JF3637: Buying in a Shifting Market, Navigating High Interest Rates, and Raising Capital Ahead of the Deal ft. Ken Gee
Aug 19, 2024
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Ken Gee, the managing member of KRI Partners, shares invaluable insights on navigating the shifting real estate market. He emphasizes the strategic advantage of raising capital ahead of deals to foster investor trust. Discussing interest rate trends, he suggests that as rates decline, deal opportunities will surge. Ken also highlights key indicators of market shifts, stressing the need for discipline in underwriting and focusing on properties with potential for growth. His practical advice is essential for investors looking to thrive in this evolving landscape.
Raising capital through funds enhances credibility and allows for smoother transactions, crucial in a competitive, shifting real estate market.
The predicted decrease in interest rates is expected to increase property availability and lead to a resurgence in buyer interest, presenting opportunities.
Deep dives
Accessing Exclusive Investment Opportunities
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Litigation Funding as an Investment Strategy
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The Benefits of Fund-Based Capital Raising
Transitioning to a fund-based approach for raising capital can provide significant advantages for syndicators in a competitive market. By securing funding prior to acquiring properties, as demonstrated by KRI Partners, syndicators can enhance their credibility and offer sellers a smoother transaction process without the uncertainty associated with post-acquisition capital raising. This strategy has proven effective in volatile credit markets, leading to favorable buying conditions and mitigating risks connected to funding delays. Overall, a fund-based model fosters a more powerful negotiating position and allows for strategic acquisitions that others may struggle to secure.
Market Outlook and Future Opportunities
As we approach 2024, market predictions indicate a shift with decreasing interest rates leading to increased property availability as sellers become more willing to enter the market. This potential uptick in property transactions is expected to present significant opportunities for experienced investors who have maintained discipline in underwriting and debt management throughout earlier market fluctuations. The anticipated decline in cap rates will eventually encourage a resurgence in buyer interest, potentially leading to a seller’s market after a period of stability. Investors should closely monitor economic indicators, such as sales velocity and the responsiveness of brokers, to identify the changing dynamics and position themselves for future growth.
Ken Gee, the managing member of KRI Partners, shares his insights on real estate investing and the current market. He discusses the advantages of raising capital in funds rather than on a deal-by-deal basis, emphasizing the importance of trust and transparency. Ken also talks about the current market cycle and predicts that interest rates will come down, leading to an increase in the volume of deals. He advises investors to stay disciplined and underwrite real numbers, focusing on properties with upside potential. Ken concludes by highlighting the indicators of a market shift, such as the comparison between the cost of debt and cap rates, the number of offers brokers receive, and the availability of bridge financing.