A lot has changed in the multifamily market since the start of the year. Back then, deals were being financed in the 2-3% range on agency debt and per-door prices were steadily marching higher. Today, with the Fed’s tightening of financial conditions, commercial multifamily rates have 5 and 6 handles on them for the same products. Understandably, there has been quite a reset in buyer expectations and we’re hearing that transaction volume for the types of deals we purchase has slowed. But rather than step back from the market and put our money in the mattress, we’re continuing to look at deals and adjusting our assumptions based on today’s economic reality. We take our cue here from some of the largest and most sophisticated institutions–do they stop transacting when markets turn? No. The best investors in any asset class make deals in up, down, and sideways markets, they simply adjust their expectations and risk parameters as new information becomes known. In this video, we’ll go over some of the changes we’re making to our underwriting (aka deal analysis) to prudently manage our risk in this brave new world.
