Real Investor Radio

Episode 66 | Multifamily Market Trends, Property Management, Financial Literacy with Andrew Kuhn

October 29, 2024

Episode Summary:

In this episode of Real Investor Radio, Craig Fuhr and Jack BeVier discuss the current state of the real estate market, focusing on trends in DSCR rates, the impact of recent Fed rate cuts, and the challenges faced by property flippers. They also welcome Andrew Kuhn, a successful real estate investor, who shares his journey from a W-2 job to becoming a multifamily entrepreneur. The conversation emphasizes the importance of financial literacy and the enduring value of residential real estate. In this conversation, Andrew Kuhn shares his journey from a blue-collar upbringing to becoming a successful business leader in the real estate industry. He discusses the importance of recognizing the opportunities available in the U.S. and emphasizes the value of taking action and learning through experience. The conversation delves into the current state of the multifamily real estate market, the challenges faced by investors, and the evolving landscape of capital raising. Kuhn highlights the significance of sound financial practices and the need for adaptability in a changing market.

Overview of Episode 66

Multifamily market trends show fluctuating dynamics, driven by interest rates and Federal Reserve decisions. Recent rate cuts initially excited investors, but expectations quickly adjusted as rates rose again. Both Craig Fuhr and Jack BeVier express concerns over unpredictable market conditions, especially for property flippers.

Shifts in DSCR Loan Pricing and Impact on Investors

With DSCR loan rates affected by rate changes, some investors find refinancing options challenging. After all, the market’s reaction to recent economic reports left many disappointed, especially as job and inflation reports unexpectedly boosted rates. Thus, investors relying on DSCR loans face mixed benefits.

Current Opportunities on the MLS

In contrast to previous years, market trends reveal new opportunities on the MLS. Both Fuhr and BeVier emphasize that as-is pricing drops and properties linger longer on the MLS, investors find better deals. Accordingly, these market conditions may signal a shift towards MLS viability for value investors.

Value Creation in the Multifamily Market

Investors see a flight to quality, as homes in top condition still attract buyers swiftly, while less appealing properties sit idle. BeVier notes that investors in today’s market should focus on adding value to properties with strong renovation potential.

Transitioning to Multifamily: Andrew Kuhn’s Story

Guest Andrew Kuhn shares his journey from a pre-med student to a full-time multifamily investor, highlighting key multifamily market trends. He advises aspiring investors to network and educate themselves through mentorships and seminars. Kuhn emphasizes the importance of persistence and adaptability in a volatile market.

Strategic Approaches for Multifamily Market Success

Kuhn recommends investing in BC-class properties in high-demand regions like the Midwest. By targeting areas with cash flow and high rental demand, investors can stabilize portfolios. Notably, Kuhn mentions his pivot to multifamily investments in 2015 as a scalable strategy to increase impact.

Building a Multifamily Organization and Investment Strategy

Kuhn’s firm, Sunrise Communities, pursues a vertically integrated model to streamline acquisition, property management, and construction. He notes that quality and speed in renovations create a competitive advantage. Overall, his focus remains on Midwest-based assets with strong value-add potential.

Multifamily Market’s Future: Opportunities Amid Challenges

As market instability continues, Kuhn and BeVier predict increased multifamily opportunities from distressed assets. Both investors maintain conservative leverage ratios and prioritize long-term gains over quick profits. With high interest and uncertainty, these multifamily market trends emphasize resilience and strategic growth.

Final Thoughts on Multifamily Market Trends and Investor Sentiment

Kuhn and BeVier acknowledge that securing capital is harder, but long-term investors still find multifamily compelling. Despite recent challenges, the multifamily sector shows potential, especially with patient capital and a strategic approach.