Don’t Let Inventory Levels Fool You

There’s a difference between short-term market conditions and long-term market trends. Inventory surges are a perfect example of a market condition. When too many units are hitting the market, developers will eventually slow down the rate of construction. This might take a year or two. If your market is experiencing a spike in new inventory you need to lower rent growth projections. You should also be reducing your expected occupancy numbers. These are all short-term measures. A smart investment in a healthy market can handle these kinds of hiccups.

In commercial multifamily, you make your money when you operate your business efficiently. Seasoned operators are not afraid of the “dark cloud of equilibrium.” They thrive in such an environment.

We have noticed an increase in the number of deals hitting the market. If your market has strong long-term fundamentals (e.g. population growth, employment growth), this is a great opportunity to buy.

It can be easy to underestimate the size of the multifamily sector. Last year there was more than $106 Billion invested in multifamily. You could have raised $100 Million dollars last year and that would have represented less than one-tenth of 1% of multifamily investing. It’s a deep pool. You should dive in.

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