Apartment Active investors buying too many door too quickly ??

[Hament Raju Mahajan]

I know over 5 Deal sponsors (active partners) who syndicate Multifamily apartment deals (they raise money from passive investors and manage the project) .

I see that in the last couple of years most of them talk about picking at least 2 deals  (value 10 + Million) and most of them have achieved (or have a target of ) getting over 1000 doors in the next couple of years.

I am based in the San Francisco Bay Area. Yes I see that real estate investment sentiment is at its top ...there are many passive investors who would like to put money to these projects based on projections  and finding money is the easy part now.

I am  how ever  not  convinced on the part that a sponsor group which probably has not seen a contraction (downturn) in market and they are buying too much too soon . Like to get perspective on how they are going to handle a market downturn  when you have so much of product in a given market  of similar type.

How would these 1000+ apartment holders(active partners)  handle these projects  when the prices and rents  go down , interest rates go up and projects need new capital infusion to survive. If we get into that market cycle how are the sponsors going to react who generally do not bring any (or very little ) money from their pocket