July Thrive Pulse

Main Question:

Is now a good time to invest in multifamily real estate?

Key Points:
  • Market Sentiment: Last rating was 0.5 (slightly positive) → now at +1. Small but real improvement.
  • Cycle Context: Most downturns last ~2 years. We’re 2.5 years in, and early signs of recovery are showing.
  • Current Conditions:
    • Fundamentals (occupancy, expenses, evictions, bad debt) are stabilizing.
    • Lenders are starting to call about distressed deals → more opportunities emerging.
    • New construction is down 71%, setting up a supply shortage in ~12–18 months.
    • Interest rates ~6.3%; some optimism about Fed cuts. Mortgage bankers are quoting 5–5.25% for 5-year money.
    • Cap rates in workforce housing ~5.3–5.8%, approaching neutrality vs. debt costs.
Case Study:
  • Thrive just raised capital for Viridian Apartments as rescue capital (buying at ~25% below original basis).
  • Previous owners struggled due to high rates + operating issues, but rehab activity in the submarket is driving signs of recovery.
  • Expectation: potential 25% value increase in ~3 years as supply/demand dynamics normalize.
Investor Sentiment:
  • Shift from investors chasing big back-end returns → now prioritizing steady cash flow.
  • Thrive’s investors funded Viridian quickly (10 days), showing strong trust despite tough markets.
Outlook:
  • Next 6–12 months may still feel “swampy and molasses” (slow, uncertain, geopolitical risks).
  • But this stage is historically the most profitable to buy—fear creates opportunity.
  • Expect more rescue capital/special situation deals ahead.
Final Rating:

From 0.5 → +1 on the Thrive Pulse scale (-10 = don’t invest, +10 = strong buy).

  • Takeaway: Market is slightly improving, still challenging, but early recovery signs are here.

JP: Hi. This is JP and Adrian. And welcome to the July version of Thrive Pulse, where you’re gonna find out whether is now a good time to be investing in multifamily real estate. Adrian, don’t give it away.

Let us know what you think.

The number is – don’t tell them. We have a number for you. Just to remind you for those who are new to our podcast, this is a short podcast where we’re gonna tell you between negative ten is do not invest, run. Zero is we’re kinda neutral, and plus ten is take your money, take your Bitcoin, cash at least half of it, definitely the Ethereum, and bring it into real estate. So I’m not saying to cash out—that’s not my agenda.

Adrian: Have no patience.

JP: No patience. No patience at all.

So, Adrian, we spoke last time. Our last number was point five. Kind of just a little above neutral, but improving.

What do you think? How are you feeling since our last our last, show?

Adrian: Well, as many of you know (or if you don’t), I’m an eternal optimist..

JP: That is true.

Adrian: And I’m actually probably some of the few that is starting to get bullish Yeah. On mainly multifamily and investing.

I think that there’s a lot of negativity, bearishness out there, which is kind of good because you don’t want everybody bullish or everybody bearish. Yeah. You need the mix. Typically, when you see too much of one side, it does the opposite.

JP: Yeah. And I think that often in downturns, everyone says this is it. This world’s, it’ll never be the same. Irrational fear at the bottom.

Adrian: That’s it.

Irrational exuberance at the top.

And so I’m starting to see, little signs here and there that we are turning a little bit of a corner.

JP: Yeah.

Adrian: Now what doesn’t help is all of the political uncertainty.

JP: Yeah.

Adrian: That includes whether it’s tariffs, all these wars, all these bombings, that pauses everything. Even if it’s going in a good direction, it just halts.

JP: So what makes you think you said that there’s little areas that you feel it’s going in the right direction. What are those areas for you?

Adrian: Going back the last probably seven to ten downturns.

There’s never been a downturn that lasted longer than two years.

We’re two and a half years in. This third year is the year where everyone says, we’re out of it. We’re going back in. This will never change.

It might change. That’s your new preemptive year for the next cycle.

JP: Yeah. Fundamentals are starting to look better.

Occupancies are steady.

Adrian: Yeah. I was gonna take you through some of that. It’s it’s slight improvement. It’s not killing it, but you’re seeing slight swings.

Let’s, we’re not seeing as much negative, whether it’s expenses, occupancy, evictions, bad debt, that’s not getting worse.

JP: No.

Adrian: It’s getting a little bit better.

JP: It is getting all better.

Adrian: And so that’s that third year where things start to stabilize, and we’re starting to get a lot of calls from lenders.

JP: We are.

Hey. Would you consider buying this property? We were gonna foreclose on it. Would you buy it at our loan amount?

Adrian: People are starting to take action instead of all the inaction we saw. And speaking of taking action, we took action.

JP: We did. We took action as rescue capital. So literally what you’re saying, Adrian, we are just completing right now our raise for Viridian Apartments, a property that we’re coming in as rescue capital about just under 25% of its original basis.

That’s right. And walking into cash flow.

Classic what you’re saying. It’s like how it came.

It took Can you give the can you give the quick story?

Like The group that bought it at, really, at the peak couldn’t keep it stabilized. It’s a ’90s asset. Yeah. 93-94% occupied.

But with interest rates so high, expenses so high, rents not going up, they struggled to cover debt service. Yeah. And there were some foreclosures on the block that really turned that little pocket very negatively. It affected it so bad because crime shot up.

All the worst.

Expenses expenses up, revenues down, crime back down.

The all the things that could go wrong went wrong. And then what you’re seeing is we are recovering from that right now.

Adrian: Got two large groups bought those two foreclosures. They’re putting a ton of rehab.

Their goal is next year to start raising rents if they’re gonna put $25,000 in cash.

Occupancy ticks up. So you’re kinda seeing all the signs of, like like, recovery, which is amazing. The other thing, Adrian, I wanna say is, like, we’re very grateful to those of you in our audience who are investors.

JP: You know, we hadn’t raised money in a while, and we really didn’t know. I mean, Adrian and I are like our people our investors freaked out. And and I was really proud of Adrian that in ten days, we were able to get this get this finalized. Yeah. Yeah. It says a lot about our current clients. I know we got some new clients who also come in.

Adrian: You know what I find interesting, JP, when in the last cycle, we had a lot of investors that had a good day job, and they weren’t real interested in cash flow.

They said, I don’t need the cash flow. I want a big backside.

When we sell, I want a big pop.

A lot of those people Want cash flow. Want cash flow.

Me, by the way. I just passed on a really sexy data center deal last night that I really wanna do, but I’m just not loving the cash flow.

Adrian: And so we’re we’re adjusting to the times, and and we keep that fear back here because we’ve seen for two and a half years how difficult the market has been.

JP: Well, and we’re we’re are we say, like, on our side, when you’re the owner right now, you’re still and when you’re a lender, you’re still experiencing the blow winds That’s right. The headwinds of the bank pressure, interest rates not really going down stable, but not going down. We feel all that. But all of a sudden, Adrian, right now, Adrian, you think about it.

JP: We’re a buyer right now Yeah. Of a new property. We’re the seller of a property right now, which has been dragging. It’s the long one of the longest closes we’ve ever seen.

Adrian: It is. And we’re a lender. So we’re really seeing every angle of what’s going on right now. I think that makes us, like as a buyer right now, we’re getting pretty excited.

JP: Yeah. As a seller, it’s still tough.

I mean I’m trying.

Our values are down 20-35% from depending on the market, so you’re feeling that. There’s really no way out of that fact.

I think the dream part is, JP, there are not enough transactions to say prices are down x.

Yeah. Yeah.

It’s a little bit here, a little bit there, but we’re not seeing the volume of transactions.

It’s starting to increase, by the way, a little bit. So I don’t know.

Phone calls are starting.

Adrian: They are. So I wanna ask you a couple questions because this is our secret formula of how we get to our number. Interest rates, about 6.3%. Some people say they’re gonna go down. I know one of our investors was saying the next Fed meeting you watch. What’s your what’s your prediction?

I think we go down.

JP: A little bit.

Adrian: We do. Quarter point?

JP: Yes. And I think if you I didn’t know this. I learned it this week.

Adrian: The UK does their CPI without housing.

JP: Right. Makes a big difference.

Adrian: If we did it without housing, we’re we’re pushing 1% and no inflation.

JP: Is that the Consumer Price Index?

Adrian: Yeah.

JP: Like, how we’re doing Consumer price index.

Adrian: Okay.

JP: And what people are having to spend. So housing is so fractured right now because in Texas, we have zero rent growth. But if you go to New York, there’s rent growth. But it’s New York.

Adrian: Right. Right? And so there are very, very few markets that are seeing noticeable rent growth. Right.

JP: It might be .5%, half a percent.

Adrian: Right. Right.

JP: Right. Right? Yeah.

So that’s where I’m really bullish that I I believe inflation is not gonna be a runaway problem. Yeah. These tariffs, we have yet to see where where it goes and how it ends up. Right. That is inflationary. I mean, if if I’m gonna pass through my material cost because it went up 10% and you have to buy it, I’m not gonna eat it.

I’m gonna I’m gonna make a bold prediction.

I’m gonna try not to be too political about my prediction. I think this is a negotiating barter term, and we’ll come to some settlement, hopefully, with some of our trading partners. And I think that’s all about what this is about.

So And I think July, the Fed does cut. Okay.

But I think what’s different now is the Fed cut might be small, but it’s not gonna save the real estate. No. No. No.

When you’re 25% or 30% down And let’s clarify.

The Fed cuts short term rates.

He doesn’t do anything to the ten year bond which doesn’t help much.

Is what we look at. But here’s another positive. I was talking to a mortgage banker yesterday.

He said you can get five-year money between five and five and a quarter It’s really good.

Right now. Wow. I would not have expected that.

You can buy it down another thirty basis points.

What that tells me because if cap rates, let’s say, on our properties, the kind of the b class workforce housing, it feels like they’re at about a five three to five eight right now, kind of that range.

So right now for net right now It’s starting to get neutral.

It’s neutral as opposed to negative arbitrage, which means that your interest rates were higher than your cap rate. Right. We’re we’re floating maybe towards a little neutrality. We’re getting close.

Still doesn’t create great cash flow, but neutral is better than negative. Yep. Okay. So let me ask you.

So we know that rent has been pretty stagnant, not down. It’s just kinda stagnant right now.

So we know that we know that rent is kinda stagnant right now, not necessarily going down, but not going up.

Vacancy also still, like—it’s holding steady.

It’s not not getting worse.

And what’s interesting, Adrian, is that right now, new construction’s down 71%. So we are probably depending on the market, we’re probably between eight and eighteen months away from watching these markets absorb, which is why I think you’re seeing rents stabilizing now. You’re starting to see some absorption led by Houston right now, led by Dallas, probably then San Antonio, then probably Austin.

Adrian: And that’s great, great insight, JP, if for for potential investors that don’t understand real estate much. If you talk about supply and demand, it’s very easy. Yeah. Oversupply, prices plummet.

Not enough supply, high demand, prices increase.

Normal market. Like, any other product.

JP: We’re we’re that’s why we’re so focused on holding on as long as you can to get that absorption because we’re gonna be in the same situation that we were last cycle that was so positive.

Well, you think about our our bet on on this new property, Viridian. We’re taking a bet that in three years well, we can always hold it longer if we refi, but we’re kinda taking a a bet that in three years, you’re gonna see these markets fast and improve. We’re actually expecting, like, a 25% increase in value.

Demand for apartments is not going down Yeah. Which is great.

Adrian: Yes.

JP: And we’re gonna have a four to five year window Yeah.

Of no new construction. Yeah. That means we hope to see a lot of rent growth and a lot of appreciation.

Adrian right now, depending on the market, we’re kind of in the beginning of a recovery phase, but it doesn’t feel like in fact, I I’ve been telling my whatever my opinion’s worth, probably a Starbucks coffee.

But, Well, a small one. It’s it’s a small one. Maybe water. But, no. I I’m feeling like we’re seeing the beginning of a recovery.

It doesn’t feel like it yet. I think it’s actually gonna have more bad news, whether it’s geopolitical news. It’s gonna feel kinda rough. I I use the word molasses.

It’s gonna feel swampy and molasses y probably for the next six to twelve months. But in between that swampy and molasses-y, I believe, Adrian, my prediction is we will come across very similar deals to this Viridian deal.

Adrian: I would agree.

JP: We’re gonna get calls from banks. We’re gonna start to get slowly these special situations where we come in as rescue capital, and I think they’ll start to by 27, depending on the market, you’re really gonna start to, like, to your point, the secret’s gonna be out.

JP: It just depends on the market.

Scariest time that whether it’s the stock market or real estate or any asset class.

When things are going down is the hardest time to buy. Yeah. But it’s the most profitable. Yeah.

It always is. It’s it’s it’s that stage one of the four stages, which you and I are gonna talk about one of these days, the four stages of investing. We need to do that. But, Adrian, so let’s just wrap this up. I think it was a pretty you know, we kept it short for us. That’s good.

Let’s talk about the magic number. Last time, we were at point five. Last time before that, we were at negative two. Remember, the scale’s negative ten to positive ten. Do you know where we’re at today?

Adrian: One. One. One.

JP: So it’s positive. It’s positive slight improvement. Nothing nothing monumental. Don’t sell your Bitcoin unless you want to. Sell your Ethereum maybe.

But, hang on there. We’re seeing we’re seeing slow improvement, and you’re not gonna get the evidence from the news. So listen to the Thrive Pulse and get what’s really going on out there. Thank you for listening.

Thank you. We will talk to you next month. Thank you. We’re out.

July Thrive Pulse Summary

Main Question:

Is now a good time to invest in multifamily real estate?

Key Points:

  • Market Sentiment: Last rating was 0.5 (slightly positive) → now at +1. Small but real improvement.
  • Cycle Context: Most downturns last ~2 years. We’re 2.5 years in, and early signs of recovery are showing.
  • Current Conditions:
    • Fundamentals (occupancy, expenses, evictions, bad debt) are stabilizing.
    • Lenders are starting to call about distressed deals → more opportunities emerging.
    • New construction is down 71%, setting up a supply shortage in ~12–18 months.
    • Interest rates ~6.3%; some optimism about Fed cuts. Mortgage bankers are quoting 5–5.25% for 5-year money.
    • Cap rates in workforce housing ~5.3–5.8%, approaching neutrality vs. debt costs.

Case Study:

  • Thrive just raised capital for Viridian Apartments as rescue capital (buying at ~25% below original basis).
  • Previous owners struggled due to high rates + operating issues, but rehab activity in the submarket is driving signs of recovery.
  • Expectation: potential 25% value increase in ~3 years as supply/demand dynamics normalize.

Investor Sentiment:

  • Shift from investors chasing big back-end returns → now prioritizing steady cash flow.
  • Thrive’s investors funded Viridian quickly (10 days), showing strong trust despite tough markets.

Outlook:

  • Next 6–12 months may still feel “swampy and molasses” (slow, uncertain, geopolitical risks).
  • But this stage is historically the most profitable to buy—fear creates opportunity.
  • Expect more rescue capital/special situation deals ahead.

Final Rating:

From 0.5 → +1 on the Thrive Pulse scale (-10 = don’t invest, +10 = strong buy).

  • 0.5 → +1 on the Thrive Pulse scale (-10 = don’t invest, +10 = strong buy).
    Takeaway: Market is slightly improving; still challenging, but early recovery signs are here.

JP: Hi. This is JP. And Adrianne. And welcome to the July version of Thrive Pulse, where you’re gonna find out is now a good time to be investing in multifamily real estate. Adrianne, don’t give it away.

JP: Let us know what you think.

The number is don’t tell them. We have a number from you. Just to remind you for those who are new to our podcast, this is a short podcast where we’re gonna tell you between negative ten is do not invest, run. Zero is we’re kinda neutral, and plus ten is take your money, take your Bitcoin, cash at least half of it, definitely the Ethereum, and bring it into real estate. So I’m not to cash that’s on my agenda.

Adrianne: Have no patience.

JP: No patience. No patience at all.

So, Adrian, we spoke last time. Our last number was point five. Kind of just a little above neutral, but improving.

What do you think? What how are you feeling since our last our last, show?

Adrianne: Well, as many of you know or you don’t know, he does. I’m an eternal optimist.

JP: That is true.

Adrianne: And I’m actually probably some of the few that is starting to get bullish Yeah. On mainly multifamily and investing.

I think that there’s a lot of negativity, embarrassedness out there, which is kind of good because you don’t want everybody bullish or everybody bearish. Yeah. You need the mix. Typically, when you see too much of one side, it does the opposite.

JP: Yeah. And I think that often in downturns, everyone says this is it. This world’s, it’ll never be the same. Irrational fear at the bottom.

Adrianne: That’s it.

Irrational exuberance at the top.

And so I’m starting to see, little signs here and there that we are turning a little bit of a corner.

JP: Yeah.

Adrianne: Now what doesn’t help is all of the political uncertainty.

JP: Yeah.

Adrianne: That includes whether it’s tariffs, all these wars, all these bombings, that pauses everything. Even if it’s going in a good direction, it just halts.

JP: So what makes you think you said you said you think that there’s little areas that you feel it’s going in the right direction. What are those areas for you?

Adrianne: Going back the last probably seven to ten downturns.

There’s never been a downturn that lasted longer than two years.

We’re two and a half years in. This third year is the the year where everyone says, we’re out of it. We’re going back in. This will never change.

It might change. That’s your new preemptive year for the next cycle.

JP: Yeah. Fundamentals are starting to look better.

Occupancies are steady.

Adrianne: Yeah. I was gonna take you through some of that. It’s it’s slight improvement. It’s not killing it, but you’re seeing slight swings.

Let’s, we’re not seeing as much negative, whether it’s expenses, occupancy, evictions, bad debt, that’s not getting worse.

JP: No.

Adrianne: It’s getting a little bit better.

JP: It is getting all better.

Adrianne: And so that’s that third year where things start to stabilize, and we’re starting to get a lot of calls from lenders.

JP: We are.

Hey. Would you consider buying this property? We were gonna foreclose on it. Would you buy it at our loan amount?

Adrianne: People are starting to take action instead of all the inaction we saw. And speaking of taking of action, we took action.

JP: We did. We took action as rescue capital. So literally what you’re saying, Adrian, we are just completing right now our raise for Viridian Apartments, a property that we are we’re coming in as rescue capital about just under twenty five percent of its original basis.

That’s right. And and walking into cash flow.

Classic what you’re saying. It’s like how it came.

It took Can you give the can you give the quick story?

Like The the group that bought it at, really, at the peak couldn’t kept it stabilized. It’s ninety asset. Yeah. Ninety three, ninety four percent occupied.

But with interest rates so high, expenses so high, rents not going up, they struggled to cover debt service. Yeah. And there were some foreclosures on the block that really turned that little pocket very negatively. It affected it so bad because crime shot up.

All the worst.

Expenses expenses up, revenues down, crime back down.

The all the things that could go wrong went wrong. And then what you’re seeing is are recovering from that right now.

Adrianne: Got two two large groups bought those two foreclosures. They’re putting a ton of rehab.

Their goal is next year to start raising rents if they’re gonna put twenty five thousand dollars in cash.

Occupancy tick up. So you’re kinda seeing all the signs of, like like, recovery, which is amazing. The other thing, Adrian, I wanna say is, like, we’re very grateful to those of you in our audience who are investors.

JP: You know, we hadn’t raised money in a while, and we really didn’t know. I mean, Adrian and I are like our people our investors freaked out. And and I was really proud of Adrian that in ten days, we were able to get this get this finalized. Yeah. Yeah. It says a lot about our current clients. I know we got some new clients who also come in.

JP: You know what I find interesting, JP, when in the last cycle, we had a lot of investors that had a good day job, and they weren’t real interested in cash flow.

They said, I don’t need the cash flow. I want a big backside.

When we sell, I want a big pop.

A lot of those people Want cash flow. Want cash flow.

Me, by the way. I just passed on a really sexy data center deal last night that I really wanna do, but I’m just not loving the cash flow.

Adrianne: And so we’re we’re adjusting to the times, and and we keep that fear back here because we’ve seen for two and a half years how difficult the market has been.

JP: Well, and we’re we’re are we say, like, on our side, when you’re the owner right now, you’re still and when you’re a lender, you’re still experiencing the blow winds That’s right. The the headwinds of the bank pressure, interest rates not really going down stable, but not going down. We feel all that. But all of a sudden, Adrian, right now, Adrian, you think about it.

JP: We’re a buyer right now Yeah. Of a new property. We’re the seller of a property right now, which has been dragging. It’s the long one of the longest closes we’ve ever seen.

Adrianne: It’s It’s like, It is. And we’re a lender. So we’re really seeing every angle of what’s going on right now. I think that makes us, like as a buyer right now, we’re getting pretty excited.

JP: Yeah. As a seller, it’s still tough.

I mean I’m trying.

Our values are down twenty to thirty five percent from depending on the market, so you’re feeling that. There’s really no way out of that fact.

I think the the dream part is, JP, there are not enough transactions to say prices are down x.

Yeah. Yeah.

It’s a little bit here, a little bit there, but we’re not seeing the volume of transactions.

It’s starting to increase, by the way, a little bit. So I don’t know.

Phone calls are starting.

Adrianne: They are. So I wanna ask you a couple questions because this is our secret formula of how we get to our number. Interest rates, about six point three. Some people say they’re gonna go down. I know one of our investors was saying the next Fed meeting you watch. What’s your what’s your prediction?

I think we go down.

JP: A little bit.

Adrianne: We do. Quarter point?

JP: Yes. And I think if you I didn’t know this. I learned it this week.

Adrianne: The UK does their CPI without housing.

JP: Right. Makes a big difference.

Adrianne: If we did it without housing, we’re we’re pushing one percent and no inflation.

JP: Consumer is that the consumer index?

Adrianne: Yeah.

JP: Like, how we’re doing Consumer price index.

Adrianne: Okay.

JP: And what people are having to spend. So housing is so fractured right now because in Texas, we have zero rent growth. But if you go to New York, there’s rent growth. But it’s New York.

Adrianne: Right. Right? And so there are very, very few markets that are seeing noticeable, rent growth. Right.

JP: It might be point five, Half a percent.

Adrianne: Right. Right.

JP: Right. Right? Yeah.

So that’s where I’m really bullish that I I believe inflation is not gonna be a runaway problem. Yeah. These tariffs, we have yet to see where where it goes and how it ends up. Right. That is inflationary. I mean, if if I’m gonna pass through my material cost because it went up ten percent and you have to buy it, I’m not gonna eat it.

I’m gonna I’m gonna make it bold prediction.

I’m gonna try to be too political about my prediction. I think this is a negotiating barter term, and we’ll come to some settlement, hopefully, with some of our trading partners. And I think that’s all about what this is about.

So And I think July, the Fed does cut. Okay.

But I think what’s different now is the Fed cut might be small, but it’s not gonna save the real estate. No. No. No.

When you’re twenty five percent or thirty percent down And let’s clarify.

The Fed cuts short term rates.

He doesn’t do anything to the ten year bond Which doesn’t help much.

Is what we look at. But here’s another positive. I was talking to a mortgage banker yesterday.

He said you can get five year money between five and five and a quarter It’s really good.

Right now. Wow. I would not have expected that.

You can buy it down another thirty basis points.

Which one of that tells me because if cap rates, let’s say, on our properties, the kind of the b class workforce housing, it feels like they’re at about a five three to five eight right now, kind of that range.

So right now for net right now It’s starting to get neutral.

It’s neutral as opposed to negative arbitrage, which means that your interest rates were higher than your cap rate. Right. We’re we’re floating maybe towards a little neutrality. We’re getting close.

Still doesn’t create great cash flow, but neutral is better than negative. Yep. Okay. So let me ask you.

So we know that rent has been pretty stagnant, not down. It’s just kinda stagnant right now, particularly in the sorry for my phone, guys.

So we know that we know that rent is kinda stagnant right now, not necessarily going down, but not going up.

Vacancy also still, like It’s holding steady. It’s holding steady.

It’s not not getting worse.

And what’s interesting, Adrian, is that right now, new construction’s down seventy one percent. So we are probably depending on the market, we’re probably between eight and eighteen months away from watching these markets absorb, which is why I think you’re seeing rents stabilizing now. You’re starting to see some absorption led by Houston right now, led by Dallas, probably then San Antonio, then probably Austin.

Adrianne: And that’s great, great insight, JP, if for for potential investors that don’t understand real estate much. If you talk about supply and demand, it’s very easy. Yeah. Oversupply, prices plummet.

Not enough supply, high demand, prices increase.

Normal market. Like, any other product.

JP: We’re we’re that’s why we’re so focused on holding on as long as you can to get that absorption because we’re gonna be in the same situation that we were last cycle that was so positive.

Well, you think about our our bet on on this new property, Viridian. We’re taking a bet that in three years well, we can always hold it longer if we refi, but we’re kinda taking a a bet that in three years, you’re gonna see these markets fast and improve. We’re actually expecting, like, a twenty five percent increase in value.

Demand for apartments is not going down Yeah. Which is great.

Adrianne: Yes.

JP: And we’re gonna have a four to five year window Yeah.

Of no new construction. Yeah. That means we hope to see a lot of rent growth and a lot of appreciation.

Agent right now, depending on the market, we’re kind of in the beginning of a recovery phase, but it doesn’t feel like in fact, I I’ve been telling my whatever my opinion’s worth, probably a Starbucks coffee.

But, Well, a small one. It’s it’s a small one. Maybe water. But, no. I I’m feeling like we’re seeing the beginning of a recovery.

It doesn’t feel like it yet. I think it’s actually gonna have more bad news, whether it’s geopolitical news. It’s gonna feel kinda rough. I I use the word molasses.

It’s gonna feel swampy and molasses y probably for the next six to twelve months. But in between that swampy and molasses y, I believe, Adrian, my prediction is we will come across very similar deals to this Viridian deal.

Adrianne: I would agree.

JP: We’re gonna get calls from banks. We’re gonna start to get slowly these special situations where we come in as rescue capital, and I think they’ll start to by twenty seven, depending on the market, you’re really gonna start to, like, to your point, the secret’s gonna be out.

JP: It just depends on the market.

Scariest time that whether it’s the stock market or real estate or any asset class.

When things are going down is the hardest time to buy. Yeah. But it’s the most profitable. Yeah.

It always is. It’s it’s it’s that stage one of the four stages, which you and I are gonna talk about one of these days, the four stages of investing. We need to do that. But, Adrian, so let’s just wrap this up. I think it was a pretty you know, we kept it short for us. That’s good.

Let’s talk about the magic number. Last time, we were at point five. Last time before that, we were at negative two. Remember, the scale’s negative ten to positive ten. Do you know where we’re at today?

Adrianne: One. One. One.

JP: So it’s positive. It’s positive slight improvement. Nothing nothing monumental. Don’t sell your Bitcoin unless you want to. Sell your Ethereum maybe.

But, hang on there. We’re seeing we’re seeing slow improvement, and you’re not gonna get the evidence from the news. So listen to the Thrive Pulse and get what’s really going on out there. Thank you for listening.

Thank you. We will talk to you next month. Thank you. We’re out.

Transcript

JP: Hi. This is JP. And Adrianne. And welcome to the July version of Thrive Pulse, where you’re gonna find out is now a good time to be investing in multifamily real estate. Adrianne, don’t give it away.

JP: Let us know what you think.

JP: The number is don’t tell them. We have a number from you. Just to remind you for those who are new to our podcast, this is a short podcast where we’re gonna tell you between negative ten is do not invest, run. Zero is we’re kinda neutral, and plus ten is take your money, take your Bitcoin, cash at least half of it, definitely the Ethereum, and bring it into real estate. So I’m not to cash that’s on my agenda.

Adrianne: Have no patience.

JP: No patience. No patience at all.

JP: So, Adrian, we spoke last time. Our last number was point five. Kind of just a little above neutral, but improving.

JP: What do you think? What how are you feeling since our last our last, show?

Adrianne: Well, as many of you know or you don’t know, he does. I’m an eternal optimist.

JP: That is true.

Adrianne: And I’m actually probably some of the few that is starting to get bullish Yeah. On mainly multifamily and investing.

Adrianne: I think that there’s a lot of negativity, embarrassedness out there, which is kind of good because you don’t want everybody bullish or everybody bearish. Yeah. You need the mix. Typically, when you see too much of one side, it does the opposite.

JP: Yeah. And I think that often in downturns, everyone says this is it. This world’s, it’ll never be the same. Irrational fear at the bottom.

Adrianne: That’s it.

Adrianne: Irrational exuberance at the top.

Adrianne: And so I’m starting to see, little signs here and there that we are turning a little bit of a corner.

JP: Yeah.

Adrianne: Now what doesn’t help is all of the political uncertainty.

JP: Yeah.

Adrianne: That includes whether it’s tariffs, all these wars, all these bombings, that pauses everything. Even if it’s going in a good direction, it just halts.

JP: So what makes you think you said you said you think that there’s little areas that you feel it’s going in the right direction. What are those areas for you?

Adrianne: Going back the last probably seven to ten downturns.

Adrianne: There’s never been a downturn that lasted longer than two years.

Adrianne: We’re two and a half years in. This third year is the the year where everyone says, we’re out of it. We’re going back in. This will never change.

Adrianne: It might change. That’s your new preemptive year for the next cycle.

JP: Yeah. Fundamentals are starting to look better.

JP: Occupancies are steady.

Adrianne: Yeah. I was gonna take you through some of that. It’s it’s slight improvement. It’s not killing it, but you’re seeing slight swings.

Adrianne: Let’s, we’re not seeing as much negative, whether it’s expenses, occupancy, evictions, bad debt, that’s not getting worse.

JP: No.

Adrianne: It’s getting a little bit better.

JP: It is getting all better.

Adrianne: And so that’s that third year where things start to stabilize, and we’re starting to get a lot of calls from lenders.

JP: We are.

JP: Hey. Would you consider buying this property? We were gonna foreclose on it. Would you buy it at our loan amount?

Adrianne: People are starting to take action instead of all the inaction we saw. And speaking of taking of action, we took action.

JP: We did. We took action as rescue capital. So literally what you’re saying, Adrian, we are just completing right now our raise for Viridian Apartments, a property that we are we’re coming in as rescue capital about just under twenty five percent of its original basis.

JP: That’s right. And and walking into cash flow.

JP: Classic what you’re saying. It’s like how it came.

JP: It took Can you give the can you give the quick story?

JP: Like The the group that bought it at, really, at the peak couldn’t kept it stabilized. It’s ninety asset. Yeah. Ninety three, ninety four percent occupied.

JP: But with interest rates so high, expenses so high, rents not going up, they struggled to cover debt service. Yeah. And there were some foreclosures on the block that really turned that little pocket very negatively. It affected it so bad because crime shot up.

JP: All the worst.

JP: Expenses expenses up, revenues down, crime back down.

JP: The all the things that could go wrong went wrong. And then what you’re seeing is are recovering from that right now.

Adrianne: Got two two large groups bought those two foreclosures. They’re putting a ton of rehab.

Adrianne: Their goal is next year to start raising rents if they’re gonna put twenty five thousand dollars in cash.

Adrianne: Occupancy tick up. So you’re kinda seeing all the signs of, like like, recovery, which is amazing. The other thing, Adrian, I wanna say is, like, we’re very grateful to those of you in our audience who are investors.

JP: You know, we hadn’t raised money in a while, and we really didn’t know. I mean, Adrian and I are like our people our investors freaked out. And and I was really proud of Adrian that in ten days, we were able to get this get this finalized. Yeah. Yeah. It says a lot about our current clients. I know we got some new clients who also come in.

JP: You know what I find interesting, JP, when in the last cycle, we had a lot of investors that had a good day job, and they weren’t real interested in cash flow.

JP: They said, I don’t need the cash flow. I want a big backside.

JP: When we sell, I want a big pop.

JP: A lot of those people Want cash flow. Want cash flow.

JP: Me, by the way. I just passed on a really sexy data center deal last night that I really wanna do, but I’m just not loving the cash flow.

Adrianne: And so we’re we’re adjusting to the times, and and we keep that fear back here because we’ve seen for two and a half years how difficult the market has been.

JP: Well, and we’re we’re are we say, like, on our side, when you’re the owner right now, you’re still and when you’re a lender, you’re still experiencing the blow winds That’s right. The the headwinds of the bank pressure, interest rates not really going down stable, but not going down. We feel all that. But all of a sudden, Adrian, right now, Adrian, you think about it.

JP: We’re a buyer right now Yeah. Of a new property. We’re the seller of a property right now, which has been dragging. It’s the long one of the longest closes we’ve ever seen.

Adrianne: It’s It’s like, It is. And we’re a lender. So we’re really seeing every angle of what’s going on right now. I think that makes us, like as a buyer right now, we’re getting pretty excited.

JP: Yeah. As a seller, it’s still tough.

JP: I mean I’m trying.

JP: Our values are down twenty to thirty five percent from depending on the market, so you’re feeling that. There’s really no way out of that fact.

JP: I think the the dream part is, JP, there are not enough transactions to say prices are down x.

JP: Yeah. Yeah.

JP: It’s a little bit here, a little bit there, but we’re not seeing the volume of transactions.

JP: It’s starting to increase, by the way, a little bit. So I don’t know.

JP: Phone calls are starting.

Adrianne: They are. So I wanna ask you a couple questions because this is our secret formula of how we get to our number. Interest rates, about six point three. Some people say they’re gonna go down. I know one of our investors was saying the next Fed meeting you watch. What’s your what’s your prediction?

Adrianne: I think we go down.

JP: A little bit.

Adrianne: We do. Quarter point?

JP: Yes. And I think if you I didn’t know this. I learned it this week.

Adrianne: The UK does their CPI without housing.

JP: Right. Makes a big difference.

Adrianne: If we did it without housing, we’re we’re pushing one percent and no inflation.

JP: Consumer is that the consumer index?

Adrianne: Yeah.

JP: Like, how we’re doing Consumer price index.

Adrianne: Okay.

JP: And what people are having to spend. So housing is so fractured right now because in Texas, we have zero rent growth. But if you go to New York, there’s rent growth. But it’s New York.

Adrianne: Right. Right? And so there are very, very few markets that are seeing noticeable, rent growth. Right.

JP: It might be point five, Half a percent.

Adrianne: Right. Right.

JP: Right. Right? Yeah.

JP: So that’s where I’m really bullish that I I believe inflation is not gonna be a runaway problem. Yeah. These tariffs, we have yet to see where where it goes and how it ends up. Right. That is inflationary. I mean, if if I’m gonna pass through my material cost because it went up ten percent and you have to buy it, I’m not gonna eat it.

JP: I’m gonna I’m gonna make it bold prediction.

JP: I’m gonna try to be too political about my prediction. I think this is a negotiating barter term, and we’ll come to some settlement, hopefully, with some of our trading partners. And I think that’s all about what this is about.

JP: So And I think July, the Fed does cut. Okay.

JP: But I think what’s different now is the Fed cut might be small, but it’s not gonna save the real estate. No. No. No.

JP: When you’re twenty five percent or thirty percent down And let’s clarify.

JP: The Fed cuts short term rates.

JP: He doesn’t do anything to the ten year bond Which doesn’t help much.

JP: Is what we look at. But here’s another positive. I was talking to a mortgage banker yesterday.

JP: He said you can get five year money between five and five and a quarter It’s really good.

JP: Right now. Wow. I would not have expected that.

JP: You can buy it down another thirty basis points.

JP: Which one of that tells me because if cap rates, let’s say, on our properties, the kind of the b class workforce housing, it feels like they’re at about a five three to five eight right now, kind of that range.

JP: So right now for net right now It’s starting to get neutral.

JP: It’s neutral as opposed to negative arbitrage, which means that your interest rates were higher than your cap rate. Right. We’re we’re floating maybe towards a little neutrality. We’re getting close.

JP: Still doesn’t create great cash flow, but neutral is better than negative. Yep. Okay. So let me ask you.

JP: So we know that rent has been pretty stagnant, not down. It’s just kinda stagnant right now, particularly in the sorry for my phone, guys.

JP: So we know that we know that rent is kinda stagnant right now, not necessarily going down, but not going up.

JP: Vacancy also still, like It’s holding steady. It’s holding steady.

JP: It’s not not getting worse.

JP: And what’s interesting, Adrian, is that right now, new construction’s down seventy one percent. So we are probably depending on the market, we’re probably between eight and eighteen months away from watching these markets absorb, which is why I think you’re seeing rents stabilizing now. You’re starting to see some absorption led by Houston right now, led by Dallas, probably then San Antonio, then probably Austin.

Adrianne: And that’s great, great insight, JP, if for for potential investors that don’t understand real estate much. If you talk about supply and demand, it’s very easy. Yeah. Oversupply, prices plummet.

Adrianne: Not enough supply, high demand, prices increase.

Adrianne: Normal market. Like, any other product.

JP: We’re we’re that’s why we’re so focused on holding on as long as you can to get that absorption because we’re gonna be in the same situation that we were last cycle that was so positive.

JP: Well, you think about our our bet on on this new property, Viridian. We’re taking a bet that in three years well, we can always hold it longer if we refi, but we’re kinda taking a a bet that in three years, you’re gonna see these markets fast and improve. We’re actually expecting, like, a twenty five percent increase in value.

JP: Demand for apartments is not going down Yeah. Which is great.

Adrianne: Yes.

JP: And we’re gonna have a four to five year window Yeah.

JP: Of no new construction. Yeah. That means we hope to see a lot of rent growth and a lot of appreciation.

JP: Agent right now, depending on the market, we’re kind of in the beginning of a recovery phase, but it doesn’t feel like in fact, I I’ve been telling my whatever my opinion’s worth, probably a Starbucks coffee.

JP: But, Well, a small one. It’s it’s a small one. Maybe water. But, no. I I’m feeling like we’re seeing the beginning of a recovery.

JP: It doesn’t feel like it yet. I think it’s actually gonna have more bad news, whether it’s geopolitical news. It’s gonna feel kinda rough. I I use the word molasses.

JP: It’s gonna feel swampy and molasses y probably for the next six to twelve months. But in between that swampy and molasses y, I believe, Adrian, my prediction is we will come across very similar deals to this Viridian deal.

Adrianne: I would agree.

JP: We’re gonna get calls from banks. We’re gonna start to get slowly these special situations where we come in as rescue capital, and I think they’ll start to by twenty seven, depending on the market, you’re really gonna start to, like, to your point, the secret’s gonna be out.

JP: It just depends on the market.

JP: Scariest time that whether it’s the stock market or real estate or any asset class.

JP: When things are going down is the hardest time to buy. Yeah. But it’s the most profitable. Yeah.

JP: It always is. It’s it’s it’s that stage one of the four stages, which you and I are gonna talk about one of these days, the four stages of investing. We need to do that. But, Adrian, so let’s just wrap this up. I think it was a pretty you know, we kept it short for us. That’s good.

JP: Let’s talk about the magic number. Last time, we were at point five. Last time before that, we were at negative two. Remember, the scale’s negative ten to positive ten. Do you know where we’re at today?

Adrianne: One. One. One.

JP: So it’s positive. It’s positive slight improvement. Nothing nothing monumental. Don’t sell your Bitcoin unless you want to. Sell your Ethereum maybe.

JP: But, hang on there. We’re seeing we’re seeing slow improvement, and you’re not gonna get the evidence from the news. So listen to the Thrive Pulse and get what’s really going on out there. Thank you for listening.

JP: Thank you. We will talk to you next month. Thank you. We’re out.

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July Thrive Pulse

Main Question:

Is now a good time to invest in multifamily real estate?

Key Points:
  • Market Sentiment: Last rating was 0.5 (slightly positive) → now at +1. Small but real improvement.
  • Cycle Context: Most downturns last ~2 years. We’re 2.5 years in, and early signs of recovery are showing.
  • Current Conditions:
    • Fundamentals (occupancy, expenses, evictions, bad debt) are stabilizing.
    • Lenders are starting to call about distressed deals → more opportunities emerging.
    • New construction is down 71%, setting up a supply shortage in ~12–18 months.
    • Interest rates ~6.3%; some optimism about Fed cuts. Mortgage bankers are quoting 5–5.25% for 5-year money.
    • Cap rates in workforce housing ~5.3–5.8%, approaching neutrality vs. debt costs.
Case Study:
  • Thrive just raised capital for Viridian Apartments as rescue capital (buying at ~25% below original basis).
  • Previous owners struggled due to high rates + operating issues, but rehab activity in the submarket is driving signs of recovery.
  • Expectation: potential 25% value increase in ~3 years as supply/demand dynamics normalize.
Investor Sentiment:
  • Shift from investors chasing big back-end returns → now prioritizing steady cash flow.
  • Thrive’s investors funded Viridian quickly (10 days), showing strong trust despite tough markets.
Outlook:
  • Next 6–12 months may still feel “swampy and molasses” (slow, uncertain, geopolitical risks).
  • But this stage is historically the most profitable to buy—fear creates opportunity.
  • Expect more rescue capital/special situation deals ahead.
Final Rating:

From 0.5 → +1 on the Thrive Pulse scale (-10 = don’t invest, +10 = strong buy).

  • Takeaway: Market is slightly improving, still challenging, but early recovery signs are here.

JP: Hi. This is JP and Adrian. And welcome to the July version of Thrive Pulse, where you’re gonna find out whether is now a good time to be investing in multifamily real estate. Adrian, don’t give it away.

Let us know what you think.

The number is – don’t tell them. We have a number for you. Just to remind you for those who are new to our podcast, this is a short podcast where we’re gonna tell you between negative ten is do not invest, run. Zero is we’re kinda neutral, and plus ten is take your money, take your Bitcoin, cash at least half of it, definitely the Ethereum, and bring it into real estate. So I’m not saying to cash out—that’s not my agenda.

Adrian: Have no patience.

JP: No patience. No patience at all.

So, Adrian, we spoke last time. Our last number was point five. Kind of just a little above neutral, but improving.

What do you think? How are you feeling since our last our last, show?

Adrian: Well, as many of you know (or if you don’t), I’m an eternal optimist..

JP: That is true.

Adrian: And I’m actually probably some of the few that is starting to get bullish Yeah. On mainly multifamily and investing.

I think that there’s a lot of negativity, bearishness out there, which is kind of good because you don’t want everybody bullish or everybody bearish. Yeah. You need the mix. Typically, when you see too much of one side, it does the opposite.

JP: Yeah. And I think that often in downturns, everyone says this is it. This world’s, it’ll never be the same. Irrational fear at the bottom.

Adrian: That’s it.

Irrational exuberance at the top.

And so I’m starting to see, little signs here and there that we are turning a little bit of a corner.

JP: Yeah.

Adrian: Now what doesn’t help is all of the political uncertainty.

JP: Yeah.

Adrian: That includes whether it’s tariffs, all these wars, all these bombings, that pauses everything. Even if it’s going in a good direction, it just halts.

JP: So what makes you think you said that there’s little areas that you feel it’s going in the right direction. What are those areas for you?

Adrian: Going back the last probably seven to ten downturns.

There’s never been a downturn that lasted longer than two years.

We’re two and a half years in. This third year is the year where everyone says, we’re out of it. We’re going back in. This will never change.

It might change. That’s your new preemptive year for the next cycle.

JP: Yeah. Fundamentals are starting to look better.

Occupancies are steady.

Adrian: Yeah. I was gonna take you through some of that. It’s it’s slight improvement. It’s not killing it, but you’re seeing slight swings.

Let’s, we’re not seeing as much negative, whether it’s expenses, occupancy, evictions, bad debt, that’s not getting worse.

JP: No.

Adrian: It’s getting a little bit better.

JP: It is getting all better.

Adrian: And so that’s that third year where things start to stabilize, and we’re starting to get a lot of calls from lenders.

JP: We are.

Hey. Would you consider buying this property? We were gonna foreclose on it. Would you buy it at our loan amount?

Adrian: People are starting to take action instead of all the inaction we saw. And speaking of taking action, we took action.

JP: We did. We took action as rescue capital. So literally what you’re saying, Adrian, we are just completing right now our raise for Viridian Apartments, a property that we’re coming in as rescue capital about just under 25% of its original basis.

That’s right. And walking into cash flow.

Classic what you’re saying. It’s like how it came.

It took Can you give the can you give the quick story?

Like The group that bought it at, really, at the peak couldn’t keep it stabilized. It’s a ’90s asset. Yeah. 93-94% occupied.

But with interest rates so high, expenses so high, rents not going up, they struggled to cover debt service. Yeah. And there were some foreclosures on the block that really turned that little pocket very negatively. It affected it so bad because crime shot up.

All the worst.

Expenses expenses up, revenues down, crime back down.

The all the things that could go wrong went wrong. And then what you’re seeing is we are recovering from that right now.

Adrian: Got two large groups bought those two foreclosures. They’re putting a ton of rehab.

Their goal is next year to start raising rents if they’re gonna put $25,000 in cash.

Occupancy ticks up. So you’re kinda seeing all the signs of, like like, recovery, which is amazing. The other thing, Adrian, I wanna say is, like, we’re very grateful to those of you in our audience who are investors.

JP: You know, we hadn’t raised money in a while, and we really didn’t know. I mean, Adrian and I are like our people our investors freaked out. And and I was really proud of Adrian that in ten days, we were able to get this get this finalized. Yeah. Yeah. It says a lot about our current clients. I know we got some new clients who also come in.

Adrian: You know what I find interesting, JP, when in the last cycle, we had a lot of investors that had a good day job, and they weren’t real interested in cash flow.

They said, I don’t need the cash flow. I want a big backside.

When we sell, I want a big pop.

A lot of those people Want cash flow. Want cash flow.

Me, by the way. I just passed on a really sexy data center deal last night that I really wanna do, but I’m just not loving the cash flow.

Adrian: And so we’re we’re adjusting to the times, and and we keep that fear back here because we’ve seen for two and a half years how difficult the market has been.

JP: Well, and we’re we’re are we say, like, on our side, when you’re the owner right now, you’re still and when you’re a lender, you’re still experiencing the blow winds That’s right. The headwinds of the bank pressure, interest rates not really going down stable, but not going down. We feel all that. But all of a sudden, Adrian, right now, Adrian, you think about it.

JP: We’re a buyer right now Yeah. Of a new property. We’re the seller of a property right now, which has been dragging. It’s the long one of the longest closes we’ve ever seen.

Adrian: It is. And we’re a lender. So we’re really seeing every angle of what’s going on right now. I think that makes us, like as a buyer right now, we’re getting pretty excited.

JP: Yeah. As a seller, it’s still tough.

I mean I’m trying.

Our values are down 20-35% from depending on the market, so you’re feeling that. There’s really no way out of that fact.

I think the dream part is, JP, there are not enough transactions to say prices are down x.

Yeah. Yeah.

It’s a little bit here, a little bit there, but we’re not seeing the volume of transactions.

It’s starting to increase, by the way, a little bit. So I don’t know.

Phone calls are starting.

Adrian: They are. So I wanna ask you a couple questions because this is our secret formula of how we get to our number. Interest rates, about 6.3%. Some people say they’re gonna go down. I know one of our investors was saying the next Fed meeting you watch. What’s your what’s your prediction?

I think we go down.

JP: A little bit.

Adrian: We do. Quarter point?

JP: Yes. And I think if you I didn’t know this. I learned it this week.

Adrian: The UK does their CPI without housing.

JP: Right. Makes a big difference.

Adrian: If we did it without housing, we’re we’re pushing 1% and no inflation.

JP: Is that the Consumer Price Index?

Adrian: Yeah.

JP: Like, how we’re doing Consumer price index.

Adrian: Okay.

JP: And what people are having to spend. So housing is so fractured right now because in Texas, we have zero rent growth. But if you go to New York, there’s rent growth. But it’s New York.

Adrian: Right. Right? And so there are very, very few markets that are seeing noticeable rent growth. Right.

JP: It might be .5%, half a percent.

Adrian: Right. Right.

JP: Right. Right? Yeah.

So that’s where I’m really bullish that I I believe inflation is not gonna be a runaway problem. Yeah. These tariffs, we have yet to see where where it goes and how it ends up. Right. That is inflationary. I mean, if if I’m gonna pass through my material cost because it went up 10% and you have to buy it, I’m not gonna eat it.

I’m gonna I’m gonna make a bold prediction.

I’m gonna try not to be too political about my prediction. I think this is a negotiating barter term, and we’ll come to some settlement, hopefully, with some of our trading partners. And I think that’s all about what this is about.

So And I think July, the Fed does cut. Okay.

But I think what’s different now is the Fed cut might be small, but it’s not gonna save the real estate. No. No. No.

When you’re 25% or 30% down And let’s clarify.

The Fed cuts short term rates.

He doesn’t do anything to the ten year bond which doesn’t help much.

Is what we look at. But here’s another positive. I was talking to a mortgage banker yesterday.

He said you can get five-year money between five and five and a quarter It’s really good.

Right now. Wow. I would not have expected that.

You can buy it down another thirty basis points.

What that tells me because if cap rates, let’s say, on our properties, the kind of the b class workforce housing, it feels like they’re at about a five three to five eight right now, kind of that range.

So right now for net right now It’s starting to get neutral.

It’s neutral as opposed to negative arbitrage, which means that your interest rates were higher than your cap rate. Right. We’re we’re floating maybe towards a little neutrality. We’re getting close.

Still doesn’t create great cash flow, but neutral is better than negative. Yep. Okay. So let me ask you.

So we know that rent has been pretty stagnant, not down. It’s just kinda stagnant right now.

So we know that we know that rent is kinda stagnant right now, not necessarily going down, but not going up.

Vacancy also still, like—it’s holding steady.

It’s not not getting worse.

And what’s interesting, Adrian, is that right now, new construction’s down 71%. So we are probably depending on the market, we’re probably between eight and eighteen months away from watching these markets absorb, which is why I think you’re seeing rents stabilizing now. You’re starting to see some absorption led by Houston right now, led by Dallas, probably then San Antonio, then probably Austin.

Adrian: And that’s great, great insight, JP, if for for potential investors that don’t understand real estate much. If you talk about supply and demand, it’s very easy. Yeah. Oversupply, prices plummet.

Not enough supply, high demand, prices increase.

Normal market. Like, any other product.

JP: We’re we’re that’s why we’re so focused on holding on as long as you can to get that absorption because we’re gonna be in the same situation that we were last cycle that was so positive.

Well, you think about our our bet on on this new property, Viridian. We’re taking a bet that in three years well, we can always hold it longer if we refi, but we’re kinda taking a a bet that in three years, you’re gonna see these markets fast and improve. We’re actually expecting, like, a 25% increase in value.

Demand for apartments is not going down Yeah. Which is great.

Adrian: Yes.

JP: And we’re gonna have a four to five year window Yeah.

Of no new construction. Yeah. That means we hope to see a lot of rent growth and a lot of appreciation.

Adrian right now, depending on the market, we’re kind of in the beginning of a recovery phase, but it doesn’t feel like in fact, I I’ve been telling my whatever my opinion’s worth, probably a Starbucks coffee.

But, Well, a small one. It’s it’s a small one. Maybe water. But, no. I I’m feeling like we’re seeing the beginning of a recovery.

It doesn’t feel like it yet. I think it’s actually gonna have more bad news, whether it’s geopolitical news. It’s gonna feel kinda rough. I I use the word molasses.

It’s gonna feel swampy and molasses y probably for the next six to twelve months. But in between that swampy and molasses-y, I believe, Adrian, my prediction is we will come across very similar deals to this Viridian deal.

Adrian: I would agree.

JP: We’re gonna get calls from banks. We’re gonna start to get slowly these special situations where we come in as rescue capital, and I think they’ll start to by 27, depending on the market, you’re really gonna start to, like, to your point, the secret’s gonna be out.

JP: It just depends on the market.

Scariest time that whether it’s the stock market or real estate or any asset class.

When things are going down is the hardest time to buy. Yeah. But it’s the most profitable. Yeah.

It always is. It’s it’s it’s that stage one of the four stages, which you and I are gonna talk about one of these days, the four stages of investing. We need to do that. But, Adrian, so let’s just wrap this up. I think it was a pretty you know, we kept it short for us. That’s good.

Let’s talk about the magic number. Last time, we were at point five. Last time before that, we were at negative two. Remember, the scale’s negative ten to positive ten. Do you know where we’re at today?

Adrian: One. One. One.

JP: So it’s positive. It’s positive slight improvement. Nothing nothing monumental. Don’t sell your Bitcoin unless you want to. Sell your Ethereum maybe.

But, hang on there. We’re seeing we’re seeing slow improvement, and you’re not gonna get the evidence from the news. So listen to the Thrive Pulse and get what’s really going on out there. Thank you for listening.

Thank you. We will talk to you next month. Thank you. We’re out.

July Thrive Pulse Summary

Main Question:

Is now a good time to invest in multifamily real estate?

Key Points:

  • Market Sentiment: Last rating was 0.5 (slightly positive) → now at +1. Small but real improvement.
  • Cycle Context: Most downturns last ~2 years. We’re 2.5 years in, and early signs of recovery are showing.
  • Current Conditions:
    • Fundamentals (occupancy, expenses, evictions, bad debt) are stabilizing.
    • Lenders are starting to call about distressed deals → more opportunities emerging.
    • New construction is down 71%, setting up a supply shortage in ~12–18 months.
    • Interest rates ~6.3%; some optimism about Fed cuts. Mortgage bankers are quoting 5–5.25% for 5-year money.
    • Cap rates in workforce housing ~5.3–5.8%, approaching neutrality vs. debt costs.

Case Study:

  • Thrive just raised capital for Viridian Apartments as rescue capital (buying at ~25% below original basis).
  • Previous owners struggled due to high rates + operating issues, but rehab activity in the submarket is driving signs of recovery.
  • Expectation: potential 25% value increase in ~3 years as supply/demand dynamics normalize.

Investor Sentiment:

  • Shift from investors chasing big back-end returns → now prioritizing steady cash flow.
  • Thrive’s investors funded Viridian quickly (10 days), showing strong trust despite tough markets.

Outlook:

  • Next 6–12 months may still feel “swampy and molasses” (slow, uncertain, geopolitical risks).
  • But this stage is historically the most profitable to buy—fear creates opportunity.
  • Expect more rescue capital/special situation deals ahead.

Final Rating:

From 0.5 → +1 on the Thrive Pulse scale (-10 = don’t invest, +10 = strong buy).

  • 0.5 → +1 on the Thrive Pulse scale (-10 = don’t invest, +10 = strong buy).
    Takeaway: Market is slightly improving; still challenging, but early recovery signs are here.

JP: Hi. This is JP. And Adrianne. And welcome to the July version of Thrive Pulse, where you’re gonna find out is now a good time to be investing in multifamily real estate. Adrianne, don’t give it away.

JP: Let us know what you think.

The number is don’t tell them. We have a number from you. Just to remind you for those who are new to our podcast, this is a short podcast where we’re gonna tell you between negative ten is do not invest, run. Zero is we’re kinda neutral, and plus ten is take your money, take your Bitcoin, cash at least half of it, definitely the Ethereum, and bring it into real estate. So I’m not to cash that’s on my agenda.

Adrianne: Have no patience.

JP: No patience. No patience at all.

So, Adrian, we spoke last time. Our last number was point five. Kind of just a little above neutral, but improving.

What do you think? What how are you feeling since our last our last, show?

Adrianne: Well, as many of you know or you don’t know, he does. I’m an eternal optimist.

JP: That is true.

Adrianne: And I’m actually probably some of the few that is starting to get bullish Yeah. On mainly multifamily and investing.

I think that there’s a lot of negativity, embarrassedness out there, which is kind of good because you don’t want everybody bullish or everybody bearish. Yeah. You need the mix. Typically, when you see too much of one side, it does the opposite.

JP: Yeah. And I think that often in downturns, everyone says this is it. This world’s, it’ll never be the same. Irrational fear at the bottom.

Adrianne: That’s it.

Irrational exuberance at the top.

And so I’m starting to see, little signs here and there that we are turning a little bit of a corner.

JP: Yeah.

Adrianne: Now what doesn’t help is all of the political uncertainty.

JP: Yeah.

Adrianne: That includes whether it’s tariffs, all these wars, all these bombings, that pauses everything. Even if it’s going in a good direction, it just halts.

JP: So what makes you think you said you said you think that there’s little areas that you feel it’s going in the right direction. What are those areas for you?

Adrianne: Going back the last probably seven to ten downturns.

There’s never been a downturn that lasted longer than two years.

We’re two and a half years in. This third year is the the year where everyone says, we’re out of it. We’re going back in. This will never change.

It might change. That’s your new preemptive year for the next cycle.

JP: Yeah. Fundamentals are starting to look better.

Occupancies are steady.

Adrianne: Yeah. I was gonna take you through some of that. It’s it’s slight improvement. It’s not killing it, but you’re seeing slight swings.

Let’s, we’re not seeing as much negative, whether it’s expenses, occupancy, evictions, bad debt, that’s not getting worse.

JP: No.

Adrianne: It’s getting a little bit better.

JP: It is getting all better.

Adrianne: And so that’s that third year where things start to stabilize, and we’re starting to get a lot of calls from lenders.

JP: We are.

Hey. Would you consider buying this property? We were gonna foreclose on it. Would you buy it at our loan amount?

Adrianne: People are starting to take action instead of all the inaction we saw. And speaking of taking of action, we took action.

JP: We did. We took action as rescue capital. So literally what you’re saying, Adrian, we are just completing right now our raise for Viridian Apartments, a property that we are we’re coming in as rescue capital about just under twenty five percent of its original basis.

That’s right. And and walking into cash flow.

Classic what you’re saying. It’s like how it came.

It took Can you give the can you give the quick story?

Like The the group that bought it at, really, at the peak couldn’t kept it stabilized. It’s ninety asset. Yeah. Ninety three, ninety four percent occupied.

But with interest rates so high, expenses so high, rents not going up, they struggled to cover debt service. Yeah. And there were some foreclosures on the block that really turned that little pocket very negatively. It affected it so bad because crime shot up.

All the worst.

Expenses expenses up, revenues down, crime back down.

The all the things that could go wrong went wrong. And then what you’re seeing is are recovering from that right now.

Adrianne: Got two two large groups bought those two foreclosures. They’re putting a ton of rehab.

Their goal is next year to start raising rents if they’re gonna put twenty five thousand dollars in cash.

Occupancy tick up. So you’re kinda seeing all the signs of, like like, recovery, which is amazing. The other thing, Adrian, I wanna say is, like, we’re very grateful to those of you in our audience who are investors.

JP: You know, we hadn’t raised money in a while, and we really didn’t know. I mean, Adrian and I are like our people our investors freaked out. And and I was really proud of Adrian that in ten days, we were able to get this get this finalized. Yeah. Yeah. It says a lot about our current clients. I know we got some new clients who also come in.

JP: You know what I find interesting, JP, when in the last cycle, we had a lot of investors that had a good day job, and they weren’t real interested in cash flow.

They said, I don’t need the cash flow. I want a big backside.

When we sell, I want a big pop.

A lot of those people Want cash flow. Want cash flow.

Me, by the way. I just passed on a really sexy data center deal last night that I really wanna do, but I’m just not loving the cash flow.

Adrianne: And so we’re we’re adjusting to the times, and and we keep that fear back here because we’ve seen for two and a half years how difficult the market has been.

JP: Well, and we’re we’re are we say, like, on our side, when you’re the owner right now, you’re still and when you’re a lender, you’re still experiencing the blow winds That’s right. The the headwinds of the bank pressure, interest rates not really going down stable, but not going down. We feel all that. But all of a sudden, Adrian, right now, Adrian, you think about it.

JP: We’re a buyer right now Yeah. Of a new property. We’re the seller of a property right now, which has been dragging. It’s the long one of the longest closes we’ve ever seen.

Adrianne: It’s It’s like, It is. And we’re a lender. So we’re really seeing every angle of what’s going on right now. I think that makes us, like as a buyer right now, we’re getting pretty excited.

JP: Yeah. As a seller, it’s still tough.

I mean I’m trying.

Our values are down twenty to thirty five percent from depending on the market, so you’re feeling that. There’s really no way out of that fact.

I think the the dream part is, JP, there are not enough transactions to say prices are down x.

Yeah. Yeah.

It’s a little bit here, a little bit there, but we’re not seeing the volume of transactions.

It’s starting to increase, by the way, a little bit. So I don’t know.

Phone calls are starting.

Adrianne: They are. So I wanna ask you a couple questions because this is our secret formula of how we get to our number. Interest rates, about six point three. Some people say they’re gonna go down. I know one of our investors was saying the next Fed meeting you watch. What’s your what’s your prediction?

I think we go down.

JP: A little bit.

Adrianne: We do. Quarter point?

JP: Yes. And I think if you I didn’t know this. I learned it this week.

Adrianne: The UK does their CPI without housing.

JP: Right. Makes a big difference.

Adrianne: If we did it without housing, we’re we’re pushing one percent and no inflation.

JP: Consumer is that the consumer index?

Adrianne: Yeah.

JP: Like, how we’re doing Consumer price index.

Adrianne: Okay.

JP: And what people are having to spend. So housing is so fractured right now because in Texas, we have zero rent growth. But if you go to New York, there’s rent growth. But it’s New York.

Adrianne: Right. Right? And so there are very, very few markets that are seeing noticeable, rent growth. Right.

JP: It might be point five, Half a percent.

Adrianne: Right. Right.

JP: Right. Right? Yeah.

So that’s where I’m really bullish that I I believe inflation is not gonna be a runaway problem. Yeah. These tariffs, we have yet to see where where it goes and how it ends up. Right. That is inflationary. I mean, if if I’m gonna pass through my material cost because it went up ten percent and you have to buy it, I’m not gonna eat it.

I’m gonna I’m gonna make it bold prediction.

I’m gonna try to be too political about my prediction. I think this is a negotiating barter term, and we’ll come to some settlement, hopefully, with some of our trading partners. And I think that’s all about what this is about.

So And I think July, the Fed does cut. Okay.

But I think what’s different now is the Fed cut might be small, but it’s not gonna save the real estate. No. No. No.

When you’re twenty five percent or thirty percent down And let’s clarify.

The Fed cuts short term rates.

He doesn’t do anything to the ten year bond Which doesn’t help much.

Is what we look at. But here’s another positive. I was talking to a mortgage banker yesterday.

He said you can get five year money between five and five and a quarter It’s really good.

Right now. Wow. I would not have expected that.

You can buy it down another thirty basis points.

Which one of that tells me because if cap rates, let’s say, on our properties, the kind of the b class workforce housing, it feels like they’re at about a five three to five eight right now, kind of that range.

So right now for net right now It’s starting to get neutral.

It’s neutral as opposed to negative arbitrage, which means that your interest rates were higher than your cap rate. Right. We’re we’re floating maybe towards a little neutrality. We’re getting close.

Still doesn’t create great cash flow, but neutral is better than negative. Yep. Okay. So let me ask you.

So we know that rent has been pretty stagnant, not down. It’s just kinda stagnant right now, particularly in the sorry for my phone, guys.

So we know that we know that rent is kinda stagnant right now, not necessarily going down, but not going up.

Vacancy also still, like It’s holding steady. It’s holding steady.

It’s not not getting worse.

And what’s interesting, Adrian, is that right now, new construction’s down seventy one percent. So we are probably depending on the market, we’re probably between eight and eighteen months away from watching these markets absorb, which is why I think you’re seeing rents stabilizing now. You’re starting to see some absorption led by Houston right now, led by Dallas, probably then San Antonio, then probably Austin.

Adrianne: And that’s great, great insight, JP, if for for potential investors that don’t understand real estate much. If you talk about supply and demand, it’s very easy. Yeah. Oversupply, prices plummet.

Not enough supply, high demand, prices increase.

Normal market. Like, any other product.

JP: We’re we’re that’s why we’re so focused on holding on as long as you can to get that absorption because we’re gonna be in the same situation that we were last cycle that was so positive.

Well, you think about our our bet on on this new property, Viridian. We’re taking a bet that in three years well, we can always hold it longer if we refi, but we’re kinda taking a a bet that in three years, you’re gonna see these markets fast and improve. We’re actually expecting, like, a twenty five percent increase in value.

Demand for apartments is not going down Yeah. Which is great.

Adrianne: Yes.

JP: And we’re gonna have a four to five year window Yeah.

Of no new construction. Yeah. That means we hope to see a lot of rent growth and a lot of appreciation.

Agent right now, depending on the market, we’re kind of in the beginning of a recovery phase, but it doesn’t feel like in fact, I I’ve been telling my whatever my opinion’s worth, probably a Starbucks coffee.

But, Well, a small one. It’s it’s a small one. Maybe water. But, no. I I’m feeling like we’re seeing the beginning of a recovery.

It doesn’t feel like it yet. I think it’s actually gonna have more bad news, whether it’s geopolitical news. It’s gonna feel kinda rough. I I use the word molasses.

It’s gonna feel swampy and molasses y probably for the next six to twelve months. But in between that swampy and molasses y, I believe, Adrian, my prediction is we will come across very similar deals to this Viridian deal.

Adrianne: I would agree.

JP: We’re gonna get calls from banks. We’re gonna start to get slowly these special situations where we come in as rescue capital, and I think they’ll start to by twenty seven, depending on the market, you’re really gonna start to, like, to your point, the secret’s gonna be out.

JP: It just depends on the market.

Scariest time that whether it’s the stock market or real estate or any asset class.

When things are going down is the hardest time to buy. Yeah. But it’s the most profitable. Yeah.

It always is. It’s it’s it’s that stage one of the four stages, which you and I are gonna talk about one of these days, the four stages of investing. We need to do that. But, Adrian, so let’s just wrap this up. I think it was a pretty you know, we kept it short for us. That’s good.

Let’s talk about the magic number. Last time, we were at point five. Last time before that, we were at negative two. Remember, the scale’s negative ten to positive ten. Do you know where we’re at today?

Adrianne: One. One. One.

JP: So it’s positive. It’s positive slight improvement. Nothing nothing monumental. Don’t sell your Bitcoin unless you want to. Sell your Ethereum maybe.

But, hang on there. We’re seeing we’re seeing slow improvement, and you’re not gonna get the evidence from the news. So listen to the Thrive Pulse and get what’s really going on out there. Thank you for listening.

Thank you. We will talk to you next month. Thank you. We’re out.

Transcript

JP: Hi. This is JP. And Adrianne. And welcome to the July version of Thrive Pulse, where you’re gonna find out is now a good time to be investing in multifamily real estate. Adrianne, don’t give it away.

JP: Let us know what you think.

JP: The number is don’t tell them. We have a number from you. Just to remind you for those who are new to our podcast, this is a short podcast where we’re gonna tell you between negative ten is do not invest, run. Zero is we’re kinda neutral, and plus ten is take your money, take your Bitcoin, cash at least half of it, definitely the Ethereum, and bring it into real estate. So I’m not to cash that’s on my agenda.

Adrianne: Have no patience.

JP: No patience. No patience at all.

JP: So, Adrian, we spoke last time. Our last number was point five. Kind of just a little above neutral, but improving.

JP: What do you think? What how are you feeling since our last our last, show?

Adrianne: Well, as many of you know or you don’t know, he does. I’m an eternal optimist.

JP: That is true.

Adrianne: And I’m actually probably some of the few that is starting to get bullish Yeah. On mainly multifamily and investing.

Adrianne: I think that there’s a lot of negativity, embarrassedness out there, which is kind of good because you don’t want everybody bullish or everybody bearish. Yeah. You need the mix. Typically, when you see too much of one side, it does the opposite.

JP: Yeah. And I think that often in downturns, everyone says this is it. This world’s, it’ll never be the same. Irrational fear at the bottom.

Adrianne: That’s it.

Adrianne: Irrational exuberance at the top.

Adrianne: And so I’m starting to see, little signs here and there that we are turning a little bit of a corner.

JP: Yeah.

Adrianne: Now what doesn’t help is all of the political uncertainty.

JP: Yeah.

Adrianne: That includes whether it’s tariffs, all these wars, all these bombings, that pauses everything. Even if it’s going in a good direction, it just halts.

JP: So what makes you think you said you said you think that there’s little areas that you feel it’s going in the right direction. What are those areas for you?

Adrianne: Going back the last probably seven to ten downturns.

Adrianne: There’s never been a downturn that lasted longer than two years.

Adrianne: We’re two and a half years in. This third year is the the year where everyone says, we’re out of it. We’re going back in. This will never change.

Adrianne: It might change. That’s your new preemptive year for the next cycle.

JP: Yeah. Fundamentals are starting to look better.

JP: Occupancies are steady.

Adrianne: Yeah. I was gonna take you through some of that. It’s it’s slight improvement. It’s not killing it, but you’re seeing slight swings.

Adrianne: Let’s, we’re not seeing as much negative, whether it’s expenses, occupancy, evictions, bad debt, that’s not getting worse.

JP: No.

Adrianne: It’s getting a little bit better.

JP: It is getting all better.

Adrianne: And so that’s that third year where things start to stabilize, and we’re starting to get a lot of calls from lenders.

JP: We are.

JP: Hey. Would you consider buying this property? We were gonna foreclose on it. Would you buy it at our loan amount?

Adrianne: People are starting to take action instead of all the inaction we saw. And speaking of taking of action, we took action.

JP: We did. We took action as rescue capital. So literally what you’re saying, Adrian, we are just completing right now our raise for Viridian Apartments, a property that we are we’re coming in as rescue capital about just under twenty five percent of its original basis.

JP: That’s right. And and walking into cash flow.

JP: Classic what you’re saying. It’s like how it came.

JP: It took Can you give the can you give the quick story?

JP: Like The the group that bought it at, really, at the peak couldn’t kept it stabilized. It’s ninety asset. Yeah. Ninety three, ninety four percent occupied.

JP: But with interest rates so high, expenses so high, rents not going up, they struggled to cover debt service. Yeah. And there were some foreclosures on the block that really turned that little pocket very negatively. It affected it so bad because crime shot up.

JP: All the worst.

JP: Expenses expenses up, revenues down, crime back down.

JP: The all the things that could go wrong went wrong. And then what you’re seeing is are recovering from that right now.

Adrianne: Got two two large groups bought those two foreclosures. They’re putting a ton of rehab.

Adrianne: Their goal is next year to start raising rents if they’re gonna put twenty five thousand dollars in cash.

Adrianne: Occupancy tick up. So you’re kinda seeing all the signs of, like like, recovery, which is amazing. The other thing, Adrian, I wanna say is, like, we’re very grateful to those of you in our audience who are investors.

JP: You know, we hadn’t raised money in a while, and we really didn’t know. I mean, Adrian and I are like our people our investors freaked out. And and I was really proud of Adrian that in ten days, we were able to get this get this finalized. Yeah. Yeah. It says a lot about our current clients. I know we got some new clients who also come in.

JP: You know what I find interesting, JP, when in the last cycle, we had a lot of investors that had a good day job, and they weren’t real interested in cash flow.

JP: They said, I don’t need the cash flow. I want a big backside.

JP: When we sell, I want a big pop.

JP: A lot of those people Want cash flow. Want cash flow.

JP: Me, by the way. I just passed on a really sexy data center deal last night that I really wanna do, but I’m just not loving the cash flow.

Adrianne: And so we’re we’re adjusting to the times, and and we keep that fear back here because we’ve seen for two and a half years how difficult the market has been.

JP: Well, and we’re we’re are we say, like, on our side, when you’re the owner right now, you’re still and when you’re a lender, you’re still experiencing the blow winds That’s right. The the headwinds of the bank pressure, interest rates not really going down stable, but not going down. We feel all that. But all of a sudden, Adrian, right now, Adrian, you think about it.

JP: We’re a buyer right now Yeah. Of a new property. We’re the seller of a property right now, which has been dragging. It’s the long one of the longest closes we’ve ever seen.

Adrianne: It’s It’s like, It is. And we’re a lender. So we’re really seeing every angle of what’s going on right now. I think that makes us, like as a buyer right now, we’re getting pretty excited.

JP: Yeah. As a seller, it’s still tough.

JP: I mean I’m trying.

JP: Our values are down twenty to thirty five percent from depending on the market, so you’re feeling that. There’s really no way out of that fact.

JP: I think the the dream part is, JP, there are not enough transactions to say prices are down x.

JP: Yeah. Yeah.

JP: It’s a little bit here, a little bit there, but we’re not seeing the volume of transactions.

JP: It’s starting to increase, by the way, a little bit. So I don’t know.

JP: Phone calls are starting.

Adrianne: They are. So I wanna ask you a couple questions because this is our secret formula of how we get to our number. Interest rates, about six point three. Some people say they’re gonna go down. I know one of our investors was saying the next Fed meeting you watch. What’s your what’s your prediction?

Adrianne: I think we go down.

JP: A little bit.

Adrianne: We do. Quarter point?

JP: Yes. And I think if you I didn’t know this. I learned it this week.

Adrianne: The UK does their CPI without housing.

JP: Right. Makes a big difference.

Adrianne: If we did it without housing, we’re we’re pushing one percent and no inflation.

JP: Consumer is that the consumer index?

Adrianne: Yeah.

JP: Like, how we’re doing Consumer price index.

Adrianne: Okay.

JP: And what people are having to spend. So housing is so fractured right now because in Texas, we have zero rent growth. But if you go to New York, there’s rent growth. But it’s New York.

Adrianne: Right. Right? And so there are very, very few markets that are seeing noticeable, rent growth. Right.

JP: It might be point five, Half a percent.

Adrianne: Right. Right.

JP: Right. Right? Yeah.

JP: So that’s where I’m really bullish that I I believe inflation is not gonna be a runaway problem. Yeah. These tariffs, we have yet to see where where it goes and how it ends up. Right. That is inflationary. I mean, if if I’m gonna pass through my material cost because it went up ten percent and you have to buy it, I’m not gonna eat it.

JP: I’m gonna I’m gonna make it bold prediction.

JP: I’m gonna try to be too political about my prediction. I think this is a negotiating barter term, and we’ll come to some settlement, hopefully, with some of our trading partners. And I think that’s all about what this is about.

JP: So And I think July, the Fed does cut. Okay.

JP: But I think what’s different now is the Fed cut might be small, but it’s not gonna save the real estate. No. No. No.

JP: When you’re twenty five percent or thirty percent down And let’s clarify.

JP: The Fed cuts short term rates.

JP: He doesn’t do anything to the ten year bond Which doesn’t help much.

JP: Is what we look at. But here’s another positive. I was talking to a mortgage banker yesterday.

JP: He said you can get five year money between five and five and a quarter It’s really good.

JP: Right now. Wow. I would not have expected that.

JP: You can buy it down another thirty basis points.

JP: Which one of that tells me because if cap rates, let’s say, on our properties, the kind of the b class workforce housing, it feels like they’re at about a five three to five eight right now, kind of that range.

JP: So right now for net right now It’s starting to get neutral.

JP: It’s neutral as opposed to negative arbitrage, which means that your interest rates were higher than your cap rate. Right. We’re we’re floating maybe towards a little neutrality. We’re getting close.

JP: Still doesn’t create great cash flow, but neutral is better than negative. Yep. Okay. So let me ask you.

JP: So we know that rent has been pretty stagnant, not down. It’s just kinda stagnant right now, particularly in the sorry for my phone, guys.

JP: So we know that we know that rent is kinda stagnant right now, not necessarily going down, but not going up.

JP: Vacancy also still, like It’s holding steady. It’s holding steady.

JP: It’s not not getting worse.

JP: And what’s interesting, Adrian, is that right now, new construction’s down seventy one percent. So we are probably depending on the market, we’re probably between eight and eighteen months away from watching these markets absorb, which is why I think you’re seeing rents stabilizing now. You’re starting to see some absorption led by Houston right now, led by Dallas, probably then San Antonio, then probably Austin.

Adrianne: And that’s great, great insight, JP, if for for potential investors that don’t understand real estate much. If you talk about supply and demand, it’s very easy. Yeah. Oversupply, prices plummet.

Adrianne: Not enough supply, high demand, prices increase.

Adrianne: Normal market. Like, any other product.

JP: We’re we’re that’s why we’re so focused on holding on as long as you can to get that absorption because we’re gonna be in the same situation that we were last cycle that was so positive.

JP: Well, you think about our our bet on on this new property, Viridian. We’re taking a bet that in three years well, we can always hold it longer if we refi, but we’re kinda taking a a bet that in three years, you’re gonna see these markets fast and improve. We’re actually expecting, like, a twenty five percent increase in value.

JP: Demand for apartments is not going down Yeah. Which is great.

Adrianne: Yes.

JP: And we’re gonna have a four to five year window Yeah.

JP: Of no new construction. Yeah. That means we hope to see a lot of rent growth and a lot of appreciation.

JP: Agent right now, depending on the market, we’re kind of in the beginning of a recovery phase, but it doesn’t feel like in fact, I I’ve been telling my whatever my opinion’s worth, probably a Starbucks coffee.

JP: But, Well, a small one. It’s it’s a small one. Maybe water. But, no. I I’m feeling like we’re seeing the beginning of a recovery.

JP: It doesn’t feel like it yet. I think it’s actually gonna have more bad news, whether it’s geopolitical news. It’s gonna feel kinda rough. I I use the word molasses.

JP: It’s gonna feel swampy and molasses y probably for the next six to twelve months. But in between that swampy and molasses y, I believe, Adrian, my prediction is we will come across very similar deals to this Viridian deal.

Adrianne: I would agree.

JP: We’re gonna get calls from banks. We’re gonna start to get slowly these special situations where we come in as rescue capital, and I think they’ll start to by twenty seven, depending on the market, you’re really gonna start to, like, to your point, the secret’s gonna be out.

JP: It just depends on the market.

JP: Scariest time that whether it’s the stock market or real estate or any asset class.

JP: When things are going down is the hardest time to buy. Yeah. But it’s the most profitable. Yeah.

JP: It always is. It’s it’s it’s that stage one of the four stages, which you and I are gonna talk about one of these days, the four stages of investing. We need to do that. But, Adrian, so let’s just wrap this up. I think it was a pretty you know, we kept it short for us. That’s good.

JP: Let’s talk about the magic number. Last time, we were at point five. Last time before that, we were at negative two. Remember, the scale’s negative ten to positive ten. Do you know where we’re at today?

Adrianne: One. One. One.

JP: So it’s positive. It’s positive slight improvement. Nothing nothing monumental. Don’t sell your Bitcoin unless you want to. Sell your Ethereum maybe.

JP: But, hang on there. We’re seeing we’re seeing slow improvement, and you’re not gonna get the evidence from the news. So listen to the Thrive Pulse and get what’s really going on out there. Thank you for listening.

JP: Thank you. We will talk to you next month. Thank you. We’re out.

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