JCORE – The Joint Chiefs of Real Estate

Congratulations Myles on your promotion!

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?? Navigating the Turbulent Waters of Floating Rate Debt ?? As experienced active duty military and veteran investors, we at JCORE have been closely monitoring the current state of the multi-family market. One concerning trend we've noticed is the impact of floating rate debt loans, particularly those offered by lenders like Arbor Realty. ?? The Risks of Over-Leveraging and Inexperience Many borrowers, including those with limited real estate experience, have taken on floating rate debt loans with the intention of executing quick turn-around projects. However, the rising costs of rate caps and the expiration of these caps have left many investors in a precarious position. The case of Jay Gajavelli, who acquired over 7,000 units in Houston with Arbor's loans and ultimately went belly up, serves as a cautionary tale. ??? The Perfect Storm: Delinquencies, Loan Loss Reserves, and Credit Concerns As Arbor CEO Ivan Kaufman stated, "We are in a period of peak stress and expect the next two quarters to be challenging." With a significant increase in delinquencies, loan loss reserves, and a drastic shift in loan ratings, the multi-family market is facing a potential crisis. ?? Where Are Rates Heading? While the FED has maintained rates for now, the possibility of rate cuts in 2024 depends heavily on inflation. If inflation persists, rate cuts could be in jeopardy, further exacerbating the challenges faced by over-leveraged multi-family investors. ?? The JCORE Approach: Patience, Diligence, and Conservative Financing At JCORE, we see the current market conditions as an opportunity to acquire distressed multi-family properties at attractive prices. By utilizing our expertise in acquisition, underwriting, due diligence, management operations, and exit strategies, we aim to find solid assets with strong returns while employing conservative fixed debt financing and moderate rental income growth assumptions. ?? Join Us in Navigating These Turbulent Waters If you're interested in learning more about how JCORE can help you navigate the challenges and opportunities in the multi-family market, reach out to us today. #MultiFamily #RealEstateInvesting #FloatingRateDebt #MarketOpportunity #JCOREInvesting