Multifamily PEAK coming to fruition?

[Joel Owens]

I have been saying this for awhile that the market is frothy and that IF you buy larger multifamily you better be using conservative underwriting numbers.

Those placing money into properties with the prediction of above markets numbers continuing indefinitely you are in for a big surprise.

Multifamily Overbuilding

[Joel Owens]

I have seen frothiness all over. There are still deals but you have to stick to your numbers and not deviate. Do not let the herd mentality make you feel like you need to buy something because you will lose out on a hot market etc.

The investors I know who have been doing it for decades and decades are very controlled with their investing strategies.

I had a client years ago who owned 300+ units spread across 10 buildings. Some they bought right and the others were over inflated thinking a market would keep rising so they took on more debt. A downturn happened and now a few properties made them money but they overall were negative for the portfolio because they had to take money to prop up the bad properties.

I did not know them when they purchased and would have counseled against that.

It's better to have quality properties and buy NOTHING more than to buy marginal properties to grow the portfolio or feel like you need to be doing something. Instead if you only bought 1 property a year but it was a great property in 10 years you would likely have an a excellent portfolio. As your network expands you tend to be more exposed to more opportunities. When people know you are a closer you usually get brought the best properties.