Apt loan defaults up.
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Apt loan defaults up. (by MikeA [TX]) Jul 4, 2024 11:46 PM
       Apt loan defaults up. (by Richard [MI]) Jul 5, 2024 6:49 AM
       Apt loan defaults up. (by RB [TN]) Jul 5, 2024 8:15 AM
       Apt loan defaults up. (by S i d [MO]) Jul 5, 2024 8:15 AM
       Apt loan defaults up. (by Chicago LL [IL]) Jul 5, 2024 9:30 AM
       Apt loan defaults up. (by Oregon Woodsmoke [ID]) Jul 5, 2024 9:35 AM
       Apt loan defaults up. (by Chicago LL [IL]) Jul 5, 2024 10:54 AM
       Apt loan defaults up. (by Ray-N-Pa [PA]) Jul 5, 2024 11:15 AM
       Apt loan defaults up. (by Sisco [MO]) Jul 5, 2024 11:48 AM
       Apt loan defaults up. (by Ray-N-Pa [PA]) Jul 5, 2024 12:54 PM
       Apt loan defaults up. (by GKARL [PA]) Jul 5, 2024 1:03 PM
       Apt loan defaults up. (by ken [NY]) Jul 5, 2024 1:03 PM
       Apt loan defaults up. (by tryan [MA]) Jul 5, 2024 1:23 PM
       Apt loan defaults up. (by WMH [NC]) Jul 5, 2024 1:30 PM
       Apt loan defaults up. (by tryan [MA]) Jul 5, 2024 1:41 PM
       Apt loan defaults up. (by Pmh [TX]) Jul 5, 2024 2:58 PM
       Apt loan defaults up. (by MikeA [TX]) Jul 5, 2024 3:02 PM
       Apt loan defaults up. (by MikeA [TX]) Jul 5, 2024 3:10 PM
       Apt loan defaults up. (by GKARL [PA]) Jul 5, 2024 4:25 PM
       Apt loan defaults up. (by 6x6 [TN]) Jul 5, 2024 8:45 PM

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Apt loan defaults up. (by MikeA [TX]) Posted on: Jul 4, 2024 11:46 PM
Message:

I just read an interesting article published by the NY Times. It was quoting a concern that as many as 20% of loans on apartment complexes may be at risk of default. They cite several reasons including much higher interest rates and adjustable rate mortgages on about 1/3 of multifamily housing, flat or declining rent, overbuilding in some key cities (Miami, Atlanta, Phoenix and Austin mentioned).

While not as bad as office buildings (7% in default) or hotels (6% in default), only 1.7% of multifamily properties are currently more than 30 days in default on loans. That number could rise as high as 20% if the current trends continues. If you will remember, I posted recently about the annual Harvard review that cited similar concerns with profits declining from 8% down to 2% over the last two years on multifamily properties.

I remember a time in the 90's where there were dozens of apartment complexes for sale through HUD. These properties had HUD loans that had been foreclosed. Many were less than 15 years old but suffered the deferred maintenance that properties that are struggling often do. Sounds like that cycle may be coming around again. --209.205.xxx.xx




Apt loan defaults up. (by Richard [MI]) Posted on: Jul 5, 2024 6:49 AM
Message:

It's part of a cycle, repeated many times.

This presents an opportunity for us to pick places up at a good discount as it continues. I remember buying places in the 90's for as little as $4000 per unit. I don't think it will get that cheap again because of inflation but in some cities, especially in B- and C units there should be some great deals. Get them, fix, stabilize and sell/trade in a 1031 as the market recovers. --172.58.xxx.xxx




Apt loan defaults up. (by RB [TN]) Posted on: Jul 5, 2024 8:15 AM
Message:

Bring it ! --69.130.xxx.xxx




Apt loan defaults up. (by S i d [MO]) Posted on: Jul 5, 2024 8:15 AM
Message:

A lot of folks bought or built apartments in 2019-2020 using 5-year commercial ARMs that are getting ready to start adjusting. Commercial rates were around 4.5% back then. Today, they are around 8%. Others have balloons, so they'll have to attempt to refi into immediate higher rate loans, without any actual adjustments.

--184.4.xx.xx




Apt loan defaults up. (by Chicago LL [IL]) Posted on: Jul 5, 2024 9:30 AM
Message:

MikeA[TX], Richard[MI], Thanks for sharing the info. I didn't know that the real estate market was bad in the 90's. Definitely looking forward for the cycle to return. It's been years that I couldn't find any multiunit deals that make sense. The prices have gone too high while rent is lagging. CAP rate keeps getting lower but people still bid the price up. Is HUD still a good place to buy foreclosed multiunit properties? I've only bought them through MLS. The only property I bought from HUD was a condo.

Sid[MO], hopefully they didn't refi their loans last year (like I did). Last year, I refi all my loans to restart the low rate for another 5 years. Hopefully other commercial loan borrows didn't. So we might get to see some good deals in the next few years. --99.128.xxx.xxx




Apt loan defaults up. (by Oregon Woodsmoke [ID]) Posted on: Jul 5, 2024 9:35 AM
Message:

The apartments locally seem to have a lot more vacancies than they used to. I don't know if that translates into "they are in trouble".

On just about every vacant land, huge apartment complexes have been going up, and are still being constructed. I drive by them wondering where they are going to get all the tenants to fill those buildings. I assume someone has done a feasibility study before they started?

It doesn't matter how cheap they sell for, I would never be able to come up with the money to buy a building with 30-40 units, or even more.

There are very few older buildings. The folks of Idaho are not apartment dwellers, so there were no apartments built until recently. The new apartment buildings are all fancy and I suspect that they are intended for incomers who are accustomed to living crowded, wherever it is they are coming from.

Rent has gone so high that local workers can't afford it, but no one has built basic apartments where the rent might be lower. --76.178.xxx.xxx




Apt loan defaults up. (by Chicago LL [IL]) Posted on: Jul 5, 2024 10:54 AM
Message:

Oregon Woodsmoke [ID]. So there is an apartment construction boom in Idaho based on your observation. I wonder if they are built by the office building investors who are giving up on office building profits since Covid started. --99.128.xxx.xxx




Apt loan defaults up. (by Ray-N-Pa [PA]) Posted on: Jul 5, 2024 11:15 AM
Message:

I recommend breaking out that real estate tool box and dusting off Sub To transactions.

Now in a perfect world, these transactions would allow you to lock in the initial low rate (which will not be the case) , there will be five years of pay down and the down payment. So there are opportunities out there in EVERY market

So what do you need to be on the look out now? Unproven syndication "opportunities"

--24.101.xxx.xxx




Apt loan defaults up. (by Sisco [MO]) Posted on: Jul 5, 2024 11:48 AM
Message:

Rent rates will be pushed upward, incentives will increase, lower credit worthiness will be accepted. For those who have experienced this before, what should I do now, with the CMBS defaults on the near horizon? --149.76.xxx.x




Apt loan defaults up. (by Ray-N-Pa [PA]) Posted on: Jul 5, 2024 12:54 PM
Message:

Sisco,

Excellent question -

The larger players control the market place. Start out by just checking out what they are offering. Look for those move in specials, you are correct to believe they are coming.

Accepting poorer quality tenants is a nasty sand trap that swallows up the untrained or the overly inspired.

There will be opportunities for those who have prepared themselves. If a property with equality goes into default, placing that property into a land trust and then purchasing that land trust will allow those who have prepared to bail these folks out. Land trust are for privacy - but the elephant in the room is the ability to take the property over subject to existing financing.

So if the property, when properly managed cash flows....there is some meat to be had in the form of an equality buy out of the land trust. . --24.101.xxx.xxx




Apt loan defaults up. (by GKARL [PA]) Posted on: Jul 5, 2024 1:03 PM
Message:

There are a couple of syndicators I follow who've been saying the same thing. One of them says the fire sale is going to occur in C class assets. There was a bunch of money chasing real estate, so many of these guys were forced to put that money to work somehow in a situation were there was more money than available assets, hence the overpaying and over building. Most of us don't play at this level but the question is how much of a spillover affect this will have in our playground.

There's certainly going to be some opportunity but it's still early yet. I think the folks who bought pre-covid and who aren't excessively leveraged will do fine even with interest rate resets. I don't think the same can be said for those who bought at the peak. A combination of rent concessions, higher vacancies, lower tenant standards and higher rates will be their challenges. All of these combined mean lower valuations and trouble for banks and investors.

--209.122.xx.xxx




Apt loan defaults up. (by ken [NY]) Posted on: Jul 5, 2024 1:03 PM
Message:

Ray- been going after pre foreclosures lately because too many people are showing up at the actual foreclosure auctions.In about 6 weeks i have 1 closed and several proceeding towards a closing including 1 that is a sub 2 long enough to buy it,clean it out, estimate of 5 30 yard dumpsters,mow the lawn and put it on the market as a handyman special --74.77.xx.xx




Apt loan defaults up. (by tryan [MA]) Posted on: Jul 5, 2024 1:23 PM
Message:

I picked 13 properties in in the hood at RTC auctions 1993-1995 .... sold the last one in 2022.

Crazy times! We never seem to learn from the past. --198.168.xx.xxx




Apt loan defaults up. (by WMH [NC]) Posted on: Jul 5, 2024 1:30 PM
Message:

I heard about the coming Tsunami of luxury apartment defaults back several years ago at a Retreat I think it was. I think that one already happened LOL! This one is another one.

Speaker said the developers over-built, needed to get them rented to sell or refi so you when you start seeing "First Month Free!" or "No Credit Check!" or whatever, you know it's coming.

Again. --198.54.xxx.xxx




Apt loan defaults up. (by tryan [MA]) Posted on: Jul 5, 2024 1:41 PM
Message:

I alway thought commercial offices would lead the decline. People have settled into remote work. Employers like the reduced overhead --198.168.xx.xxx




Apt loan defaults up. (by Pmh [TX]) Posted on: Jul 5, 2024 2:58 PM
Message:

here we go again…. --12.232.xxx.xx




Apt loan defaults up. (by MikeA [TX]) Posted on: Jul 5, 2024 3:02 PM
Message:

After thinking about this a little, I agree with Ray. When these big guys start getting in financial trouble the salesmen will be knocking down doors offering these "amazing" syndication deals using stale data that makes them look better than the current numbers show. Beware of where you invest, desperate people do desperate things in an effort not to get flushed down the toilet. --209.205.xxx.xx




Apt loan defaults up. (by MikeA [TX]) Posted on: Jul 5, 2024 3:10 PM
Message:

Tyran, yes commercial offices are leading this trend. Currently 7% of commercial office buildings are in default on their loans. The only reason they haven't been called by the banks is the bank will have to write off a huge portion on these buildings if they take them back. The banks are doing their best to keep these guys alive hoping that it will turn around in the next year or two.

Apartments are the newest threat. If they end up anywhere close to 20% default and office buildings don't recover, there is going to be a huge reconing in the RE and banking industries that will send ripples through the whole economy. --209.205.xxx.xx




Apt loan defaults up. (by GKARL [PA]) Posted on: Jul 5, 2024 4:25 PM
Message:

I don't see a catalyst for office to recover. The pull back was already evident as folks were working remotely prior to COVID. COVID just accelerated a trend that was already in place. The issue with apartments is different; a bunch of money chasing yield and the syndicators weren't about to turn down money. They had to deploy it whether it made sense or not. I suspect when this thing is all done, there will be a number of fraudsters and all sorts of malfeasance uncovered. That's inevitable in mania situations. --209.122.xx.xxx




Apt loan defaults up. (by 6x6 [TN]) Posted on: Jul 5, 2024 8:45 PM
Message:

--76.129.xxx.xx



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