Carson · AZ Multifamily

I invest in multifamily and post what the numbers actually say. IR @ Neighborhood Ventures. Licensed broker AZ/WA.

[Carson · AZ Multifamily @CRECarson]

I'm Carson. I invest in multifamily across Arizona and the Sun Belt with Neighborhood Ventures.

A few times a week I post what the numbers actually say — rents, cap rates, what pencils. No hype.

If that's your world, follow along, and tell me where I'm wrong.

[Carson · AZ Multifamily @CRECarson]

@TripleNetInvest Brutal. At $27 a foot the new owner can lease it cheaper than anything around it and still make money. We're watching a smaller version in Phoenix apartments, 2021 deals bought on floating debt trading around 30% under what the last guy paid.

[Carson · AZ Multifamily @CRECarson]

@johnarnold @Redfin Run it as a payment and it gets wild. A $300k loan at 2.7% was about $1,215 a month. Bump it 33% to $399k at 7.4% and you're near $2,765. that's a big reason so few of our Phoenix renters move out to buy anymore.

[Carson · AZ Multifamily @CRECarson]

@jasonlewris Arizona's number tracks with what we see. A lot of 2022 buyers out in Buckeye and Maricopa can't sell for what they owe, so they rent the house out. Those zips get a wave of single family rentals landing right on top of the build to rent product already leasing up.

[Carson · AZ Multifamily @CRECarson]

@ClarenceWongCRE repeat work orders are where the bones are buried on apartments. Three plumbing calls on one stack in six months is usually a cast iron line the seller's been patching for years.

[Carson · AZ Multifamily @CRECarson]

@jonbrooks Same split on the apartment side in Phoenix. Lease ups out on the edges of the valley are stacked next to each other and still giving a month or more free. Older infill with nothing new nearby is holding occupancy fine. Your block matters more than your metro right now.

[Carson · AZ Multifamily @CRECarson]

Commercial property is half a point from an all-time high.

It's also 19% below peak.

Same market, same month. The difference is deal size, and underneath that, debt.

Volume is down 8.6% year over year. Prices firming in a market most owners are sitting out.

https://t.co/3RpNO2kurK

#CRE

[Carson · AZ Multifamily @CRECarson]

@NewsLambert apartment loans feel it too. agency debt prices off that 10 year, so at 5.24% fixed quotes land somewhere near 7. buy at a 5.5 cap and you're starting with negative leverage until rents catch up.

[Carson · AZ Multifamily @CRECarson]

@jonbrooks Shows up on the rental side too. In Phoenix the payment on a starter home at these rates runs well over a grand above rent, so fewer residents move out to buy and renewals hold. Plenty of would be buyers are signing another 12 month lease.

[Carson · AZ Multifamily @CRECarson]

@thecredaily Supply explains most of that spread. SF barely built, Austin built a ton. Phoenix sits closer to Austin right now, but starts here fell off hard after 2022 and once the last wave leases up, that free month on new leases starts disappearing

[Carson · AZ Multifamily @CRECarson]

@robbiehendricks 2 and 3 end up as one lesson out here in Phoenix. keep a renewal and you skip the turn, the weeks sitting dark and whatever concession it takes to backfill. fast work orders hold more residents than a golf simulator ever will

[Carson · AZ Multifamily @CRECarson]

@m3_melody we watch rent delinquency the same way on the apartment side. a month late happens. the share rolling from 30 into 60 days is the line our property managers flag first.

[Carson · AZ Multifamily @CRECarson]

@jonbrooks That's Sun City in the photo. It's age restricted, so those homes mostly trade retiree to retiree. The younger households in Phoenix rent near the jobs in Tempe and Chandler, which is right where we see apartment demand holding up.

[Carson · AZ Multifamily @CRECarson]

@realEstateTrent the cash buyer still has to sell to someone with a loan, so the exit cap moves with the 10 year either way. plus that equity could be clipping 5% in treasuries with zero toilets to fix

[Carson · AZ Multifamily @CRECarson]

@jasonlewris Saw a smaller version of this in Phoenix when resale froze up. Homes that couldn't sell came back as rentals, and the 3 bed apartments nearby felt it first. Takes a couple lease cycles for a towel like that to wring out.

[Carson · AZ Multifamily @CRECarson]

@Keith_Wasserman with the 10 year over 5.3% a developer needs something like a 7 on cost before a start makes sense, and Sun Belt rents mostly aren't there yet. good setup for anyone already holding product.

[Carson · AZ Multifamily @CRECarson]

@jayparsons Yep, and it shows up on the first call with equity. They ask how predictable a city's rules are before they ask about rent growth. Phoenix and most of the Sun Belt kept winning that question the last few years, and I don't see that changing anytime soon.

[Carson · AZ Multifamily @CRECarson]

@bobbyfijan yep, renewals tell the story. The residents who'd normally leave to buy a starter home are signing another 12 months instead, and they tend to be the ones who pay on the 1st.

[Carson · AZ Multifamily @CRECarson]

@PatCarino Ha, we get those in Phoenix every week now. Fresh OM, same price, plus a line that the last buyer "had financing issues." If the deal didn't clear 1.25x DSCR on their agency quote it isn't clearing on ours.

[Carson · AZ Multifamily @CRECarson]

@LoganMohtashami we feel that on the rental side. Rates over 7 and our move outs to buy a home dry up while renewals climb. Closer to 6.5 we lose a few more residents to first purchases.

[Carson · AZ Multifamily @CRECarson]

@mikesimonsen @ErinCollard Same checklist works for apartments. The Phoenix distress we're seeing is mostly #2, floating rate bridge loans from 2021 and 2022 once the rate caps ran out. Owners who took fixed agency debt that same vintage are sitting tight and riding it out.