52: The Wrath of 1031 Investors and a “Chaotic” Multifamily Market w/Ashley Wilson

On The Market

BiggerPockets

Business, News, Education, Investing

4.8 • 859 Ratings

🗓️ 14 November 2022

⏱️ 64 minutes

🔗️ Recording | iTunes | RSS

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Summary

Cap rates affect multifamily investing more than most investors come to realize. If you’re in the commercial real estate space, you know that as cap rates decrease, price points for apartment complexes increase. And, as cap rates start to expand, multifamily prices begin to dwindle. With rising interest rates and high labor/material costs, the multifamily market should see a decline in property valuations. But that isn’t what’s happening. Behind the scenes, a group of investors is unknowingly keeping this multifamily boat afloat, artificially inflating cap rates and keeping prices at record highs. The problem? This makes average asset prices skyrocket to almost unaffordable levels, ruining the playing field for any investors who can’t outright buy a multi-million dollar property in cash. Ashley Wilson, experienced multifamily investor, calls this the “cap rate con” and blames much of today’s high multifamily pricing on it. Ashley is a veteran real estate investor with a decade and a half of experience. She’s been investing in large multifamily housing since 2018 and is shocked at what’s happening today. This “multifamily madness” is affecting investors across the board, and she’s convinced that it must come to an end. But what’s causing these inflated prices? How are multifamily investors reacting? And is there still space for the new investor to make money? You’ll have to tune in to find out! In This Episode We Cover How a pandemic-fueled buying spree massively inflated multifamily housing cost 1031 exchange investing and how “all cash” buyers are damaging the system The “cap rate con” leading to surging property price hikes without reasoning How to evaluate a multifamily investment property in three different ways Advice for passive real estate investors and those investing in syndications Whether or not a wave of multifamily defaults is on the horizon And So Much More! Links from the Show Find an Investor-Friendly Real Estate Agent BiggerPockets Forums BiggerPockets Agent BiggerPockets Bootcamps Join BiggerPockets for FREE On The Market Join the Future of Real Estate Investing with Fundrise Connect with Other Investors in the “On The Market” Forums Subscribe to The “On The Market” YouTube Channel Dave’s BiggerPockets Profile Dave’s Instagram James' BiggerPockets Profile James' Instagram Book Mentioned in the Show The Only Woman in the Room by Ashley Wilson Connect with Ashley: Ashley's BiggerPockets Profile Bar Down Investments Apartment Addicts Ashley's Instagram Check the full show notes here: https://www.biggerpockets.com/blog/on-the-market-52 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Check out our sponsor page! Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	Buy low, sell high. Very easy to say, but not always so easy to do. For example, high interest
0:07.2	rates are hurting the real estate market right now. Demand is dropping and prices in a lot of
0:12.2	markets are falling, even for many of the best assets. So it's no wonder the Fundrise
0:17.3	Flagship Fund plans to go on a buying spree expanding its billion dollar real estate
0:22.7	portfolio over the next few months you can add the fundrise flagship fund to your portfolio in
0:28.9	just minutes and with as little as $10 by visiting fundrise.com slash pockets fundrise.com
0:35.7	slash pockets carefully consider the investment objectives,
0:39.5	risks, charges, and expenses of the Fundrise Flagship Fund before investing. This and other
0:44.9	information can be found in the fund's prospectus at fundrise.com slash flagship. This is a paid
0:50.9	advertisement. In a frequently shifting market, deciding how to invest can be overwhelming.
0:55.7	You need a partner that has a proven track record, BAM Capital.
0:58.6	They've navigated the Great Recession, COVID, and even the current interest rate environment, delivering max returns.
1:04.4	If that track record isn't impressive, then I don't know what it is.
1:07.4	Bam Capital is a trusted multifamily syndicator with over $1.3 billion in transactions.
1:12.7	Their disciplined investment strategy targets cash flow stability, capital preservation,
1:17.4	long-term appreciation, and accelerated tax benefits. Join Bam Capital's 1200 plus investors across America
1:23.5	at biggerpockets.com slash bam. That's biggerpockets.com slash BAM.
1:29.3	Hey, Henry Washington here from the on-the-market pod. You ever get frustrated while hunting
1:33.0	for off-market properties? Well, you're not alone. Just ask Alex, a fellow real estate investor who
1:37.4	was in the same boat struggling to find those hidden gems. Then he discovered deal machine.
1:41.6	Now, Alex effortlessly locates off-market gems
1:44.5	leveraging Deal Machine's free unlimited contact data,
	...

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