June 22, 2020

MB 219: The New World Order of Multifamily Investing – With Michael Becker

MB 219: The New World Order of Multifamily Investing – With Michael Becker

No one knows exactly what will happen in the multifamily real estate market as the Coronavirus pandemic continues to unfold. But the heavy-hitters who have been in the game for a long time can predict, with relative certainty, which markets will...

No one knows exactly what will happen in the multifamily real estate market as the Coronavirus pandemic continues to unfold. But the heavy-hitters who have been in the game for a long time can predict, with relative certainty, which markets will thrive, when we’ll see new deal flow, and what the capital markets will look like over the next 12 months.

Michael Becker is a Principal at SPI Advisory and Senior Director of Mortgage Origination at Old Capital Lending. A 15-year veteran of commercial real estate banking, Michael has originated and managed portfolios in all the major asset classes. In the six years since he started investing in multifamily, Michael has acquired 10K units and currently manages a portfolio of 6K doors. He also serves as the Cohost of the Old Capital Podcast.

On this episode of Apartment Building Investing, Michael joins me to discuss the post-COVID new normal in multifamily real estate. He explains how the pandemic is impacting his business and offers insight around what the recovery might look like—and what that means for us as multifamily investors. Listen in for Michael’s predictions on multifamily capital markets and deal flow in the next twelve months and learn what you can do to be ready when the market turns!

Key Takeaways

How Michael’s career has evolved over the last several years

  • From 1K to 10K units in Dallas-Fort Worth and Austin
  • Start in workforce housing then sold old, bought new

How Michael was able to scale so quickly

  • Access to capital (JV with HNWI, shift to syndication)
  • Leverage technology for efficiency in raising equity

The biggest challenges Michael faced as he built SPI Advisory

  • Raise money + find deals while managing portfolio
  • Stay organized as scale (e.g.: send 1,200 K-1 forms)

Why Michael’s uses a third-party property management team

  • Geographically concentrated in certain area
  • No interest in accounting, HR or construction

How the pandemic is impacting Michael’s business

  • 5% delinquency on rents (4X normal rate)
  • Leasing only down by 15%

Michael’s predictions around the post-COVID recovery

  • Multifamily product used more than ever
  • Rent softening (how much depends on market)
  • Supply will constrict, new construction unlikely
  • Increase rental pool as people lose homes
  • Accelerating economic migration to Sun Belt

Michael’s predictions around post-COVID multifamily deal flow

  • Few deals in Q3, trickle in Q4
  • Steady stream of distressed deals starting in 2021

What the capital markets will look like for the next 12 months

  • No hard money, financial contingencies available
  • Challenging to get Fannie/Freddie loans
  • No bridge loans, personal guarantees required

What work Michael is doing on the acquisitions side right now

  • Active participant but don’t expect to buy until Q4
  • Aware of real-time data, ready when market turns

Where Michael sees his company going in the next five years

  • 10K units, continue transition to newer assets
  • Team runs day-to-day so Michael can travel

Connect with Michael Becker

Old Capital Real Estate Investing Podcast

SPI Advisory

Resources

Join Michael’s Mentoring Program

Register for Deal Maker Live

Join the Nighthawk Equity Investor Club

Michael Becker on ABI EP064

The Real Estate Guys Summit at Sea

Ken McElroy

Podcast Show Notes

Michael’s Website

Michael on Facebook

Michael on Instagram

Michael on YouTube

Apartment Investor Network Facebook Group