PassivePockets: The Passive Real Estate Investing Show Rate Cuts and LP Accountability: Pulse Check
10 snips
Sep 30, 2025 The hosts dive into the Fed's recent 25 basis point cut and its limited impact on fixed versus floating debt in commercial real estate. They highlight a distressed 22-unit value-add property targeting impressive yields and discuss the shift towards private credit for enhanced risk-adjusted returns. A candid discussion on LP accountability explores fraud, operator errors, and market risks, while emphasizing the importance of community for smarter investing. Plus, insights on leveraging tools for tracking syndication investments.
AI Snips
Chapters
Transcript
Episode notes
Deep Value-Add 22-Unit Example
- Paul Shannon bought a 22-unit, deeply distressed property and is executing heavy value-add work while it's 50% vacant.
- He expects yield-on-cost near an 11% operating cap against an 8% market cap and aims to stabilize occupancy in ~6 months.
Prefer Fixed Rate For Stability
- Favor fixed-rate debt when you expect uncertain long-term financing because long-term rates follow the bond market, not Fed cuts.
- Use credit lines and existing banking relationships to bridge down payments and preserve optionality when stabilizing value-add deals.
Fed Cuts Help Short Rates More Than Long-Term Rates
- Fed cuts affect SOFR and short-term financing more than long-term agency fixed rates which track the bond market.
- Sponsors may pivot to SOFR-based agency products if they expect short rates to fall faster than long-term yields.