Real Estate Distress Cycle: A Buying Opportunity for Investors

During their latest episode of the VALUE: After Hours Podcast, Taylor, Carlisle, Kagan, and Bennett discussed Real Estate Distress Cycle: A Buying Opportunity for Investors. In this milieu, the conversation naturally gravitates towards entities like commercial property appraisal firms, whose role in the ecosystem becomes increasingly pronounced. Positioned at the nexus of valuation and market analysis, these firms navigate the complexities of real estate cycles with a nuanced understanding of asset valuation and risk mitigation. For realtor Winston Salem call Leanard Ryden Burr Real Estate to assist you. However, if you’re planning to try having a mobile home, visit the Home Nation listing. You may also check out New Construction Homes in Myrtle Beach SC here if you’re looking for some real estate properties. If you’re looking for someone to help with your rental property, a Kauai property management company can handle your rental maintenance needs seamlessly.

Downsizing and transitioning can be difficult. SilverGate’s senior real estate specialists provide a seamless one-stop moving solution so you can stress less, save time, and focus on what really matters-family. Visit sites like https://silvergateseniorrealty.com/ for more info.

In the quest for a suitable property to purchase amidst the ebbs and flows of the real estate distress cycle, savvy investors often seek efficient avenues for exploration. Collaborating with experienced property managers in Chicago can provide valuable insights and streamline the search, ensuring a more strategic and successful investment process.

Amidst discussions on the crucial role of commercial property appraisal firms lies the practical need for accessible and reliable resources. That’s where platforms like EZ Home Search come into play. With its user-friendly interface and comprehensive listings, EZ Home Search offers a better way to navigate the complexities of the real estate market. So, why not check here for a seamless experience in discovering properties that align with your investment goals? You can also find the best industrial spaces, which experts from B8 Real Estate can help you with. Here’s an excerpt from the episode:

Moses: Yeah, exactly. It’s this very weird situation where you’re trying– The whole business exists because the LPs trust you to invest their capital. You’ve got this really screwed up incentive structure where you’re doing stuff because you got to pay your analysts and your asset managers. It’s a crazy model. I think a lot of people having experienced that at other firms are like, “Hey, we are interested in another way of doing this business.”

Tobias: It seems fragile, and it seems to me that at the end of every business cycle, there’s always a whole lot of real estate developers who go bust just at the very beginning. That marks the start of guys who are over levered and they just on that margin start going bust and then everything else seems to follow from that.

Rhett: Yeah, and I think we’re starting to see that now. Unfortunately, obviously, people are suffering, but it’s a classic start of what we think at least distress, maybe a distress cycle where you have people that are undercapitalized, probably didn’t have the operational experience, and they paid a price that really looking back on it just didn’t make any sense. And so, we’re starting to see loan sales and assets start to trade below the debt basis, which is something we haven’t seen a long time.

Moses: Yeah, I want to add to that too. So, the prices paid were not good and the operations were not good, but fundamentally, the assets selected were also not good. [crosstalk]

Jake: Other than that though, it was full.

[laughter]

Moses: If you own a 1960s or 1970s apartment complex in Phoenix that has not been re-piped, you are in for a world of pain, if you own that. You will have leaks. If you actually have to eat that cash flow and that’s the source of your returns, you are not going to like the meal that you’re eating. And for so long, that was obscured because you had just lease it up, paint it, release it, send along to the next guy before the repairs and maintenance really started to hurt you. And now people are having to eat.

Tobias: It must be good though if you’ve got a full cycle view and you can see– As some of the weaker hands get shaken out, then clearly, they’re going to be some better prices at some point through this and anybody who’s liquid will be able to make some good deals.

Rhett: Yeah, I think that’s a big part of our thesis. We started this firm March 1st, and we raised an evergreen vehicle to take advantage of some of what you’ve talked about, and then we also have additional investors as well. We haven’t actually purchased an asset in this entity. Obviously, Moses and I have purchased a lot of real estate through the years. But when we were first thinking about this, I had real anxiety about, was this the right time?

And so we were going pretty slow, and then all of a sudden, you started to see the signs of stress. And so now the anxiety flipped from, “Okay, are we going too slow? I mean, are we going slow enough to like, ‘Oh, we really need to get the infrastructure in place,’” because you never know if it’s going to be the opportunity of a lifetime. But it’s very clear there’s enough stress in the market that you should be able to find good assets that you want to own for a very long period of time.

Moses: It’s certainly a better buying environment than it has been over the last couple of years. I haven’t bought one of those rehab deals in probably two and a half years. We bought some core stuff because we could lock in really long-term, very cheap debt like prior to the rates spiking. But yeah, we’ve been really bored around here and inactive because the numbers just didn’t make sense. We’re starting to see stuff where you’re like, “Yeah, that actually might be interesting.”

You can find out more about the VALUE: After Hours Podcast here – VALUE: After Hours Podcast. You can also listen to the podcast on your favorite podcast platforms here:

Apple Podcasts