Cash flow covers property management, taxes, insurance, repairs, and mortgages. Without it, owners still owe these bills. A $1 trillion wave of loan maturities hits in 2026, many underwater, forcing sales and squeezing cash flow across the market.
Cash flow is the lifeblood of any property. Cash flow is what is used to pay the expenses of the property, like your property management, like your taxes, like your insurance, like your repairs. Cash flow is also what you use to pay your mortgage. And then if there's anything left over, you can make distributions. It's a simple way to say it, but if you don't have cash flow, you still have to pay all these other things. So the next question is, well, how are you going to do that? If you're in a deal with, I would say, heavy value-add where they're going to do a significant amount of renovation and hope to get the cash flow up through this renovation program, then you need to understand how long of a runway do I have before things get serious, right? If I don't hit cash flow breakeven, because every month the mortgage statement's still going to get sent to me and I still got to pay that. Every year I still got to pay my property taxes or the county might file a lien on my property, right? These are things that you have to manage. And so at the end of the day, cash flow is king. And while there can be cycles of valuations, right? So there's kind of this compounded impact right now in the market where not only have we not had rent growth for the past few years, we've had higher expenses. Right, that have hurt cash flow. We've also seen cap rates, which is the valuation of that cash flow, go up or in the valuation scenario, the values have gone down. All these things are putting pressure on all these deals. And I would say we're at the bottom of the multifamily market, right? And we have a lot of other research to support that. But if you're forced to sell right now, where a lot of deals are going to be forced to sell this year, let's just be real. $1 trillion of loans are maturing this year alone, 2026, and most of those deals are underwater. The problem is if you don't have cash flow, you can't make it through the downtroffs. You can't make it through the challenging times because at this point, if you can make it through the bottom, you can actually have some hope to pick up the next uptick, the next bull market if you have cash flow. So again, cash flow is a— one, it's a great just reduction of risk because if you have cash flow, you can pay all those bills. If you don't get the upside that you're hoping for, you're at least not draining cash, bleeding cash, having to put more money in and putting good money after bad. And two, it helps give you some stability through the market cycles. And that's the real, real important part is real estate is cyclical, right? It's not always straight up to the right every single year, like a lot of people think it is when you're reading these books. You have to manage the cycles. Cash flow is the best way to do it.
