What No One’s Talking About in Multifamily Right Now…

What No One’s Talking About in Multifamily Right Now…

Real Estate Coach · Frisco, TX · Member since 2025 · 59 posts · 75 votes


Hey BP Community,

I’ve been in the multifamily space for a long time — 120+ deals, $1B+ in transactions — and I can honestly say this is one of the most challenging seasons I’ve ever seen.

In 2024, I exited 20 deals — and not all of them by choice.
It was painful. Financially, emotionally, relationally.

But here’s the crazy part…

No one’s really talking about what they learned.
Some folks have gone silent.
Others are still acting like it’s 2021.

Meanwhile, behind the scenes:

  • Deals are bleeding cash

  • Lenders are backing away

  • Insurance costs are exploding

  • Operators are quietly scrambling

Here’s what we’ve had to navigate — and none of this is theory:
- Loan maturity issues
- Capital calls (fun times…)
- Deed-in-lieu negotiations
- Rescue capital and complex structures
- Exit plans under massive pressure
- Forced sales

We’ve taken our share of hits. But we’ve also learned. A lot.

Not all lessons come from wins — in fact, most don’t.

So I'm curious: How are YOU approaching distress right now?

  • Are you proactively repositioning deals?

  • Having hard convos with lenders early?

  • Raising capital from both current and new investors?

  • Looking at deals others are too scared to touch?

I’m happy to share what’s worked (and what hasn’t) — especially if it helps someone else avoid costly and stressful mistakes. This is a time for real strategy, not just theory.

Let’s talk.

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Brian BurkePro Member
Investor · Santa Rosa, CA · Member since 2012 · 2k+ posts · 7k+ votes
1y

@Mark Kenney I’m sure we would both agree that we learn 100x more when things are going wrong than we’d ever learn when things are going right.  I got my PhD from the school of hard knocks in the 2008 GFC, and it changed literally everything about how I’ve approached real estate investing ever since.  Fortunately it was those lessons that led me to sell 3/4 of my multifamily portfolio in 2021/early 2022.  Unfortunately, the buyers of those assets are in the same mud as you’ve described here.

Survivors of times like this will be great partners for passive investors on the other side of it all, so long as they learned the lessons and made adjustments.  What will separate survivors from has-been’s will come down to how they communicated with investors during the tough times, and how their decisions mitigated damage. 

I think we’ve only seen the tip of the iceberg in multifamily distress. I think one of the best lessons for sponsors going through this is the paragraph above. If you ghost your investors and do nothing to mitigate the damage, and make no adjustments to your approach to investing, you’re done.

See this reply in the discussion

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  • Errol GrahamPro Member
    Investor · FL · Member since 2020 · 38 posts · 25 votes
    1y

    @Brian Burke, your response validates one of my own investment strategy that I have used over the last 14 years. That is, I have only taked 30-year fixed rate mortgages for my investment properties and even my own primary home. 

    I have used this strategy based  on my reasoning that when times are good, I can always pay extra to principal to bring my mortgage to the crossover point where more of the payment goes towards principal than to interest. And when times are bad, i have one less thing (rate increase) to worry about! There is less of the flexibility on short-term and variable-rate debt. 

    I have used this strategy so carefully that I have been able to pay off a 30-year mortgage for one of my properties in 13 years and have started to “snowball” higher interest mortgages to the crossover point. 

    This snowball strategy is particularly attractive when the interest rate on my reserves in a fix deposit is lower than the interest rate on my mortgage. 

    It’s of course a balancing act, based on your level of risk tolerance etc. To be sure, some friends will be quick to point out that interest payments are tax deductible! But this is not a recourse if you lose the asset to foreclosure! 

  • Tulsa ok · Member since 2025 · 84 posts · 60 votes
    1y

    @Mark Kenney Great post enjoyed reading comments and thoughts. I’ve been in real estate since 2002, primarily focused on single-family rentals, and I'm now transitioning into multifamily for many of the reasons you outlined. I believe there will be significant buying opportunities ahead, as many syndicators relied too heavily on appreciation without understanding how to truly operate a real estate business.

    Unlike many operators who outsource everything, I’ve built my systems to control construction and rehab costs — consistently delivering work at 40%–50% below market because my team and I self-perform all unit turns and capital improvements. As the GP, I’ll stay closely involved in operations and work hand-in-hand with a third-party property manager to ensure tight control over expenses and execution.

    I’m specifically targeting properties with value-add potential where bloated labor and materials costs are dragging down performance and outdated interiors are costing rent rates to increase.  Having self-managed and rehabbed my portfolio for 20+ years, I’m now looking to scale into multifamily with aligned capital partners.

     investor friendly structure, I plan to offer:

    no GP fees I earn from cashlow and appreciation that I create if property doesn't perform i dont get paid.

    Investor First-money-out security,

    A monthly preferred return,

    Performance-based bonuses on cashflow once stabilized and NOI targets are achieved

    bonuses on money invested at refinance 3 to 5 yr target

    And equity retention post-refinance for long-term upside with zero capital invested and no loan liabilities.  

    Any advice for someone raising outside capital for the first time after a solo career would be greatly appreciated. Thanks again for sharing your insights.



  • Real Estate Coach · Frisco, TX · Member since 2025 · 59 posts · 75 votes
    1y

    @Chris Howell, 

    I think self-managing is a great idea based on your background!

    Raising capital…there is a ton about raising capital. Probably better for a totally different post, but a few things to consider…

    - Be clear on the type of deals you plan to do.

    - It is ok to start small.

    - Educate your investors…the more your investors know, the better off you are.

    - Decide if you are going to allow just accredited investors or also non-accredited. There is a big difference on what you can/cannot do based on this decision.

    - Get a good securities attorney.

    - Build your list and communicate with them.

    - Over-raise for reserves and working capital.

    - Cautiously partner with others.

    - Know that once you raise from others, you now have new people you answer to.

    • Flipper/Rehabber · CA · Member since 2023 · 1k+ posts · 1k+ votes
      1y

      Great thread, learned alot.

      I guess it's a stupid question but im compelled to ask

      For context im a low leverage low risk mom n pop investor and have much more experience running small businesses. You know w2 employees etc. Many of my biz friends were around during the late '70s early '80s and became highly concerned about inflation at QE3, by QE4 they were freaking out.

      Its my assumption that high level investors would have keen financial accumen. Isn't raising interest rates 1 of the few tools in the box to combat inflation? BTW im not a fan at all of the waterfall model.

      Signed; still learning

    • Real Estate Coach · Frisco, TX · Member since 2025 · 59 posts · 75 votes
      1y

      @Alan F.

      Thanks for the comment!

      Some people might not be aware of what the "waterfall model" is. A definition is below. 

      "A waterfall in an investment—especially in private equity or real estate syndications—refers to the hierarchical structure that dictates how profits (and sometimes losses) are distributed among investors and sponsors after an investment begins generating returns."


      I certainly would not want to speak for anyone else, but in general, I don't think most people have an issue with a "waterfall" structure; it is "what" the actual waterfall is for a given deal where people can have issues. For example, a waterfall could be set up to be extremely favorable to LPs; have no GP fees whatsoever; etc. And, while this example uses a waterfall, it is much more favorable to the LPs.



      And, while I don't want to speak on your behalf or anyone else's behalf,



      And, while I don't want to speak on your behalf or anyone else's behalf,





      A waterfall in an investment—especially in private equity or real estate syndications—refers to the hierarchical structure that dictates how profits (and sometimes losses) are distributed among investors and sponsors after an investment begins generating returns.

    • Austin, TX · Member since 2019 · 5k+ posts · 5k+ votes
      1y

      To me it seems that to many people, these private multi-family deals are probably some of the most opaque deals in the industry.

      Who holds the power, where the money flows, and why some don’t survive.

      Sometimes it might be an overleveraged landlord who’s having trouble finding a way out.

      Even though it may not be indicative of their portfolio.

      So sometimes it’s the mortgages on the property, but sometimes circumstances beyond their control make it hard to operate too, such as financing repairs or improvements, and etc...

      Even so, some remain ready, willing and able to close title.

      Just my 2 cents.

    • Real Estate Coach · Frisco, TX · Member since 2025 · 59 posts · 75 votes
      1y

      @Melanie P.

      I don’t think anyone would disagree that having liquidity in the stock market is a major advantage over real estate — and there’s been comments on that point already from others and myself.

      As for the idea of requiring accredited investors to also be “sophisticated.” I am not an SEC attorney and not providing any legal advice. 

      But…

      To my knowledge, there is absolutely no current SEC requirement that accredited investors also need to meet a “sophisticated” standard. Unless I’ve missed something, this remains true today.

      There was a proposed amendment floating around about five years ago that hinted at potentially adding a sophistication requirement to the accredited investor definition. But as far as I know, that has never been formally adopted.

      I’m not saying it’s not a good idea to expect accredited investors to be sophisticated. But the bigger question is: who defines sophistication? It's a subjective term, and trying to standardize it could get messy — fast. And, if the SEC (who regulates all of this) does not require this, then you are always going to have accredited investors who invest and might not be sophisticated (whatever "sophisticated" even means to you vs. someone else).

      • Real Estate Agent · Sisters, OR · Member since 2014 · 1k+ posts · 1k+ votes
        1y
        Quote from @Mark Kenney:

        @Melanie P.

        I don’t think anyone would disagree that having liquidity in the stock market is a major advantage over real estate — and there’s been comments on that point already from others and myself.

        As for the idea of requiring accredited investors to also be “sophisticated.” I am not an SEC attorney and not providing any legal advice. 

        But…

        To my knowledge, there is absolutely no current SEC requirement that accredited investors also need to meet a “sophisticated” standard. Unless I’ve missed something, this remains true today.

        There was a proposed amendment floating around about five years ago that hinted at potentially adding a sophistication requirement to the accredited investor definition. But as far as I know, that has never been formally adopted.

        I’m not saying it’s not a good idea to expect accredited investors to be sophisticated. But the bigger question is: who defines sophistication? It's a subjective term, and trying to standardize it could get messy — fast. And, if the SEC (who regulates all of this) does not require this, then you are always going to have accredited investors who invest and might not be sophisticated (whatever "sophisticated" even means to you vs. someone else).

        Maybe people really do need the government to tell them they cannot invest in certain opportunities.  Most people with a job, kids, etc don't have enough time and energy to understand how much BS there is.  
    • Member since 2018 · 76 posts · 15 votes
      1y

      I sold all five of my Indianapolis duplexes that were bleeding cash. I pocketed the money and will deal with whatever the tax consequences are, because I just don't have the cash to add to that cash to make more purchases.

      My other properties are fine. All loans are long-term fixed-rate, so no crisis there. Just dealing with creeping taxes and insurance. So far, it's all sustainable.

    • Rental Property Investor · Fremont, CA · Member since 2017 · 125 posts · 75 votes
      1y

      I'll throw my two cents in, as someone who's been on both the sides of the multifamily acquisition and operations. 

      In 2022 I took on a bridge loan for one of our properties. We were offered up to 87% leverage but looked way to aggressive. Unfortunately many of my peers were drawn by the higher returns and too the gamble, some even up to 90% leverage. I myself limited ourselves to 70% and that's how we survived. 

      Over the past few years we were able to drive our NOI by 30%, which barely offset the ~30% drop in cap rate expansion. The key takeaway I think still comes down to the conservative underwriting. My general metric is 10% economic vacancy at exit, 10% worse cap rate at exit, no more than 2-3% rent growth, and around 50% expense ratio for Dallas. That's what really saved us and allowed us to refinance our of the bridge debt. The ones that survive are those that focused on operations.

      Right now, we are benefitting from picking up the broken pieces of other failed bridge loan. We bought two properties recently in September of 2024 and another one last month. In today's market we are able to buy at the price of the loan at about 34% discount on a 2017 construction.

      This is a very attractive market for those that can find the right deal and raise equity for it. If you're able to buy deals for 30-35% off peak pricing you'll be well setup to exit in 5-7 years. 

    • Investor · TX · Member since 2021 · 53 posts · 59 votes
      1y

      Hey mark, judging by the amount of transaction you have done I'm curious to know are you in the same market for that whole time frame? Or do you buy nationwide? Curious to see if you are seeing the same situations across multiple markets (if you buy in multiple markets) or are they all in the same market. Or if you have seen different markets reacting differently. I know as a whole MF has had a tough couple years because rates are obviously the same every where. But what else are you seeing that's market specific 

    • Real Estate Coach · Frisco, TX · Member since 2025 · 59 posts · 75 votes
      1y

      @Gabriel Watts

      We are in 15 states. As you stated, the floating rate issue exists regardless of market.  

      Some issues such as insurance increases has applied across the country, but the coastal markets have been hit much harder. The time to evict has varied drastically across different markets. New supply has varied across various markets. Also, while cap rates have increased across the county, the percent of increase has varied drastically. For example, one market we are in saw the cap rate increase 8% and another market we are in saw an increase of 70%. 

    • Wholesaler · Irvington, NJ · Member since 2025 · 112 posts · 53 votes
      1y

      Really appreciate you sharing the realities here it’s rare to see someone talk openly about the hard side of deals. I’ve been seeing a lot of owners quietly dealing with the same issues, especially around lender communication and exit timing.

      Curious in your experience, has early lender engagement made the biggest difference in avoiding forced sales, or has it been more about creative capital structuring?

    • Real Estate Coach · Frisco, TX · Member since 2025 · 59 posts · 75 votes
      1y

      @Sultan Ali

      There is no doubt early lender engagement is critical. The typical mindset of a borrower is…”I don’t’ want to tip my lender off that I am having issues.”

      The balance between trying to protect your position and keeping open lines of communication with the lender is a tricky one. The idea that being upfront with your lender might tip them off to problems and make things worse is understandable, but not engaging early can lead to worse outcomes when they get frustrated by lack of communication and surprises.

      It’s also a tough pill to swallow that some lenders will act out of spite or pure strategy, rather than being reasonable partners. And, the reality is a loan modifications isn’t always as straightforward or even beneficial as you might think. The requirement to bring more money to the table for a loan modification, while still being uncertain of the lender’s true intentions or what a loan modification will even look like, adds a lot of complexity and uncertainty to the situation.

      A loan modification will typically also include a borrower signing a Pre-Negotiation Agreement (PNA). It's essential to get the legal advice you need and fully understand what’s at stake before agreeing to sign anything. Many borrowers are too eager to fix the immediate issue without realizing how that PNA could limit their flexibility down the road.

      The key here, especially in this climate of uncertainty, is knowing your options, being prepared to pivot, and having the right legal and financial support. Navigating these waters is tough, but the more informed and proactive you are, the better. It’s a game where being transparent and getting ahead of issues early can be the difference between controlling your property’s fate or losing it.

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