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.”
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!
Chapters-
0:00 Intro: Why is Jake Stenziano So Frustrated?
0:37 The “Fireside Chat” on the State of the Market
1:29 AI Confirms: A 7% Return is Now “Very Difficult”
3:28Clarifying Our Focus: Cash-on-Cash and Profit Per Unit
4:35 Market Update: Occupancy Pullback and Flight to Quality
7:05 The Failure of Rent Control (New York & California)
8:41 How to Underwrite a Deal When Rents Are Going Backward
10:51 The “Gain to Lease” Trap: Be Honest with Your Numbers
12:29 Implementing a “Cadence of Accountability”
15:44 Running Multifamily as a Business, Not Just an Investment
19:32 A Day in the Life: Budget Season and Property Walks
22:13 The Cost Analysis System: Tracking Every Penny Per Unit
24:52 How to Create Value When You aren’t Buying Deals
26:52 Why Syndication is Extremely Difficult in This Market
28:55 The Power of Long-Term Holds Over Syndication Fees
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