But, if you’re a multifamily investor, there’s another gap you must keep in mind.
The “funding gap.”
A “funding gap” occurs when a property cannot refinance its mortgage for the outstanding loan balance, because property values have fallen or interest rates have risen.
In this case, the owners must put in additional money to refinance – also known as a “cash-in” refinance.
If you follow Multifamily real estate, you know that many properties purchased in 2021-22, at super high prices and super low interest rates on short-term debt are now having problems refinancing.
But it was just reported that $21 billion – with a “B” – in Multifamily loans from 2018-2020 also have a funding gap.
That’s because MFRE prices have fallen back to 2019 levels – not so bad, except that you usually buy at 75% leverage and can only refinance at 70%. So if values are the same, you may not be able to get to your full original balance.
And we know that operating expenses like insurance and property taxes and labor are through the roof, meaning that net operating incomes are down in many states as well.
Many of those 2018-19 vintage deals will hit the markets soon, because LPs will balk at putting cash into the deals.
And this means that the property market will probably start to loosen up.
And there are going to be some bargains available.
Especially among smaller, non-professionally managed deals.
Can anyone else smell opportunity?
I personally believe it will be the biggest opportunity in Multifamily real estate since 2008. And there won’t be another opportunity like it for years to come.
If you’ve been wanting to break into the multifamily investment space, but ridiculously high prices and crazy deal terms (hard money on day 1, anyone?) kept you out, your moment is definitely coming.
The chance to finally start building the kind of income that can allow you to leave your corporate job. And the kind of wealth that can set your family up for generations to come.
But, to take advantage, you must be ready.
This not only means learning how to do deals in time.
It means building a base of ready investors – understanding where you can meet them and how to get them into your deals.
It means being part of a community that can share experience with you, share resources, partner with you, and help you raise capital.
Now, as you probably know, I’m overhauling my entire Apartment Investing Accelerator at the moment.
I’m incorporating all the valuable lessons I’ve learned since the last iteration of the program in 2019.
Apartment Investing Accelerator will be available just before Thanksgiving at a one-time, introductory price of $1,000.
And, included in the special price is another limited offer: 12 months of complimentary access to Apartment Investors Club, where you get direct access to me and my entire community for support, partnership, and accountability.
And for help overcoming obstacles like: how you quickly raise enough investor capital to close a great deal with no list, no experience, and no track record in real estate.
Your chance to prepare for the coming opportunity arrives soon, when you can join the Accelerator.
