Calvera Insights

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

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.

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

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.

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.

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.

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.

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.

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.

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.