Beginner Series - Where Are The Deals?

Today’s show is another in our beginner series. We have people in our lives who are still in the learning phase. The audience for the Real Estate Espresso podcast is a sophisticated audience. Many of you own large portfolios of properties. But you probably have people in your life who are less experienced. Where do they go for information? So many of the information sources that are focused on the rookie investor in my opinion leave a bad taste in my mouth. So these few shows a month focused in the beginner series are designed to help investors who are still learning.  

On today’s show we are going to be looking into the so-called wave of distressed properties that are supposed to be hitting the market. Where are they? It seems like they are nowhere to be found. If you do find them, what is the seller looking for in a buyer? In order to answer this question, let’s break down the properties that are coming on the market today into a few different categories. To be clear, I speak regularly with commercial brokers across numerous markets. So what I’m discussing today is not just my opinion, but observations from commercial brokers in large markets. For the purpose of this discussion, I’m going to focus on multi-family apartment projects. 

Property sale listings are falling into four distinct categories:

1. Some apartment complexes are owned by investment funds that have a specific mandate. For example, they may have been purchased with a five year horizon. That means the fund is looking to start divesting of those assets. 
2. There are those who are upside down and don’t have a path to permanent financing that makes any sense. 
3. There are the tired landlords that have been holding a property for a long time and have no succession plan with a family member to take over the business. 
4. There are some owners with a portfolio who will choose to sell an asset in order to raise cash to solve a problem on another asset. 

Each of these sellers has a different criteria for selling, and therefore is looking for something different in a buyer.

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