Wealth and Wisdom in 5 minutes a Week

Despite recent challenges from high interest rates and too many new buildings hitting the market at once, multifamily properties are becoming the top choice for real estate investors in 2025.

Here's why this matters: Developers are dramatically slowing down new construction—with construction starts down to just 122,000 units over the past 6 months compared to peak delivery periods. At the same time, buying homes remains unaffordable for many, with monthly mortgage payments (principal and interest alone) having increased nearly 100% over the past 5 years while apartment rents increased only 28% over the same period.

The fundamentals are shifting decisively in favor of rental demand. All 50 of the largest US markets experienced positive month-over-month rent increases as of March 2025, and apartment rents now account for just 21% of household incomes—well below the historical average of 23%. This affordability gap, combined with wage growth that has exceeded rent growth for 28 consecutive months, creates substantial pent-up rent growth potential of approximately 9.5%.

Most fast-growing markets have already reached their peak of new apartment openings, with national occupancy rates hitting 95%—above the long-term average of 94.6% and considered "full."

With the supply pipeline dramatically reduced and demand fundamentals strengthening, it's an opportune time to consider apartment buildings, especially as the current rent growth drought—now in its 10th consecutive quarter of trailing inflation—appears poised to end as new supply continues to dwindle.

For investors: Multifamily is strong, disciplined operators that rightly sat on the sidelines over the last few years are buying and developing, they think there are considerable yields to be realized in this emerging cycle, and so do we.

"Be fearful when others are greedy and greedy when others are fearful." - Warren Buffett

This legendary quote from the Oracle of Omaha reveals one of the most crucial temperamental traits separating great investors from the crowd: the ability to manage emotions and make informed decisions based on facts, not fear.

I've spoken with numerous investors lately who are "waiting to see what happens"—uncertain and fearful about current market conditions. This emotional paralysis is exactly when the best opportunities emerge for those disciplined enough to act on data rather than sentiment.

During the 2008 financial crisis, while markets crashed and investors fled in panic, Buffett deployed over $15bn in strategic investments, including $5bn into Goldman Sachs and major stakes in General Electric. He famously wrote in his New York Times op-ed: "A simple rule dictates my buying: Be fearful when others are greedy and greedy when others are fearful." Those crisis investments generated billions more in returns as markets recovered.

The most successful investors understand that uncertainty creates opportunity. When others are paralyzed by fear, mis-priced assets become available to those with the conviction to act on solid fundamentals rather than market sentiment.

This principle applies beyond stock picking to all investment decisions. The ability to separate emotion from analysis—to recognize when fear is creating value rather than signaling danger—distinguishes professional investors from those who buy high during euphoria and sell low during panic.

Great investing isn't about predicting the future; it's about maintaining discipline when emotions run high and having the temperamental fortitude to act decisively when the facts support it, regardless of crowd sentiment.

In this first edition of our financial concepts distilled for the layman, we’ve got a 3 part series for you that will break down what a cap rate is, how it’s calculated, and how it’s used in the real world of investing.

To read part one, click here: What Actually IS a Cap Rate?

In his book "The Psychology of Money," Morgan Housel makes a profound distinction between the pursuit of wealth and the pursuit of status:

"People want wealth to signal to others that they should be liked and admired. But using money to buy respect prohibits it from being used to gain independence and autonomy—which are, counter-intuitively, the real prizes of wealth."

This observation cuts to the heart of why we invest in the first place. The true purpose of building wealth isn't to impress others with visible status symbols, but rather to create freedom to live a more meaningful life.

The true irony here is that when we outsource our value or respectability to the imagined perceptions of others by playing the status game, we actually respect ourselves less. When we use money to create margin and use that margin to live authentically according to our highest values, deep self-respect is the natural outcome. Then it doesn't really matter whether other people respect you or not—although, in my experience, I respect people the most who respect themselves.

True wealth is measured in time, not dollars. It's about having the freedom to make choices based on what brings meaning and joy rather than financial necessity. It's about defining "enough" for yourself and recognizing when you've reached it, rather than perpetually keeping up with imaginary Joneses.

As you review your investment goals this week, consider asking: Am I building wealth to impress others, or am I building it to secure my freedom and live according to my values? A simple exercise here is to look at your wealth not so much as a net worth or income number, but as a measure of the margin in your life. Use the 5 whys. For each financial goal you're pursuing, or each large recurring expenditure—house, second house, luxury vehicle, yacht, etc.—ask yourself: Why do I have this/want this? Why? Why? Why? Why?

The answer might change not just how you invest, but why.

Find out who are, what we do differently, and why our we only work with the top 1% of private equity sponsors and operators to put investors first. Always.

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