Is Multi-Family Real Estate Still Good in 2024?

There's been a lot of talk out there in the last year about the difficulties with multifamily real estate, particularly with the rapid rise in interest rates. You know, there's this market cycle. It goes between the point of maximum optimism and the point of maximum pessimism. Where would you say we're at right now?

You know, there's a lot of opium in the air, you know, where for the last 12 months everyone's been hoping that rates were going to drop at some point and we're going to see this boom. I think it's impossible to guess, but so we just base it off of like this is where we are. We don't forecast. You have this tricky thing where you can create a performer based off of Today's model rates. 7, 7.5%, maybe 8%, who knows. But you can play this game with yourself. It's like, oh, what would they look like if it rates dropped to five, five and a half? You can't do that. You look at a deal based off today and maybe a little higher and if it works, great, you dig into it further. But I think you can't hope that it's going to drop to make a deal work. I think it's trickier for deals that are longer running. Like 5 to 10 year deals that started before 2020 when rates were really low and now they're coming into a high rate market. Those deals are kind of are just naturally off kilter. But deals that you buy at 7% interest rate can still work pretty well because you're buying it in straight, that's higher, but you're buying it at a lower price. So it all kind of blends out as long as you keep the fundamentals the same. So I think in general with any deal that you're buying today, you base it off of what's today's numbers. If you have a three year exit for the deal, there is a chance that if you hit the market the right way and rates drop 18, you know, over the next 18 months, you're, it's, that's added, that's, that's cake. You're not planning for. You know, there's that, there's that, that party that always wants to believe it, but you never know. Life and the market over the years has taught me to, whenever you think when things are going one way, they're going to go another. So you plan for the worst and the best can be a surprise. And I think in general that kind of keeps you out of trouble most of the time.

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