All Forum Posts by: Austin Wolff

If I had the money reserves to stomach the risk, I'd build all day long. Better returns (at least in the South/Southwest), and you actually provide the most value to the community by creating an additional living unit that did not exist before. Win-win.

 As someone who looks at macro data all day... I couldn't agree more!

For certain markets, right now is the trough of the multifamily business cycle. 

The bubble size represents new multifamily units delivered and under construction, proportional to existing units.

The current cycle in multifamily real estate presents an opportunity, especially in oversupplied markets. See the chart below:

The cities on the right-half of the graph did not have as many proportional units under construction, and so they saw an increase in rent and a decrease in vacancy (Miami is the exception – which saw solid proportional supply growth and rent growth).

You’ll notice the markets on the left-half (starting with Dallas) are all markets that had a larger proportion of units either delivered or currently under construction (see the bubble graph above).

Without regurgitating everything mentioned in this podcast on the 18.6-year real estate cycle, I think now might be an excellent time to look for multifamily deals in oversupplied markets, as long as the underlying fundamentals of demand remain strong. (Honorable mention of Durham, NC.)

With high vacancies and lower NOI, multifamily properties should be priced accordingly (lower). And once the wave of new supply has been absorbed, vacancies should start lowering again. For certain markets, this half of the year is the dip.

Thanks to CoStar.com for providing the underlying data and publishing these graphs.

 Fun fact, core CA counties grew in population YoY last year (this chart was pointing out San Diego's slow growth relative to other CA counties):

This is a crazy wave of supply. To quote CoStar, "The 8,500 units under construction in Durham will increase the market’s inventory by 13.3% when they are completed, while the 690,000 units being built nationally will increase U.S. inventory by just 3.4%, about one-quarter of Durham’s rate."

Obviously this is great for renters and affordability. But are any NC investors worried?

 This ^

The market you're willing to learn about the most -- and one you can actually afford -- will likely be the best market for you.

I bought a new build OOS. Pros: Got into an appreciating market for an affordable price. Cons: It's going to be awhile (a few years) until there's any meaningful cash flow. 

Pure long-term, hands-off appreciation play (yes my upside is limited). 

Good point. I have yet to see a successful partnership that didn't go up in flames sooner or later. "Don't have a partner" is the usual advice I'm given when I ask my network for their most important business lesson they've ever learned (the context is that they specially meant don't have a 50/50 partner).

What are some downsides, if any, to this region?