All Forum Posts by: Spencer Gray

@Arn Cenedella Great point! The conditions could change tomorrow, as you pointed out the only constant is change itself. 

@Badri Malynur When I get this question, and I ask it myself all the time, I try to identify the evidence that points to a market crash. The majority of the evidence on the side of a pending crash or bubble is simply that prices are higher than they were. While we'll have some kind of mean reversion at some point, there's simply little evidence that the longer term trend of upward price pressure from increased demand will simply reverse. 

Investors can pay more because of the fundamentals, primarily rental growth, occupancy trends, and very low interest rates. When any of those three change significantly, we will most likely see a slow down and modest reversion. 

Also not legal/financial advice

Let me just say this - I do invest through an LLC when I invest as an LP. I also have attorney's who invest in my syndications who invest as individuals, not through an entity or trust.

Multifamily apartments are not only real assets, they are also one of the best inflation hedges compared to any other investment asset class. They also have a long track record of appreciation, cash-flow, and tax benefits.

The United States is experiencing a severe housing shortage. Even as over 360k apartments will be built in 2021, data suggests developers will fall nearly 100k units short of the 460k units of projected absorption. Multi-decade-high household formation, spurred by post-pandemic job growth, has lead to record occupancy levels, especially in economically resilient markets such as Indianapolis, IN in addition to markets across the Sunbelt. 

Record-high home values have widened the affordability gap, creating an even larger number of renters-by-necessity, putting even more pressure on apartment demand. Rent growth is up 6.8% year over year nationally.

Simultaneously, demand for multifamily apartments from investors continues increasing as real yields on most bonds are negative. Global investors and retiring baby-boomers intensify their search for yield. A strong performance from multifamily assets during the pandemic only solidified the asset class's claim to being "recession resilient." 

Interest rates are at a multi-millennial low, combined with strong growth is creating attractive yields for multifamily investors even in a low cap rate environment. Cap rates will continue to compress until growth slows significantly and or if and when interest rates rise.

One of the greatest transfers of wealth in human history is currently underway and real estate is the most time-tested method to grow and preserve wealth. Given the current economic, demographic, and social trends, allocating capital to multifamily apartment assets in growing, business and tax friendly markets appears to be an incredibly compelling opportunity.

There are quite a few experienced sponsors here on BP. We have been investing in and syndicating multifamily projects in Indianapolis for some time now, both value-add as well as core plus as has @Andrew Hogan from BAM. @Justin Goodin is also putting together syndications in Indy and elsewhere. 

Remember that underwriting and assessing the sponsor is more important than the deal. Good luck!

@Mallikarjun Reddy Pateel You'll just need to look at the rent roll to see when leases are expiring. If the leases were all signed the day before you close, it's impossibly to have market rents until those leases turn over, assuming you are able to get everyone up to market. 

Great seeing/meeting everyone that was at DML! 

Definitely networking at meet ups or conferences. I was at Michael Blanks conference last week and there were dozens of people looking for partners, some capital raisers, some deal finders. 

@Erik W. Where are you investing that gave you the idea that it's impossible to collect rents from residents? We're seeing all time high occupancy, collections, and rents at all of our multifamily assets. Maybe in NY, CA, or even MN, but it's been business as usual for most of the Midwest and South East. 

@William Costello I would say the biggest contribution is having a great team to work with, we just need to get some deals locked up! 

@Joe Archbold makes a great point, the advantage of syndication is time and the ability to leverage the experience of the sponsor. As @Greg Scott mentioned, you very well may be able to achieve higher rates of return doing your own project whether that be a SFH or a duplex. The problem comparing MF syndication to doing a project yourself is the value of time. If you have an incredible amount of free time and you decide you want to spend it managing real estate, then doing your own projects may be the way the way to go, assuming you have the experience and the know how to execute.

Even factoring in time, I often see syndications out performing direct projects as the scale and leverage syndications can provide and the power of full time real estate professionals managing the investment as opposed to someone managing a few rentals on the side as a more or less hobby. 

The question becomes, do you want to be an investor or a landlord?