Last cycle rewarded value add, high leverage deals until interest rates skyrocketed, property values plummeted and supply flooded the market. A lot of wind at the back of those sails. Very little Multifamily supply from 1986 to 2016. Focus was building residential and modifying credit restrictions, so the American dream of home ownership was available to all. Great on paper, then the GFC.
Coming out of the GFC was zero percent short term rates and no supply for 20 years. People were starved for new, value add product, and with a little work NOIs exploded and were rewarded. Then covid, then surplus money supply and an overreaction to inflation and rate hikes crushing CRE followed by over supply, occupancy drops, rental rate drops, and costs spiking – insurance, taxes and labor.
What to do now? Make RE boring again. Like it was intended. Take advantage of the reset. Buy cap rates 150-250 points above 10 year T-bills. Use low to moderate leverage, and hold for decades and not months. Create a synthetic bond. Sure, it’s work with employees, tenants, opex, capex, but you get rewarded for it with consistent cash flow, low to zero taxes and long term appreciation.
Want more yield? Blend in high yield notes by buying at a discount or originating your own. Still use CRE depreciation to offset income.
Want more diversification, add other asset types like Industrial and Retail. Condo conversions, provide high IRRs and minerals, deed restricted, proven production, lowers volatility and help you smile when fueling up your car.
J19 HYTD, High Yield Tax Deferred Fund, does all this for you. Using modern portfolio theory and dedicated due diligence, we are constructing a high yield tax deferred portfolio that you can access today. No J curve risk, immediately receive a 10% monthly distribution while growing your total return to 17-19% Net IRR.
Want liquidity? Our lockup periods are either 1 or 3 years depending on your election. No other private equity funds or SPV provide that kind of liquidity. You usually have to ride it out 7-10 years and sometimes longer.
We remove all the down sides to investing in funds and make them investor friendly. We are investors first, and manage our money the way you want us to with transparency and accountability in our fund administration and reporting.
J19 offers several unique benefits for estate planning as well. And easy to access subscription agreements through Schwab and Fidelity for RIAs.