All Forum Posts by: Spencer Gray

Significant growth over the next 2-3 years. 

Indianapolis, the supply demand imbalance is massive. Suburban submarket rents are growing 20-30%+ with little supply in the pipeline, unlike many Sunbelt markets (high growth with high supply).  

100 units is our minimum, we prefer at least 150 and 250-300 is ideal. 

This was a great thread to go back and read. I'm hoping all who were thinking about investing into MF back 4 years ago did so into good deals with good sponsors. We did ( w/ @Ivan Barratt and others) and have been syndicating our own deals for the past few years now as well. The deals we invested in over the last 4 years many of which are coming full cycles are hitting 2-3.5x returns. 

Who knows what the next few years will hold but with everything being expensive, MF real estate is still a great asset class to be invested in (we just closed on another 114 units last week). 

@Karl B. cap rates do not equal return or yield. We bought a deal at the end of 2020 for a 4.75% cap rate, it cash flowed 13% in 2021 (this year). This was a class A 2018 built asset, one of those that when one would look at it you would assume no cash flow, but one would be incorrect.

Cap rates reflect market sentiment, nothing else. 

What many are missing is that there is a $150-250 (10%-35%) spread between effective and market rents depending on your market. With inflation still rising that delta is likely to increase. 

If you are still operating out of the same playbook that you were in 2019, you will be left behind. 

That being said, in this environment it's easy to over speculate, and may groups are. In my mind when I see we are going to fall short a few hundred thousands units of supply this year when we are already millions of units short, there are good reasons for modest speculation on future growth. 

We've had quite a bit of success in Greenfield. We're up to 640 units (across three assets) in the Greenfield market and all have been performing quite well. 

Just to add and maybe clarify: most sellers are selling not on actual, in place income, but on potential or pro-forma income. There may be bad debt and tenants on notice today, but that's not necessarily reflective of the cash flow potential in a year from now once the bad debt is written off and the property is occupied. 

Hi @Sterling Clifton without knowing your personal situation, goals or objectives I would suggest learning about real estate syndication and see if it might make sense for you. If it does, it could make sense to split your $200k into 4 $50k investments into 4 different multifamily properties with an experienced syndicator/operator. That's just what I would do, it might not make sense for you and this is not legal or financial advice. 

I do know of a bank that offers lines of credit with ownership in syndications as collateral. That being said it is typically only offered to sponsors/GPs using their GP interest as part of the collateral, but there are also other personal guarantees that go along with it. The facility is intended as a stop gap if there is a shortfall in an equity raise, and the terms make the product very unattractive and very much a vehicle of last resort. 

Hi @Jason Malabute

I'm an investor based out of Indianapolis (an hour north) and am currently invested in two apartment complexes as an LP and one as a GP in Bloomington. We recently lost out on a bid to acquire another large (268) unit property there just a few weeks ago. 

Is there anything in particular you had a question about? 

Within the past week:

LOI submitted - 268 units, Bloomington, IN 2000's vintage, student to conventional conversion strategy / cap rate arbitrage, got to best and final and buyer interview, lost

LOI submitted - 190 units, Fishers, IN, 2020 delivery, core+

LOI submitted - 271 units, Evansville, IN, 1970's vintage, value add, LOI submitted

LOI submitted - 290 units Evansville, IN, 2000's vintage, value add, LOI submitted, lost

Submitting LOI on an Indy property (not saying) tomorrow

Working on an off market portfolio in Ft. Wayne, IN for 6 months, LOI submitted awaiting counter.

Closing on Suncrest Apartments in Indianapolis, IN 140 units 1986 vintage, light value add, at the end of September. 

Hoping to get at least 2 more deals in before end of the year, but maybe none.

I just went full cycle on an LP investment that was an 18 month hold, 2.14X! It definitely can happen with wedge deals.