As you may know, my partners and I are actively looking for multifamily to purchase in the Southern US. Our team has analyzed over 100 deals now! It's been somewhat frustrating, but we will not compromise on our criteria. The numbers have to work.
The imminent recession is going to bring on opportunities. It also calls for very conservative underwriting, and writing offers below what sellers typically want... but we're starting to see sellers come to terms with the changing market.
And in the meantime, our investors in the fund are waiting, but they are getting paid to do so. We pay a 7% preferred return that accrues.
Why would we do this?
It's incredibly beneficial to have capital ready to deploy quickly when the right opportunity presents itself. It's exactly what the largest investment funds are doing - they are raising billion$ in anticipation for "opportunistic investments" (article).
Having the capital before the deal, puts us above 90% of other buyers out there, who find the deal first and then raise the capital. It gives us tremendous negotiating power, especially these days when 80% of deals are not closing due to financing.
Want to learn more about this, join us on Wednesday evening. At this point, the fund is over 2/3 allocated.
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