Summary:

In this video, I walk you through what I’m seeing right now in the market:
→ The exact red flags that disqualify most deals instantly
→ The common traits of the few deals that actually make sense
→ Where to find opportunities while everyone else is getting crushed

Brokers are still selling fairy tales
Sellers are stuck in 2021 pricing
Underwriting is full of red flags: fake rent growth, fake cap rates, fake NOI

i looked at a 100 deals this month and 98 of them are absolute garbage brokers are still selling fairy tales sellers are pricing like it’s 2021 and if you don’t know what to look for you’re going to get crushed in this video I’m going to walk you through exactly what I’m seeing behind the scenes right now from real underwriting fails to two deals that I’m actually moving forward on right now if you’re serious about investing in 2025 then you need to hear this because most people are about to learn these lessons the hard way so how
many of those 100 deals are actually worth a second look and which ones immediately were disqualified from the rest number one proformers that use unrealistic rent growth and 2023 comps two sellers that are still anchored to old capitalization rates three expenses wildly underestimated based on actuals especially taxes and insurance anytime you see expense reductions run or the value ad is already priced in and there’s no more upside so what’s the biggest disconnect between a seller or a broker on what’s being presented and
what’s actually true the first big red flag is rent growth and rent projection is based on the future and not actuals the second is high vacancy and even concessions that are being used to incentivize tenants because concessions are just reductions in income they’re really more like an expense expenses are up across the board we all know this we’re all dealing with inflation so things like labor utilities insurance property taxes and just all the components that it takes to actually fix or build something are way up so
whenever the net operating income doesn’t reflect like concessions or delinquencies or lease tradeouts then I move on and I move on quickly and if the investment is based on a 2026 refinance play then you better run because today’s debt could remain this high in the foreseeable future and lastly if the seller or broker are projecting lower capitalization rates on the exit then all they’ve done really is just fabricate a higher value in the future so cash flow deals are rare but they do exist of the deals that I did like they
all had the same things in common they were self-managed with high expenses and had easy operational upside typically these had higher vacancies and they were mom and pop type managed one deal that we recently bought in Arizona the owner lived in Florida had owned it over 20 years and rarely visited the property this is the kind of deal I’m talking about another indicator is that rents are 15 to 20% below market now market is exactly what a renter would pay today not tomorrow not in the future but today if there was a vacancy what’s it priced
at today and from there your rent should be 15 or 20% less and in many cases in many deals you can find this i like to look for properties in secondary markets where there’s not a lot of institutional competition institutions typically favor highly populated core markets and therefore there’s a lot of money chasing few deals gold is near all-time highs but appreciation isn’t the only way to benefit monetary Metals you could potentially earn a yield on your gold paid in physical gold without selling it here’s how it works when you lease your
gold through their platform pre-qualified companies pay to use it under strict guidelines like renting out real estate but with gold instead of paying to store your metal you may earn up to 4% annually in gold you stay in control and you can choose which leases to participate in monetary Metals handles the due diligence lease terms and all the administration thousands of investors use this approach to grow their gold not just sit on it visit monetary-medals.
com/ken to learn more leasing gold involves risk and returns are not guaranteed this is not an offer to buy or sell securities please review all risk disclosures at monetary-metals.com visit monetary-metals.com/ken to learn more another one is I look for properties that don’t have any recent capital improvements my experience is a lot of real estate investors distribute all the money and then they don’t have any money left over to do the basic maintenance like the painting of the buildings the roofs the parking lots and
those kinds of things those oftent times can be great assets to acquire all you need to do is what we say put lipstick on a pig and just paint them put new roofs on redo the parking lots and some of the landscape and maybe the fitness center things like that things that tenants would want you guys have seen this of course when you take over an old house and just renovate the kitchens or upgrade the flooring those kinds of things except for commercial apartment buildings those kinds of things can help draw more tenants and command higher
rents another thing that we’re looking at is of course land for new construction now why would we build new construction today because any new construction that we build today is going to open in 27 or 28 when there’s not a lot of new supply hitting the market so once this disruption stops in the market it all starts to firm up in 2026 and then in 27 and 28 we should see high rent growth again because there won’t be hardly any supply entering the market at that time and if you are an accredited investor and want to see some
of those deals that we’re working on just click the link here so if someone is actively looking for something right now what should they be looking for mom and pop sellers with fatigue or partnerships that are being broken up right now or loan maturities mismanaged portfolios with negative NOI growth properties that have a lot of deferred maintenance a lot of investors are afraid of these but I look at them as great reposition opportunities and off-market direct to owner still works cold outreach still works so what are
the top two or three deal structures or conditions you’re walking away from immediately negative leverage on day one so what does that mean that means that the occupancy doesn’t cover the expenses you got to be very careful with these deals i just looked at a deal the other day that was $40 million and the lender was going to sell it for 14 the loan on the property was 25 and they were going to take an $11 million haircut on the loan itself and even at 14 I passed sometimes you’re stepping right into the lender’s shoes and you’re just catching
a falling knife be very careful as you’re trying to buy some of these distressed assets walk away if a seller needs bridge financing and the deal doesn’t pencil today just to get through the next period of time walk away if syndicators are using really aggressive rent growth numbers and really aggressive expense cuts and they have very thin margins at that and there’s no operational upside walk away and if they say it’ll cash flow after refi walk away because they don’t know just like we don’t know what interest rates are going
to be in the future all real estate deals must have a story it must be simple and straightforward for everyone to understand and it should not be pie in the sky based on some future analysis of what might happen on interest rates or or rent growth or expense cuts be very careful and all deals need to underwrite and cash flow at today’s numbers so the market pulse what’s shifting right now so based on what I’m seeing in real time what trends are unfolding behind the headlines price expectations are finally starting to
soften in many markets cap rates are going up and lenders that used to extend and pretend they’re not extending anymore and they’re not pretending anymore they’re actually starting to put some of these deals on the market finally expenses like insurance premiums and property taxes continue to go up killing cash flow this makes it even worse and the only thing that can help is going to be the low interest rate costs on potential debt so always underwrite higher expenses in the future on any deal that you’re trying to buy
today the real estate market is not repeating what happened in 2008 in this next video I’m going to go over exactly what is happening in this video I’m going to break down three charts that every serious investor needs to be watching one the 10-year Treasury this is the indicator that’s the most important for commercial real estate two how inflation and tariffs are going to affect commercial real estate in the future and how you should be underwriting your deals three the renter nation shift has started and it’s going
to give real estate investors a huge advantage in the future this cycle does not look anything like 2008 yet a lot of investors are treating it that way and they’re making a lot of mistakes like they did in the last cycle they’re making the wrong moves and you need to make the right moves to reflect the issues of today so if you’re building buying or just trying to time this market I highly recommend you watch this video next