In recent weeks, the multifamily sector of the real estate industry has noted a tidal wave of activity. This wave stems from issues raised by the ongoing pandemic and the recent spate of socio-political problems and civil instability in various parts of the world.
A multifamily investment’s health depends on two things: occupancy and collections. As such, multifamily assets were hurt during the pandemic and continue to reel from its effects.
The resolution of a number of these issues has seen a massive influx of capital from both investors and lenders after more than a year of inactivity. Renters are coming back, but now there are fewer rental units available on the market.
It’s the sort of situation that inevitably creates supply and demand issues which lead to rent increases. This eventually resulted in the current capital tidal wave and an upsurge of deals being closed.
So what does this mean for potential investors? Do they simply ride out the wave or maximize its potential?
Some sensible advice
Investors should consider this tidal wave as an opportunity to become liquid. Why? Liquidity is necessary if you want to stay competitive during these times. You can manage this easily enough by selling or refinancing property and other measures.
Once you find yourself properly liquid, you have to form a team before you start looking for good deals. The current situation dictates that you already have to have a team in place before anything else. That means bringing in your broker, lender, inspections team, lawyer, and even due diligence people at the very beginning.
The principle behind this is simple: once you find a deal, you can get your team’s feedback and make an offer almost immediately. It’s a solution that is both effective and efficient.
Stand out from the competition
Next, how do you set yourself apart from the competition? By this time, you ought to be aware that prices are all high. Rather than offering more money, you can actually swing a deal on your own terms. Provided that you already have a team in place, you are in a position to offer quick and highly efficient terms for closing and contingencies.
Likewise, don’t shun good feedback from people you’ve previously worked with or had transactions with: it puts you in a position of reliability and credibility.
That said, consider the following strategies:
- If you’re planning to sell a property over the next couple of years or so, sell it now. There is currently a lot of capital sloshing over the market. But, we surmise this will only be around until the end of this year. Consider taking advantage of the situation and making a sale within the second half of 2021; and
- Get a professional broker who knows how to navigate their way through a tidal way to help you formulate your marketing plan. A smartly conceived (and executed) plan essentially forces the market to give you the best possible price for your property as opposed to set prices.