In this episode, Andrew Cushman discusses best practices for evaluating multifamily deals and operators as a passive investor. He outlines several red flags to watch out for, such as sponsors only providing one return metric or making assumptions above market trends. Plus the importance of assessing the sponsor's track record, focus, and reputation in the market.
Cushman also discusses the current multifamily market environment conditions for acquisitions. In the coming years as new development remains constrained, he advises investors to have a probabilistic mindset rather than making predictions. Cushman then gives us direct access to details on how he structures debt and acquires properties responsibly.
You'll discover the best practices for deal evaluation, get Cushman's outlook on the current cycle, and learn how to structure investments for different economic scenarios. His expertise will help passive investors make well-informed investment decisions.
Here are 3 key takeaways from this episode:
- Key red flags to watch out for in sponsors and deals: unrealistic assumptions, lack of transparency, and only providing one return metric.
- The importance of evaluating a sponsor's track record, focus, and reputation in the local market.
- How to structure multifamily debt and investments to provide flexibility for different economic scenarios, such as rising or steady interest rates.
Andrew Cushman is sharing his top strategies for evaluating multifamily deals, sponsors, and market conditions. Tune in to discover how to structure your investments for different economic scenarios and navigating the real estate cycle as a passive investor.
Timestamps:
00:40 - Introduction to Andrew Cushman's background and experience
02:07 - Current state of the multifamily market and acquisition challenges
02:48 - Importance of doing good deals and maintaining a positive culture
05:43 - Keeping an acquisition team motivated during difficult markets
12:19 - Outlook on the current real estate cycle and when to invest
16:16 - Non-negotiables Andrew looks for in multifamily deals
23:54 - Transitioning asset focus and risk mitigation strategies
25:20 - Challenges of different property classes and locations
30:06 - Evaluating return metrics and red flags in sponsor projections
35:43 - Importance of a sponsor's track record and local market expertise
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