Calvera Insights

Make Apartments Boring Again

The recent investment cycle turned apartment investing into a momentum-driven meme stock. Untrained operators promised 20%+ returns with limited downside. They thought the market would go up indefinitely. It was an exciting place to be. And at the time, many thought what was there to lose?

Waiting For the “All Clear”

At Calvera, our job is to outperform. If we wait for the “all clear,” it’s too late. The best deal we ever purchased was in Sunnyvale, CA in 2011. Other buyers were afraid. To them, it wasn’t cheap enough. Yet, the asset was well-maintained for its age. And its location was solid. Sunnyvale is home to Yahoo, LinkedIn, and many tech companies. This investment generated a 4.1x gross multiple on invested capital.

What’s in a name?

Our company name, Calvera Partners, has two meanings—both relating to our studies at the University of California, Berkeley’s Haas School of Business. First, the “Cal” in Calvera is the nickname for UC Berkeley. “Vera” is our abbreviation of the Latin word, veritas, for truth. To us, Calvera represents “True Cal.” Second, for astronomy buffs, Calvera…

How many units do you own?

That question is common in the multifamily industry, but not a good measure of success. An individual with a 200-unit portfolio in the high-cost Bay Area is likely worth more than a syndicator who did joint ventures to amass 10,000 units. Instead, I’d rather ask questions like: Where are you investing? What’s your strategy to generate higher returns? What type of leverage do you use to finance acquisitions? From this, I can learn something.

Digging into Austin

Choosing the right market to invest in is critical to the success of an apartment investment. We’ve experienced it firsthand. The pandemic knocked down high-flying areas like the San Francisco Bay Area and accelerated markets like Austin, TX. Yet that’s not the whole story. An otherwise great market can have poor performing submarkets. That’s happening…

How to Invest Like the Pros

We were once told that you can’t make money in apartments. That’s what a capital provider said in 2010 when we formed Calvera. He was wrong. Apartments still provide the best risk-adjusted return among all major property types. And the cash flow it generates provides some downside protection.

Opportunity Costs of Cash

If you missed the runup in the S&P (or Bitcoin), how can you position yourself to take advantage of a recovery in the real estate market? Apartment values have already declined 20-30% since 2022. Since 1978, institutional real estate has returned, on average, 9.3% per year on rolling 10-year hold periods. It has also never had a negative return viewing the data this way. And the lowest 10-year return was 6.1%.

Winning the Deal

Today, real estate investing is wrapped up in Excel spreadsheets. Investors become economists and believe they can predict interest rates and rent growth. They also think the more complex the model, the easier it is to justify an improbable assumption. Many investors have forgone common sense, cash flow-based models, and opted to rely on appreciation.

Answers to Three Questions Investors Are Currently Asking Us

1. What differentiates Calvera Partners from other private equity firms in the multifamily real estate space?

It’s no secret some of the biggest real estate companies also have evergreen investment funds. However, our boutique size allows us to have tailored business plans for each asset. We can devote the time necessary to ensure our vision is implemented. This approach, we believe, will translate to better investment returns for our investors. Click here to see the rest.

2024 Calvera Partners Investor Letter

Having a positive and deep Calvera investor relationship is our primary goal. Strong multifamily real estate returns are only one part of the relationship. Through transparency, accessibility, and thought leadership, we seek to enhance the bond with our investors. The annual Calvera investor letters are an important part of this. You can access it here.

Urban Investing Challenges Create Upside

Urban investing has always been challenging. Usually, it involves investing in an up-and-coming city pocket. Developers work in tandem to create new neighborhoods. Restaurants, bars, and retail shops open as new amenities. Adventurous people move into apartments and condos to give the neighborhood a soul. Everything feeds off of one another to generate a palpable energy. This is what makes urban areas great.

Top 4 Takeaways from the 2024 NMHC Apartment Strategies Conference

Thousands of real estate professionals descended upon San Diego to attend the NMHC Apartment Strategies Conference and Annual Meeting. There, a distinguished lineup of multifamily experts provided insight. Here are four main takeaways from the conference.

Why NAV should be calculated by a trusted source

Non-traded REITs calculate NAV (Net Asset Value) in many ways. Some perform third-party appraisals on every property. This can be a true arms-length analysis. Often, though, it’s influenced by the one ordering the appraisal. Additionally, appraisals are backwards-looking and may not reflect current values. Our preferred way to calculate NAV uses inputs from both the broker and appraiser communities. For extra scrutiny, an independent auditor reviews our NAV models. This is to ensure the result conforms to market standards.

Why real estate is the next asset class to outperform

It’s one of the few major asset classes that hasn’t recovered yet. The stock market was up 24% in 2023. Bond yields fell significantly from highs earlier in the year, meaning that prices soared to end 2023. Even Bitcoin rallied and returned 150% for the year. Apartments are attractive as they remain 20-30% off their highs from early 2022. Between improved cash flow and appreciation potential, multifamily real estate is set to outperform in 2024.

5 Predictions for the Multifamily Investment Market in 2024

1. Phenomenal buying opportunity as time runs out for many owners.
2. Considerable new apartment supply creates tepid rent growth.
3. Insurance and other expenses will remain elevated, causing NOI (net operating income) to be flat or down from 2023.
4. We’ll get clarity on the 10-year US Treasury by Q3…either 3.5% or 5.5%.
5. Cash will be trash again.

Apartments don’t usually return 20%

Since 1978, apartment investments have produced a 9.3% annual return over rolling 10-year periods. There is not one 10-year period where apartments lost money. This is without using leverage and based on institutional properties and ownership. Apartments have been resilient and are known for stability, not excess risk-taking. Now that values are down from the peak by a wide margin, we must recalibrate expectations. Should they be even higher because of the great buying opportunity? Should returns be lower with more uncertainty and higher debt costs? It depends on the strategy and appetite for risk.


Answers to three questions investors are currently asking us:

1) What are the top three danger signs you see in deal prospectuses you are reviewing?

1) Negative leverage. Some is ok if the business plan warrants it, but in today’s environment, the focus should be on positive cash flow. 2) Short-term rent growth. Most markets have an influx of new apartment supply which will push down rents and keep them flat. Prudent underwriting has below-average rent growth in the short term. Click here to see the rest


Answers to three questions investors are currently asking us:

1) Why should I commit funds to multifamily now?

Multifamily is resilient. According to NCREIF, at no point in the past 45 years has apartment investments produced a negative return on a 10-year hold. With values well below peak pricing, this is an opportune time to buy.Click here to see the rest

Two Lessons from Charlie Munger

“He often said that the key to investing success was doing nothing for years, even decades, waiting to buy with ‘aggression’ when bargains finally materialized.” Great investors need to fully believe in their investment thesis and wait patiently to deploy considerable capital at the opportune time.


Answers to three questions investors are currently asking us:

1) Will Calvera’s ratio of debt/equity for acquisitions change in 2024?

I’m starting to see some acquisitions pencil to 70% loan-to-value (LTV) which is a big improvement from 9 months ago when it was closer to 55% LTV. Our fund has a LTV limit of 75% for any single asset and 65% for the portfolio. We find it promising to be within those ranges as we seek acquisitions in 2024. That means more properties for the Calvera Income and Growth Fund.Click here to see the rest

Why do so many real estate sponsors use bridge debt?

Why are people still extolling the virtues of bridge debt today? You won’t hear it from me, but here’s their argument: 1) the Fed is going to stop raising rates and you don’t want to be locked into fixed rate debt; 2) you can buy an “in-the-money” cap to bring the interest rate down from 9% to 7% or lower; and 3) a value-add business plan is going to raise net operating income, therefore allowing an investor the option of refinancing or selling during their three-ish year business plan. Never once do I hear any of these groups discuss that they’re taking on more leverage than the property can adequately sustain today.

Why Interest Rates Matter

At no point in the past 20 years can I recall spending so much time wondering about where this interest rate will go. Interest rates matter because they impact property values. Rates also impact capitalization (i.e., debt vs. equity amounts) and cash flow. Real estate is frequently a leveraged investment, meaning debt is used to finance the purchase. When debt is used, it can make a good investment great, and it can also turn a good investment bad.

Tax Considerations in Real Estate Investing

Taxation is one of the hottest topics for our investors. Not only are they concerned about how much they might have to pay, but they’re also concerned with the potential hassle that tax reporting can create. When making an investment in real estate, it’s important to have a tax plan in mind and a full understanding of your filing requirements and the potential cost.


Answers to three questions investors are currently asking us:

1) What are the advantages of your “evergreen” structure?

The biggest benefit is that your money keeps working for you. We will work to defer any capital gains taxes indefinitely. This allows you to fully maximize your investment with us. Also, with a focus on cash flow, regular and growing quarterly distributions are another benefit. Click here to see the rest


Answers to three questions investors are currently asking us:

1) Why invest now versus putting available funds in a money market fund?

You can do both! We do not call your commitment unless we’re acquiring a property. In the meantime, you can keep your dry powder in a US Treasury or money market fund earning 5%. Once we call your investment, you start earning a preferred return and will be investing in a property with a return target in excess of 10%. Being an investor now puts you in the best position to reap the rewards of Calvera’s distressed investing. Click here to see the rest

Calvera Shifts Focus to the Long-Term

Back in 2010, we launched Calvera out of the Great Financial Crisis without capital, a deal, or long-term vision. All we had was a belief that there was going to be a major opportunity in the apartment market. Today, I’m getting similar vibes to when we started Calvera. Our enthusiasm is high. There are opportunities starting to trickle out with more on the horizon. The market fundamentals are very different than in 2010, but the opportunity is the same.


Answers to three questions investors are currently asking us:

1) Have we reached bottom in the distressed commercial real estate market?

Not in multifamily. Distress isn’t even fully here yet. We have only seen the initial cracks of expiring interest rate caps and loan maturities. The bid/ask spread remains wide enough to stymie transactions. Keep an eye on 2024. Click here to see the rest

Did Long-Term Investors Get Lucky?

The people who I look up to in real estate are those who have been invested for the long-term. They largely invest their own money, self-manage their properties, rarely sell assets, use modest-to-no leverage, and continue to accumulate properties. This investor doesn’t buy when prices are high and is a favored buyer when the market is in distress. The Calvera Income and Growth Fund is specifically modeled after this successful investor profile.

Sourcing and Underwriting the Calvera Way

We uncover new investment opportunities many different ways -off-market, on-market, and limited market. Sourcing properties off-market gets all the attention. It’s what everybody wants, but it’s not always the best deal.

Is There Enough Fear to Start Buying?

Warren Buffett famously said in his 1986 letter to shareholders, “to be fearful when others are greedy and to be greedy only when others are fearful.” This is great advice, and an admirable goal to have, but it can be incredibly difficult to execute. Now, however, there’s plenty of fear in the real estate market, and unlike past times of distress, there are attractive risk-free options for those who are fearful.

How Co-Investments Work

At Calvera, we invest in apartment buildings through discretionary funds where we receive capital from numerous investors. Sometimes, investors really like a particular deal and they want more of it. To accommodate those investors, we offer the ability to co-invest alongside the fund, so they have extra exposure to that single asset.

Multifamily Expenses Outgrow Rents

In today’s market, owners need to actively manage their properties’ expenses. Rents are down or flat in most markets across the country. Therefore, reining in expenses preserves net operating income and buys an owner time until the market allows for rent increases.

Waiting is the Hardest Part

For a proactive team like Calvera, waiting on the sidelines for the right deal to materialize is tough, but it can be the right thing to do. Learn why our latest multifamily property acquisition in Fort Worth, Texas checks all the boxes for potential investment success.

Real Estate “Doom Loops”

More distress is to come in certain metro areas and in the overall apartment market. How deep the distress becomes remains to be seen as there has already been a substantial reset in pricing, both from interest rate increases and lackluster urban recoveries.

One Last Fed Rate Increase

We can’t prognosticate where interest rates are headed or if the Fed is pushing the economy into a recession. We do know that growth is slowing and that there remains a large bid-ask spread between sellers and buyers in the apartment market.

Multifamily Permitting Falls 32% Year-Over-Year

There are going to be fewer apartment buildings built in the near term as interest rates and slowing rents make it unfeasible to begin new construction. According to an analysis by Real Page, the U.S. Census Bureau shows a seasonally adjusted drop in multifamily permitting as of July 2023 of 32.2% compared to the prior year.

Minneapolis’ Inflation Win is Downtown’s Loss

The inflation rate in Minneapolis was tracked at 1.8%, primarily due to low shelter costs. New [apartment] supply coupled with tepid demand has been a killer for rents and occupancy

Inflation and Interest Rates Continue to Make Apartments Attractive

Subsequent increases in the Fed Funds rate are going to continue to put upward pressure on mortgage rates, which will continue to exacerbate the growing unaffordability of single-family homes.

Is Negative Leverage Losing Steam?

The apartment market is at a standstill, and the numbers show it. As of Q2 2023, multifamily transaction volume (i.e., sales of apartment buildings) is down 71% compared to a year ago and is on par with activity back in 2009, in the middle of the Great Financial Crisis when there was more fear in…

Why Form a REIT Now?

Our investors are always looking for ways to be invested in cash-flowing real estate at all times. In the most efficient manner possible. The Calvera Income and Growth Fund is just that, and we believe that the timing is just right – given the current and pending distress in the market. Learn why…

Do You Know Who You’re Investing With?

Crowdfunding is safe, right? Not always. This article details one company’s involvement in a bad investment that resulted in bankruptcy proceedings, lawsuits and the termination of a CEO. Learn how the Calvera Income and Growth Fund is nothing like crowdfunding, it’s about transparent financials.

How Calvera Became a Value-Add Apartment Investor

There aren’t many groups like Calvera in the Twin Cities, and I am curious how much the local real estate market and one’s experiences shape their outlook on risk and opportunity.

Trust, but Verify

The front page of the Wall Street Journal recently showcased what can happen to trusting individual investors when a real estate syndicator’s internet savvy is combined with inexperience in a turbulent market. A syndicator based in Dallas, TX, who at one time amassed an apartment portfolio of 7,000 units worth $500 million, recently lost a…

Distressed Apartment Properties: A New Wave of Deals is On the Way

Gain a better understanding of the forces behind today’s apartment property distress—and why a new wave of deals ready to hit the market may be a direct result of over-leveraged owners.

What It Means When Apartment Demand Plunges In The Urban Core

Across the country, people have found a way, sometimes with the help of federal stimulus, savings or installment plans, to make their rent payment. In instances where the rent burden is too great, people have moved back in with family, added roommates or relocated to a lower-cost community. As the National Multifamily Housing Council (NMHC)…

Are There Any Value-Add Deals Left?

Where have all the value-add deals gone now that we’re 10 years past the Great Recession? Certainly, there will be a new set of opportunities as a result of the economic shutdown from the coronavirus. However, the traditional apartment building in need of significant renovation in a quality submarket has largely vanished. It seems like…

14 Up-and-Coming Real Estate Locations To Watch

In major global cities, the real estate market is caught in a high-demand, low-supply cycle. That’s why many real estate investors are looking in other areas to diversify their property portfolios. There are a few factors to consider when looking for the best areas to invest in, such as affordability and population growth. To help…

Riding California’s Rent Control Wave

Recently, California’s State Assembly passed a statewide rent control bill for all apartment units built more than 15 years ago.

Two Key Questions To Ask Yourself Before Jumping Into A Real Estate Partnership

I was recently asked by a friend to review a private real estate transaction that he was considering investing in. On the surface, the deal sounded interesting.

Apartment Owners Are Leaving Money On The Table By Avoiding Renovation

Today, there is no shortage of apartment owners upgrading their tired properties with unit renovations, clubhouse transformations and new amenities. These improvements work: Landlords can charge higher rents and implement new revenue streams like utility reimbursement, and they will likely sell their property for a higher price than if they never did the renovation. There…

Staying Disciplined At The Market Top

Everyone seems to be waiting for the bottom to fall out of several investment markets: real estate, stocks, cryptocurrencies, etc. We may be waiting a while for this to happen, but volatility and uncertainty does pervade the daily news cycle. In this environment, it is difficult to form an opinion about how to succeed. How…

15 Booming Real Estate Markets That Are Trending In 2018

The real estate market is heating up. Of course, some markets are hotter than others and have been seeing sales surge in recent months. Plenty of metropolitan areas in North America are reaching new heights in property sales and are on the verge of popping before your very eyes. Below, 15 members of Forbes Real…

How Are Fintech And Proptech Changing The Real Estate Industry In 2018

Buying a home in 2018 is much different than, say, 15-20 years ago. The antiquated ways of the real estate market have paved the way for proptech and its experience-based applications. It is now possible for a buyer to purchase a home without ever leaving their couch by using a wide array of online tools…

How To Buy Your First Apartment Building

While buying a single-family home might sound like a good idea because you don’t need too much cash for a down payment, it’s awfully risky. Why? Well, if and when your tenant leaves, so does your cash flow. When it comes to property management, I like the diversification that comes with a multi-unit or apartment…

10 Things To Consider Before Investing In Commercial Real Estate

The commercial side of real estate can be an appealing proposition for any investor. It offers you the ability to dip into a new pool of clients and grow your business interests. But, the commercial side of real estate is also a different beast that requires some additional considerations versus the residential side of the…

Three Need-To-Know Secrets of Investing in Real Estate

Real estate is likely missing from your investment portfolio. It’s not your fault — the deck is stacked against you. From many investment advisors not wanting to provide advice for investments they don’t earn a commission on, to the horror stories of becoming a landlord and dealing with stopped up toilets and irate tenants, investing…

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Performance data listed in this website or is otherwise provided by Calvera Partners, LLC, or its affiliates (“Calvera”) with respect to a particular property or project represents past performance calculated for the relevant project and does not purport to reflect the overall performance of any private funds managed by Calvera, which may include other projects, as well as charge additional fees or carried interest, or have additional expenses, which would reduce the overall performance of the project from the perspective of a fund investor. Past performance does not guarantee future results; Current performance may be lower or higher than performance data presented. Calvera is not required by law to follow any standard methodology when calculating and representing performance data; the performance of any of Calvera’s projects may not be directly comparable to the performance of other investment vehicles or funds; and qualified potential investors can contact Calvera Partners for more current performance data of any private funds managed by Calvera. 

This website is provided for informational purposes only. Nothing contained in this material is an offer or solicitation to buy or sell any security. In addition, (i) any securities offered to investors that respond to any general solicitation or general advertisement made by Calvera, may be sold only to accredited investors; (ii) such securities will be offered in reliance on an exemption from the registration requirements of the Securities Act and such securities offered are not subject to the protections of the Investment Company Act or required to comply with specific disclosure requirements that apply to registration under the Securities Act; (iii) Neither the SEC, nor any state securities regulator, has passed upon the merits of or given its approval to any securities offered by Calvera, the terms of the offering, or the accuracy or completeness of any offering materials or the accuracy or completeness of any of the information or material provided by or through this website; (iv) the securities will be subject to legal restrictions on transfer and resale and investors should not assume they will be able to resell their securities; and (v) investing in securities involves significant risks, and investors should be able to bear the loss of their investment. Please click here for additional important disclosures.