A Student of the Real Estate Game

class B value-add properties and seek assets that are priced below replacement cost and comparable sales, where we can add value at then property level, and that are in markets we like long-term. It could be as simple as a tweak to the marketing approach, a new amenity, a resident contest, or a resident event which improves the resident experience or drives additional prospects to the site and improves the performance on an asset. While onsite, I noticed there are several large façades facing the road which are perfect for banners showcasing the improvements including photos on the newly renovated units, new amenity set, and renderings of the brand-new clubhouse coming soon. At another fully stabilized deal where we’ve extracted much of the value-add, we seek incremental improvements which enable further rent growth and help with retention.

That massive growth in demand has fueled the high average occupancies and strong rent growth the apartment sector experienced over the course of the recovery. Young professionals remaining in the renter pool is primarily driving the demand for Class A luxury communities in urban areas (Class B demand is different). On the fertility side, U. S. births are lower by 500K annually from their pre-recession peak, a figure more amazing given that the number of women aged 25-34 is higher by roughly 2.5M. With the declining fertility rate, population growth in the U. S. will be fueled by immigration. According to the Mortgage Bankers Association, unregulated higher leverage, higher-priced private debt funds placed $67 billion in mortgage loans in the U. S. in 2018, up from $52 billion in 2017 and $32 billion in 2016.

It’s an incredible place filled with modern cities, unique animals, beautiful landscape, great coffee, and welcoming people. The largest city in Australia (population roughly 5M growing 2% annually), Sydney is a modern metropolis set on one of the most beautiful harbors in the world (with the iconic Sydney Opera House and the Harbour Bridge in every view). Highlights of our time there included the Coogee to Bondi walk, Sydney Harbour Bridge Climb, the ferry to Manly Beach, and wandering around cool neighborhoods like Surrey Hills (if you’re ever visiting, we stayed at a great little boutique hotel called the Little Albion). We spent our last day exploring Brisbane, Australia’s 3rd largest city (population 2.4M).

There’s been several studies which have concluded that more information doesn’t necessarily lead to better investment decisions and oftentimes, having more information can be harmful because it leads to over-confidence and fuels confirmation bias. However, when making multifamily investment decisions, there is only a handful of data points that are relevant and materially impact investment success. In this post, I want to dig deeper into the key pieces of information needed to make quality investment decisions. Typically, I’ll use 2-3 comps to set the pro forma rents, then assess higher-quality and lower-quality properties to ensure there’s a wide enough spread in rents.