06/26/2018
ARE THERE STILL DEALS OUT THERE?
It is true that apartment sales pricing has been rising steadily since 2010, and employment gains in Texas have increased to the point that many active apartment investors want to invest here. But while current pricing per unit gives many investors “sticker shock”, rents are also rising to help support increased pricing. The challenge that investors face in Class B & C apartment communities is that salaries have not kept pace with rents, so delinquent rent is a greater concern than our industry has faced in the last 8-9 years. Our Company seeks to look for investment opportunities in communities where good management practices and/or capital investment is lacking – this combination creates an opportunity to solve problems and raise rents. This might be finding properties that do not screen potential residents well or has had management tolerate problem residents. It might include a broader reputation of poor management - where management takes advantage of residents (such as keeping all security deposits when residents move out). It might be in finding properties that owners have not actively invested in replacing worn out flooring or appliances or making other improvements. It might be in finding properties that have physical problems that no one has been able to solve, such as drainage or foundation issues…these are examples of opportunities to manage problems, improving resident satisfaction, and increasing value through rent increases.
