All Forum Posts by: Percy N.

 Are you sure it is newly built and only $88k/unit? What size are these units?

@James McGovern, I suspect the auction will be as-is-where-is and you are not entitled to anything other than the deed.

If you email me the address, I can run a co-star report which typically identifies the property manager. However, remember that they may no longer manage the property if the owner has not paid them.

Make sure you understand all the rules of the tax auction. In our state, it does not mean the property is free of all liens. 

Bumping this thread to see what people are seeing.

We own around 1,200 units in the Huntsville/Madison area and just bought a Built-for-Rent community in Athens. We find that it helps to have scale and focus in the market.

There is some new supply coming but the demand is still strong.

@Brian Burke had a good set of data showing rent growth and contraction in different markets.

We have many investors who started out their RE investing journey by managing their own SFR rentals. In fact, I also started the same way.

However, you quickly reach a point where you realize it is hard to scale and that managing even 10-12 rentals becomes a full-time job. So many turn to multifamily for scale and in order for a property to afford dedicated property manager and maintenance, you need 80-100 units (depending on the market) minimum.

One big difference between single-family rentals (which is what most individual investors may be currently investing in) and multifamily is how they are valued. SFRs are valued based on the comps in the area while multifamily is valued based on the Net Operating Income. Even 2 identical MF properties next to each other could have very different values if the NOI is different.

In Multifamily, every dollar added to the NOI results in a 20x jump in value at a 5% cap rate. Add on leverage and depreciation benefits and this becomes a very powerful business model if operated well.

There are also benefits of managing the property if you have the scale to do so. This is why many of our investors choose to invest with us as they know there are 20+ people dedicated to overseeing our investments.

We own and operate multifamily (100-250 units per property) in undiscovered or underserved markets in the sunbelt.

We acquire most of our properties off-market, so if they are interested, please have them reach out to us as we have some opportunities in the pipeline. We work with brokers as well. 

The rapid interest rate hikes are causing some turmoil for those who need to purchase new rate caps or refinance in the short term. 

Based on what we are seeing in the market about 75% (rough estimate) of deals are pausing but accruing distributions to LPs and some are even doing capital calls to prevent a default scenario.  

Even though you may have a rate cap, some lenders are panicking and asking to increase reserves by 50-200% in anticipation of much higher costs for the new rate cap. 

Hopefully, with the Fed slowing down the rate of increases, it should settle the capital markets and bring the costs down a bit, but most people's crystal balls have become snowglobes in the past year.

@Jenny Zhang what size (#units) apartments are we talking about?

We have seen 30yr and recently even got a 35yr amortization with 3yr IO, but the term for these large commercial loans (typically $15-$25mm) are generally 5-10 years with some extensions available. The longer the term, the more "yield maintenance" or defeasance will be required if you sell in a shorter timeframe (e.g. you get a 10yr term but sell in 5yrs might cost you 2pts on exit).

@Gabriel Hall, that is like asking which stock is better. As usual, the answer is - "It depends" on a number of factors.

Are you looking to manage these properties yourself?

What resources (financial, systems, personnel, etc) do you have in place?

Many of our investors (and ourselves) started out with Single Family but when we wanted to scale, switched to Multifamily. Our most recent acquisition was a Built-for-Rent community.

Each of these sub-asset classes will have its own mini-market cycle and will also depend on the local market.

Happy to chat and share what we are seeing in our markets (underserved markets in the Sunbelt) and why our investors are switching from SFR to Multifamily.