Family Office Podcast: Billionaire & Centimillionaire Interviews & Investor Club Insights
The Family Office Podcast released 3-7 episodes a week of interview mandate interviews, private investor strategies, innovative investment structures, and wealth management related insights.
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We cover private equity, real estate, income investments, commercial real estate, hard money lending, private loans, and innovative structures such as performance-fee only and Co-GP investment opportunities.
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Family Office Podcast: Billionaire & Centimillionaire Interviews & Investor Club Insights
Real Estate Valuations, Interest Rates, and Cash Flow Pressures: What’s Next for the Market?
In this episode, we explore how elevated interest rates are impacting real estate valuations and deal activity. Mark shares insights from the multifamily and student housing sectors, discussing the widening gap between buyer and seller expectations, the growing pressure on assets with variable-rate debt, and the cash flow challenges reshaping the market. As recession fears loom, we unpack what investors should watch for—and where opportunities may emerge below replacement cost. If you're navigating real estate in today’s economic climate, this conversation is a must-listen.
Mark, with valuations down in real estate from the peak, sometimes anywhere from 3 %
to 20 % some percent, how are you seeing it on the real estate side? With interest
rates being high, there's a real stymie in the market. The buyers and sellers were
really far apart. Sellers were thinking back a couple of years when prices were a
lot higher, and they were holding to those thoughts. And the buyers were looking at
interest interest rates the way they are they want to yield and so we've bought
selectively some deals and we're very cash flow driven both our student housing and
multifamily portfolio and what we see is there's a lot of people they got variable
rate debt and that's going to hit you know they've got extension after extension and
a lot of those deals are going to come apart and they'll be available for sale at
below replacement costs and so there'll be some real opportunities for those that are
patient?
I think interest rates, as I think Gary said, interest rates, I don't think are
particularly high. I mean, when I started in the '90s, we were paying 12 % to 15 %
for our money, so this is still nothing. I think the bigger issue is cash flow.
We haven't had a recession for so long that people have forgotten what recessions
are like.
My basic rule is anything that's cash flow negative and doesn't have cash in the
bank has zero value So from that perspective everything right now is massively
massively overvalued When we do go into a recession, which will probably be very
soon I think there'll be a lot of write -offs from from all asset classes