Understanding Off-Market Multifamily Acquisitions In CRE Today
The Thirty Capital Financial team attended The Crittenden Report’s Multifamily and Finance conference in Dallas, TX. During the conference, Thirty Capital Financial CEO, Kevin Swill, spoke as a panelist for the session “Off-Market Multifamily Acquisitions”.
During the panel, Kevin shared a unique approach and thoughts concerning off-market commercial real estate (CRE) transactions. We asked Kevin to share his key takeaways from the conversation.
What Are Off-Market Multifamily Transactions?
Generally speaking, an off-market multifamily transaction is a commercial real estate deal that isn’t publicized (meaning it never hits the market). However, Kevin shared that the general definition of an off-market transaction is too broad. Instead, he says that an off-market deal is when a seller and a buyer find each other and make a deal without the help of a third-party. Kevin argues that if a deal is not listed but a broker is paid for contacting five of their top borrowers, the deal can no longer be considered “off-market”.
How Can You Find Off-Market Multifamily Deals?
As you know, off-market multifamily deals are not listed on the market. Buyers are required to dig deeper to find these unlisted opportunities. Often, buyers must perform independent research and engage in door-to-door outreach to successfully pursue a new deal.
Deal seekers can find off-market commercial real estate deals by:
- Building strong relationships with brokers in their targeted areas
- Browsing property websites
- Searching area building directories
- Contacting owners directly
- Sending direct mail to property owners
Although non-exhaustive, the above list of methods to find off-market multifamily deals demonstrates the dedication required to find unlisted opportunities.
Note: A service provider, like Thirty Capital Performance Group, can run property optimization reports on a specific address or sub-market. With these reports, you can learn about specific asset types and how a particular property compares to similar properties in the same market.
What Are The Current Off-Market Multifamily Transaction Volumes?
Today, unlisted commercial real estate deals are harder to find. Some buyers are fearful that pandemic pricing is still controlling the market, andas a result, are scared to engage in off-market deals for fear of being exploited. Additionally, buyers are hesitant to engage in off-market deals because of rising interest rates. They worry that a potential deal may not pan out because of widening rates. Both of these factors contribute to an increasingly difficult off-market environment.
During the panel, Kevin shared that the industry does not currently have a high volume of off-market transactions. He explained that buyers and sellers have not adjusted to the recalibration of CRE and its impacts on the current market cycle. Plus, commercial real estate market shifts like rising interest rates and declining property values have slowed industry-wide transaction volumes (both on- and off-market).
How Thirty Capital Financial Can Help with Off-Market Multifamily Transactions
Seeking an off-market multifamily deal? If so, you may want to take a glimpse at your portfolio prior to engaging in a new deal. Thirty Capital Financial’s experts can help you prepare for an off-market transaction by:
- Re-evaluating the current assets in your portfolio
- Identifying opportunities to cut costs and expenses
- Determining whether off-market and/or discounted deals fit in your overall portfolio strategy
