Multifamily Real Estate Industry Update 2022
Is Now A Good Time To Invest In Multifamily Housing Properties?
My team recently asked me to write a few paragraphs about why I’m so bullish on multifamily real estate right now. So here it goes…
The case is actually very simple.
A hedge on inflation and currency devaluation. Ok. Duh. We all know this one already. Moving on. It gets far better!
Home mortgage activity is crashing while rents scream higher! Rent increases on “resident trade-outs” in our target markets are in the teens or stronger in many cases! It doesn’t get much simpler than historically high demand vs. supply (yes, all the way back to the fifties, if memory serves!), but there’s still more reasons to be bullish.
As a strong owner/operator, debt is still historically cheap and with reasonable terms attached! Rates are moving up yes, but they’re still at historic lows of the past forty years! Further, BAM Capital is able to secure low floating rates combined with rate caps and ultra-low prepayment penalties (which allows for an early sale or refi if desired!) via our institutional lender.
Rising rates and uncertainty in the markets are creating turbulence for those that need to exit now (or very soon)! There are increasing numbers of developers, institutions, and poorly run sponsors that need to sell soon due to a concern of lower valuations in the near future/short term (call it 18 months or less). The result? Our acquisition team is seeing far more opportunities inside our “buy box” than we typically see. Remember, in this incredibly difficult game, there is always somebody, somewhere, mismanaging one or more aspects of the asset!
Worth saying twice! Deal flow is increasing! There are always opportunities in any phase of the market cycle, but especially at times like this. Pair that with BAM Capital’s history of strict acquisition criteria and one of the top execution-driven management teams in the midwest, and you’ve got one beautiful machine. Be sure to look at the new acquisition supplementals (one released and more to follow very soon) via the investor portal. If you do not already have access to the portal, you can create a free account here.
As a fund sponsor, BAM Capital is often called a “jockey,” and yes, she wins a lot of races! But, I also like to think of her as a vineyard. BAM Capital is made up of many amazing people who come together to execute on making great wine consistently. Some vintages will be better than others; however, our average returns on ten exits have been a 33.5% IRR, 2.5x equity multiple, and an average hold period of 3 years.
In short, we may be seeing the ingredients of another great vintage in Fund III. Get started now.
BAM Multifamily Growth & Income Fund III
BAM Capital created this fund in order to yield consistent and reliable cash flow, long-term appreciation, and accelerated tax benefits. The fund aligns with BAM Capital’s demonstrated track record of successful multifamily investing by continuing to implement our signature investment thesis, now in fund format. The fund aims for greater overall returns and lower risk through a multi-asset diversification strategy.
- Consistent passive income
Lower-risk assets with in-place cash flows with the ability to distribute preferred return after acquisition.
- Significant tax benefits
A cost segregation analysis allows for accelerated deprecation to years of ownership. This large passive loss gets passed onto investors through a K1.
- Vertically integrated company
In-house property management and construction allow for predictable cost reduction and value add.
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source https://capital.thebamcompanies.com/2022/09/multifamily-real-estate-2022/
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