State of the Market: Insights on Deal Volume, Loan Assumptions, and Seller Expectations with Ellie Perlman, ep 306

REady2Scale - Real Estate Investing

In this episode of the REady2Scale podcast, host Ellie Perlman provides valuable insights into the current state of the multifamily real estate market. As the owner and operator of Blue Lake Capital, a company specializing in value-add multifamily properties, Ellie shares her observations and experiences from the first six months of 2023.

Ellie discusses the recent increase in deal volume in the acquisition sector, with many attractive loan assumptions available to buyers. Sellers have adjusted their expectations, leading to a rise in deal flow and a significant increase in Broker Opinion of Value (BOV) volumes. While some institutions are reevaluating their strategies, those engaging in transactions are driven by the need to deploy capital or fulfill investor redemption requests.

Off-market transactions have decreased, indicating a shift towards more open-market deals. Sellers and brokers now prioritize vetting sponsors for their credibility and ability to execute, rather than solely focusing on the highest bid. Cap rates have experienced a slight uptick, ranging from 4.5% to 5.5%, influenced by rising interest rates and conservative lending practices.

Tune in to this episode to gain a comprehensive understanding of the multifamily market's current landscape and the factors shaping its dynamics in the second half of 2023. Please note that the information shared is based on Ellie Perlman's perspective and should not be considered official investment advice.

6 Key Takeaways:

1. Increase in deal volume: The acquisition side of the multifamily market has experienced a significant increase in deal volume in recent weeks. This suggests a growing interest in multifamily assets.

2. Attractive loan assumptions: Many deals are being offered with attractive loan assumptions, such as low fixed interest rates for extended periods. This makes these deals more appealing to potential buyers.

3. Realistic expectations from sellers: Sellers have adjusted their expectations on asset values, leading to more realistic pricing. This shift has resulted in a higher volume of deals and increased market activity.

4. Importance of vetting sponsors: Sellers and brokers are placing greater emphasis on vetting potential buyers earlier in the process. This is due to previous instances of deals falling through, leading to a focus on selecting reliable and committed buyers.

5. Cap rate fluctuations: Cap rates have slightly increased, ranging from 4.5% to 5.5%. Rising interest rates and conservative lending practices are influencing this trend.

6. Institutional activity and investor considerations: Many institutions are currently recalibrating their strategies, while others are driven by the need to deploy capital or fulfill investor redemption requests. This influences the volume of assets being sold in the market.

These key takeaways provide insights into the multifamily real estate market, including deal volume, loan assumptions, seller expectations, vetting processes, cap rates, location considerations, market competitiveness, transaction types, and institutional activity. Listeners gain a comprehensive understanding of the current landscape and factors shaping the multifamily market in 2023.

Are you REady2Scale Your Multifamily Investments?

Learn more about growing your wealth, strengthening your portfolio, and scaling to the next level at www.bluelake-capital.com.

To reach Ellie & her team, email them at [email protected] or complete our investor form at https://www.bluelake-capital.com/new-investor-form and they'll connect with you.

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