I wanted the boring version and I accidentally bought the risky version

I put $60k into a 220 unit apartment deal in 2022. I picked it because a friend I trust was already in it and because apartments felt like the least exciting thing available, and I wanted unexciting. I asked three questions on the call and they were all about the property. Age, occupancy, what the neighborhood was like.

What I never asked about was the loan. I found out this year, reading a quarterly letter properly for the first time, that the debt was floating rate on a three year bridge with an interest rate cap that expired before the loan did. Distributions ran for five quarters and then stopped. They've been stopped for two years. There was a capital call last spring, I funded $7,200 of it, and there's language in the latest letter about exploring options with the lender.

The thing I got wrong wasn't the property. Occupancy is 92% and the buildings are fine. Apartments were the boring choice. Floating rate bridge debt with a business plan that has to work on schedule is not the boring choice, and nobody lied to me about it. It was in the documents I skimmed.

I now know the distinction I was missing. Fixed rate agency debt on a stabilized property is the version of this I actually wanted. It's slower, the projected returns in the deck are lower, and the deal survives a bad two years. The version I bought needed rents to rise and rates to stay put.

What I'd do differently is one question, asked first. Is the loan fixed or floating, what's the term, and what happens to this deal if the plan takes twice as long. If the answer is complicated, that's the answer.