backgrounds—a lesson that could prove particularly relevant as the sector navigates current market uncertainties. *** Explore the world of real estate capital allocators—a fresh approach to financing that’s reshaping the industry. In this series, I talk with allocators, investors, sponsors, and service providers to give you an inside look at this fast-growing space. PLUS, subscribe to my free newsletter for real estate investors and gain access to: * Introductions to sponsors, allocators, and investment opportunities. * Insights drawn from my 30+ years of experience in real estate investing. * Hacks and tactics for raising capital to help you scale your real estate portfolio. Visit GowerCrowd.com/subscribe /episode/index/show/nreforum/id/35191810

From Wakeboarding to Real Estate Success 02/18/2025

From Wakeboarding to Real Estate Success What does wakeboarding have in common with real estate? My guest this week, Austin Hair, is an expert at connecting the dots between these two careers. In today’s show, he discusses how he transitioned from being a professional wakeboarder to becoming the Managing Partner at Leaders Real Estate, where he raises capital for his own healthcare real estate acquisitions. Austin is also exploring the ‘capital allocator’ model as the next stage in his career and shares insights he’s gained about that approach. Deal Structure Having attended several real estate and business masterminds, Austin has identified three key roles in a fund: the fund manager (largely administrative), the ‘expert investor’ (more commonly known as the sponsor or operator), and the capital raiser (the role Austin plays). Austin’s approach is to seek opportunities where these roles split the General Partner economics equally, one-third each, or at least where the capital raiser earns a pro-rata share of the GP economics based on the proportion of equity raised relative to the project’s total equity requirement. Target Deal Criteria Austin prefers deals in the $14-$15 million acquisition range that require approximately $5 million in equity and is comfortable raising $500,000-$1 million per deal. He seeks sponsors with a minimum of 5+ years and 5+ deals of experience, avoids first-time sponsors aiming to raise large funds (up to $100 million), and is skeptical of sponsors projecting unrealistic IRRs (70%+) preferring, instead, deals with IRRs of 15-18%, which he considers more realistic. Austin is particularly drawn to healthcare real estate, especially dental practices, as his research shows they have some of the lowest tenant default rates, making them a safer investment option. Challenges and Lessons Learned Listen to this episode to hear Austin discuss the biggest challenges he has faced in raising capital and to learn about the single most effective way he has found to connect with more investors for his fund. *** Explore the world of real estate capital allocators—a fresh approach to financing that’s reshaping the industry. In this series, I talk with allocators, investors, sponsors, and service providers to give you an inside look at this fast-growing space. PLUS, subscribe to my free newsletter for real estate investors and gain access to: * Introductions to sponsors, allocators, and investment opportunities. * Insights drawn from my 30+ years of experience in real estate investing. * Hacks and tactics for raising capital to help you scale your real estate portfolio. Visit GowerCrowd.com/subscribe /episode/index/show/nreforum/id/34939475

A Day in the Life of a Capital Allocator 02/11/2025

A Day in the Life of a Capital Allocator Meet real estate capital allocator Nick Stromwall, founder of Oak and Vine Capital, in this week’s edition of my podcast/YouTube show, The Allocator: A New Way to Finance. The Role of a Capital Allocator As an allocator, and unlike sponsors who source deals, sign on debt, and execute business plans, Nick works with sponsors to raise capital for their deals. He pools funds from his own investor network to secure larger-than-minimum investment thresholds, in return for which he negotiates preferential terms. Insights and Lessons from the Field Nick shares the details of his process, providing insights you won’t hear elsewhere: • He discusses his typical average raise and the terms he negotiates with sponsors. • He explains how he gets compensated, how he shares preferential terms with his investors, and the additional fees he collects from them. • Nick outlines his due diligence process, evaluating sponsor track records, ethics, and community impact. Part of Nick’s unique value proposition in an increasingly crowded field of capital allocators is his focus on more than just financial returns (though those are, of course, important). He emphasizes creating lasting community impact. Challenges & Myths Nick also talks about how he uses AI and automation to remain compliant with securities laws. He candidly shares the challenges he has faced in recent years as the market has shifted and discusses the lessons you can also learn from. Additionally, Nick addresses common myths associated with the capital allocator business - insights that every aspiring allocator should hear. *** Whether you're an investor, sponsor, or simply curious about the growing capital allocator industry, this episode unpacks the details and nuances behind the model. *** Explore the world of real estate capital allocators—a fresh approach to financing that’s reshaping the industry. In this series, I talk with allocators, investors, sponsors, and service providers to give you an inside look at this fast-growing space. PLUS, subscribe to my free newsletter for real estate investors and gain access to: * Introductions to sponsors, allocators, and investment opportunities. * Insights drawn from my 30+ years of experience in real estate investing. * Hacks and tactics for raising capital to help you scale your real estate portfolio. Visit GowerCrowd.com/subscribe /episode/index/show/nreforum/id/34922770

$11 Million of Equity Raised in Year One! 02/04/2025

$11 Million of Equity Raised in Year One! In today’s show, I welcome Bobby Sharma, co-founder of Connected Capital Fund, an exclusive membership organization of capital allocators - people who pool investor capital to negotiate preferential terms with sponsors. Bobby is also the manager of Better Capital Fund, his private money lending fund. Although Connected Capital Fund is just a year old, the organization has already allocated capital to vetted sponsors across markets including Dallas, San Francisco, and Lincoln, Nebraska, raising and investing $11 million in its first year of operation. Case Study Bobby explains that the Connected Capital Fund team has reviewed fifty deals but invested in only six so far, illustrating their highly selective due diligence process, mitigating risks that individual investors might overlook while providing them with enhanced returns. As an example, Bobby shares a case study involving a deal with a self-storage operator. The sponsor initially offered investors a 70/30 split with a 6% preferred return. However, Connected Capital secured a 90/10 split and increased the preferred return to 8%. These favorable terms were then passed on to Connected Capital Fund members, who promoted them to their networks of investors. Depending on the deal, allocators may either retain the entire delta between the original and negotiated terms or share the benefits with their investors. Allocator Co-Investment Bobby also discusses the practice of backfilling deals. In this process, after a minimum investment is agreed upon with a sponsor, Bobby acts as the first investor, providing the full amount required to meet the threshold. He then raises additional capital from other investors, 'backfilling' his initial capital contribution. In 95% of cases, he leaves a portion of his own capital in the deal to maintain alignment with investors though, on rare occasions, if demand is particularly strong, he may relinquish his position entirely, leaving no co-investment in the deal. Bobby was the first fund manager client of Avestor, a platform designed for capital allocators (whose co-founder, Badri Malynur - who was the first guest in this podcast series). He is highly knowledgeable about the capital allocator industry being an allocator himself as well as leading Connected Capital Fund, an organization of allocators. Tune in to learn more about this emerging industry of capital raisers in today’s episode - you’ll be glad you did. ***** Explore the world of real estate capital allocators—a fresh approach to financing that’s reshaping the industry. In this series, I talk with allocators, investors, sponsors, and service providers to give you an inside look at this fast-growing space. PLUS, subscribe to my free newsletter for real estate investors and gain access to: * Introductions to sponsors, allocators, and investment opportunities. * Insights drawn from my 30+ years of experience in real estate investing. * Hacks and tactics for raising capital to help you scale your real estate portfolio. Visit GowerCrowd.com/subscribe /episode/index/show/nreforum/id/34880840

Demystifying the Capital Allocator Model 01/28/2025

Demystifying the Capital Allocator Model My guest today, Jeff Greenberg, founder of Synergetic Investment Group, is a capital allocator whose business model focuses on identifying, vetting, and providing capital to sponsors by aggregating funds from his network of investors. Aggregating Investor Funds By pooling investor capital, typically $1MM or more, Jeff negotiates preferential terms with sponsors, such as higher preferred returns and better promote splits than individual investors could secure on their own. Through his fund, Jeff offers his investors the opportunity to allocate capital according to their preferences among the offerings he promotes. Negotiated Benefits for Investors Jeff explains that the delta he negotiates with sponsors is partially passed on to his investors through returns that are at least equal to or better than what they would achieve by investing directly with the sponsor. He retains some or all of the delta as compensation for his role in aggregating capital, negotiating terms, and conducting due diligence. Rigorous Due Diligence Together with a group of other capital allocators via the Connected Capital Fund group, Jeff utilizes a 250-point due diligence checklist to select and screen sponsors. This process includes analyzing business structures, assessing team competencies, and evaluating operational controls. Challenges in the Market Throughout his capital allocation activities, Jeff has raised a total of $6–7 million. However, in 2024, he raised only $100,000, reflecting the challenges of the market. When possible, Jeff invests alongside his fund investors to align his interests with theirs. Concerns About the Allocator Model Jeff expressed concern about other capital allocators who lack operational experience and fail to conduct thorough due diligence. This can undermine the quality of deals in the industry and damage the reputation of the allocator model when poorly vetted projects fail. Dispelling Misconceptions He also addressed the misconception that the allocator model is a quick and easy path to wealth. Many new entrants, lured by promises of simplicity, fail to appreciate the effort required to build trust with investors, properly vet sponsors, and manage deals effectively. Listen to this episode, meet Jeff, and learn more about the capital allocator model. ***** Explore the world of real estate capital allocators—a fresh approach to financing that’s reshaping the industry. In this series, I talk with allocators, investors, sponsors, and service providers to give you an inside look at this fast-growing space. PLUS, subscribe to my free newsletter for real estate investors and gain access to: * Introductions to sponsors, allocators, and investment opportunities. * Insights drawn from my 30+ years of experience in real estate investing. * Hacks and tactics for raising capital to help you scale your real estate portfolio. Visit GowerCrowd.com/subscribe /episode/index/show/nreforum/id/34865525

Changing the Real Estate Capital Game 01/21/2025

Changing the Real Estate Capital Game In today’s first episode of my new podcast and YouTube show, The Allocator: A New Way to Finance Real Estate, I’m joined by Badri Malynur, co-founder of Avestor. Badri explains how Avestor caters to the needs of the real estate capital formation industry by providing a platform that redefines how funds are created and managed. What is an Allocator? An allocator is someone who typically negotiates preferential terms (such as higher preferred returns or more favorable promote splits) with a sponsor in exchange for delivering a significant investment into a deal. Once the terms are secured, the allocator pools investments from other individuals to meet the negotiated threshold. They may share the preferential terms with their investors or retain the difference as compensation for their efforts. How Avestor is Different Unlike platforms such as Juniper Square or IMS, which primarily serve as document management systems, Avestor goes further by integrating these backend processes with a customizable fund model. This model allows sponsors and allocators to create funds that consolidate offerings from multiple sponsors, giving investors the flexibility to allocate their capital as they see fit across various deals within the same fund. Streamlined Processes Avestor simplifies fund management by providing a single Private Placement Memorandum (PPM) that covers all deals within a fund, along with individualized deal disclosure statements. Investors receive a consolidated K1 at year-end, eliminating the need for multiple documents. By reducing legal fees and administrative burdens, the platform makes fund creation and management more efficient for allocators, sponsors, and their investors. Additional Resources and Support Beyond fund customization, Avestor provides pre-developed legal templates, accounting support, and optional marketing partnerships. It also offers access to educational content, mastermind groups, and tools to help fund managers grow their businesses, creating a comprehensive solution for those looking to streamline capital raising and fund management. Badri and I discuss the Avestor platform and the capital allocator industry in detail. This is an episode you don’t want to miss. ***** Explore the world of real estate capital allocators—a fresh approach to financing that’s reshaping the industry. In this series, I talk with allocators, investors, sponsors, and service providers to give you an inside look at this fast-growing space. PLUS, subscribe to my free newsletter for real estate investors and gain access to: * Introductions to sponsors, allocators, and investment opportunities. * Insights drawn from my 30+ years of experience in real estate investing. * Hacks and tactics for raising capital to help you scale your real estate portfolio. Visit GowerCrowd.com/subscribe /episode/index/show/nreforum/id/34845775

How to Find Off-Market Deals With AI-Powered Title Searches 11/12/2024

How to Find Off-Market Deals With AI-Powered Title Searches Have you ever used title reports to find off-market deals? My guest today, Tali Gross, explains how his platform, Dono.ai, can be used at scale to uncover off-market opportunities before anyone else – by using AI to read and analyze title reports. With Dono, you simply enter your search criteria (type of property, liens, divorces, back taxes, etc.), and Dono will help you scan every property that meets your requirements in a target city. You can also access detailed title search results in seconds – with no calls to title companies, no waiting on manual checks, and no human errors. Here are a few EasyWins you’ll get with Dono.ai: • Instant Property Insights: Enter an address and get an instant title snapshot. • Automated Risk Checks: Avoid costly mistakes by automatically detecting liens, ownership issues, and title gaps (shadows) within seconds. • Distressed Property Alerts: Quickly identify off-market properties with unpaid taxes or open judgments – a goldmine for off-market deals. • Tailored Search Filters: Narrow down properties by owner, tax status, or location to spot hidden investment opportunities. Dono.ai is also being used by title companies to grow without increasing manpower. But what really sets Dono.ai apart? The “Ask Dono” feature – a chatbot that lets you ‘chat’ with title reports using natural language. Dono.ai is a platform giving innovative investors a significant competitive edge. Tali explains it all in this episode you won’t want to miss. ***** The only Podcast you need on for raising capital in real estate - enhanced by AI. Get immediately actionable strategies and tools to find more deals, connect with accredited investors, raise more capital, and scale faster – with podcast guests who are taking the real estate industry to the next level with AI. And walk away with something you can actually use in every episode. PLUS, subscribe to my free newsletter and get: • practical guides,• how-to's, and• news updates Get immediately actionable strategies and tools to raise more capital, connect with accredited investors, and scale faster—enhanced by AI to stay ahead of the competition. All in just 5 minutes, for free. /episode/index/show/nreforum/id/33817554

Transforming Site Selection and Planning with AI 11/05/2024

Transforming Site Selection and Planning with AI Meet Clifton Harness, the mastermind behind TestFit.io and one of the most innovative thinkers in real estate tech today. I came across Clifton’s work on LinkedIn, where he shares some seriously impressive images of TestFit’s capabilities. What TestFit does is simple yet mind-blowing: plug in a land parcel, add your development criteria, and boom – it’ll show you what’s possible and churn out real-time design options, including optimizing the parking configuration for you, tailored to your investment goals, all in seconds. It’s highly visual, super intuitive, and it’s saving developers and architects hundreds of thousands — even millions of dollars — in pre-development costs. Clifton gives us a look under the hood of TestFit, explaining how it combines real-time AI with zoning data to make site planning as streamlined as possible. This isn’t just about filling in some details and hoping for the best; TestFit allows for customization down to specific unit layouts, parking configurations, and even zoning quirks. It is a truly next-level development tool. Here are some EasyWins with TestFit.io: Generate Site Plans Fast: Input specs, get multiple optimized layouts in seconds. Perfect Your Parking: Automated layouts reduce wasted space and effort. Stay Zoning-Compliant: Seamless zoning data integration. Customize to Fit: Tailor designs for specific unit and building needs. Preview in 3D: Realistic visuals for streamlined stakeholder buy-in. If you’re in real estate and haven’t tuned into AI-powered solutions yet, this episode will be an eye-opener. Clifton’s insights on what TestFit can do are nothing short of revolutionary and trust me (I’m a doctor ) this is one tool you’ll want to use. ***** The only Podcast you need on for raising capital in real estate - enhanced by AI. Get immediately actionable strategies and tools to find more deals, connect with accredited investors, raise more capital, and scale faster – with podcast guests who are taking the real estate industry to the next level with AI. And walk away with something you can actually use in every episode. PLUS, subscribe to my free newsletter and get: • practical guides,• how-to's, and• news updates Get immediately actionable strategies and tools to raise more capital, connect with accredited investors, and scale faster—enhanced by AI to stay ahead of the competition. All in just 5 minutes, for free. /episode/index/show/nreforum/id/33519427

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