128: The Real Estate Goldmine; Riding the Multifamily Wave; The Psychology of Homeowning

This episode of Kiss My Assets features Jamison Manwaring, CEO and co-founder of Neighborhood Ventures, and John Kobierowski, co-founder of Neighborhood Ventures and CEO of ABI Multi-Family. They discuss the multi-family real estate market in the Phoenix Metro area, financing and lending issues, sellers holding, and interest rates.

According to John, there is a need for 277,000 apartment units over the next 10 years in Arizona, but the construction is not keeping up with the demand. They discuss the supply chain issues and delays caused by the COVID-19 pandemic, resulting in a backlog of units to be delivered even today. They anticipate a drop-off in new unit deliveries by the end of 2024. Despite the need for more units, property owners are hesitant to sell due to rising interest rates and the reluctance to take on debt at higher rates. They discuss high-interest rates and the federal reserve increasing lending rates over the last year to cool the market.

The discussion moves on to the lending landscape for multi-family properties. They explain that while regional banks are facing credit crunches and have reduced lending on commercial real estate, multi-family properties still have lending options available through agencies like Fannie Mae, Freddie Mac, and HUD. These government-sponsored lenders have a directive to lend on multi-family housing, making it a more favorable investment option compared to office buildings or other commercial real estate.

Despite the tightening lending options, Jamison and John see this market situation as an opportunity. They highlight their good understanding of the market, strong banking relationships, and the ability to raise capital quickly as advantages that allow them to be opportunistic in purchasing properties. They believe that competition from other buyers may be limited due to their lack of access to financing and capital, potentially leading to attractive buying opportunities in the midsection (3-5 million) of the market.