An epic tax‑aware investment crossed my desk recently, targeting mid‑to-high teens net of fees and taxes.
And it exists because of a weird moment we’re in right now.
Over the last cycle, a lot of developers did… let’s call it “creative” underwriting:
- Aggressive rent‑growth assumptions
- Floating‑rate debt
- Thin reserves
Looks great in a pitch deck. Falls apart when:
- Rates spike
- Construction costs blow out
- Rents roll over
Now those same developers need to save face and keep projects alive, which means they’re willing to offer extremely attractive terms to capital that can step in today.
In this environment, the sweet spot for risk‑adjusted returns often isn’t common equity – it’s preferred positions, especially when you know how to structure them for tax efficiency.
One particularly interesting pocket right now is Austin:
- Temporary oversupply
- Strong long‑term fundamentals
- Ability to come in below the original developer’s basis
It’s the kind of setup that shouldn’t exist in “normal” markets – and probably won’t for more than the next 18–24 months.
It also highlights why being active in the tax‑aware alternative space matters:
- You can be nimble and opportunistic
- You get paid for complexity – you can’t replicate this exposure with an ETF
- You can structure (depreciation, loss flow‑through, etc.) for maximum tax benefit
In a world of stretched equity valuations, capturing little‑known opportunities like this is one way $5M+ investors improve their odds of hitting long‑term after‑tax return targets.
If you want to see how this type of preferred, tax‑aware real estate could fit into your broader plan, and how we’d pair it with long/short and hedge funds, the easiest way to explore it is a brief call – the link’s in my profile.