As an investor with over 30 years of experience in commercial multifamily real estate, I want to provide my outlook on the market in 2024.
In multifamily, we’ve seen struggles lately, especially in value-add deals. I've spoken to other investors dealing with capital calls right now. In Atlanta, some multifamily properties are worth 42% less than just two years ago!
Rising interest rates make acquisitions more difficult. Value-add deals below 90% occupancy will have a particularly tough time in this environment.
Today, I'll share my predictions on opportunities inside and outside of real estate and what investors can do to capitalize on them.
Here are my key predictions:
1. Recession Fears Will Linger
I believe recession fears will persist in 2024. The technical definition of a recession is two consecutive quarters of GDP decline, which happened in 2022. And yet, the government said it wasn't a real recession.
As an investor, recession uncertainty creates opportunity. As Warren Buffett says, “Uncertainty is the friend of the buyer of long-term values.” I'm keeping an eye out for deals in this uncertain climate.
2. We Will Not Have a Soft Landing
I don't believe the Fed will engineer a “soft landing.” They won't smoothly curb inflation and reduce unemployment at the same time. However, when things stabilize, asset prices may become more favorable again. Volatility creates chances for long-term investors like myself.
3. Explore Non-Real Estate Options
I suggest looking into non-real estate investments and businesses with real estate right now. Real estate relies heavily on debt. But with other assets, you can reduce leverage risk. I am not an investment advisor, please do your due diligence, I'm exploring options like ATMs, car washes, vending machines, marinas, franchises, cos. in cyber security and AI and business acquisitions below 3x annual earnings.
The key is achieving passive income without over-managing operations yourself. I'm keeping an open mind and staying liquid to capitalize on 2024's challenges and opportunities.
Despite headwinds, I'm optimistic about multifamily and excited about new avenues as well. For experienced investors, times of uncertainty can be rewarding.
Let me know if you have any other thoughts or questions! I'm happy to discuss.