The biggest losses in real estate often happen when investors run out of time, not when the market goes down.
Experienced investors understand that losses are typically realized only when a property has to be sold during a downturn.
Many of the investors who struggled were operating with short-term debt, floating-rate loans, or too much leverage. Their financing expired before the market had the opportunity to recover.
The investors who had structured their deals with longer runway were able to hold through the cycle.
As markets recovered over the following years, many of those investments regained their value, and in many U.S. markets, home prices eventually exceeded their previous highs.
The lesson is simple.
The strength of an investment is not measured only by its returns.
It is measured by how much time the structure gives the investment to succeed.
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