Downside for buying small properties unlevered: lower IRR

Sometimes, lower MOIC

Upside: Protect basis during macro downturns

Maximize whole $ profits ("you can't eat IRR")

Significantly less risk of "losing your equity"

Lowers transactional friction (lending process the same for $2m and $40m deals)

Time-horizon and business plan optionality

Most surprising benefit: can offer compelling seller financing at exit to enhance pricing

Current investment market conditions favor real estate debt vs. real estate equity

We like real estate equity, unlevered or low-leverage

In real estate investing, there's a fundamental tension between DURATION and LIQUIDITY.

Benefits of long DURATION in a real estate fund: frictionless compounding of interest, ability to harness Operating Company Value, the power of scale, knowledge of your own assets, data / information. We've materialized this first-hand in our employee housing, neighborhood retail, and vacation rental platforms.

I feel very strongly that real estate investing performs best over long time-horizons.

BUT, it is at the expense of LIQUIDITY to LP investors, who have their money tied up for the long-term with one sponsor / investor.

Paramount to getting comfortable with DURATION: TRUST. Can you TRUST your manager. Who are they as a person. And TRUST is impossible to build in one meeting or one dinner.