Investing in Properties That Don't Cash Flow

Danny Cevallos: I think 2023, a lot of the motivated sellers are going to be people who bought in the last year or two and don't have the cash flow they need to hold on to the property. He says lower occupancy is actually better because it helps you accelerate the repositioning. "I probably would do that deal again today. I would," he said about buying at 30%. 'It's not an ideal for this kind of market situation'

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A commercial real estate crash is looking more and more likely in 2023. Rising interest rates, compressed cap rates, and new inventory about to hit the market is making commercial real estate, and multifamily more specifically, look as unattractive as ever to a real estate investor. But with so much money still thrown at multifamily investments, are everyday investors going to get caught up in all the hysteria? Or is this merely an overhyped crash that won’t come to fruition for years to come?

Scott Trench, CEO of BiggerPockets and host of the BiggerPockets Money Podcast, has had suspicions about the multifamily space since mortgage rates began to spike. Now, he’s on the show to explain why a crash could happen, who it will affect, and what investors can do to prepare themselves. This is NOT a time to take on the high-stakes deals that were so prominent in 2020 and 2021. Scott gives his recommendations on what both passive and active investors can do to keep their wealth if and when a crash finally hits.

But that’s not all! We wouldn’t be talking about multifamily without Andrew Cushman and Matt Faircloth, two large multifamily investors who have decades of experience in the space. Andrew and Matt take questions from two BiggerPockets mentees, Philip and Danny, a couple of California-based investors trying to scale their multifamily portfolios. If you want to get into multifamily the right way or dodge a lousy deal, stick around!

In This Episode We Cover:

The commercial real estate crash and bad news for high-interest rate investors

Cap rate compression, rent stagnation, and red flags for the multifamily market

Recommendations for both active and passive multifamily investors

How to vet a real estate syndication deal when raising private capital

Scaling from small to large multifamily and why the jump is easier than you think

Cash flow vs. appreciation and which is a better bet if valuations start to tank

Balloon payments, adjustable-rate mortgages, and risky financing options putting new investors in a tough spot

And So Much More!

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