All Forum Posts by: Mark Kenney

@Brian Burke, Agree 100%! I would say there are certainly some differences between the last cycle and this cycle, but applying all lessons learned is critical. 

@Denise Supplee, Thanks for your comment and I am glad to hear you and others are discussing the tough topics! These discussions are not fun, but they are absolutely invaluable and 100% necessary. 

I just sent you a request to connect. 

@Mike Dymski, No doubt about that...I have been living this market. I do find it ironic that people are only calling out syndicators when 150 year old trillion dollar firms are having properties foreclosed on. Or, when someone's wealth manager invests someone's money into a stock that loses money, this is somehow different. 

@Errol Graham, location is one aspect for sure and a critical one. For example, location will control things such as the eviction process, rent control, new supply, debt options, crime, insurance, property tax, cap rates, etc.

A couple real examples on deals we own and the impact on location…

A year ago, it was still taking 16+ months to evict in one city we own in. So, people just didn’t pay. Be aware that evictions are at the county level…so, a so-called landlord friendly state might not be true for some states.

One property in a coastal area we own saw our insurance go from $1.2M to over $3.2M in one year…yep, these are real numbers. Not sure how a property can sustain a $2M increase in insurance.

Property taxes can kill a deal as well.

Cap rates – one city we bought a deal in 2022 had all the great market stats, but cap rates in that city went from 4.4% in 2022 to 7.5% in 2024. To put this in perspective, a $22.7M deal in 2022 was worth $13.3M in 2024. This is over $9M lost. So, imagine trying to do a sale or refinance on this deal. Another deal we own in a more boring market saw cap rates go from 7.5% to 8% from 2022-2024. For the same NOI, this market would have only gone down by $830k in value. Much easier to handle if you have to sell or refinance.

There are opportunities in a lot of locations. I do think some of the more boring markets such as the Midwest (I grew up in Michigan) are typically very good options. One of the reasons being...there is generally less pricing fluctuation as I explained above and it can be more predictable. In some cases you might not get the major homerun on appreciation, but you also might not get those huge decreases in values either.

If you are an out of state investor, I would highly recommend having someone local look at your deal. There are a ton of lessons learned on asset management from my side. Too many people underestimate the effort involved to property asset manage a deal.

Hi John,

The issues and distress that is being experienced is related to deals bought previously. This distress is actually opening up a whole new set of opportunities for people who want to buy now. The one caution is...find out what people have learned from this cycle and what adjustments (in some cases, major adjustments) they will make going forward. If you understand what caused the distress and how you can help avoid these same mistakes, you will be in much better shape.

There are actually a lot of advantages to getting started now. For one, pricing is way down; less buyers; and selling brokers have a lot more time these days to spend with people getting started.

@Syed Ahmed

Thanks for commenting!

Each deal is a bit unique. For example, if your lender is an operator themselves, the discussions and outcomes might be very different. Or, if your lender sold your loan off, that can restrict what they may/may not be able to do for you. Knowing that a lender will likely ask you to sign a Pre-Negotiation Agreement (PNA) and what the "gotchas" can be in the PNA is important. Knowing that a loan modification with a lender could just be kicking the can down the road and put you in a worse position. While other loan modifications could be very good. 

Understanding your loan documents and when strapped for cash, what is the best use of the money you have. For example, if given a choice, are you better off paying a lender who has filed a lien; or paying your lender the mortgage? I am not suggesting or indicating what you should do in this situation, but I can tell you that once you understand your loan documents, you will be able to make "better" decisions.

Understanding which GPs can make which decisions and other important aspects such as does a 1031 investor get to decide on what the ultimate outcome is.

On the capital raising side...the reality is many investors are just tired and frustrated and this is totally understandable. However, looking at a deal that is stabilized and needs money as a cash-in refinance is much different than putting money into a deal that is not stabilized and still on short-term debt. I am not saying what an investor should/should not do with their money, but too many investors are looking at a member loan/capital call with the same for every deal...this in my opinion is a mistake.

Understanding what the future financial obligations can be on a deal even if you sell a property. And, how a "hope note" can impact this. Not to mention what are the tax implications on each scenario.

Some of the lessons learned can certainly be used to help on current distressed deals, while other lessons can only be applied to future deals.

@David Briscoe

Great question! 

If nothing else, this market cycle has shown many partners' true colors. It's a small world, so ask around.

Understanding how someone has behaved in this cycle is very important. Many people are out there simply "bashing" anyone who has had issues on deals. Even the trillion dollar funds have had issues on deals. 

Losing money or having a property in trouble does not mean someone lacks character or integrity. Don't get me wrong, there are a lot of people (not just syndicators) who have done things wrong, but that isn't the norm.

So, it is important to understand what a potential partner has done over this last cycle and what they plan on doing differently going forward. If someone has not been in this past cycle, I personally would not even consider partnering with them if I was a newbie.

My philosophy has dramatically changed due to the issues we have had. I have a new perspective on...

- Which markets to buy-in (I have bought in 15 states and some I would never buy in again)

- Type of debt 

- Who I will partner with and how to structure partnership agreements

- How taxes truly impact an investor and how to plan for major tax surprises

- Types of deals...cashflow vs. value-add

Hey BP Community,

I’ve been in the multifamily space for a long time — 120+ deals, $1B+ in transactions — and I can honestly say this is one of the most challenging seasons I’ve ever seen.

In 2024, I exited 20 deals — and not all of them by choice.
It was painful. Financially, emotionally, relationally.

But here’s the crazy part…

No one’s really talking about what they learned.
Some folks have gone silent.
Others are still acting like it’s 2021.

Meanwhile, behind the scenes:

• Deals are bleeding cash

• Lenders are backing away

• Insurance costs are exploding

• Operators are quietly scrambling

Here’s what we’ve had to navigate — and none of this is theory:
- Loan maturity issues
- Capital calls (fun times…)
- Deed-in-lieu negotiations
- Rescue capital and complex structures
- Exit plans under massive pressure
- Forced sales

We’ve taken our share of hits. But we’ve also learned. A lot.

Not all lessons come from wins — in fact, most don’t.

So I'm curious: How are YOU approaching distress right now?

• Are you proactively repositioning deals?

• Having hard convos with lenders early?

• Raising capital from both current and new investors?

• Looking at deals others are too scared to touch?

I’m happy to share what’s worked (and what hasn’t) — especially if it helps someone else avoid costly and stressful mistakes. This is a time for real strategy, not just theory.

Let’s talk.

There are a lot of good comments in here. We have purchased 18,000 units and have used 3rd party mgt. I do wish we had self-managed though for the control, transparency, consistency, etc. 

If you’ve ever syndicated a deal that included 1031 exchange investors, I’m curious:

Have you run into any challenges?

If yes, please share your experience.