All Forum Posts by: Ed Matthews

My wife and I are in our first year of MF investing; learning a lot by reading books, watching videos and podcasts, and attending Meetups and seminars around DFW. We've invested in our first deal. 

The deals we've seen have so far had an underwriting time range of 3-5 years. Why is that range so typical?

One big reason to get into real estate is to hedge against inflation and as a means to get long-term cash flow. That's the mantra I hear from people who buy, hold, and rent out SFRs, but I don't hear that in the MF world; the message I hear is getting in and out of a deal in a few years. Is there a reason syndication wouldn't work for a 20 year or longer period? Or is the legal and financial system structured to offer substantially better returns to these shorter deals?

Thanks!

Suppose you were evaluating a potential 5-year MF deal. Which approach to loans would you consider most conservative at this point in the market cycle?

A 10-year fixed from Freddie Mac sounds pretty conservative. But if the economy slides into recession next year, the Fed would very likely lower rates, so an ARM could supply extra cushion against lower-than-expected rent increases in subsequent years. Would that make an ARM actually more conservative?

Thoughts?

Thanks!

Ed Matthews

What skill set and expertise would a passive investor need to credibly evaluate a MF development deal? 

A good portion of the underwriting analysis for a value-add MF deal makes use of data from the existing property (rent rolls, property taxes, etc.). For a development deal, that data doesn't exist, so what would an underwriter use in its place? Projections and comps?

Thanks!
 Ed Matthews