Lessons learned in commercial real estate seldom come cheap, which is why learning from others’ mistakes is far better than learning firsthand.
The four principles that follow are the ones that cost investors the most. They’re also the lessons that, learned the easy way, will create the biggest advantage.
Luckily, with J19’s inception in 2026, we can build off these and make them foundational ground rules to our investment platform.
1. Invest in Necessity
Everyone wants to know what’s hot. What sector is about to pop. What trend has legs.
Those aren’t bad questions. But they’re not the ones a weathered investor would ask.
The real question is simpler: will people still need this in 10 years? Not want it. Need it.
Co-working spaces got hot with the rise of WeWork, then faded just as quickly. Short-term rental arbitrage in multifamily looked bulletproof. Then COVID came and dedicated units sat vacant. Most recently, value-add strategies that relied on a robust transaction market fell flat overnight. When volume dried up, so did the thesis.
Housing. Food. Basic services. These don’t go out of style. Capital that chases the next big thing often leaves as fast as it arrived. Capital parked in necessity tends to stay.
The strategy: build a foundation in housing, industrial space, minerals, long term notes then layer on the upside of condo projects and distressed opportunities.
2. Don’t Fight the Fed
Many real estate investors learned this lesson recently, the hard way.
2022 and 2023 were a gut check for the entire industry. The Fed told the market rates weren’t moving. Then raised them 11 times in 17 months. Floating-rate debt that was structured at zero plus 300 went to 550 plus 300. Debt service didn’t just increase. It tripled. Valuations dropped 30% to 40% almost overnight.
Deals that penciled in January didn’t pencil in June 2022. A lot of investors got caught because they had structured around the environment they were in, not the one they might be in.
It was a black swan event, no one was immune. Some are still kicking the can, feeding deals and using hope as a strategy.
No one can out-underwrite the Fed. When the macro changes, the investor’s job is to adapt, not argue. Cut what needs to be cut. Restructure what can be restructured. Move on.
The market doesn’t care how long something has been working. That’s why J19 is creating a multi strat fund to blend in several asset classes and structure high yield with low volatility. Not just one approach but several that improve returns while reducing risk.
3. Structure Matters
Returns get all the attention. Structure is what determines who can actually keep them.
Many deals with great projected returns fall apart because the debt was wrong. Too much leverage. Floating rate. Short-term maturity. When the market moved, there was no room.
Fixed-rate, lower-leverage debt will cost some upside in the good years. In the bad years, it will be the difference between riding it out and losing the asset.
Underwrite for the downside. The upside will take care of itself.
4. The Team Is Everything
Strategy is nothing without execution. Execution comes down to people.
When things are going well, it’s easy to credit the market. When things get hard, and they will get hard, investors quickly find out what their team is actually made of.
Two things separate the people who add momentum from the ones who merely add drag.
First: when incentive pay is gone and the work is thankless, it’s easy to quit. Nobody blames the ones who leave. The ones who stay, knowing they’ll be treated fairly when the cycle turns, are the ones who make the real difference.
Second: the ones who are willing to present a contrarian view. In 2023, most of the industry was saying “survive ’till ’25.” That was a bad call. Most employees would be too scared to say so, even if they saw it coming. The ones who did say so made the difference between their organization going under and surviving to tell the tale.
Can they make a tough call under pressure? Can they be straight and honest when the news isn’t good? Will they stay locked in on a long-term plan when short-term results are disappointing?
The people who can do all of that are rare. Once found, they should be cherished and rewarded.
At J19, our executive team has over 50 years of industry experience between us. We have experienced the GFC, Covid, and this latest CRE collapse. We are squarely in the mid-point of our careers, experienced and have another 20 years left in us to build something special, something exceptional, something that will last a lifetime.
Everything we do with our approach to investing, structure and fund management is for long-term success. Make real estate boring again!