Month: December 2025

Jewels of Wisdom Newsletter – Why Haven’t Mortgage Rates Gone Down Yet?

Why are Mortgage Rates Still Above 6% (as of Friday, Dec 12)

Mortgage rates are actually set by investors who view risk & reward in the same way you do. To illustrate the reason why mortgages are still above 6%, allow me to do a demonstration: (assume you have $300,000 to invest)

Would you loan me $300,000 at 12% interest? Many readers actually make loans like this to Diamond Equity (my company) often. I assume this is because the 12% is an attractive return compared to competing opportunities AND our track record and strong balance sheet offers lower risk

Would you loan me $300,000 at 6% interest? Most readers would NOT make this loan. They have better opportunities to earn more than 6% OR don’t want to risk their money being tied up at 6% in case something better comes along.

Would you loan me $300,000 at 4% interest? We all agree that no one reading the Jewels of Wisdom newsletter would make a private loan at 4% to fund a fix & flip investment deal. We would rather leave it in a money market account safely earning 3% with no risk.

This is How Mortgages Work

The money to fund those 6% mortgages comes from bonds. Bond investors are people like us and institutional investors (life insurance companies/pension funds).

Why Were Rates so Low for so Long?

Until early 2022, the Fed was buying mortgage bonds. The fed was willing to “lend” into mortgages at rates as low as 2-3%. In other words, using the example above, it would be like the Fed lending the money to me at 2-3% interest.

Once they stopped buying those bonds (lending through mortgages), rates immediately jumped to the 6-7% range. This is the market driven rate of return investors expect in today’s market if they are waiting 20-30 years to have their money returned.

Don’t Count on Rates Dipping Below 5-6%

I recently wrote about The Maturity Wall, where the high interest rates have arranged a dirty bomb in commercial real estate similar to what occurred in 2008 in the residential housing on account of adjustable rate mortgages.
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6% Mortgage rates are the “normal” rates over the course of our lifetimes. During the time from 2008 (shaded area is recession) through 2022, the Fed was “buying” the mortgage bonds and receiving 3% return on their investment. Now, they are not.

We can expect rates to settle in this 5-6% range for the next few years unless we enter recession. If the overall economy falters significantly, and the Fed buys mortgage bonds again, that is when we could expect to see 4% mortgages. I don’t have high hopes in this occurring anytime soon.

Have a Value Add Deal For Sale? Here’s our Buy Box:

Industrial & Commercial Property, 10K sq. ft. – 250K sq. ft.
Mobile Home Communities (50 pad minimum)
Well located Retail Development Sites
Residential MFR & SFR
Ideally long term rented asset with below market rents

Recent Portfolio Exit Volume

2021 $54,615,000
2022 $54,547,000
2023 $57,489,000
2024 $56,031,000
2025 YTD $55,921,000

Jewels of Wisdom Newsletter – You don’t deserve heat – That’s what my dad told me growing up.

The Fireplace Fallacy: Why You Aren’t Getting “Heat”

Imagine standing in front of a cold, empty fireplace and screaming at it to keep you warm. It sounds ridiculous, yet this is exactly how the majority of aspiring real estate investors approach the business. They stand before the marketplace with a sense of entitlement, believing they’re just going to find a deal for sale that is profitable at the list price.

Don’t Mistake Movement for Progress

Even those who are willing to put in effort often fall into the trap of dragging heavy stones into the hearth. They exhaust themselves carrying the dead weight of busy work—perfecting logos or organizing desks—genuinely confused why their backbreaking labor yields no sparks. In this business, rocks might feel heavy like work, but they will never burn like wood; effort alone is useless if it is applied to the wrong materials.

The Skill is Knowing Where to Dig

Real success comes from venturing out into the snow-covered field of the market to find the hidden logs. The “magic” isn’t in how hard you carry the fuel, but in knowing exactly where to dig to find the deals that others overlook. Experienced investors work smarter, not harder, gathering high-quality wood that ignites easily, realizing that you must provide specific value to the fire before it will ever provide heat to you.

Proverbs 25:2 “It is God’s privilege to conceal things and the king’s privilege to discover them”

Anyone I’ve studied who built lasting success has built in this manner. Discovering the nuanced & effective actions and then repeating them over and over. It’s actually simple, but not easy.

Success & deals are discovered through intelligent effort and high level execution. And yet, sometimes a deal is had through luck by an idiot. I’ve found the latter to be tough to repeat-better to build a business on sound strategy, tactic, decisions, & effort than luck.

Stones: Heavy Lifting, No Heat (Busy Work)

These tasks feel like work because they consume time and energy, but they do not generate revenue. They are heavy to carry but will never catch fire.

Organizing the CRM: Endlessly color-coding your database or shuffling old, cold leads instead of generating new ones.
Endlessly Touring Property: You can see all the properties you want, but without an offer made, you have nothing.
Doom Scrolling the MLS, Zillow, Loopnet, Etc: Daydreaming over listed property might feel good, but you have to take action!

Wood: The Fuel for Profit (Revenue Generating Activities)

These tasks often require digging through the “snow” (rejection), but they are the only things that create heat (money).

Making Offers: Putting a specific price and terms in writing and presenting it to a decision-maker.
Follow-Up: relentless contact with warm leads who aren’t ready to sell today but will be ready tomorrow.
Live Conversations: Speaking directly with property owners about their motivation to sell.

Personally, I’m ALWAYS on the hunt for Heat, those good, profitable deals. If you have one, I am ALWAYS buying, open to Joint Ventures, and write many checks throughout the year into Private Placement deals. Feel free to email me back. (You sign up for this newsletter to get my personal email address)

Additionally, I’m ALWAYS on the hunt for our next Acquisition Manager. Ideal Ac Man’s have made $70K-$100K per year in a sales job before, want to double that, and know the cost, in effort, to create that result. Find me if this is you. Convince me of your “heat” with more than a resume.

Have a Value Add Deal For Sale? Here’s our Buy Box:

Industrial & Commercial Property, 10K sq. ft. – 250K sq. ft.
Mobile Home Communities (50 pad minimum)
Well located Retail Development Sites
Residential MFR & SFR
Ideally long term rented asset with below market rents

Jewels of Wisdom Newsletter – 2026 will be the Year if the Operator

The Grind vs. The $1.8 Trillion Wall

There is a misconception that real estate is a “passive” game. We are sold the dream of sitting back and collecting checks while the market does the heavy lifting.

But in 2025, the investors who relied on the market to do the work for them are in trouble. The era of “lazy capital” is over, and the era of the operator is back.

The “Easy Money” Crash Between 2020 and 2022, too many investors got comfortable. They bought properties with short-term bridge debt, assuming low interest rates were a permanent law of nature. They didn’t hustle to create forced appreciation; they leveraged cheap debt to fake it.

Now, those bills are coming due.

We are staring down a $1.8 Trillion commercial real estate “Maturity Wall” by 2026. These loans are expiring, and the owners can’t refinance. Their properties are worth less than they were three years ago, and rates have doubled.

Why Hustle is the New Equity This is where the separation happens. While the passive investors are paralyzed by negative leverage, the real operators are engaging. You actually have to WORK the deals in order to generate the return.

The Opportunity: Thousands of owners are holding assets they can no longer afford. They don’t need a “market price” offer; they need a solution to a debt problem that is about to drown them.

The Work: These deals aren’t just sitting there waiting to be picked up effortlessly. You have to make offers, often below what the sellers paid in 2020-2022. Then you have to have the capital to close & complete improvements.

As value add investors, we buy “as-is” because we aren’t afraid of the mess. We aren’t afraid of the work required to stabilize a property that a “lazy” landlord let slide. Plus we have the cash necessary to do the work.
The Maturity Wall is scary for the passive investor. But for us? It’s the greatest buying opportunity of the decade—if you’re willing to put in the work.

Have a Value Add Deal For Sale? Here’s our Buy Box: