Real estate is a giant cyclical ship, it takes freaking forever to turn.
That can feel boring. But, it lets you actually see the cycle and do something about it.
Case in point: real estate values peaked in 2022. Over the next eight quarters, they dropped about 19%.
Yet NOI, the un-leveraged cash flow from the properties, grew 11% over the same stretch.
In other words, this is mostly a math problem. Cap rates moved up about 90 basis points as rates climbed.
So you had a full repricing without a collapse in fundamentals.
The market looks a lot different than 2021. Back then you had peak pricing, a giant new supply pipeline AND cheap debt.
Today you have:
More reasonable entry points
Crashing new supply
And stingy lenders (think Scrooge McDuck)
That makes Real estate and real estate debt (for higher / defensive income) attractive investment options.
Because when it’s harder to get deals across the finish line, that’s usually a better time to invest.
Brad Johnson
Evergreen Capital
P.S. If you’re an accredited investor and want to look at income options we’re recommending to clients, feel free to reach out.