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Three Multifamily Trends Investors May Not Like


1) More money chasing fewer deals

Nabbing a multifamily deal today is almost as elusive as getting a rose from Juan Pablo, so Institutional Property Advisors Texas executive director Will Balthrope (center between IPA Texas partners Scott Lamontagne and Drew Kile) anticipates more assets coming to market later this year while capital remains eager to purchase. The situation should change as developments stabilize and become ready to sell. Additionally, many loans made seven to 10 years ago are beginning to mature, causing more assets to hit the market later in the year.


2) Selling core pre-stabilization

As institutional buyers seek new construction assets (while avoiding a competitive bid frenzy), Will says he sees them look at completed assets that are in the process of leasing up. The general rule is that these buyers want the assets to have achieved final certificate of occupancy so there is no longer construction risk. (If this were the NBA draft, these buyers would only take college grads.)


3) Increased out-of-the-box interest

That means more interest in Class-B assets, secondary markets, and other situations where buyers can find higher yields and less competition. While this strategy will generally not be used by core, institutional investors, many other private and hybrid buyer groups are seeking higher yields in Class-B and C assets, and in secondary markets, Will tells us.