💰 Investors are cashing in on court cases. Here's how.

👋 Hello, Best Ever Community! CBRE has declared that the multifamily market has bottomed out. Goldman Sachs’ head of real estate said the same of the broader CRE market. Get your popcorn ready. 🍿

In this week’s newsletter, litigation funding gives investors options, passive investors learn mistakes to avoid, and deal flow picks up.

Today’s edition is brought to you by BAM Capital, a leader in innovative investment solutions aimed at maximizing returns and building wealth for accredited investors.

Join BAM Capital on Thursday, August 29, at 2 p.m. EST for an exclusive webinar: 5 Due Diligence Strategies Every Passive Investor Should Know. Sign up here to save your seat.

CRE time!

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CRE HEADLINES

🤠 Y’all Street: Dallas is now second to NYC in finance industry employment. Texas investment-banking jobs grew 111% over 20 years and 27% post-pandemic, far outpacing New York's growth. Overall finance employment in Texas increased 13% since 2019, compared to 2% in New York and 3% nationally.

❤️‍🩹 Recovery Signs: The multifamily housing market is showing signs of recovery with increased demand and stabilizing vacancy rates. Absorption rates rose from 118,000 to 166,000 units in Q2. This, along with modest rent growth projections and vacancy rates expected to peak at 8.1% in early 2025 before declining, could signal expanding fundamentals in the next six to 12 months.

💥 Data Boom: New data centers are being occupied faster than they can be built. Demand from Big Tech for AI and cloud services is outpacing data center supply despite more than 10% inventory growth in primary U.S. markets during the first half of this year. 

🏘️ Record Deliveries: U.S. apartment construction is expected to deliver a record 518,108 units in 2024, with the top 20 markets accounting for 60% of new units. NYC leads with 32,935 units, followed closely by Dallas. In total, there are two million apartments set to come online by 2028.

💰 Hyatt’s Big Buy: Hyatt Hotels Corp. is buying Standard International in a deal valued at up to $335M. Meanwhile, Sonder and Marriott have signed a 20-year licensing deal, expanding Marriott's short-term rental offerings while giving Sonder access to Marriott's global network and loyalty program.

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INSIDE THE WORLD OF LITIGATION FUNDING

With high interest rates taking a toll on real estate prices, and 11 of the last 14 fed rate hikes ending in a recession, investors are reallocating into recession-resilient alternatives to real estate and the stock market. One of the long-established and fast-growing options — and one you likely haven’t heard about — is litigation funding.

Litigation funding is a financial arrangement in which a third party provides funds to a law firm to cover the costs of a lawsuit. These costs can include attorney hourly rates, court fees, expert witness fees, and other expenses associated with pursuing a legal claim. These law firms often defer payment and work on contingency. Investors returns are derived from these cases’ settlements.

Litigation funds typically spread investor capital across cases in commercial litigation, personal injury, mass torts, class action lawsuits, and other legal disputes where the litigation costs, and potential settlements, are substantial. One such fund, offered to accredited investors, is Passive Investing Mastery’s Diversified Litigation Portfolio, which targets high-value, late-stage lawsuits with plaintiffs such as:

• Soldiers who drank contaminated water at Camp Lejeune

• Farmers battling cancer from pesticides like RoundUp

• Firefighters with illnesses from chemicals in the foam they use to put out fires

The appeal for investors is that litigation funding leverages the stability of the legal services industry and yields returns that are not correlated to common investments like real estate, energy, and stocks, which can be subject to volatility. 

“Market instability doesn’t influence the outcomes or amounts awarded in these cases,” Patrick Grimes, CEO and founder of Passive Investing Mastery said. “Consequently, these investments offer returns that are independent of broader market fluctuations, ensuring stability and consistency even during economic downturns.”

Investors yield returns derived from settlements while benefitting from diversification on two levels:

• The Markets: Those over-allocated in real estate and stocks benefit from a non-correlated investment and reduced exposure to the volatility of traditional markets.

• The Cases: Many portfolios, including Passive Investing Mastery’s Diversified Litigation Portfolio, spread risk across thousands of lawsuits, encompassing a broad spectrum of legal cases, and America’s leading litigation law firms.

WHAT IT ALL MEANS

In a world where investors have more options than ever, litigation funding is emerging as an appealing non-traditional, non-correlated option for those seeking true diversification. The potential for attractive returns combined with low volatility — and the opportunity to do some good in the process by providing support for victims of corporate misconduct — are all key factors that make litigation funding one of the fastest-growing alternative investment classes available.

👉 To learn more about litigation funding and Passive Investing Mastery — and to access a free investor kit — click the button below.

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MAXIMIZE RETURNS, BUILD WEALTH

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With over 1,400 investors and $1.3 billion in transactions, BAM Capital is a leader in the industry. Their focus on institutional Class A multifamily assets means you’re investing in properties with significant upside potential. Plus, they handle everything — from finding the opportunities to managing the assets — so you can enjoy cash flow-positive returns.

Act now, and see why thousands of individuals partner with BAM Capital.

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TOP SYNDICATION MISTAKES LPS MAKE

Being an LP isn’t easy. Choosing the right syndicators, the right investments, knowing what to focus on in investor decks — it can be overwhelming.

At this year’s Best Ever Conference, passive investor advisor Aleksey Chernobelskiy joined us to discuss the top 15 syndication mistakes he sees LPs make, highlighting what aspects LPs should consider most carefully when passively investing.

Here are a few of his top cautions for LPs:

• A Sub-65% Split to LPs: When assessing syndicated real estate deals, Chernobelskiy says, a below-market LP split (less than 65%) is something to be wary of. It is not a reason to reject the deal, but it is a reason to investigate further. For instance, he says, if you find that the deal also offers a 10% pref, the conversation changes.
  
  📣 “If you see a deal that is a 60% split to LPs … that's a little bit off,” he said. The entire investment process is one of checks and balances. So [a sub-65% split] is not a reason to pass, it's just the reason to search for other things that might compensate.”
  

• Social Proof Tactics: Chernobelskiy estimates that roughly 50% of the time, when a deal goes sideways — it results in a capital call, a foreclosure, etc. — the LP says they invested in that deal because of the syndicator’s celebrity, social following, deal volume, or even out of nepotism. This, he says, is one of the easiest tactics to fall for.
  
  📣 “It's nice that someone has a following,” he said. “It's nice that they're famous. But as an LP, you need to be actively fighting the urge to make conclusions based on social tactics.”
  

• A +3% Acquisition Fee: Fees are an important part of the GP business. LPs should be wary of GPs that say they don’t take fees — again, he says, it’s not a reason to pass on a GP, but cause for caution. Typically, acquisition fees run from 1–2%.
  
  📣 “What I would recommend LPs understand is that the fee is always a percent of the purchase price,” he said. “And so if there's leverage involved, you're actually down on your investment day one. So the higher the fee is, the bigger that hurdle is.”

The 2025 Best Ever Conference will be upon us before you know it. If you haven’t secured your ticket yet, today is the day.

Prices go up on September 1, and if you register before August 31, you’ll get exclusive access to all the sessions from 2024, including Aleksey’s full list of 15 syndication mistakes LPs make.

Click the button below, use the code BestEver10 to receive 10% off your conference ticket, and secure your spot for BEC 25 today!

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CRE DEAL FLOW IS PICKING UP

CRE Deal Flow is showing signs of revival as property sales have increased in core markets.

Midyear CRE transaction volume for 2024 nearly matched all of 2023, with Q2 outpacing Q1, signifying increased momentum in deal volume across CRE assets (office, industrial, retail, multifamily, and hospitality). This shift is likely a key factor behind the optimism we’ve seen from CBRE, Goldman Sachs, and others.

Multifamily is bouncing back, too. Total multifamily deal volume rose nearly 3% in the first six months of the year to about $39.6 billion, according to CoStar data, with Blackstone leading the way with its $10 billion purchase of AIR Communities.

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DOUBLING THE VALUE OF A BAY AREA PROPERTY IN 4 YEARS

Max Sharkansky and the team at Trion Properties nearly doubled the value of this Bay Area suburb property in just four years. Here's how they did it👇

🏢 Property Details: The 38-unit apartment complex was purchased in January 2016. It’s located in San Leandro, California, which is a nearby suburb of San Francisco and considered an emerging high-tech feeder community of the Bay Area.

💸 Finances: The property was purchased for $7.2 million with $765,000 in capital raised for the down payment, closing costs, and cash reserves. The team secured a $6 million bridge loan at 4% interest with a 30-year amortization period.

💼 Business Plan: $15,413 per unit was allocated to interior renovations such as flooring, paint, appliances, kitchen upgrades, and bathroom upgrades. $267,000 was allocated to exterior renovations such as re-branding, a new facade, and common area improvements. The team refinanced in 2017, just one year after purchase. And by the time the property was sold, rents had been raised from $1,131 to $2,236.

🍾 Projected Results: The property was sold in August 2020 for $13.1 million. Investors realized a 33.41% IRR and 2.85X equity multiple on their initial investment. The Trion Properties team increased the property’s NOI by nearly 2.5x during the duration of ownership.

If you have a deal you'd like us to feature, share it with us!

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FREE DOCUMENT DOWNLOAD

5-Step Process for Securing Passive Investor Commitments

Congrats! You’ve done your due diligence and locked in financing on your deal. Now, you just need to secure commitments from passive investors to fund it. Oftentimes, easier said than done. This document outlines a five-step process for securing enough commitments to cover 30-40% of the project costs to close on the deal.