Apartment Sales Volume Surges 22% in May | Multifamily Executive Magazine | Dispositions and Transactions, Sales, Cap Rates, Transactions, Real Capital Analytics
[{"id": "csik3x3", "text": "How long can this run on apts continue?", "replies": [{"id": "csiklx1", "text": "Not much I agree with Keynes other than this, 'markets can stay irrational, longer than I can remain solvent.'  \nAll joking aside, not sure, entering a very interesting time in the market.  Rental ranks are exploding, with no signs of ebbing.  Home ownership continues and will continue to decline, especially as more draconian aspects of Dodd-Frank take hold.  High-end MF construction is certainly the closest to the over-valuation marker.\nSales volume, esp in the Phoenix Metro, has seen a huge surge in the 10-99 unit property categories as most of the 100+ value-add plays have already been flipped.  Interestingly, I've been seeing your traditional 100+ unit property acquisitions guys change their acquisition criteria to include 40+ and are aggressively pursuing those opportunities especially where a DTC or other high urban density rezone is possible.  This has caused investors to search in secondary AZ markets, i.e. Tucson Metro with multiple portfolio closings and consolidations.", "replies": [{"id": "csikyp6", "text": "What is the lowest cap rate you've seen? How can the numbers work at that level?", "replies": [{"id": "csit65h", "text": "On the really low caps, sub 4/5 to which we've seen a few but not a ridiculous amount as those seen in markets on the coasts, that product is Class A/A+ and, at least here in Phoenix Metro, institutional investment grade only, i.e. insurance company, REIT etc and all cash deals.  Basically they're looking for safe harbor.  Most deals trading now are 5-7 on the value adds (pushing into the C-/C+ asset categories) with asset managers looking and relying heavily on LTL amounts.  \nFor more context, I'm posting an article next week about underwriting.  Going to give a practical 'how-to underwrite guide.'  As part of that post, I'm going to be including real life examples of MF sales that have occurred, Phoenix Metro only, in the past several months.  Also going to delve into the nuances of underwriting and tell it from the perspective of the different players involved, i.e. institutional investors, portfolio managers, single-asset managers, property managers etc.  Most likely end up being a 2 or 3 part series since there's a lot of information to cover.", "replies": [], "depth": 4}, {"id": "csjgzts", "text": "The lowest caps I have seen have been 5-6 in rural SC for B/C grade stuff (with no value add).  I know the big cities have caps in the 2's and 3's but to see a 5/6 in rural SC for a sucky product, simply blows my mind.", "replies": [{"id": "cslp4j1", "text": "Anyone buying at under a 6 in rural sc is probably going to get their fucking head ripped off. ", "replies": [{"id": "csltaso", "text": "I hear yah but there are alot of deals in the residential commercial market as well as the SFH market that MAKE NO SENSE WHATSOEVER and alot of these deals are being done by established educated buyers.  I just don't get it !", "replies": [{"id": "csltc2p", "text": "Hedge funds buying $300k homes for $370k and doing it by the thousands.  I get some of the reasoning but not enough to justify those numbers.\n", "replies": [], "depth": 7}], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "csvgrlx", "text": "Primary and Gateway markets still have room to run on MF cap rate compression, though not a ton.\n\nBeware the secondary markets with multifamily. Potential for bubbles are already in place multiple places around the country.", "replies": [], "depth": 1}]