Joe Stampone

Markets like Nashville don't support high-rise multifamily today. Incomes/rents don't justify the cost. And the best midrise product is hitting the same rents as the high-rises nearby. Cheaper, faster, same rent, and better YoC for midrise. Why would you build the tower?

In private real estate investing, HNW money is the best when things are going well and the worst when things are going poorly

As a follow-on to this post, what makes this cycle so dangerous is that the economy didn't cause this downturn in multifamily. Rate shock + a massive supply wave did. GDP grew. Unemployment stayed under 4%. Renters kept paying. And values still dropped 20-30%. That should tell you everything about how overleveraged and mispriced the 2021-2022 vintage really was. Looking forward, just as everyone is forecasting a sharp recovery, what happens if we do experience a real job loss recession?

Multifamily values are down 20-30% from 2022 peaks. But "cheaper" doesn't mean "attractively priced" Look at what has to go RIGHT for today's underwriting to work: → New starts stay muted for the next few years → Demand stays strong (especially middle and higher-income renters) → Demand outpaces new supply → Homeownership stays unaffordable → Cap rates stay compressed → Rates trend lower, not higher This could all happen, but I suspect that many of the 2024-2025 'discount to replacement cost' buys could underperform.

Any good real estate transaction starts with a forced or motivated seller. Below is a list of the most common seller motivations I’m seeing. What I'm I missing? - Loan Maturity: No Path to Refinance Loan is maturing with no remaining extensions, and the borrower can't refinance without a material cash-in event. - Loan Maturity: Unwilling/Unable to Extend Extension options may exist, but the borrower is unwilling or unable to throw good money after bad to buy more time. - Distressed Operations: The deal is underwater operationally, requiring the owner to fund ongoing expenses out of pocket — another form of throwing good money after bad. - Open-End Fund Redemption Pressure: Sales driven by the need to fund redemption queues in vehicles like BREIT and SREIT. - Closed-End Fund Maturities: Assets trapped in closed-end funds past their maturity date. Estimates put ~$300B in NAV stuck in these structures. Continuation vehicles partially address this, but don't fully solve the problem. - Platform Wind-Downs: Firms exiting the business entirely and liquidating portfolios — plenty of examples out there. - Merchant Builders Recycling Capital: Merchant builders naturally turning assets to redeploy capital into the next development. Also worth noting that not all merchant builders have been holding on to deals. - Selling Winners to Cover Losers: A firm has legacy portfolio problems and is selling performing assets to plug holes elsewhere. I don't love this story as a sourcing thesis, but it can be real on a case-by-case basis.

Underrated asset management hack: Build real relationships with the asset managers at your comps. Learn their business plan. Understand their challenges. Know their incentives. This isn't a zero-sum game. The best operators in a submarket lift each other up. Collaborate. Share intel. Win together.

@resetbasis 0% chance this isn’t in west TX

That's gonna be a no from me, dog

This sums up my mindset on multifamily investing well. “I think if you're too qualitative, you miss a lot of details that are important, and if you're too quantitative, you miss a lot of the details that are qualitative.” - Investor Vince Hanks on balance in thinking

Multifamily owners don’t set rents. The market does. Owners set the strategy: → Revenue mode: Focus on occupancy — accept lower rents to keep units full and protect cash flow → Value mode: Focus on rents — accept lower occupancy to push rents and drive asset value Today, most owners are defensive and in revenue mode

@danielgothits Haha this but for commodity garden-style multi in oversupplied Sunbelt suburbs

I have openclaw sending lowball offers on Zillow all day just to make boomers start panicking lol

@EllliotttB In hindsight I’m sure many owners wished they sold in 24’ when most still believed the market would recover by 2H25.

@Joe_Stampone That’s a shame

The multifamily market is full of zombie deals. Newer vintage assets that traded at 3-4 caps in 2019-2022 now have a basis above market value. Owners want to sell but won't take a 25-50% haircut on equity when they have runway to wait. So they test the market every 6-12 months, pull the listing, and repeat. The only high-quality multi deals trading today are forced. Everyone else is playing extend and hope. Transaction volume will pick up eventually - but not until the math on waiting stops working.

Multifamily real estate is wildly misunderstood because people consume national data. Real estate is hyperlocal. Submarket-level. Address-level. National stats are meaningless when: → Austin rents are down 5% and Chicago rents are up 3.6% → Huntsville grew inventory 35%+ in 5 years while NYC added ~5% → Charlotte's population is up 12% since 2020 with 2.7% job growth. Chicago's city population has shrunk every year with flat job growth. → Vacancy is 20% in Huntsville and 3.4% in NYC These are not the same markets. They shouldn't be analyzed the same way. Opportunities exist everywhere on a deal level — but the thesis and story that makes each deal compelling is different.

This paraphrased Elon quote has been living in my head rent-free: It's better to go through life as an optimist and be proven wrong than a pessimist and be proven right.

One of the core jobs of multifamily operators today is understanding generally when pricing power shifts and rents turn positive and the submarket/asset level. One trend we're watching is for new lease rent growth to exceed renewal rent growth.

The best deals in multifamily right now are the ones that were marketed 12 months ago, didn't close, and the seller finally has to face the music. Patience is paying off.

It's tough to layer in all the nuance. We typically start by renovating the units in the worst condition that need new flooring, appliances etc. so do you use the cost to turn that specific unit or avg. turn cost? How do you factor in the additional vacancy? I think they key here is consistency to ensure the reno's make sense. We target 15%+ RoC but whether that return is 17% or 19% doesn't matter as much to me as the confirmation that we should keep renovating units.

@Joe_Stampone Is reno cost the right denominator? Shouldn't it be reno cost minus turn cost? If you didn't renovate it, you have to spend X to lease it. We frequently set unit need as a trigger for reno. If cabinets need replaced , do full reno or if floors need replaced do full reno.

Multifamily operators: what classic rents do you use when calculating the RoC for unit renovations? Is it premium over prior rent / reno cost? Premium over in-place classic rent for that unit type / reno cost? Premium over trailing 60-day achieved rent for that classic unit type / reno cost? Each method can swing the "ROI" by hundreds of basis points on the same unit. Which means two operators can renovate the same floor plan, spend the same dollars, and report wildly different returns.

@sellercarry I'm not sure, but I can be convinced. Do you think residents view $1,500 rent with 1 month free up front the same as $1,375 rent with no concession (12 month lease term)?

@Joe_Stampone Two sides of the same coin.

Hot take: concession burn-off is not a rent increase. A renter who signed at $1,500/mo with one month free knows their rent is $1,500/mo. That free month was a move-in deal — not a permanent discount. Renewing at $1,500 with no concession? That's flat rent. The industry calling this an "8% increase" confuses temporary concessions with renter psychology. No resident is budgeting around effective rent. They budget around what hits their bank account every month. This distinction matters because it means concession burn-off creates far less turnover friction than actual rent increases — and the market is pricing it like they're the same thing.* *I’m willing to change my mind on this point.

@FizzyWaterDrink Ha. I'm listening. Do you think residents view $1,500 rent with 1 month free up front the same as $1,375 rent with no concession (12 month lease term)?

@Joe_Stampone No one's falling for it sorry bro