BiggerPockets Real Estate Podcast - 995: BiggerNews: Multifamily Market Update + Where to Find Deals NOW

Starting point is 00:00:00 A class apartments are on the rise, but is this what tenants actually want? How does multifamily fit into the bigger picture and how does this impact single family buy and hold landlords? Today, we are discussing the state of multifamily and its general impact on the housing market at large. What's going on, everybody? I am Henry Washington, and with me today is our economics queen herself, Mrs. Kathy Fetke. Kathy is the co-host with me on the Bigger Pockets on the Market podcast, And so she's stepping in as some of our other hosts are taking some PTO. What's up, Kathy?

Starting point is 00:00:39 Well, I love being called a queen. So thank you. And if you are new to the Bigger Pockets podcast, welcome. And if you're a longtime listener, we are happy you're here. You could have been anywhere else in the world right now, but you're right here with us. So we appreciate that. Kathy, what are we talking about today? Well, today we are talking to Tom LaSalvia, who is the head of commercial real estate economics at Moody's Analytics.

Starting point is 00:01:01 Today we're going to discuss the state of moral. Multi-family and what is actually going on in this asset class. We're going to discuss what is going on in multifamily investing and its impact on residential real estate. We'll talk about markets with oversupply and markets where there's going to be some opportunity in multifamily. And finally, we're going to talk about affordability and the harsh reality of new construction of multifamily and what impacts that has on the market overall. Sounds great. Well, let's bring on Tom LaSalvia. Mr. Tom LaSalvia, welcome back to the Bigger Pockets podcast. It is wonderful to be back.

Starting point is 00:01:36 Amazing, man. Thank you for being here. So to get us started, for our audience, can you explain the big differences between commercial and residential real estate? Well, commercial real estate encompasses office, industrial, retail, and housing, but housing in the form of multifamily. You're thinking 20 plus unit buildings, 40 plus, you know, large investable universe. And I think that's really the biggest difference when you're thinking from an investment perspective is, yes, there's plenty of single family and small multifamily to invest in. But we're talking large scale, more corporate level investing. Yeah, I mainly invest in single family and small multifamily.

Starting point is 00:02:26 I think my biggest property is an eight unit, which I guess technically is a commercial residential property. At least for tax purposes, yes. Yes, yes. But it feels and operates more like a smaller single family. Do you see trends from the larger commercial corporate space kind of carryover into the residential real estate space? They're different. They really are. I mean, there's trends that if the economy is incredibly stressed, then typically both of those investment types will be stressed.

Starting point is 00:03:02 You'll see residential hurt. You'll see commercial real estate be affected by that as well. But then there's also times where they act as substitutes. So right now, the single-family residential market and even the small multifamily market is very tight, right? There hasn't been a tremendous amount of activity, very high prices. And what that has done, it's actually boosted the demand. for multifamily housing, right? Because, hey, if I am trying to get into my first single family house as an owner occupied, but the prices are out of reach, given financing costs, you know,

Starting point is 00:03:48 where interest rates are, given just the pricing of a lot of these homes, then I stay in multifamily. So it acts as a demand boom or boost for multifamily. And so there's relation there on the demand side. And then even on the supply side, you'll see moments where single family new permits are going through the roof. And that's pulling some of the capital away that would go into other parts of real estate, commercial real estate. So there are relations. Sometimes there are relations that work in opposite directions and other times very similar directions. Well, if the housing market is tight and more people are living in apartments, how is that affecting rent growth today? Interesting because it's going to sound somewhat counter to what I was just saying.

Starting point is 00:04:36 But remember, this is a market and your Econ 101 professor hopefully taught you that it supply and demand matters. And so we've had a tremendous amount of supply growth in multifamily over the last really two and a half years. And a lot of that stemmed from a tremendous amount of supply growth in multifamily over the last really two and a half years. and a lot of that stem from a tremendous amount of investment pre-pandemic, and then early in the pandemic period when there was just a tremendous amount of wealth and capital, it was pouring into multifamily, and a lot of those properties are now being delivered. And so, even though demand has held up reasonably well because of the tight single-family market, supply has just been that much larger. And we actually saw rent decline subtle, but rent declines

Starting point is 00:05:30 in 2023 and flatness to start 2024, I think we're just starting to see rent growth in the second quarter data now for 2024. So we are seeing that the supply demand market is becoming more in balance and a little bit of rent growth is returning. Well, there was so much record rent growth just over the past few years that maybe maybe that's a good thing. If we were to just sort of average it out over the past four years, are we now where we would have been, had there been no pandemic? A little bit higher in terms of rent growth. We had in certain markets, we saw annualized rent growth of 10, 12% for two and a half years. I mean,

Starting point is 00:06:19 you're getting a bump of 30% rent growth in a two and a half year period for markets, particularly markets in the Sunbelt, right, where you had a lot of that migration headed in that direction early in the pandemic from a lot of the more expensive cities around the U.S. Now, something really interesting about that to discuss. I'm glad you brought that up and we went in this direction because we're seeing rent growth, not only be sluggish all around the country, but even more so in a lot of those darling markets, right?

Starting point is 00:06:59 I don't want to use the word bubble because I think a lot of that migration into the Sunbelt cities, those darlings, is permanent. So I don't think we actually have a bubble here, but, and I think about this, I think it's pretty logical what's going on. If you have a lot of wealthy New Yorkers, right, San Francisconians, I don't know, what do we call San Francisco folks? Crazy? But if you have the, right, so there's a wealthy household.

Starting point is 00:07:40 If they're moving into communities with a lower. cost of living, pretty much any apartment, any house is fair game, right? And so they can go there and pretty much get the pick of the litter and not worry so much about price because it's still so much cheaper than what they would have spent in New York. But what happens when some of that high-income migration slows down, then the locals have to try to afford the new development in all of those markets, and they can't quite do it. And so that's where we're seeing more concessions and pullback and rent from a multifamily perspective in a lot of those markets.

Starting point is 00:08:23 Again, I think it's more temporary than permanent, but that's kind of the boom. Boom and bust is probably too strong, but that's part of the cyclical nature, I think, of commercial real estate, especially when the shock is migration influenced. Yeah, and when that starts to slow down, the sudden. Yeah. All right. Now that we have the lay of the land on commercial real estate, we're about to dive into Tom's insights on how this impacts investors, affordability, and even the labor market right after the break. You ever head out on a trip, lock your door, and think, cool, my most valuable asset is now doing absolutely nothing. Because while you're off

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Starting point is 00:12:19 So they're building these A-class properties. They're popping up all over the place. So when you see so much new development in one particular asset class, what does that do to the subsequent asset classes? So what happens to B and C-Class when we build so? so much A class. And how is that impacting vacancy rates? Yeah, that's a very good question. What we are seeing right now is with all of this new supply that the property owners, the management companies, they want to, for lack of a better way to put it, get butts in the seats. And so what they're doing is they've been offering pretty large concessions. and with those concessions, it's pulled some of the folks to be able to trade up from B to some of those A.

Starting point is 00:13:09 And it's actually caused a little bit of an increase in the class B vacancy rate. Now, with that said, there's still a pretty large shortage of what I might, we in the industry, I think, often call workforce housing. So I think this is more temporary. As household formation picks up as we move over the next three, five, seven years, you'll see new supply of that class A pull back a bit. And then you'll see those markets come in balance. So I do think we have a temporary hit to some of that class B as the property the owners are trying to get more and more folks in that class A. So I agree with you, Henry.

Starting point is 00:14:03 We're still seeing record completions or near record completions through the end of this year. But if you look at the pipeline where here at Moody's, we track permits, we look at satellite imagery to see when construction has begun and how it's progressing, we're going to see a much slower late 2025 and 2026 is going to be tremendously slow. Right? So all of those, that high financing costs and all of the glut of new supply, as well as the sluggish rents are going to take their toll. And again, it kind of goes back to this timing problem within real estate, right? This isn't like I'm building a widget that I can just run the factory another hour that day and I produce another 10,000 widgets and sell them because the market wants them. This is, hey, well, and we're going to have a lot. lot of money, a lot of interest and activity for multifamily, all these developers and investors

Starting point is 00:15:04 are going to do it at once, and it's going to come online in four to five years, and then the demand dries up a little bit, and then we go through this period, right, where Kathy, I think you said it, well, you know, the rent levels kind of balance, right, that growth balance. Yeah, it is so hard to time the market, especially when you're a developer and a developer of large, large things. So it could take four to five years and how could you possibly know what the economy will be like at that time? So what we do know is that the economy does appear to be slowing down a little thanks to these higher rates. It's finally working. And we may see these rate cuts this fall. Do you have any concerns that that we'll see more job loss and that it will slow too much, and that might affect

Starting point is 00:15:53 multifamily at a time when there is more supply coming on? Yes. Yes. Simple, concise answer. Yes, I do have a concern. No, no. So right now our baseline forecast is for a slow and steady continued softening of the labor market. But that will be balanced somewhat by a little bit of household formations picking up

Starting point is 00:16:23 over the next year or two. So that'll help a little bit. So earlier we were talking how there were households that remained in multifamily because they couldn't get to their single family. Okay, I don't think that's going to be very easy for a lot of these households in the near future. So let's put that aside for a second. The other thing we saw happen is rents got so high in a lot of markets that household formation took a little dip from because of the affordability issue, right? So I may have separated with my roommate and got my own apartment, or I may have left mom and dad's house finally, but it was so high from a rent perspective. that I stayed there longer, well, finally, with rents pulling back slightly, household formation can

Starting point is 00:17:17 pick up a little bit, and it will balance some of those other demand drivers that are weakening a little bit via the labor market. Tom, I'm curious, have you seen apartment vacancy decrease as a result of affordability or a lack thereof in the single-family housing market? So if people can't afford or at least think they can't afford to go and buy a new home. Have you seen that caused those buyers now to move into these apartment communities or decreased vacancy? Decreased vacancy. It's helped. It's helped. We would have seen much higher increases in vacancy rates over the past couple of years in multifamily, given all this new supply if it wasn't for exactly what you described there. That lock-in effect where, hey, I can't.

Starting point is 00:18:10 can't trade up to that single family house, it's going to keep me in that, that multifamily. And it did help. We, we were anticipating. If that lock-in effect, we kind of did a counterfactual research. If that lock-in effect didn't happen, we would have taken a vacancy rate that's currently sitting around 5.7, 5.8% nationally. And it would have been another 100 basis points higher. So with these large new apartments coming online, how do you, you see that effect? I know you already kind of mentioned this, but how do you see that affecting supply and demand? And we've got two types of listeners here at Bigger Pockets. We've got real estate investors where they would be affected as landlords, but we also have people who just are,

Starting point is 00:18:55 you know, not loving the high rents, right? We've got families who need affordable housing. So with these new large apartments, is that going to help solve some of this? Or are these more high-end apartments that really isn't going to solve the affordable housing? housing problem at all. Again, it can help a little because you do get some households that will end up being able to trade up from a B to one of these newer A's, as long as there's a concession involved, or if they've earned a little bit more income, and that should help relieve some of the issues. But generally speaking, a lot of these apartment owners, these building owners, these landlords, managers, they are still going to hold out a little bit and not lower the rents on those newly

Starting point is 00:19:46 constructed buildings that much, right? They're going to still. So I guess the answer to your question is we still have a shortage of housing in this country somewhere between two and five million units depending on the research that you look at. And a lot of that is at the lower end of the income distribution. So this doesn't solve that problem. Certainly not directly over time, right? Over time, there is an argument to be made that new apartments or new houses become old, and they move their way down the classes.

Starting point is 00:20:32 So I'll give you that. But we do have more of an immediate problem that I think needs to be remedied a little bit. And so I'll try to be as balanced there as I can and say there's there's some help, but I also think we're at a point in our society where there's public private partnerships that are going to be needed to fix a lot of the housing and security problems that we do have. I'm not saying we need public housing, certainly not like the 1940s and 50s that really, you know, ruin. ruined a lot of our cities because of the way they were built and all the issues associated with them. But I think some form of, I'm not going to subsidize housing is a wrong way to put it, but some form of public-private partnerships to better a lot of the cities and society in many ways. Yeah, because I've heard some reports that are like seven million homes needed for that are

Starting point is 00:21:33 on the affordable side. Incredible. Yeah. I mean, I think it, you know, indirectly, directly. It's all absolutely correlated, in my opinion, because if you are building or overbuilding or, you know, air quotes, overbuilding A class, that means that A class has to offer incentives and lower rents to get people to fill the butts and seats. And if they do that, that means B class has to do the same, lower rents offer incentives and then vice versa. So you have this trickle down effect to where the more affordable apartments are now dropping price. And people can get that affordable housing may not be the affordable housing that they want, but it is an affordable housing option. I live in northwest Arkansas, right? And so I live in the home of Walmart. And one of the things people often say about Walmart when they come and open a new store is Walmart comes and opens its big box. And then the local mom and pop stores in the area now suffer because this big box discount retailer is there taking their customers and they're more convenient, yada, yada, yada.

Starting point is 00:22:33 do you see how do you see the A-class apartments coming into these communities and and building in these communities? How does that affect the mom and pop maybe smaller complexes in the area? Is it a positive effect? Is it a negative effect? And does it create an opportunity maybe for the smaller investor, the mid-sized investor to come in and grab some of these deals? Often it's been a positive effect on the rent growth in those communities. Obviously, there's location specific dynamics that will define if it is ultimately a pro or a con. But for what we mostly see is developers coming in building some of these complexes, and then you get the positive externalities associated with higher income individuals moving

Starting point is 00:23:26 into the community, which typically helps to raise the potential for rent growth in those areas. Now, if we go back to the social side of that, there's a whole argument against this, you know, this bad word gentrification, right, that we often hear. I try personally in my economic beliefs here to be pretty, I would say pretty balanced in terms of how I think about this, right? because a lot of those older properties, over time it needs to be renovated. It needs to be kept up, right? H-back, piping, whatever it might be. And that is costly.

Starting point is 00:24:13 And what we've noticed is that in a lot of these neighborhoods where you've seen investment from larger scale, developers, investors, you have seen the ability to then invest into some of those smaller units, smaller properties to actually bring them up to, I think, a better place. So again, tradeoffs and everything, right? I think, and you're absolutely right, I think it does create an opportunity. And so if you have large scale A class coming into the area, that doesn't mean that there

Starting point is 00:24:51 aren't people who live in that area who want to stay in that area and live in a B or C class. And yes, there are going to be properties that probably haven't been updated for a long period of time and that could create an opportunity where somebody could go and buy those properties. I think where we as investors have to take some responsibility is we have to, like, if you want to slow or stop gentrification, you can still invest successfully in these markets by underwriting your deals properly. So if you find that opportunity, you can underwrite that deal at a price point that allows you to buy it, fix it up, and then offer it back to the same community at under A class rents somewhere in the B to C class rents. And so you're allowing people

Starting point is 00:25:37 to stay in their communities in a newly updated, renovated apartment that doesn't have to compete with A class, but that's not sexy and that's not fun. And I think that that's where gentrification comes in is because people want to buy a property and do the sexy fun thing. And that typically equals a class and then that prices people out of neighborhoods. I'll play devil's advocate for one second. And I think the pushback that you'll get is that the math just doesn't work. So you say we can underwrite it at that lower point to keep the rents lower. And the pushback on a lot of those investors well, then I'm not even going to bother because,

Starting point is 00:26:16 hey, if the risk-free rate is given me 5% returns, return, you're going to tell me you have to go buy this building, put this money in, and then ultimately keep the rents where, you know, and then 08, one more, my insurance expenses are going through the route. And your property gets reassessed at a higher price point and your taxes are higher, yes. And, you know, all, all of that, all of that. And again, playing a little bit of devil's advocate with you here, but there, you know, there's truth to both of those.

Starting point is 00:26:47 There's truth to both of that. I am guilty of buying an old apartment and having it cost much, much more than expected to renovate it. So there does need to be some kind of tax credit or something for investors who are willing to take that risk. Because as a developer, I'm sitting in one of our projects here in Utah, and we did offer 30% affordable housing. But as inflation hit, we are taking major losses. It's costing twice as much to build the affordable units as it as it. as we can sell them for. So, you know, it shouldn't be the investor that takes the hit.

Starting point is 00:27:23 There should be a tax credit of some kind. And I do think that the investors get vilified in the media a little bit. The developers, they do wrongfully. And I don't think enough people, enough in our society are following the expense side of the equation, right? All they see is 10, 20% rent growth. And they don't see that insurance. costs have gone up 40, 50% in the same time span and management costs and building materials, et cetera, et cetera, et cetera. Again, you know, I'm not about to say go cry a river for all of

Starting point is 00:28:02 your developers out there, but there is that balanced side of the story that I think needs to be told better by our media, by even maybe it's on us by our industry to just tell, tell that story a little bit more. So many people have been waiting for the multifamily market to just fall, you know, that maybe one way to attack this affordable housing crisis is that multifamily prices will come down. And that would mean costs are down and maybe rents could be lower. But that crisis has not really made headline news as much as I thought it would. What is going on? I mean, definitely prices have come down, right?

Starting point is 00:28:42 Yes, yes. But where's all the distress? So that's the thing, right? prices have come down, but the distress isn't there in the same way that, certainly not in the same way, that distress in the residential market in the great financial crisis, right? If you were there, you would have been able to pick up properties, you know, pennies on the dollar practically, especially if you were buying a large-scale portfolio of properties from a bank that had a lot of distress loans, et cetera.

Starting point is 00:29:13 There were a lot of opportunities. And we did. Yeah. But now that's not happening for a variety of reasons. I think there was a lot more conservative underwriting coming into this slowdown in the market, right? Some of that was through regulation. Some of that was through learning, right? And so, you know, you did see more conservative underwriting. So there was more of a cushion. You saw, I put it this way. In the previous cycle, you had almost an unwillingness for banks to work with their borrowers or other lenders or investors to work with their borrowers or those that were partners in the capital stack or whatever. And here, the regulatory bodies are actually promoting that in a different way, right? They're really pushing this, let's modify, let's extend, let's, you know, push through this downturn so as to not cause this incredibly distressed market.

Starting point is 00:30:27 And so you end up with maybe 10, 15, maybe even a 20% discount from a previous high, let's say, in 2021 or 22 to right now for certain properties. but you're not getting that 50, 60, 70% discount. Not in multifamily. In office, you might find a few of those if you want to take that risk, but not in multifamily. Okay, time for one last quick break, but stick around. We'll get into Tom's predictions for what's next and the markets where he still sees opportunity right after this. As a reminder, BiggerPockets does have a website. So make sure to visit www.biggerpockets.com to learn more about real estate investing.

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Starting point is 00:34:19 Hey, BP investors, welcome back to the show. Yeah, you know, I think I expected to see more of a bottoming out than I think we're seeing right now as well. But I don't think that that means there aren't opportunities. And so maybe you could give us maybe some areas and maybe not necessarily cities and states, but what are some things or indicators people could be looking for that would tell them maybe I need to go dive in and look to find some of these opportunities for reinvestment? Well, one way that we're helping our clients is through tracking loan maturities, right? And so we're able to go ahead and look at what's actually coming off the book soon. And when you have some of that transaction about to occur, whether it's through refinance, that often then leads to the potential for distress anyway.

Starting point is 00:35:22 And so that's at least at the larger scale from the investment community. I think you can look at some of those properties where there's publicly available information of what's coming off the books from a loan. At the smaller scale, I think that is a lot tougher, right? That information is much harder to grab to find, you know, exactly when and where some of that distress will be. I'm curious on your side, what do you guys find? So just quickly to define for people, when we're talking about, um, loans maturing. Typically with commercial property, you're going to buy a property and you'll finance it on a commercial loan, which will have a three or five year adjustable rate, meaning that that loan will mature

Starting point is 00:36:11 in three to five years and you need to refinance it or the rate adjust. It just depends on exactly what type of loan product there is. And so what you're suggesting is if you can track when those loans might be coming due, in other words, if somebody bought something in 2021 and we're sitting in 2024, it was on a three-year adjustable rate. Well, that loan's coming due now. And so you may be able to find an opportunity because the interest rate in 2021 is not today's price, right? Like the interest rate is much higher now, which may mean the deal doesn't pencil. So that could create an opportunity. I think that that's definitely an indicator that's that you can track. What I would do is a lot of the times these these apartment deals are funded by local community banks on these commercial loans. And local

Starting point is 00:36:58 community banks want to protect their investments. And so if I was a multifamily investor and I was considering looking for opportunities, one of the ways I would do that is to call up these local community banks and build a relationship or join some of the same organizations. These local community banks are members of, Chamber of Commercees, Rotary clubs. And then that way you kind of get to leverage a warm introduction through these groups and then start to ask them, hey, what do you see coming in terms of maturity? Do you have any potential opportunities from maybe a loan that's coming due that you feel might need somebody else to come in with some capital to take over? And so that's one way I would think to do it. It's a much smaller scale way of doing it. But a lot of

Starting point is 00:37:42 these deals are done through relationships. That's very, very true. And an answer to your question, And that's why I stick with one to four units personally because I love fixed rates. I love fixed rate mortgages. Those adjustable just freak me out a little because I did go through 2008 and it was not fun. Just my two cents. So, you know, Henry said you don't have to mention markets, but I would love it if you would. Which markets would you say are potentially a little oversupplied or will be and which ones are, you know, in hot demand?

Starting point is 00:38:14 I was talking about it a bit earlier when I mentioned those pandemic darlings where there was a lot of that migration. And again, I do think at this moment there is a bit of oversupply. It's oversupply, though, temporary. So I think rent growth picks up in a lot of those areas and a couple of years out after we get through this sluggish economy. So while that, you know, there's some of these markets like even Austin and Miami, which were major darlings, you're seeing just a tremendous amount of supply growth. On a smaller scale, some of the Tennessee markets, you know, there's a lot of activity in those when a lot of that migration was occurring.

Starting point is 00:38:58 Same thing with through the Carolinas. And so, again, I'm not bearish on those except for a very short period where I think pushing forward, pushing more rent growth through is a bit tougher there. interesting what we've started to see in the data is some of these forgotten Midwest markets, some of the old Rust Belt, they're actually picking up a bit in terms of activity, and we're seeing some signs that there's life. And it goes back to that affordability story we were talking about earlier. So as some of these pandemic darling, hot market, darling, hot market.

Starting point is 00:39:43 markets, the rent to income ratios have leapt from 20 to 25, 26, even 28, right, getting close to that HUD-defined 30 percent rent burden threshold. Some of these other markets that had been forgotten for a while by investors, you're starting to see some demand to come back to them. And I think there's going to be opportunities there over the next five, ten years. Some of that also has to do with those insurance costs. And you have to look at what areas are in troubled spots. It's one of those things where it seems like we've been saying that for a while,

Starting point is 00:40:32 that, oh, you know, there's these markets. Why would we want to build when they're below sea level or why would, you know, we want to. And it didn't seem to matter because a lot of people, people just kept moving to them. But the pocketbook talks, right? And so when insurance costs start going through the roof or insurance companies are pulling out, that's when things get a little trickier for investing. Yeah, yeah, we talked about on a earlier show, you know, Californians, most Californians don't

Starting point is 00:41:07 have earthquake insurance, but we know one's coming, but not today. What other long-term concerns do you have for multifamily or commercial real estate in general? I really think we just mentioned it. And we talked earlier, the expense side of the equation. I do think, generally speaking, demand holds up reasonably well, even through this economic softening. But we're not seeing a lot of softening from the expenses. And so how do you make a lot of softening from the expenses? And so how do you make that work in an era where, yes, we do think interest rates will come down a little bit, but we're in a new interest rate regime, right? This is not 0% Fed Funds rate and 3% 30-year mortgages. I think that, to me, is somewhere where we're going to have to adjust to get used to this new world.

Starting point is 00:42:11 And that does cause a bit of a, I'm going to use the word correction in valuations across multifamily. We just, you know, we said it earlier. Prices have come down a little bit. And certainly across the other asset classes within commercial real estate, that correction does have to still occur. It sounds like to me we got a little spoiled in, you know, post-COVID on the returns. we could get out of multifamily in a short period of time. And now it sounds like what you're saying is we've got to be extremely careful on the evaluation and the underwriting.

Starting point is 00:42:49 Some of these ancillary expenses have gone up. And it's more of a long-term play. You're going to be able to hit good numbers and make a profit. But you're not going to be turning that over in the next two to three years after you buy one of these larger communities. I talk to a lot of investors. and lenders in the multifamily market. And what I've heard from some of those that are feeling pretty good right now

Starting point is 00:43:21 is they buy to halt. They don't, they buy, they build their portfolio. Yeah, occasionally they'll take something out of their portfolio to get to a better diversified point where they want to be. But generally speaking, they're not flipping. in that sense, right? And those right now, they're saying, hey, we're fine because, you know, there's nothing really we need to do differently. Yeah, if I bought something in late 21, early 22, and I have to refinance it right now, that's going to be a little problematic.

Starting point is 00:44:00 But the rest of my portfolio is fine. I've been holding these properties. I have so much, you know, capital appreciation from the last 20 years, you know, for a lot of these. these properties that I'm in a great position from a leverage perspective. And so this doesn't bother me that much. And that's where I think you're right, Henry, we're getting back to that point where you're going to buy, you're going to hold, it's going to be part of your portfolio, and that's where I think the money gets made. I love that you said that. It seems like every offering that came across my desk over the past four years for multifamily was a flip. And I was like, man, if I'm going to buy multifamily, I want it to be my retirement plan.

Starting point is 00:44:44 You know, I want to hold it forever. But, yeah, it's the flipping business versus the buy and hold. So we're back to the buy and hold. Tom, this has been amazing. Tons of valuable information here. Thank you so much for coming on and sharing these insights and giving us a peek into commercial multifamily real estate. And kind of what we really did, I think, is kind of play a little bit of myth busters here.

Starting point is 00:45:06 So thank you very much for the insights. You guys are the best. Always so much fun to just. join you on the show. And I hope I earned a spot back sometime. Absolutely. Can't wait. Already looking forward to it. Thank you all. Thank you very much again, Tom. And thank you, everybody. We'll see you for the next episode of Bigger News. We do this every Friday. Kathy, it's been great having you. Great to be here. Thank you all for listening to the Bigger Pockets Real Estate podcast. Make sure you get all our new

Starting point is 00:45:55 episodes by subscribing on YouTube, Apple, Spotify, or any other podcast. platform. Our new episodes come out Monday, Wednesday, and Friday. I'm the host and executive producer of the show, Dave Meyer. The show is produced by Ian K. Copywriting is by Calicoe content, and editing is by Exodus Media. If you'd like to learn more about real estate investing or to sign up for our free newsletter, please visit www.com. The content of this podcast is for informational purposes only. All host and participant opinions are their own. Investment in any asset, real estate included, involves risk. So use your best judgment and consult with qualified advisors before investing. You should only risk capital you can afford to lose.

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BiggerPockets Real Estate Podcast - 995: BiggerNews: Multifamily Market Update + Where to Find Deals NOW

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