Houston Apartment Owner Loses 3,200 Units to Foreclosure

Member since 2021 · 34 posts · 16 votes

If you do not want to read the whole article it is basically

Building values are falling, interest rates are rising and rent growth is slowing

https://www.wsj.com/articles/houston-apartment-owner-loses-3-200-units-to-foreclosure-as-multifamily-feels-the-heat-fb3d0e75

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Scott Mac
Austin, TX · Member since 2019 · 5k+ posts · 5k+ votes
3y
Here's the story by the real deal without the WSJ paywall.
Low income housing, it's always the poorest of the workers who feel it first.
https://therealdeal.com/texas/houston/2023/04/10/arbor-realty-forecloses-on-229-million-multifamily-portfolio-in-houston/
I wonder if they used ARM's with no principal payback loans, and when interest rates rose, OUCH.
I don't know if that happened here, the article doesn't say, I'm just speaking from industry knowledge in general.
If they shutter these places that will be a lot of Houston low income families looking for new places to live.
Just my 2 cents.
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Chris SeveneyBusiness Member
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
3y
@Scott Mac
From what I heard These allegedly were variable rate loans with no cap.
Properties were allegedly purchased at a cap rate under 5 and the sponsors experience was allegedly questionable.
Investors allegedly lost it all plus because bonus depreciation was taken now investors will have to pay that back to Uncle Sam.
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Scott Mac
Austin, TX · Member since 2019 · 5k+ posts · 5k+ votes
3y
Quote from @Chris Seveney:

@Scott Mac
From what I heard These allegedly were variable rate loans with no cap.
Properties were allegedly purchased at a cap rate under 5 and the sponsors experience was allegedly questionable.
Investors allegedly lost it all plus because bonus depreciation was taken now investors will have to pay that back to Uncle Sam.

That has to be embarrassing, losing like that I mean.

Plus the investors who knowingly went in on variable rate deals, I'm sure knew the risk (risk reward).

Sometimes though, still a man hears what he want's to hear and disregards the rest (Simon and Garfunkel).

That's why I prefer to stay on the conservative end of things--stability.

I think this is one of their places that was foreclosed on.

https://www.google.com/maps/pics

From an industry eye, I can see right away they are having financial issues.

Probably cut trash pickup to half, pool maintenance--well it needs to be shocked (or drained and chained off).

Deferred repairs, such as the bricks on the mail center.

These all seem to look like cash flow issues.

Just my 2 cents.

Remediation? The dumpster guys do not pick up what's on the ground, they only dump what's in the dumpsters.
When this place turns around, this is going to be on unpleasant job on a 100 degree day, flies, smell, etc...
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