Welcome to the very first edition of Flow Equity Insights, a newsletter aimed at providing you with fresh and up-to-date insight on the multifamily real estate landscape, so you can make informed investment decisions, protect and grow your capital, build passive income, and achieve freedom so you can live life on your own terms.
The word FLOW means so many things to us. A couple of examples…as it relates to our investment firm Flow Equity Partners: Finding Lucrative Opportunities for Wealth through Real Estate Investing, and as it relates to life in general: Freedom, Lifestyle, Ohana (Family), and Wealth.
We’ve invested in various markets and asset classes and created Flow Equity Partners to help you find and invest in the best opportunities out there, so you can protect and grow your wealth through stable and secure multifamily real estate investments.
We wanted to share some multifamily & economic insight, As you may know about the recent announcement of the $229MM foreclosure in Houston, TX & banking collapse that happened with SVB, there will likely be more. But, when you examine multifamily real estate’s performance during previous recessions, the proof is overwhelming. The intrinsic return components of present income, income growth, effective risk-adjusted returns, and lower volatility can provide strong overall performance in good times and bad.
Multifamily apartment owner foreclosed on 3,200 units in Houston!
Arbor Realty Trust initiated the foreclosure on March 13 after Applesway Investment Group defaulted on its mortgage payments. The properties went to auction on April 4, but no bids were made, according to sources familiar with the foreclosure. Arbor initiated a credit bid, in which the lender can use the outstanding debt owed on a property as collateral for their bid at a foreclosure auction, for each property. That allows the lender to bid without bringing cash to the table.
The credit bid placed by Arbor was $25 million cheaper than the principal amounts, totaling about $204 million for the four properties, according to ForecloseHouston.com. The lender won the bid and took over all four properties, with Heights at Post Oak being the most expensive at a final bid of $60 million.
Lesson for Investors from the SVB Collapse
The recent collapse of Silicon Valley Bank (SVB) has sent shockwaves throughout the venture capital & startup industry. However, it is essential to note that the ripple effects of this collapse unfold far beyond this industry.
The challenges faced by SVB have been brewing for some time and are a consequence of the bank’s strategy of investing in long-term bonds with low rates. The recent sudden spike in interest rates has compounded the issue.
Investors can learn from the collapse of SVB by taking steps to mitigate risks and navigate the current market conditions. These measures include diversifying their portfolios, conducting rigorous due diligence before investing, paying attention to leverage and liquidity, and remaining informed and adaptable to changing market conditions.
2023 Multifamily Investing Outlook
The multifamily sector is poised for continued growth and profitability this year. In a 2023 forecast, CBRE stated that “despite economic headwinds and ongoing capital markets disruptions,” the nation’s multifamily sector was expected to see above average performance. Although the group forecast lower rent growth and higher vacancy rates than in recent years, it noted that housing fundamentals were still strong and anticipated occupancy rates higher than 95% and rent growth at 4%. Read more
While an economic downturn is here, demand for multifamily properties still remains high, with many Millennials, Gen Zers and Baby Boomers choosing to rent rather than buy. This has led to an increase in rental rates and occupancy rates, making multifamily real estate a lucrative investment opportunity.
As we navigate the dynamic real estate market, it’s crucial to recognize the potential risks and opportunities. The recent foreclosure in Houston and the collapse of SVB serve as reminders to investors to exercise caution and implement risk mitigation strategies. Diversifying portfolios, conducting thorough due diligence, and staying informed about market conditions are key to success. Despite economic headwinds, the multifamily sector remains strong, with high demand for rental properties. Millennials, Gen Zers, and Baby Boomers continue to choose renting over buying, driving up rental rates and occupancy levels. This trend presents a lucrative investment opportunity for those seeking stable and secure returns.
About Flow Equity-
At Flow Equity Partners, we are dedicated to finding and investing in the best multifamily real estate opportunities out there. Our team of experts constantly monitors the market to ensure we stay ahead of the curve.
We are always delighted to bring insights to you and look forward to continuing to provide you with valuable insights on multifamily real estate. If you want to learn more about investing in multifamily real estate, please join the Flow Equity Investor Club today!