Multi-Family Properties

Multi-Family Properties

At Yellowtail Commercial, we have a dedicated team of top industry professionals with extensive focus on transactions of multi-family apartment communities, student housing, apartment developments, and mixed-use properties throughout Tampa Florida and the surrounding region. Our depth of knowledge has allowed us to understand and more effectively communicate the challenges and opportunities posed by each category of multi-family investment. Our team focuses on both single and multiple property transactions. Clients include private ownership, institutional ownership, funds, subsidized companies, and others. We focus on both urban and suburban communities paired with development projects and other value-add opportunities.

The sheer number of transactions our group is actively involved in and has previously worked on affords us unparalleled experience and unmatched access to both data and market intelligence, which is used to produce powerful and unique insights to our clients.

For each project we work on, we assemble the best and most comprehensive team in the Tampa market. Our team will collaborate across our internal specialty avenues to identify the best path for each transaction and ownership strategy. We have niche specialists with unmatched expertise in a variety of housing, lending, and valuation services.

Managing Tenant Risk

Today, Multifamily is a top real estate segment in the commercial market. The recent downturn has done nothing but further support this market. While management can be heavy on this asset type, the rollover risk is limited. In a single tenant office, industrial, or retail building, the world seems to be great so long as the tenant is in place, fits in the building, has a successful business, and is paying their rent. Leases aside, a singular tenant can vanish in a heartbeat through a default, relocation, business bankruptcy, or a variety of other issues. In these cases the presence of a lease occupancy contract can often mean nothing. Not to mention, a single-building occupant has substantial landlord leverage to negotiate terms, renegotiate rents, force landlord capital improvements, etc. In the event any of these negative scenarios present themselves, a landlord can overnight be held holding an asset that went from a prized possession to a huge hole in their wallet as carrying and infrastructure costs can burn a hole in any ownership arrangement. The rollover risk is extreme. On the other end of the spectrum is multi-family, where rollover risk is low. Fortunately in multi-family this issue is much less likely. While downturns, tenant issues, and economic issues can certainly hurt an asset, if an apartment building with 100 residents loses 10 tenants to evictions and another 10 due to inability to pay rent, that same building will still feature 80% paying occupancy. The landlord may not be happy, but their exposure is limited, their bills will be paid, and they can rest easy at night. This example is a prime reason why investors have flocked to this asset type since the economic downturn.

Knowing The Market

In addition, macroeconomic drivers have continuously supported the growth of this asset. These drivers are present in all assets of the economy and demographics. On the youthful side of the demographic spectrum, college attendance is at an all time high. With many students craving the college experience through living on their own, these students need somewhere to live. These residences have proven to be consistently stable in terms of occupancy and therefore are more sought after as investment grade assets. For the next level of demographic, young professionals today are marrying later and later. While past generations used to marry in their early and mid-twenties, it is common today to see many young adults wait until their late twenties through their thirties to settle down, resulting in increased demand for apartments as families and traditional home requirements are pushed back to later in life. This same generation of in college and recent college grads have had to deal with previously unfathomable educational costs that have continued to skyrocket in recent years. Paired with this, the banking system has now required student loans to be evaluated as part of any home loan and liquidity analyzing process. With student loan costs high and many students facing hundreds of thousands of dollars of loan debt due with little initial income, their preparation, capability, and willingness to pursue owning a residence is low – fueling further the apartment demand. While the young married couple through families generally prefer home ownership, they seem to be the only demographic interested in doing so. Past older generations had held on to their home or continued to “invest” late in life in home ownership as part of their retirement plan and future income. Unfortunately the Great Recession left a burn in that generation’s mind when many of those home owners were upside down in their home loans or could not even sell their homes. If they did it was often at a discount, costing them much needed money at the settlement table. That memory has not yet faded, resulting in older generations preferring rental assets.

In addition, the on trend living preferences for today’s market include gyms, eateries, roof decks, pools, and other amenity areas that are difficult or impossible to duplicate in a home. Urban environments have also been craved by non-family generations (older and younger generations), which cater to apartment occupancy. Fortunately for multifamily investors, the demand drivers for the asset are a combination of systemic, foundational, and on trend, resulting in an asset type that appears to truly be here to stay for the long term.

Competitive Market

Competition for this asset type today is immense on both the buy side and sale side. Full buildings, vacant buildings, and development projects are all of immense interest to acquirers. In addition, asset class and type do not seem to differ in their level of interest. Luxury, Class B, low income, student, and senior housing are all of immense demand from both occupants and property purchasers. It is a good time to buy and good time to sell as the marketplace is full of transacting parties. We service both sides of the transaction, understanding that every deal is not a good deal just because of pricing, but because of the foundational background items to any deal. We see the full picture. Oftentimes our multifamily team pairs with our traditional investment team to deliver top to bottom service as well as wide access to the entire of capital markets services. In addition our firm’s broad insights will allow our clients to conclude on the appropriate course of action for any potential transaction.

The attractiveness of the current market has resulted in a flock of unqualified advisors entering the market to chase the dollar. The increased presence of these unqualified advisors has resulted in negative experiences for many clients. Clients should be careful who they work with and who they obtain advice. Every advisor at Yellowtail Commercial is a licensed commercial agent with a depth of transactional experience a training so every client obtains quality advise from trained professionals instead of simply putting agents on the street to chase a dollar with no real qualifications.

Buying a Multi-Family Building

On the buy side, we have a commitment to the process. While loans are reasonably easy to obtain, the right deal is difficult to find. Occupancy are high, but many buyers these days are overpaying for their assets due to the ease of lending and occupancy. Real estate can be great investments however they are time intensive to sell and can be expensive to carry if not managed or handled appropriately. For these reasons finding the right deal is key. If the deal is not right and you are not truly making money, then why do it when you can easily purchase another type of asset such as a stock or bond, which you can sell with the click of a button. With this in mind, we work with our buyer clients to truly understand their objectives of ownership timelines, price thresholds, and property types. Once we understand these items, we take the time to turn over every stone to sort through on market, off market, coming to market, and distressed assets. We self-filter through these assets to present the best of the opportunities to our clients while also providing details on each and every opportunity so a buyer can easily analyze the opportunities and how they play within the local submarket.

Selling a Multi-Family Building

On the sale side we understand the market is deep, but we are sure to see each and every possible opportunity in the market.  Our brokers work. We pick up the phone on average 500 to 1,000 times per transaction ensuring our clients have a widespread marketing reach as well as a continued tracking of each in progress transaction to be sure we get it over the finish line. Sure, hard work and perseverance are critical parts of the equation, but we truly rely on a strategic approach to get ahead of the competition. The most successful multifamily brokers are those who find and create their own opportunities. Sometimes these opportunities seem to arise out of thin air. They do not – they arise from sheer work ethic and a comprehensive approach to each property.

Our Realtors Multi-Family Expertise

Multi-Family property types we have handled include:

• Apartment Communities
• Garden Apartments
• Urban Apartments
• Suburban Apartments
• Mixed Use Projects
• Student Housing
• Distressed Assets
• Workforce Housing
• Rehabilitation Communities
• Low Income Housing