2022 investing strategy

[Jason Malabute]

I invest in 2 markets: Indianapolis and Kansas City.The uncertainty in the market has caused a lot of buyers to put their pencil down for the next few months. I refuse to abandon Warren Buffett’s saying of being greedy when others are fearful. I am trying to determine how to still be aggressive in today’s market in a smart way. If you look at the last recession, Indy peak price per unit was $59,331 (Cap rate 7.1%) in Q2 2007. Price per unit hit lowest Q3 2009 at $39,377 (8.7% cap rate). It did not recover to $60,282 price per unit until 2012 Q4 (cap rate 7.4%).As of Q1 2022 (before interest rate hikes), Indy price per unit was $114,288 at a 5.8% cap ($60-65K and 6.5% for the C class vintage product). KC peak price per unit was $75,034 (Cap rate 6.7%) in Q3 2007. Price per unit hit lowest Q3 2009 at $51,360 (8% cap rate). It did not recover to $75,622 price per unit until 2012 Q1 (cap rate 6.9%). As of Q1 2022 (before interest rate hikes), KC price per unit was $143,287 at a 5.5% cap ($70-120K and 5.5% for the C class vintage product depending on location). As you could see, price per unit dropped 32-33% which was in line with value drops across the nation during the 08-09 crash. The interesting thing is that Indy and KC took only 5 years to recover their price drops when other markets across the nation took 10 years to recover. My intuition is telling me that the happy middle ground is to not use bridge in the next 6 months and use 60-65% ltv and use a 7-7.5% cap rate plus .1% for every year I intend to hold this property. My concern is if I do this strategy will I have a reasonable chance of getting a deal in the next 6-12 months? I’m targeting 8-99 units, built 1960-2000, direct to owner and brokers strategy. A lot of people are going to say "2009 was a different environment". True, but " history doesn't repeat itself, but it often rhymes".  I would love to get feedback from investors who have been in multi family for at least 10 years and are doing deals in the last 12 months.