Syndication Expert and Investor · Indianapolis, IN · Member since 2016 · 591 posts · 808 votes
BP Team -
As the 10 year treasury hovers barely above 2% MF yield spreads have expanded from the dark days of the end of 2018 and early this year. This environment gives a ray of hope and encouragement to the enormous amount of dry powder sitting around waiting to be deployed. In this scenario terms and price are getting even more competitive. With that being the assumed reality I thought it would useful to me and the community to do a quick testing of the waters out there.
What kind of terms are you currently offering for larger (100+ units) MF assets? (DD time, earnest $, any waiving of contingencies?)
If you're currently selling what are you seeing?
Let us know what markets you're active in as well.
@Spencer Gray we are buying over $100M in multifamily this year and have closed over $50M to date. The terms we are getting are 30 day due diligence then 30 days to close with about 2% earnest money (sometimes hard money and sometimes refundable) with typical contingencies like appraisal, lender 3rd parties, and phase 1 environmental
@Spencer Gray we are buying over $100M in multifamily this year and have closed over $50M to date. The terms we are getting are 30 day due diligence then 30 days to close with about 2% earnest money (sometimes hard money and sometimes refundable) with typical contingencies like appraisal, lender 3rd parties, and phase 1 environmental
I work for a multifamily brokerage out of Houston and see a lot of offers. 30-day DD and 30-day close is standard. 1-2% earnest money and frequently at least part of the EM is hard (usually 10~25%). 30-day extensions for additional hard money is pretty typical. A lot of groups waive financing contingencies
@Spencer Gray To your point about treasuries moving lower, it seems that pricing expectations haven't adjusted to this and thus are creating opportunities to buy deals with more favorable cap rate to cost of debt spreads. We'll see if the market adjusts pricing expectations - it seems that you're seeing this.
We are putting up $100k to $200k hard money on almost all of our deals.
As the 10 year treasury hovers barely above 2% MF yield spreads have expanded from the dark days of the end of 2018 and early this year. This environment gives a ray of hope and encouragement to the enormous amount of dry powder sitting around waiting to be deployed. In this scenario terms and price are getting even more competitive. With that being the assumed reality I thought it would useful to me and the community to do a quick testing of the waters out there.
What kind of terms are you currently offering for larger (100+ units) MF assets? (DD time, earnest $, any waiving of contingencies?)
If you're currently selling what are you seeing?
Let us know what markets you're active in as well.
Thanks in advance!
All depends on what's important for the seller. I'll go high on price, conservative on EM and other terms if I'm paying what I'd consider to be 'retail'. But if I'm going aggressive on price, then I'll go lots of hard day one EM to get my offer selected.
I'm putting a $8m deal under contract this week that'll have $250k EM, $50k hard day 1.