We made it. 2023 was by far the most difficult of my professional career which started in 2011. I dealt with a myriad of deal and market-related issues; uncapped floating rate debt straining cash flows, raising preferred equity behind an agency loan, inability to access construction financing, complex capex challenges in an environment with no liquidity, and general market pessimism which makes everything feel worse. In the past, rents/values kept growing and with interest rates at zero, we’ve been able to continually refi deals at higher valuations, and sock proceeds away as reserves or send ..read more

One of the trends in real estate I’m most interested in is the rise of experience-focused boutique resorts. These are typically 10 units or less, independently owned and managed, and provide a unique/hospitality-driven experience. These opportunities are made possible by booking platforms such as Airbnb and VRBO and supercharged by social media (Instagram/Tik-Tok/YouTube). What gets me excited about these projects is the opportunity to create a differentiated product through design, creativity, and providing hospitality experiences, which serve as long-term competitive advantages. From an inv ..read more

Although it’s only been a few months since my last state of the multifamily market update, I feel like it’s time to write another one. That post is not dated by any means but needs to be expanded upon. The world is changing rapidly, pessimism has crept in, rates being higher for longer is becoming consensus, and ‘survive until 25’ is the new motto. I spend a lot of time reading and talking with people, attempting to organize my thoughts in a cohesive narrative that drives my investment thesis. This post is another attempt to take all the messy information and weave it into a story that I beli ..read more

The value-add multifamily (“VAM”) business was the darling of real estate investing over the past decade. In a zero interest rate environment where capital flooded the space, it was impossible to do wrong. The more you bought and the more aggressive floating rate debt you used, the better you performed.  What a time! Things have shifted quickly and the sentiment toward VAM investing has turned negative. The real estate rags and online discourse are littered with outlier distressed situations. In November 2022 the co-founder of a well-known syndicator was featured in Entrepreneur Magazine ..read more

Over the past few years, with the world changing so rapidly, I’ve posted several times on the state of the multifamily market. It’s been a great way to organize my thoughts, distill all the information I’ve been consuming into a semi-coherent narrative, and justify my investment strategy. Here are just a few of the posts: Making Sense of the Multifamily Market (June 2022) A Golden Era for Apartments? (February 2021) What’s Going on with the Multifamily Market (August 2020) This is the Moment We’ve all been Waiting for (June 2020) Suffice to say, my views on the market change quickly, but I ..read more

We recently acquired a 256-unit value-add deal in Savannah, GA. Despite being a relatively new asset (2015 construction) and performing well (95% historical occupancy), we intend to upgrade and reposition the property, targeting rents approximately $250 above the market rate at takeover. We believe there is unmet demand in the submarket, which has experienced significant growth in recent years. However, achieving success requires flawless execution and a flexible hold period. Flawless execution begins prior to takeover. We establish goals and expectations for the staff. At Atlas, we strive to ..read more

Every so often, I go back and read old blog posts to get a sense of my thinking at the time. It can be embarrassing (like the bearish case for multifamily in 2019), but others (such as why we prefer value-add deals and long-term holds and our 4 forms of sustainable competitive advantage) serve as incredible resource for me to understand my views at specific times and as a result, reflect on my decision-making. One thing I’ve consistently said over the years is that by establishing trust with our investors, we can scale our high-net-worth capital base. With the use of technology and systems, H ..read more

Over the past decade multifamily investors had it easy; interest rates were nearly zero, debt was widely available and cheap, capital poured into the space compressing cap rates, fundamentals were strong etc. It was nearly impossible not to well. The key to success was just being in game and outperformance meant not selling too early. That’s quickly changed. We’ve shifted from an asset market to an operator market, where success requires buying assets at the right basis and executing well.   Outperformance, going forward, will require differentiation. Packy had a great post on differenti ..read more

I started my career in real estate in 2011 and have experienced a decade of low rates and increasing asset values. Success in multifamily investing was driven simply by being in the game. Well, the game has changed. Today’s environment is unprecedented.  I’ve been spending an inordinate amount of time recently reading macro news, speaking with brokers, and underwriting deals. We’ve quickly shifted from over-exuberance to fear and everyone I speak to in the multifamily space is preparing for “distress” and lining up capital for buying opportunities. While there has been a much-needed pric ..read more

As 2022 winds to a close, I’m sure you’re getting inundated with predictions for 2023. While I certainly enjoy making predictions (like I did in 2019), I struggle with forecasting short-term trends. In 2019, for example, I was talking about renter flexibility and the disruption of the STR business. While the predictions were directionally correct, real estate is a slow-moving business with trends emerging over decades, not in a single year. What’s more relevant and interesting to me are the longer-term trends impacting the multifamily industry. At Atlas, we buy/develop quality multifamily ass ..read more