Is the Real Estate Market Broken? Why 4.5% Returns Are the New Normal (And What to Do)
The real estate market is stuck in a frustrating holding pattern, and even seasoned investors like Jake Stenziano are feeling the pain. With interest rates still elevated and sellers demanding 2022 prices for 2025 deals, achieving that golden 7% cash-on-cash return feels impossible—and AI data confirms it's now considered "very difficult."
Jake & Gino: Real Estate Investing & Multifamily · Jake Stenziano, Gino Barbaro
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Show Notes
In this episode, Jake and Gino get real about the current state of the market, why underwriting deals has become a nightmare, and the crucial shift investors must make from "buy right" to "manage right" to survive this cycle. Learn how to implement a "cadence of accountability," control your expenses with a fine-toothed comb, and create immense value in your existing portfolio while you wait for the acquisition market to thaw.
🔑 Key Takeaways:
☑️ The 4.5% Reality Check: Achieving a 7% cash-on-cash return is now "moderately to very difficult" in most major metros, with realistic returns hovering around 4.5%-5%.
☑️ The Underwriting Nightmare: With rents pulling back and sellers wanting premium pricing based on future growth that isn't happening, traditional underwriting models are broken.
☑️ Beware the "Gain to Lease" Trap: Be honest with yourself—your "loss to lease" might actually be a "gain to lease" where your current rents are higher than what the market can support.
☑️ Shift to "Manage Right": When you can't buy new deals, you must focus on optimizing your current portfolio. Implement a "cadence of accountability" with weekly L10 meetings, daily reports, and rigorous property walks.
❓ Question for the Audience: Are you finding it difficult to underwrite deals in the current market, and what is your minimum acceptable cash-on-cash return right now? Let us know in the comments!
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About Jake & Gino: Jake & Gino are multifamily investors, operators, and owners who have created a vertically integrated real estate company. They control over $350M in assets under management. Connect with Jake & Gino here --> https://jakeandgino.com.
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