On The Market A “Signal” That Multifamily Is Finally Bottoming Out (Time to Buy?)
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Apr 10, 2025 Brian Burke, a veteran multifamily investor and author of "The Hands-Off Investor," shares his insights on the shifting real estate landscape. He discusses why the multifamily market might be bottoming out and what that means for buyers. Burke highlights the potential for small multifamily properties to be lucrative investments. He also delves into the challenges facing the market, including loan maturities and rising expenses, and predicts that by 2027, there could be a significant reversal in trends.
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Uninvestable Multifamily
- Large multifamily is currently an "uninvestable" asset class due to low cap rates relative to borrowing costs.
- This means investors are essentially losing money based on the spread between cap rate and interest rate.
Restaurant Analogy
- Brian Burke uses a restaurant analogy to illustrate the current multifamily market dynamics.
- High prices are like bad food that people eat due to lack of alternatives, but new competition (forced sales) will improve quality (pricing).
Lender Motivation
- Lenders are delaying foreclosures to protect their own interests, not to help borrowers.
- They'll stop "kicking the can" when the market improves enough to ensure they recoup their principal.
