Multifamily Investment: It’s All About the Fundamentals
Travis is a classic serial entrepreneur with varied passions—he’s built businesses spanning the oil and gas industry and ventured into successful investments in biotech and enterprise technology. His interest in game-changing led him to launch a company that could provide a unique service—predictive analytics to execute sourcing campaigns for multifamily acquisitions—and in barely two years he’s built a major client portfolio. He lives with his wife and young children in beautiful Austin, Texas, and enjoys riding anything man-powered, including surfboards, kiteboards, hydrofoils, paddle boards and mountain bikes.
As the old adage holds, investment is about fundamentals—and there’s nothing more fundamental than home. That’s why the data we have about multifamily assets around the country represent a key indicator of economic recovery.
Right now, about 40% of the population resides in rental units inside multifamily properties. That’s a massive market segment, and for almost all of these consumers, housing is the biggest single expense item. It’s not discretionary, it’s not a luxury, it’s not up for debate: It’s fundamental.
More to the point, related granular data about occupancy rates, rent hikes, defaults, evictions, neighborhoods, school districts, local jobs, tech hubs and more—our stock in trade at Offerd—tells us more about the economy at large than most academic and government studies.
From an investor’s perspective, it’s the ideal opportunity. If multifamily isn’t recession-proof, then it’s at least recession-resistant.
Consider the current environment. We’re mired in a health crisis that has taken a horrific human toll and wreaked havoc in virtually all areas of the economy. Who could have predicted a global pandemic in which any physical proximity might be toxic, and where all business, education and socializing must happen online?
And yet. . .and yet. . .in the multifamily market, there’s been almost no sign of massive bad debt, rampant vacancies or rent collection issues. We were coming off a construction boom anyway—major development over the last decade—yet we see only a decline, not a reversal. In fact, supply still lags behind demand in particular markets (affordable housing in specific cities, etc.). Demand from baby boomers isn’t going away. As we pointed out recently in "Rent Growth, Rent Fall: A Tale of Two (Kinds of) Cities," cities as disparate as Tacoma, WA, Mobile, AL, and Boise ID, are registering some of the greatest rent hikes around the country.
Covid-19 has its own effects too. We’re speeding into the work-from-home era, and when consumers no longer need to live close to their place of work, they seek out alternative living arrangements. The suburbs are less expensive, but only when there are sufficient options.
On the finance front, the activity is even more apparent. Fannie Mae and Freddie Mac are still bustling. With interest rates where they are, debt is cheaper.
So let’s sum up: Strong fundamentals, hard assets, low interest rates, low risk of default. Multifamily checks all these boxes.
Of course, it helps to know where the best assets are. Offerd tracks trends and properties with access to 10,000-plus data points at the national, market, sub-market, and property-levels, and uses the knowledge to shape and execute targeted sourcing campaigns specific to every acquisition strategy.