What are the most difficult market metrics to obtain for multifamily analysis (15+ units)? Rent value? Appreciation? 🙏
When/if you've recently invested in a larger multifamily property (15+ units), what were the hardest metrics to obtain for the investment analysis portion? What about the metrics to understand post-COVID changes? Thank you!
[{"id": "hiwi4fu", "text": "Stability", "replies": [{"id": "hiwibek", "text": "As in volatility? For prices or rents specifically?", "replies": [], "depth": 2}], "depth": 1}, {"id": "hiwizuj", "text": "Probably AR/bad debt. If non-institutional like the post suggests, then even more so bad debt.. but KPIs are different for every shop, usually is determined by your capital source whether the bank or your investment committee", "replies": [{"id": "hiwnhne", "text": "Great. Thank you!", "replies": [{"id": "hiwpmut", "text": "I\u2019ll add on that tracking profit centers other than rental income (storage, pet fees, parking, retail income, RUBS penetration) all become much much more important and often overlooked in the 100+ unit assets, but they can really move your returns if they actually exist and your able to capitalize them", "replies": [{"id": "hiwvkc1", "text": "Very insightful! Sounds like you know the space very well. Have you transacted a lot of larger multifamily properties?", "replies": [], "depth": 4}, {"id": "hixjgf6", "text": "On the flip side to RUBs is water, heat, and electric conservation on the stuff you can't pass back. This is more critical on older construction that may be expensive or infeasible to bill back. \nOn new construction it is building efficient designs so tenants pay to heat the hallway and installing low energy lighting in the hallways.", "replies": [], "depth": 4}, {"id": "hj0bl0t", "text": "Gotta ask\u2026 what\u2019s RUBS?", "replies": [{"id": "hj2745s", "text": "Ratio utility billing system - allows you to recoup utility costs. Google/the internet has lots of info on it if your interested in the specifics", "replies": [{"id": "hj7rt4n", "text": "I learned something new today. Thanks!", "replies": [], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "hiyntrd", "text": "We look for spike in legal costs. When it\u2019s a few thousand in legal that usually means evictions.", "replies": [], "depth": 2}], "depth": 1}, {"id": "hiwm8go", "text": "Just like everything in real estate, the answer is \"it depends\", but for me and my market - RE taxes.", "replies": [{"id": "hiwnpno", "text": "Thanks!", "replies": [], "depth": 2}], "depth": 1}, {"id": "hixkhdx", "text": "Appreciation is guess work at best. As a rule of thumb low cap markets are forecasting higher appreciation compared to high cap markets and if it were an efficient market someone should be indifferent between buying in a low cap or high cap market.\nIn reality throughout the cycle faster growing cities tend to see more price appreciation and have more liquidity to easily sell their building compared to cities that are declining in population.", "replies": [{"id": "hixp3gf", "text": "Thanks!", "replies": [{"id": "hiy3ho3", "text": "I have generally used a 0.20 increase in CAP rate for each year compared to CAP at purchase, and try to be conservative on my exit plan.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "hiynxa2", "text": "I\u2019d say deferred maintenance or even cap Ex schedule. Harder to tell what has been maintained or not.", "replies": [], "depth": 1}]