All Forum Posts by: Trevor Richardson

The apartment rental market in Reno/Sparks leveled off in the first quarter of 2023. For 80+ unit properties, average rental rates increased by $19 per month to $1,644, but this is only $10 more than Q1 last year. Overall vacancy decreased to 2.66% since the last quarter of 2022. This is due to a combination of factors: increased interest rates have made it more difficult to purchase a home, new renters continue to enter the market and job growth. Employment levels in the Reno and Sparks metropolitan statistical area (MSA) are still above pre-pandemic levels and appear to be able to hold strong through 2023.

The apartment rental market in Reno/Sparks leveled off in the first quarter of 2023. For 80+ unit properties, average rental rates increased by $19 per month to $1,644, but this is only $10 more than Q1 last year. Overall vacancy decreased to 2.66% since the last quarter of 2022. This is due to a combination of factors: increased interest rates have made it more difficult to purchase a home, new renters continue to enter the market and job growth. Employment levels in the Reno and Sparks metropolitan statistical area (MSA) are still above pre-pandemic levels and appear to be able to hold strong through 2023.

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As noted above, probably a good idea to do the flooring last. But you could cover them up. Hope this helps, we just put this version one together this week as part of our investor guide to help our clients after they close and begin rehabs.

2023 isn't the easiest year to make deals work. But one topic always inspires my real estate coaching side, assumptions.

Get comfortable with assumptions. I’ll say it again, GET comfortable with assumptions. Assumptions on potential rents, interest rates, management fees, operating expenses, rehab amounts.

While looking at deals you won’t always be able to figure out every detail and amount to the dollar, but you can get close with accurate assumptions. Work on figuring out your accurate set of assumptions and have confidence in those numbers. We are seeing investors miss on good opportunities because they are not comfortable with assumptions in 2023. 

Point - This is an assumption business! There is no way to avoid that, it’s fundamental to real estate investing. Large real estate companies that own 10,000 units base their acquisitions on assumptions. It’s really the only way to analyze multiple deals and help make a purchase in a slow and tough year.

 

Not every investor is looking for the highest cap rate and return. It’s kind of funny, but believe it or not there are a lot of investors who are ok breaking even and paying a lower cap because it suits their needs. 

It would make more sense to build multifamily apartments (those are the same) over SFRs in most areas of the US because higher density is not only needed, the numbers work better on exit. Selling SFR new developments is tricky right now. Still plenty of multifamily demand, again in most areas.

Tell her that every day thousands of apartments and rental homes are being inspected by the owners in the country with our without the tenants present. Inspections or showings are part of rental housing. 

It’s rare we allow buyer prospects to tour prior to writing an offer. We like to do it in escrow. 

Student housing rents per bedroom. I would research other listings to determine the going $/bed.

Also you don’t have to have vacancies during summer. Sign an annual lease just like market rate tenants, but lease up during the summer so if the students transition next year you are set for the incoming round of new students. Talk to a property manager that knows student rentals. They will screen better or provide little moves like having parents co-sign leases. 

Tanner,

Saw your post, thought it would be fun to underwrite your deal with our Addres Income Investor Tools. There are obviously multiple things I don't know about the property...don't even know the address. 

Any feedback on our tools would be appreciated. We wonder if these would be helpful to larger portions of the investor community.

Thanks,

https://drive.google.com/drive...

Investors are finding it difficult to keep up with interest rates and the lending market.

Residential (Single Family and Multifam up to 4 units) - On average, we are seeing rates 0.75% higher than owner-occupied loans. Right now, rates are ranging between 6.49% to 7.625% and the average LTV is 75%. Lenders are tightening their standards but doing their best to uphold guidelines that are good for lending and the future financial health of homeowners and investors alike. Experienced investors are still seeking good deals on properties as they know there will always be a market for rentals.

Multifamily commercial loan (5+ units) - Overall, there are still solid opportunities for commercial multifamily financing (5+ units). Agency loans (Freddie and Fannie) are still the most competitive as they will underwrite to market cap rates. Rates range in the low 5s to low 6s, but only for $1M+. Life Insurance companies will lend competitively with agency but tend to be more conservative with their underwriting. Their spreads tend to be better, but generally can't get to the same loan proceeds as Agency if you are looking for higher leverage. Banks are selectively lending and tend to require a large depository relationship for investor loans as a result of the balancing act that comes along with their balance sheet, market uncertainty and increased cost of funds. Local banks that quote over prime are in the 8%+ range. Regional banks are lending in the 5.75% to 7.25% range depending on LTV and deposit relationship.