CRE valuations are back to where they were a decade ago. Supply is peaking. Insurance costs have dropped 30-35%. Taxes are starting to come down. Even payroll is adjusting with AI workflows.
This is the most investable setup since the Global Financial Crisis. Not because conditions are strong. Because they’ve finally reset.
But here’s the hard truth: the playbook that worked last cycle will get you killed in this one.
The last cycle was a lie we told ourselves
From 2020 to 2022, the strategy was simple. Buy anything, lever it up, ride appreciation, refinance, repeat. Cap rates compressed to levels that only made sense if you believed rents would grow forever and rates would stay at zero.
Neither of those things were true. We just acted like they were.
When rates moved, the assumptions broke. Investors who bought at 4 caps with floating-rate debt and 80% leverage found out they weren’t investors. They were speculators with a spreadsheet.
What this cycle actually rewards
This is a yield market. Not a growth market. The distinction matters.
Growth markets reward speed and conviction. Yield markets reward discipline and math. If you can’t underwrite a deal to cash flow on day one at today’s rates, you don’t have a deal. You have a hope.
Here’s what we’re targeting: 7%+ cap rates at entry. Light value-add to push toward 10%. Leveraged returns in the 14-15% range. Double your money in 7 to 10 years.
That sounds boring compared to the 2x-in-three-years stories from the last cycle. Good. Those stories ended with capital calls and foreclosures. Boring is the point.
The window is now, but it won’t be obvious until it’s gone
Transaction volume is the signal nobody is watching. Pre-COVID, a healthy market did about $190 billion in annual volume. We’re at roughly $160 billion. When that number normalizes, the cycle has turned and the pricing advantage disappears.
Recovery is coming. Probably 2028 or 2029. But it won’t be a sharp rebound. Higher rates mean a slower, flatter recovery. No hockey stick.
That’s actually good news if you’re buying now. It means the window stays open longer than most people think, and the competition stays on the sidelines longer than it should.
Occupancy is stabilizing. Rent declines are flattening. The supply pipeline is shrinking. None of this is exciting. All of it is directionally positive. The downside is largely priced in. The upside is gradual.
Gradual is fine when you’re buying at reset pricing.
It’s not just about returns. It’s about what you keep.
Tax efficiency is the multiplier most investors underweight. Cost segregation. Bonus depreciation. 1031 exchanges. A 14% return that’s fully tax-deferred is not the same as a 14% return you pay ordinary income on. It’s not close.
We’re building portfolios, not buying buildings. That means blending strategies: high-cap-rate multifamily for income and depreciation. Distressed debt at 15-20% discounts where the loan is performing but the borrower defaulted on a rate reset. Condo conversions that solve the affordability gap and generate 50-80% IRR on exit. Mineral rights for passive income and estate planning.
Each piece does something different. Together, they create yield, tax efficiency, and optionality. Single-asset thinking is how the last cycle caught people.
Operations are the new alpha
When appreciation is muted, margin comes from one place: how you run the asset.
We’re automating leasing, collections, maintenance, and renewals with AI. Every inbound lead gets a response. Every late payment gets a reminder. Every maintenance request gets triaged before a technician is dispatched. The result is a 20% reduction in payroll, which is our largest controllable cost.
That’s not a technology bet. That’s an operating decision. When you can’t count on rents growing 8% a year, you need to find margin somewhere else. Operations is somewhere else.
Insurance is down 30-35%. Taxes are starting to ease. Payroll is getting more efficient. For the first time in years, NOI is expanding without relying on rent growth. That changes the math on every deal in the portfolio.
The real risk right now
The risk isn’t buying too early. Prices have already reset. The risk is waiting for a signal that’s obvious to everyone and buying into a market that’s already priced the recovery in.
Every cycle has a moment where the conditions are right but the confidence hasn’t caught up. That’s where we are. The investors who move now, with discipline, with conservative leverage, with a focus on cash flow over appreciation, will own the best basis in the market for the next decade.
The ones who wait for certainty will pay for it.