From the Desk of CF Capital: March Investor Report

Hello Friends and Investors,

We hope you and yours are doing well. This month, we're excited to be welcoming two new best-in-class team members to the CF Capital Family! Join us in celebrating the arrival of Andi Weis, Regional Property Manager, who brings 20+ years of experience in the property management business with institutional and private equity operational experience with prestigious outfits with strong presence in our markets. Andi is a graduate of the University of Louisville, a proud mom, avid fitness enthusiast, and we are very excited to bring her expertise to our portfolio to help drive results across the portfolio. Andi's leadership will be instrumental in ensuring our partners' interests are actively pursued and optimal results are driven on each of our sites now and into the future. This hire is pivotal for executing current and future investments at the highest level and we couldn't be more excited to be working with Andi.

Additionally, we are excited to be welcoming Dan Michael, Senior Real Estate Analyst, joining CF Capital from Equity Residential where he worked with the acquisitions and asset management teams in the same capacity. Dan will be bringing his sophisticated perspective toward leveling up our acquisitions team, asset management team, and investor relations team to help drive business results. Dan hails from Chicago and is a graduate of the University of Illinois. He enjoys golf, football, and all things Chicago sports. We're very lucky and excited to be bringing Dan on to our team to help us strengthen our intelligence and decision-making to optimize our future and current investments, along with leveling up our investor experience. 

Aside from these updates, we always think it's helpful for us to share our perspective on the market and where we see things going. If we didn't say the last couple of years have been challenging in this business we would be lying, to put it frankly. Most in real estate would agree that we've gone through a meaningful market downturn in large part induced by the most rapid rate hiking cycle in history, and a collection of other extreme headwinds (including factors such as inflation, insurance volatility, along with several other operational challenges). While the last couple of quarters have brought more stability, the market has still been doing its darndest to catch its footing and find some equilibrium, yet the forecasted outlook is still murky. Prices for multifamily assets have come down, creating compelling buying opportunities, but in large part there's still a bid/ask spread in the market of about 10%, causing the transaction market to remain largely muffled. All the while, our tireless acquisitions efforts have yielded several very attractive potential acquisitions we're circling closely that we hope to be sharing more with you soon.

With such a choppy market, it's been a challenging time for us to acquire more deals and offer more opportunities to partners such as yourself at the rate we desire. Nevertheless, we continue to invest in our business and grow tactfully and thoughtfully with the long term in mind. This, after all, is a cyclical business, and we are believers that continually investing in our infrastructure, team, and systems is always prudent, especially as we operate with long-term in mind. As we continue to strengthen our investment platform throughout all stages of the cycle, we are positioned to capture significantly attractive investment opportunities that this "window of opportunity" of market instability is generating and delivering results to our partners, such as you. We anticipate that as 2024 progresses, more truly motivated sellers ready to transact at market levels will surface, as the significant wave of debt maturities materialize mid-year. There hasn't yet been enough of a reason for sellers to actually sell in a depressed valuation market until now, yet that is rapidly changing.

Looking ahead, we're excited to invite you to our upcoming investor event. On April 11, from 5:00 pm - 7:00 pm, join us for an expert panel, networking, and a happy hour to follow. We look forward to a lively discussion on the state of the market, expert analysis and forecasts, deal-making, and relationship-building. We're excited to be collaborating with the folks at Ness & Associates on this exciting event, and hope to see you there.

We look forward to seeing you soon and exploring expanding our partnership together during this unique time in the market! Don't hesitate to reach out and schedule a time to discuss anything whether that be market analysis, current pursuits, your goals and objectives or upcoming investment opportunities. 

In Partnership, 
Tyler and Bryan

PS. There's no higher compliment than you referring us to your friends, family, and colleagues. We'd be honored by the opportunity to become a part of their trusted networks. Share your experience investing with CF Capital & invite others to become an investor here.

Long-Term Capital Gains Tax for Investors

As an investor, you likely have encountered a common issue when it comes to investing in real estate: tax implications. More specifically, long-term capital gains tax can have a significant impact on your overall returns and financial goals as a real estate investor when going full cycle on an investment. It is important to know this tax structure and its potential implications to make informed decisions and maximize your return on investment. Understanding long-term capital gains tax is crucial for investors who want to preserve capital and ensure long-term financial security through real estate investments. Let's explore the intricacies of this tax structure and how it can impact your investment decisions.

Decoding Long-Term Capital Gains Tax

This tax structure plays a pivotal role in shaping investment strategies and unlocking remarkable opportunities for investors like yourself.

So, what exactly is long-term capital gains tax? It is a tax imposed on the profits from the sale of assets held for an extended period, typically over one year. The purpose of this tax structure is to incentivize long-term investment strategies and reward investors who embrace a patient, disciplined approach to wealth accumulation.

The tax rates for long-term capital gains vary and are based on your annual taxable income. Depending on your income, you could face a tax rate of 0%, 15%, or 20% on gains from the sale of most assets or investments held for more than one year. Therefore, the amount you owe in taxes on long-term capital gains is determined by your overall income.

When determining the holding period, or the amount of time you owned the asset before selling it. For example: if you acquired an asset on January 25, 2024, your holding period commenced on January 26, 2023. The one-year mark of ownership would be reached on January 25, 2025.

Advantages of Long-Term Capital Gains Tax

There are many benefits of long-term capital gains tax, so it is an attractive proposition for those seeking sustainable growth and wealth preservation. One of the primary advantages lies in the lower tax rates applied to long-term gains compared to short-term gains. By holding onto assets longer, investors can benefit from preferential tax treatment, enabling them to retain a larger portion of their profits.

Moreover, long-term capital gains tax aligns seamlessly with your aspirations for sustainable growth and long-term wealth preservation. By encouraging investors to adopt a patient investment horizon, this tax structure supports strategies that focus on long-term value creation rather than short-term speculation. It embodies a visionary approach, cultivating fertile ground for your investments to flourish and appreciate over time.

Incorporating Long-Term Capital Gains Tax into Investment Strategies

To fully leverage the potential of long-term capital gains tax, you must align your investment horizon with the tax structure. By consciously considering the tax implications when crafting your investment strategies, you can significantly reduce your overall tax burden and enhance long-term returns.

One effective strategy for minimizing tax liability is the buy-and-hold approach, where investors maintain ownership of assets for an extended period. This approach reduces your tax exposure and allows your investments to mature.

*In order to make the most of the benefits of long-term capital gains tax, it is important to match your investment timeline with the tax system.*

Embracing Tax Efficiency for Maximum Returns

Maximizing returns and preserving capital in real estate requires a deep understanding of tax efficiency. By integrating tax considerations into your investment decisions, you establish the foundation for success. Thoughtful structuring of real estate investments and optimal timing for asset sales are essential components. Selectively exploring opportunities like tax-deferred exchanges or utilizing 1031 exchanges further enhances your tax efficiency, potentially deferring or eliminating capital gains taxes. As always, we recommend that you consult with your CPA to implement the appropriate tax strategy for your objectives.

Staying Informed in a Dynamic Landscape

As the real estate and tax landscapes evolve, staying informed about updates impacting long-term capital gains tax is crucial. Knowledge of shifting tax laws, legislation, and market conditions empowers you to make informed decisions. Actively engage as a proactive investor, seeking professional guidance when necessary. Harmonizing your strategies with the latest tax laws and industry developments fortifies your real estate investments and aligns them with sustainable financial growth and long-term wealth preservation.

Unleashing the Power of Long-Term Capital Gains Tax with CF Capital

At CF Capital, we empower real estate investors. By navigating this tax structure, we unlock extraordinary opportunities for wealth creation and financial security. Our team possesses an expert knowledge of capital markets and multifamily investment strategies, making us your trusted partner in real estate. Together, we navigate the complexities, maximize returns, and preserve capital, ensuring a prosperous future. Discover the unparalleled power of long-term capital gains tax and unleash the full potential of your real estate investments. Get in touch with us to start this investment journey with us today.

From the Desk of CF Capital: February Investor Report

Hello Friends and Investors,

We hope you are doing well and having a great month so far. It's always great to get a chance to sit down and write this newsletter and share with you what we've been up to, what's on our mind, how we're viewing the market, what data and perspectives we're synthesizing, how we're making sense of key business decisions surrounding existing operations and potential acquisitions, and simply sharing with you company and personal updates from members of our team at CF Capital. We look forward to doing so once again today, and investing further into our long-term relationships together with you. Allow us to strive to strike the balance between covering all these bases without making this too much of a novel, a challenge indeed!

Ultimately, the real estate investment business can be either very complicated or very simple depending on the lens you look at it with. If we were to attempt to simplify, as we always say success always hinges on high quality relationships, nuanced and nimble intelligence (ie. distilling information and experience into wisdom), and effective action. To chunk it down even further, in multifamily real estate, it's all about providing a quality place to live at a fair market price, offering high quality service on maintenance or other requests, and operating the business by prudently managing to a realistic budget. This all assumes you made conservative assumptions prior to the investment and the return on investment is competitive and helps you reach your objectives, of course.

On the "nuanced and nimble intelligence piece," we continue to be operating within a complex and constantly changing broader climate currently heavily influenced by capital markets volatility, persistent yet recent reduction in quarter over quarter inflation (perhaps a degree of current disinflation, also depending on how you forecast), a unique labor market that appears to be healthy on the surface and complicated beneath the surface, an election year of momentous impact, and black swans (ie. unknowable impactful events) always swimming at some part of the horizon. While the broader US economy is not technically in a recession, most in real estate would agree that we've been operating within a downturn for more than the last year with significant reductions in transaction activity across the country, downward pressure on occupancy rates from record new construction deliveries (along with some markets outside of our targets in boom/bust territory experiencing significant downward pressure on rental rates), and operating costs materially rising. Market participants are challenged to find a "light at the end of the tunnel." Yet, all the while, and perhaps due to these conditions, significant opportunities are absolutely abound. In many respects, we believe we are in a window of opportunity for generational investment opportunities in multifamily real estate. With our relationships, expertise, we are positioned to capture these opportunities and will continue to keep you informed as deals develop.

In December the Fed Chairman Jerome Powell indicated the likelihood of 3 rate cuts in 2024 to begin as early as March, a surprising dovish stand from otherwise a very hawkish Fed as of recent quarters, and in early February the same Jerome Powell indicated that in light of recent economic data they would be treading lightly on any rate cuts. Bond markets reacted and impending interest rates responded in opposite directions to each set of commentary, and no one can truly predict where markets will lead as the year progresses. Forward looking curves could be as valuable as the paper they are written on for all we currently know. Further sauce to add to the saucepan of making sense of a market with conflicting indicators across the board. The result? Continued confusion and a continuation of somewhat of a stalled market. Yet, as this year unfolds, we are anticipating transaction activity picking up due to necessity for a myriad of reasons whether debt maturity or operational challenges related.

So now that you're either bored to tears by all of this analysis or confused with all of the conflicting considerations, let's ask the question that you've been waiting for! What else have the men and women of CF Capital been up to and what else is on our mind?

We are thrilled to announce that we just hired a new Regional Property Manager with over 20 years experience to oversee our portfolio exclusively. We couldn't be more pleased with this successful recruitment and cornerstone hire for our organization as we persistently deliver upon our promises to our partners on all active deals, into the future. More details to come as we introduce this team member to you in the coming months.

We're nearing the hire of a Sr. Real Estate Analyst who will be joining our team in the coming month. We're very excited to level up our nuanced intelligence and capacity for effective action on the fronts of intelligence, asset management and investor relations.

We had a great trip to San Diego for the annual NMHC conference to meet with the top brokers, operators and investors across our region and the country. The future certainly is bright with some of the brightest minds in our field!

We're keeping close tabs on the HR 2074 Bill that was recently passed in the House of Representatives, which includes provisions for the reinstatement of the 100% bonus depreciation of real estate investments, retroactive to 2023. This bill has been moved on to the Senate with tremendous bipartisan support.

As always, please reach out to us and let's discuss your thoughts, concerns, objectives or to catch up in general. We appreciate your partnership and look forward to continuing to earn your trust as time marches on.

In Partnership,

Tyler & Bryan

Recession vs Depression: Navigate Market Volatility

When it comes to investing, understanding the differences between a recession and a depression is helpful nuance for navigating market volatility, mitigating risk and capturing opportunities. An economic downturn can cause concern and confusion among even the most skilled investors, so having strategies in place to minimize risk and capitalize on opportunities becomes crucial. The comparison of recession vs depression, two terms that describe periods of economic decline, has distinct characteristics and impacts on the market. By grasping these differences and implementing strategies to navigate market volatility, investors can make informed decisions and protect their assets. Let’s go over the essential differences between recessions and depressions and provide strategies to navigate market volatility.

Recession vs Depression: What’s the Difference?

Recession: A Moderate Economic Downturn

A recession is a significant decline in economic activity lasting for a relatively short period. It is characterized by a slowdown in economic growth, a contraction in business activity, and an increase in unemployment rates. During a recession, consumer spending tends to decrease, so business revenue and profit margins decrease, too.

Recessions can be caused by various factors such as high-interest rates, reduced consumer spending, natural disasters, or financial market crashes. One significant historical example is the 2007-2008 recession, which was primarily triggered by the bursting of the housing bubble and subsequent financial crisis. However, it is important to note that every recession has its unique combination of factors and causes.

Key indicators of a recession include declining GDP (Gross Domestic Product) for two consecutive quarters, a rise in the unemployment rate, and a decline in consumer confidence. Recessions can be caused by factors such as a significant shift in supply demand dynamics, employment market volatility, geopolitical instability, inflation, trade disruptions, and financial market crashes.

During a recession, investors face unique challenges and considerations. The reduced consumer demand during this period can directly impact businesses and subsequently affect the stock markets. Therefore, it is crucial for investors to closely monitor the financial health and performance of the companies they have invested in or are considering investing in. Stock markets often experience increased volatility, with prices fluctuating based on investors' perceptions of the overall health of the economy.

To mitigate risks during a recession:

Diversify your investments and focus on defensive options.
Research and select investments with strong financials and a history of resilience.
Maintain a long-term perspective and avoid reacting to short-term market fluctuations.
Stay informed and monitor the financial health and performance of your investments.
Keep a cash reserve to provide a buffer in case of emergencies or investment opportunities.

Depression: A Severe and Prolonged Economic Downturn

A depression is a more severe and prolonged economic downturn . While there is no universally agreed-upon definition of a depression, it is generally characterized by a significant decline in economic output, widespread unemployment, and a lasting impact on various aspects of the economy. characterized by a significant decline in economic output, prolonged periods of reduced economic activity, a significant decline in GDP, widespread unemployment, and a lasting impact on various aspects of the economy. Unlike a recession, a depression extends beyond a few quarters and can last for several years or even a decade.

Depressions typically have a cascading effect on the economy. Job losses lead to reduced consumer spending, which dampens business activity, leading to further job losses. The cycle perpetuates itself during the economic downturn and creates uncertainty, fear, and distrust in the overall economy.

Depressions are often accompanied by massive bankruptcies, widespread business closures, and financial crises. Stock markets can experience significant declines, causing widespread investor apprehension. Governments often intervene by implementing fiscal and monetary policies to stimulate economic growth and stabilize the financial system.

Investing during a depression can be challenging but here are a few tips:

Assess your risk tolerance and invest accordingly.
Diversify your portfolio across different asset classes.
Stay informed and adapt to changing market conditions.
Maintain a long-term perspective and avoid reacting to short-term fluctuations.
Evaluate investment opportunities selectively.

*Multifamily syndication investors saw stable rental income during the economic downturn.*

Navigating Market Volatility through Multifamily Syndication

Though we are not in a recession or depression at the time of this writing, it is always important to protect your assets against market instability. At CF Capital, we operate with a long-term viewpoint at all times, and recognize that we operate in a cyclical investment class that goes through various phases of the market cycle: expansion, hyper supply, recession, and recovery. In the event of a potential downturn, multifamily syndication can be an effective strategy to achieve risk mitigation and wealth protection. By pooling capital from multiple investors to acquire and manage larger real estate properties, such as apartment communities, investors can gain access to steady cash flow, diversification, professional management, tangible assets, tax benefits, passive income, and potential for appreciation.

During periods of economic turbulence, multifamily syndication can offer a safe haven for elite investors looking to protect their assets and generate stable returns. The consistent rental income generated by these properties can offset the impact of economic downturns, and investors can benefit from the expertise of professionals who manage the properties on their behalf.

There have been historical instances where multifamily investing during a recession or depression has proven to be a wise investment strategy. One example is the Great Recession of 2008. During this time, while the housing market experienced a significant downturn, the multifamily real estate sector remained resilient.

Investors who had allocated their capital into multifamily syndications found that the consistent rental income from residents helped offset the impact of the economic downturn. Additionally, the demand for rental properties increased as individuals and families affected by foreclosures or financial hardships turned to renting instead of owning homes.

Explore Multifamily Syndication Opportunities with CF Capital

Understanding the differences between a recession vs depression and having strategies to navigate market volatility is crucial for investors. By investing in multifamily syndication, individuals can protect their assets during economic downturns.

At CF Capital, we specialize in multifamily investments and leverage our expertise in acquisitions and management to deliver superior risk-adjusted returns. Our primary focus is on prioritizing the preservation and growth of our investors' capital. We are committed to protecting your financial security and building lasting partnerships. With our track record and dedication, we strive to be a reliable option for investors seeking more exposure to the multifamily real estate market.

Take the next step and explore the multifamily syndication opportunities with CF Capital today.

Elevate Your Invesment Portfolio with this infographic outlining 9 key benefits of investing in multifamily real estate

Effects of Inflation: Strategies for Wealth Preservation

While inflation has generally become a regular occurrence in the context of economic growth, elevated or unexpected inflation can present obstacles for prudent wealth preservation and economic stability. To safeguard and augment wealth over time, it is essential to understand the causes and ramifications of inflation. By proactively implementing effective strategies, investors can mitigate the impact of inflation and secure their financial well-being. Through a combination of foresight and ongoing vigilance, individuals can take control of their financial future—protecting their investments from the eroding effects of inflation and ensuring long-term prosperity.

Causes of Inflation

Various factors, such as imbalances in supply and demand, supply shocks, and expectations of future price increases, can drive inflation.

Imbalance in Supply and Demand

When demand for goods and services outpaces available supplies, inflation occurs. In such cases, producers and businesses may raise prices in response to the heightened demand, which can lead to inflationary pressures. On the other side of this equation, when the overall money supply increases and productivity remains generally equal, inflation tends to follow as well. In recent years, we’ve seen money supply increase exponentially, leading to very substantial inflation.

Supply Shocks

Disruptions in supplies can also trigger inflation. For example, a sudden decrease in global energy supplies due to geopolitical tensions or natural disasters can lead to a spike in energy prices. This increase in production costs can ripple through the economy, contributing to inflation.

Following Russia's invasion of Ukraine, international sanctions restricted countries in the "collective West" from purchasing energy supplies directly from Russia. While Russia still sells energy to some countries, the restriction on their exports impacted global energy markets and led to increased prices. This tightening of the market contributed to inflation.

Expectations of Inflation

Expectations of future price increases can also influence inflation. When people anticipate prices will rise in the future, they may demand higher wages to protect their purchasing power. In turn, businesses and producers may respond by raising prices to cover the increased labor costs. This dynamic of wage-price spirals can contribute to inflationary pressure.

*Inflation erodes money's value, diminishing purchasing power and challenging the maintenance of a consistent standard of living.*

The Effects of Inflation on Wealth Preservation

Reduced Purchasing Power

Inflation decreases the value of money over time, leading to a reduction in purchasing power. This erosion of purchasing power can gradually diminish the value of your wealth. As a result, it becomes more challenging to maintain the same standard of living because the same amount of money will buy fewer goods and services.

Erosion of Investment Returns

Inflation can erode the real returns on your investments. When the inflation rate exceeds the returns on your investments, it diminishes the purchasing power of your investment gains. For example, let's say you earn a 5% return on your investments, but inflation is at 3%. In this case, your real return is only 2%. This example illustrates that even when inflation is at a lower rate than your return, it still reduces the purchasing power of your investment gains.

Negative Impact on Fixed Income Investments

Fixed-income investments such as bonds and fixed-interest securities have a predetermined interest rate. In an inflationary environment, the purchasing power of the fixed income generated by fixed-income investments such as bonds and fixed-interest securities decreases—meaning the buying power of the interest income may not keep pace with the rising cost of goods and services. As a result, the real return on fixed-income investments may be lower, impacting your overall strategy for preserving wealth.

Real Estate Value Fluctuations

Inflation can have a dual impact on real estate. On one hand, property prices may increase in an inflationary environment, leading to appreciation in the value of your real estate holdings. On the other hand, the real value of the asset may decrease if the rate of inflation outpaces the growth in property prices. This can make it challenging to preserve and grow wealth through real estate investments. Inflation can also impact income and expenses that real estate properties generate, elevating both sides of the income statement.

Increased Cost of Living

Inflation leads to an increase in the cost of goods and services, which affects your cost of living. When prices rise, your day-to-day expenses will increase, impacting your ability to preserve wealth. The higher cost of housing, food, healthcare, and other necessities can eat into your savings and limit your wealth accumulation.

*Investing in multifamily real estate serves as an effective inflation hedge, leveraging historical property value appreciation*

Mitigating the Effects of Inflation

To mitigate the impact of inflation on wealth preservation, it is crucial to adopt various strategies, such as:

Diversification

Diversify your investment portfolio across different asset classes, such as equities, real estate, commodities, and fixed income. A diversified portfolio can help you spread risk and mitigate the potential negative impact of inflation on your overall wealth.

Inflation-Protected Securities

Consider investments in inflation-protected securities or bonds. These securities are designed to provide returns that keep pace with inflation, ensuring your purchasing power is preserved in an inflationary environment.

Real Estate Investments

Investing in real estate, specifically multifamily, can be an effective hedge against inflation. Historically, property values tend to rise with inflation. Furthermore, rents are marked to market on an every 12 month basis, taking inflationary effects into account on the income side of these investments for owners. By investing in this type of real estate, you can benefit from the appreciation of property values and protect your wealth from inflation.

Investing in multifamily real estate is beneficial for several reasons: stable cash flow from multiple rental units, economies of scale for cost-efficiency, diversification to spread risk, accessible financing opportunities, and the potential for property value appreciation over time.

Equity Investments

Equities have the potential to outpace inflation over the long term. Companies can raise prices for their products and services, generating higher revenues and deliver real returns which outpace inflation. However, it is essential to assess the risk profile of equity investments before making any decisions.

Regular Review and Adjustment

Review your investment strategy and make adjustments as needed to adapt to changing market conditions and inflationary pressures. Staying proactive and informed is crucial in preserving your wealth and ensuring its growth over time.

CF Captial Leveraging Real Estate as a Hedge Against Inflation

Inflation can have a significant impact on wealth preservation and growth. However, by implementing these strategies, you can navigate the challenges of inflation and ensure the preservation and growth of your wealth over time. At CF Capital, we focus on acquiring and operating multifamily assets that provide stable cash flow, capital appreciation, and a margin of safety. With our expertise in acquisitions and management, we prioritize capital preservation while delivering superior risk-adjusted returns. When you invest with CF Capital, you can navigate the complexities of inflation with confidence, knowing you have a trusted partner dedicated to optimizing your wealth preservation and growth strategies.

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From the Desk of CF Capital: January Investor Report

Hello Friends and Investors,

Happy New Year! As real estate investors, we are generally happy to see the calendar turn to 2024 after the very challenging and tumultuous year of 2023. While the change in the calendar is more a symbolic change and much of the uncertainty remains in the broader market, there seems to be a sentiment among market experts that this year will bring a renewed sense of clarity and stability in the overall commercial real estate market versus the opposite in the year in the rearview. For example, the Fed's recent "dovish" commentary introducing potentially 3 rate cuts in 2024 has enlivened investors for the potential of increased cash flow, improved financing dynamics and an overall de-icing in transaction velocity for the year. On the other hand, the 2024 election is now heating up and anyone with any form of a crystal ball to predict the state of the economy during such a time in the next year would be untrustworthy or a charlatan.

At CF Capital, one thing we can count on is family and each other. We appreciated the opportunity to spend more quality time with our families for the holidays and to celebrate our team's accomplishments in 2023. Here are a few photos of our team from our annual holiday dinner and with our families making memories during a very special time in our lives:

Bidding Farewell to Elevate Podcast

I come to you with a mix of emotions as I share some important news regarding our journey together on Elevate Podcast. After 4.5 incredible years and over 320 episodes with some of the world's most prolific investors, #1 NY Times Best-Selling Authors, Hall of Fame Athletes, Olympic Legends, world leaders in personal development, profoundly influential entrepreneurs, leaders, coaches and renowned economists, the time has come for me to bid farewell to this chapter of our podcasting adventure. Creating Elevate has been an extraordinary experience, and I am immensely grateful for the support, inspiration, and enthusiasm you've shared with me throughout this journey. Your engagement has fueled the growth of our like-minded community and has made every episode a meaningful conversation that transcended the digital airwaves. As I reflect on the countless conversations, insightful interviews, and shared moments of learning and growth, I am filled with a deep sense of gratitude for the impact this podcast has had on both myself and our community. The connections we've forged and the stories we've explored together will forever hold a special place in my heart.

While it's bittersweet to say goodbye to Elevate, I am excited to share that new creative endeavors are on the horizon. Although I can't reveal the details just yet, I am committed to bringing you content that continues to inspire, uplift, challenge and engage our community. I want to express my sincerest appreciation for you being a part of this incredible community. Your feedback, messages, and unwavering support have been the driving force behind Elevate's success, and I am genuinely excited to embark on a new chapter with you.

As we close this chapter together, I am encouraged that we are remaining connected and you'll be the first to know about upcoming projects. Thank you once again for being a part of the Elevate community. I look forward to the next adventure and continuing this incredible journey with you. In the meantime, our journey together with CF Capital is only just beginning, and many profound triumphs lie ahead of us as we conquer substantial goals in partnership.

Looking Ahead

As for 2024, we're expanding our team, forming new partnerships with investors and other strategic partners, growing our portfolio, protecting our partners' capital via capital events, and plugging into doing the hard things daily. Our focus remains in being your trusted real estate partner, which includes remaining plugged into the latest happenings in the market and reacting as necessary, yet also creating proactive opportunities through our expanding and extensive network.

If you're attending NMHC in San Diego at the end of this month, we'd love to meet with you, use the button below to schedule a meeting with us.

Meet with us at NMHC

If you are interested in being a part of our team or know someone who should be considered, please send your resume here.

If you are ready to discuss investing in our next project, schedule a call with us:

Schedule a Meeting with Tyler

Schedule a Meeting with Bryan

In Partnership,

Tyler & Bryan

From the Desk of CF Capital: December Investor Report

Hello Friends and Investors,

Excitement is in the air as the holiday season is upon us! As we navigate the ever evolving seas of the real estate market, we're grounded by the opportunity to take time with family and friends during this special time of year. There's so much to be thankful for. Simultaneously, we remain very active in optimizing our current portfolio during this volatile market and seeking new acquisitions during this window of opportunity to acquire high quality assets at a discount, while Santa gets his sleigh all loaded up. Let's dive into some updates and some of what's going on in our world.

November: A Transformational Month - Personally and Professionally

Members of our team had an incredibly productive and transformative November. Bryan and his wife Channing traveled to Peru during the week of Thanksgiving to hike the Inca Trail to Machu Picchu. For 4 days and 3 nights, they challenged themselves mentally and physically to explore one of the most remarkable places in the world, and the metaphoric transformation they experienced was infectious.

Tyler traveled to South Beach Miami to attend Bisnow's Ascent Retreat, which is the most exclusive commercial real estate community across the country, comprised of the top owners, developers, and investors under the age of 45(ish). With $4 trillion+ in AUM, 2.1 billion in square footage under ownership, & 600K+ in multifamily units owned, the Ascent community powers the entire CRE industry. This was a great event with some of the most respected CRE participants (institutional equity investors, lenders, debt and equity brokers, sponsors, developers, etc) across the nation (and included excursions with some of the most renowned experts on high performance) for Tyler represent CF Capital and to connect to new and existing strategic partners, discuss and identify collaboration opportunities in a casual environment. While the waters of the economic sea remain choppy, relationships forged and innovation identified through this type of event is to the benefit of our existing and future partners with folks like yourself.

Also, CF Capital was the “Featured Developer” at the 2023 KY CPA Commercial Real Estate Conference, where we discussed strategies, structures, tax strategies and case studies with leading CPAs across the state.

Separation Season

For many in the real estate industry, this time of year brings a slowdown in activity, yet for CF Capital we see it as "separation season," even without giving up the fun of the holidays. Separation from the previous version of each of our team members in a sense of personal growth (we believe that our collective success is a lagging indicator of our continued individual personal growth, after all) and separation from the competitive landscape in the sense of business development. Many others are taking their foot off the gas in many ways and taking extended time off during this time of the year, yet, for us, we're doubling down on finishing the year strong and setting up 2024 to be our best year yet. Of course we're still taking time to observe the holiday season with our loved ones, but instead of taking the entire season off, we're challenging ourselves to step up our commitments during this time of year.

How are we doing so? For starters, later this week we are conducting our annual offsite retreat for our leadership team. During this multiple day out of town retreat, we reflect on the success and opportunities for growth that we've encountered this year, refresh and discuss our SWOT analysis, go deep on what's working and not, and set goals in accordance with our Vivid Vision for the next year, and more. Since our inception, we remain committed to the Traction EOS comprehensive business management framework, and we're looking forward to "emptying the tank" of our minds to help create clarity, efficiency, inspiration and set the path for optimal execution in the next year. We certainly mix in a little fun and team bonding experiences, but this type of thinking is some of the hardest work we do, and inevitably it helps us really hit the ground running for the new year.

How else are we embracing this separation season? Another example is the doubling down on the growth of our team, even during this time of year (and during the phase of the market cycle, where many groups have implemented hiring freezes and are even downsizing). In addition to our normal course of daily business, we're actively recruiting two positions: Sr. Real Estate Analyst, and now Regional Property Manager. If you know someone who should be considered for either of these positions, please send us a resume with a cover letter to [email protected].

Real Estate Market Analysis & Outlook

The elephant in the room remains interest rates. Recently, we've seen treasuries decline significantly from mid October to the early part of December. Will this trend hold? Does this tell us that the bond market is projecting a "hard landing" in 2024 after all? How will the Fed respond to a recession during an election year? In the words of Nate Bargatze, nobody knows. (By the way, if you missed that skit on SNL, it’s definitely worth 5 minutes!)

Beyond interest rates, many multifamily markets across the sunbelt and western US continue to see very meaningful rent declines, and growing vacancy with record new deliveries. The midwest and northeast have been more stable (while our markets in the midwest have been as steady and attractive as can be, especially during this time, further cementing the relevance of our investment thesis for these markets where we tend to be more insulated from booms and busts), with less prior significant expansion during the boom period of late 2020 to mid 2022 (the key word is "less" here, as historic liquidity and artificially low interest rates made some investors make some strange decisions in all markets). Investors who aggressively pursued assets at all time low cap-rates during 2021 who have maturing debt in this environment are looking at carnage in the face as they approach capital events, leading to some opportunistic scenarios.

These factors, and continued inflation, eating into profit margin for operators all over the country, will heavily influence the condition of the market into this new year. Well capitalized operators and investors will likely be the beneficiaries of some very attractive opportunities as a result. Stay tuned, and stay ready.

In conclusion, we'd like to wish you and yours a fantastic and memorable holiday season. We challenge you to join our separation season challenge, and at the same time, enjoy the magic of this wonderful time of the year. As always, don't hesitate to reach out to us if you'd like to discuss the market, your goals, and any other questions you might have for us. We're here to help you, and in partnership, we can and will go far together.

Season's Greetings,

Will the Housing Market Crash? Insights for Investors

A market crash in the housing sector would affect the entire economy, reducing consumer spending and negatively impacting investor confidence, leading to economic uncertainty and volatility. Against the landscape of recently soaring home prices and continuing uncertainty, this blog aims to provide insights and analysis for investors, as we examine the potential for a housing market crash. By understanding the underlying factors and trends influencing the market, investors can make informed decisions to navigate through these uncertain times and safeguard their investments.

The Current State of the Housing Market Crash

Since the pandemic and the historic response from Congress and the Central Bank, the US housing market has experienced a surge in activity and values. This dynamic can be attributed to a combination of factors, including record-low mortgage rates and high demand in conjunction with very low supply, and the continuing trend of lower new construction deliveries than ongoing buyer demand, putting substantial upward pressure on home prices across the country. There are concerns about the sustainability of this rapid growth and the stability of the market moving forward.

The recent historically rapid interest rate increase induced by the Federal Reserve, juxtaposed with record-low inventory levels, has led to sustained elevation in home prices, yet now those prices are resulting in significant increases in homeownership costs. These increases, along with significant inflation impacting the cost of living for all Americans, makes it challenging for potential buyers to afford homeownership. Moreover, the cost of construction continues to rise, suggesting inventory levels are unlikely to change significantly in the near future.

Given these circumstances, some analysts question whether the current growth in the housing market is sustainable in the long run. While the current conditions favor sellers, there are early signs of a market correction (some markets are already seeing longer days on market for listed homes in comparison to prior quarters, and there are examples of sale price declines in certain markets) or even the potential of a market crash, depending on the health of the consumer moving forward, along with the stability of the job market. It is important for both homeowners and investors to carefully assess the market and consider alternative options to safeguard against risks.

Factors Affecting the Housing Market

The US housing market is affected by a range of factors, including the COVID-19 pandemic, affordability, regional-specific circumstances, interest rates, job market, and inflation.

The pandemic has had a significant impact on the housing market, leading to changes in consumer behavior, including increased demand for housing in suburbs and rural areas. At the same time, the pandemic also created challenges for potential buyers in terms of affordability.

Regional-specific factors such as zoning laws and land availability also impact the housing market. For example, areas with limited land availability may experience a surge in demand and prices, which can lead to increased risks of a housing bubble.

Interest rates are another critical factor affecting the housing market. Low-interest rates can lead to increased demand for housing, while high-interest rates can lead to decreased demand, impacting home prices. Economics 101 reminds us that higher demand with the same or declining supply will equal higher prices.

The job market is also important to consider when assessing the housing market. A weak job market can lead to lower demand for housing, whereas a strong job market can increase demand. While the job market remains generally robust and resilient, some analysts have concerns with where it’s heading due to certain substantial industries being significantly negatively impacted by current economic circumstances.

Finally, consumers’ ability to stay afloat amidst inflation is another factor that can impact the housing market. Inflation can lead to a rise in prices, including housing prices and other costs of homeownership, making it more difficult for consumers to afford homeownership.

Is a Housing Market Crash Likely?

While a market crash is a possibility, the more likely outcome in the short term is a market correction. The market has historically shown resilience and economic factors like strong demand, low inventory, low-interest rates (in the broader context of history, by comparison), and a non-linear economy suggest gradual adjustments instead of a severe crash. Understanding the real estate market cycle, which includes expansion, hyper-supply, recession, recovery, etc., can help in predicting future patterns and forming realistic expectations. In summary, a slowdown is more probable than a market crash, with gradual adjustments expected in the housing market.

*Multifamily real estate has historically been a stable form of investment.*

The Reliability of Multifamily Investment

In these uncertain market conditions, multifamily investment remains a strong option for investors seeking stability and consistent cash flow throughout market cycles. Multifamily properties, such as apartment complexes, have a history of showing resilience even during market downturns, making it an attractive alternative to the unpredictable housing market. Sometimes, the factors that cause tremors in the single-family residential market are driving forces that improve fundamentals within multifamily real estate. For example, when a homebuyer is priced out of the single-family market due to interest rates, rising home values, lack of inventory, inflation, or a host of other factors, that individual typically seeks an apartment to rent for shelter. After all, human beings always need a place to live, no matter the economic circumstance.

While single-family primary residential housing demand may wane, multifamily property investors can ensure consistent rental income streams while working to reduce vacancy rates. Additionally, the diversification of a multifamily investment portfolio further increases stability and benefits in times of market disruption.

Multifamily investments, when thoroughly vetted and properly evaluated, have a proven track record for success. Investors who have invested in multifamily properties through a rigorous vetting process have found stable and consistent cash flows while waiting for appreciation. The advantageous real estate sector offers a hedge against market downturns, mitigating any potential losses.

Multifamily Properties: A Stable Alternative to the Uncertain Housing Market

Determining whether the housing market will crash or continue to grow is a complex endeavor. The current state of the housing market indicates significant price appreciation and increased challenges, meaning it’s an uncertain investment risk. To navigate housing market conditions, investors need the knowledge to make informed decisions. A comprehensive investment strategy in multifamily property can provide a stable investment opportunity by mitigating potential risks while enabling stable income streams. It is crucial to work with experienced and accredited real estate investment professionals, like CF Capital, for optimal results. Multifamily investments offer an attractive alternative to the sometimes erratic (and usually speculative/unpredictable) housing market, instilling confidence and stability for investors for the long haul.

CF Capital specializes in multifamily property syndication, offering a range of investment opportunities for interested investors. Our platform offers equity investments in top-performing multifamily properties across the Midwest and Southeast, and our team handles all the management, construction and maintenance on your behalf while giving you exposure to the benefits of ownership (ie. Passive income, tax benefits, equity appreciation, etc.) without all the headaches. If you are interested in learning more about multifamily property investment and how it can benefit your investment portfolio, contact CF Capital.

From the Desk of CF Capital: November Investor Report

Hello Friends and Investors,

We hope you and yours are enjoying the season of autumn as we welcome the month of November. You may have found yourself in the hundreds of millions of Americans that welcomed this month with a significant cold snap, firmly cementing the transition to the fall season. The kids in our lives (and their parents, for that matter!) broke out their winter coats, hats and gloves and still had a blast for Halloween, nevertheless! We hope you did too.

In this month's investor report, we're excited to share what we've been up to and what we're seeing in the market in an effort to help our valued partners make more sense of the complexity of the current and projected marketplace.

Strengthening Partnerships in the Real Estate Capital of the World

First, in October, it was great to spend time in NYC, where we had the privilege of spending valuable time with some of CF Capital's important strategic partners (some of the most elite minds in our industry, nationwide), discussing the state of the market and strengthening our relationships for future opportunistic pursuits. We are excited about the opportunities that are emerging through these best in class collaborations and look forward to sharing more details in the coming months, to your benefit.

Market Updates: Residential Market Dynamics, Midwest Stability, War in the Middle East and Interest Rates

Multifamily real estate continues to be a resilient and attractive investment in today's ever-changing and in many cases turbulent economic landscape. Demand for quality apartments remains robust, driven by factors such as high single-family mortgage interest rates, rising costs of home ownership, steady population growth, and select job market expansion. As the chart below shows, the gap between homeownership and multifamily rents are at historic levels. This spread driven by increased mortgage rates coupled with the overall housing shortage are keeping demand for rental property strong.

CF Capital and our partners are actively invested in Kentucky and Indiana and are further pursuing growth in the Major MSAs of each state in addition to Cincinnati, OH, and in Nashville, TN. Depending on who you speak to, these markets would be considered the Midwest, while in many circles Kentucky would be considered the Southeast, and usually Tennessee is firmly considered Southeast. Regardless, the characteristics of most of the markets that we target (with the exception of Nashville), tend to follow Midwest trendlines. The Midwest, historically known for steady and attractive growth, remains strong and steady while some other regions of the country are seeing rental rate declines. The Midwest's healthy overall economic conditions, population stability, stable population growth, and continued rent and job growth make it a compelling destination for investment in otherwise volatile macroeconomic conditions. Recent reports of our target markets like Louisville, Indianapolis, and Cincinnati leading the nation in rent growth and salary expansion for 2023 highlights the region's position for long-term value, compelling us to continue to pursue attractive value-add multifamily opportunities to share with you.

Unless you live somewhere deep under a rock, you are well aware that in October, a brutal war in the Middle East broke out from the attack on innocent civilians in Israel. Our hearts go out to the many families impacted, and the many families that are being impacted in the conflict since the initial attack. Geopolitical concerns are on high alert across the world, impacting capital markets and anticipated market conditions. There are no certainties of how things will play out, but investors are on high alert as governments play the high-stakes chess game of incredibly complex circumstances that no doubt impact financial markets, investor sentiment, and the flow of capital.

Last week, the FOMC met and left interest rates unchanged, making it the second meeting in a row where the central bank has skipped a rate hike. Capital markets remain very volatile, influencing decisions related to capitalization, growth targets, and the broader investment landscape. Uncertainty remains, but a pause gives players like us more clarity and stability in the real estate market today for investors positioning for transactions. The recent jobs report showed a softening employment market, which caused treasuries to dip meaningfully as the market anticipates an overall weakening economy, signaling perhaps future dovish central bank behavior. While interest rates are not directly correlated to cap rates (ie. multifamily asset valuations), they are absolutely sensitive to them, and overall cash flow is certainly impacted. Time will show how the capital markets continue to make sense of the state of the market, after a dizzying last 20 or so months of interest rate hikes working their way through the system. We continue to believe this time of uncertainty remains a window of opportunity to secure attractive deals at discounts, while being properly capitalized for longer term hold periods.

Looking Towards 2024

As we look forward to 2024, we are closely following the significant wave of multifamily maturities coming due, comprising hundreds of millions of dollars worth of quality assets in our target markets that may be forced to transact at adjusted market level prices. The story of how this landscape will evolve, including strategies for recapitalization, refinancing, or asset disposition at potentially reduced valuations due to increased interest rates and cap rate expansion, is still unfolding. Time will tell, and flexibility remains our north star as we navigate these ever changin market dynamics.

Thank you for being an integral part of our community. We look forward to keeping you updated on the latest developments in the real estate market and opportunities to grow your wealth through real estate at CF Capital. If you have any questions, comments, or suggestions, please feel free to reach out to us.

Wishing you a prosperous November!

Your Trusted Real Estate Partners,

Tyler & Bryan

Multifamily Real Estate Due Diligence: A Key to Successful Investing

Investing in multifamily properties can be a lucrative venture, providing a steady stream of income and potential long-term value appreciation. However, it is crucial to conduct thorough due diligence before committing to a multifamily property purchase. What is this central principle of investing and how can you perform such an investigation? Let’s discuss:

Understanding Real Estate Due Diligence

Due diligence refers to the comprehensive investigation and analysis of a potential investment or business opportunity before making a decision. It involves conducting thorough research, gathering relevant information, and assessing the risks and benefits associated with investment. Equipped with this information, you can make more informed decisions with your investment through accurate, reliable information. In short, the due diligence process maximizes the potential of your investment decisions.

Minimizing Risk through Real Estate Due Diligence

Due diligence plays a critical role in minimizing risks in multifamily real estate. By conducting comprehensive research, financial analysis, and property inspections, you can identify underlying issues that could impact the property's long-term viability. Understanding these risks will enable you to make informed decisions, protect your investment, and optimize profitability.

Research the Area

In addition to property-specific investigations, due diligence involves thorough research of the surrounding area. Understanding the neighborhood, local market trends, and demographic data is essential to gauge the property's potential and sustainability in the market. Factors such as employment growth, local amenities, vacancy rates, and rental demand can significantly impact the success of your investment.

Evaluate Property Conditions

During due diligence, it is crucial to inspect every aspect of the multifamily property. Conducting thorough inspections of individual units, common areas, and building structures allows you to identify any existing or potential issues. Estimating repair and maintenance costs accurately will help you plan your budget and make informed decisions regarding property improvements.

Analyze Financial Performance

A comprehensive review of the property's financial performance is an integral part of due diligence. Analyzing the rental income, operating expenses, and financial records provides insights into the property's profitability and alignment with your investment goals. Examining rental history, lease agreements, and payment records will help you understand tenant management practices and potential income stability.

Investigate Legal Compliance

Legal compliance is a crucial aspect of multifamily real estate due diligence. Thoroughly reviewing zoning restrictions, permits, licenses, and certificates ensures adherence to local regulations. This step helps you avoid potential legal issues and disruptions in the future. Identifying any potential legal disputes or liabilities associated with the property protects your investment and promotes smooth operation.

Assess Market

Assessing the market and the surrounding area is vital to make informed investment decisions. Analyzing local market trends, vacancy rates, and rental demand allows you to gauge the property's competitiveness and potential for growth.

CF Capital: Your Partner in Comprehensive Multifamily Due Diligence

Overall, conducting thorough due diligence is a crucial step in multifamily real estate investment. At CF Capital, we truly understand the paramount importance of conducting thorough due diligence in the multifamily real estate investment process. We prioritize comprehensive research, financial analysis, and property inspections to ensure our investments align with our investors' goals and objectives. This commitment to due diligence enables us to make informed investment decisions, minimize risks, and protect our investors' capital. Get in touch with our team, so you can start investing alongside our thorough team for your future.