m. stanfield

you want it to be one way

sometimes real estate stuff

[m. stanfield @resetbasis]

https://t.co/bx1GYXOMZu

[m. stanfield @resetbasis]

@JMS49119 @JerryBl24848861 Vibes > returns

[m. stanfield @resetbasis]

Dinner with an exec/friend at a large national property management company tonight. This person oversees ~150k apartments; access to an insane amount of data.

Current multifamily market in most of the country is worse than S&L, .com bust, or the GFC. Worst they’ve seen.

Class A mostly fine, decent rent growth. However:
- credit scores at class A have gone down meaningfully over the past 3 years.
- more people are paying rent via credit card.
- average bank account balance noticeably lower than even 2 years ago
- class A tenants stretched thin, living beyond their means. 20k comes in, 20k goes out every month.
- starting to see these renters move down a tier

Class B:
- simply too many apartments, we built too much new stuff. Ripple effect is enormous.
- fewer renters tomorrow than today. Same store foot traffic noticeably down year over year. Some markets down 40-50%
- considering dropping rents below $700 a month on some 1beds in major southern markets.

Class C:
- looking at degrading NOI. Rents aren’t growing for a long time, but expenses keep creeping up
- more renters are one missed paycheck away from disaster than they can remember seeing in decades
- tenants aren’t paying rent because they simply don’t have it
- wage growth has not kept up

Lenders:
- some major investment funds, household names, haven’t paid their mortgages in 2-3 years. Banks won’t foreclose because “X is a big client.” Mexican standoff.
- a roof leak gets ignored, becomes water damage, then mold, then a down building. Buildings are rapidly deteriorating as some owners choose cash preservation over funding losses.
- number of pre-foreclosure and REO deals is the highest as a % of total units they can recall.
- data providers know it’s bad, but they’re paid to sell optimism to owners/lenders. So every forecast is “it will probably get a little better next year maybe” and that gets regurgitated at investment committees all over.

I asked “how do you think this ends?”

“Not sure. My gut says slowly then suddenly, and things will get really bad. Been doing this 40 years, you can feel it in the air. But, there’s a chance it’s just a decade of tolerable pain. I’m praying for that.”

[m. stanfield @resetbasis]

@JerryBl24848861 Companies this big manage properties for thousands of owners big and small. It’s not one monopoly sticking it to the poor, it’s a broader market issue

[m. stanfield @resetbasis]

@JerryBl24848861 Management company. They don’t own the apartments.

[m. stanfield @resetbasis]

@fracturedSOS Thanks. I’m a fuckin wordsmith. Feels good to be appreciated.

[m. stanfield @resetbasis]

@forestryba20986 Having a tough day little fella?

[m. stanfield @resetbasis]

This tweet is gonna escape containment, and some unwashed commie is gonna say “eat shit rent-seeker” because they fail to understand the interconnected nature of the economy

[m. stanfield @resetbasis]

@xmikemac em dash, huh?

[m. stanfield @resetbasis]

@Little_K_Story Exactly right. Fancy house of cards.

[m. stanfield @resetbasis]

@credealjunkie Metaverse is the move these day brah

[m. stanfield @resetbasis]

@AsAllocated

[m. stanfield @resetbasis]

@yield_fiend Property management, not owner

[m. stanfield @resetbasis]

@BangTheClose I’ve been saying “yes” for a few years now, so perhaps I’m the idiot, but at some point they gotta start letting deals go

[m. stanfield @resetbasis]

@randyengel I don’t know the inner workings, but I assume it’s a mix of extensions and refusal to act. Only reporting what I heard

[m. stanfield @resetbasis]

@shotsandscience They see bank statements for a lot of residents when they first apply for the apartment

[m. stanfield @resetbasis]

@jayparsons I think some (not all) forecasts are used as a panacea for owners wondering if their distressed assets are ever gonna turn around. They’re looking for hope.

I’ve been on calls with you, and to your credit, I think you call balls and strikes when you see em

[m. stanfield @resetbasis]

@BryanLiu10 I think people rush to jump up a tier as concessions hit, then realize they’re over their skis

[m. stanfield @resetbasis]

@MomsPostingLs There is no mental load on stolen land

[m. stanfield @resetbasis]

@moseskagan A wise man wrote about this once

[m. stanfield @resetbasis]

@wavelinejosh @visegrad24 Feels like if you have to say "heterosexual" you might be trying too hard