In 2021, these healthy fundamentals supported unprecedented growth in multifamily NOIs, which climbed to nearly 18%. Experts project that rent growth will remain positive through the remainder of 2022, but will likely moderate to a more reasonable, yet still-elevated level.
However, on a geographic level, not all markets fare the same. Understanding the specifics of a region before developing investment strategy will determine the overall venture success.
With this objective, multifamily investment firms concentrated on vertical integration deliver the highest level of output. By maintaining a narrowed focus and comprehensive expertise in specific market regions, this fundamental encompasses a deep understanding of market values, cost-effective building and enhancement of living space, value-add strategies, and best management practices for the area—allowing the firm to invest more skillfully and efficiently.
With a full scope of operations held under the same corporate umbrella, vertically integrated companies have the knowledge and ability to control costs and generate the greatest returns possible for their investors.
As a sponsor, successfully navigating the current macroeconomic environment characterized by peaked inflation and climbing interest rates takes finesse. But through careful examination of key fundamentals, and implementing a prudent vertically integrated investment approach, a multifamily portfolio can be built to withstand all economic cycles and provide stable, outsized returns.
Max Sharkansky is managing partner at Trion Properties, a private equity investment firm that primarily acquires value-add real estate properties with an emphasis on multifamily and currently has more than $1 billion in assets under management. Contact him at [email protected].