Current State and Direction of Dallas Fort Worth Multifamily Market with Mark Allen

On This Episode of Peak Market Watch...

Current State and Direction of Dallas Fort Worth Multifamily Market with Mark Allen

Mark Allen, Executive Managing Director of Greystone Sales Group joins the show to share his views on the current state and direction of the Dallas Fort Worth multifamily market.

Episode Highlights:

  • Recovery from COVID-19 uncertainty
  • Rent and revenue growth 
  • Price appreciation 
  • Tax changes
  • Expectations for 2021
  • And so much more!

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Show Host

Guest Speaker

Connect with Anton Mattli

Connect with John Martinez

  • Email: john@disruptequity.com 
  • Website: https://www.disruptequity.com/ 

Connect with Mark Allen

  • Phone: 972.865.6328
  • Email: mark.allen@greystoneisg.com
  • Website: https://greystoneisg.com/

VIDEO TRANSCRIPTION

00:00

watch we speak with market leaders in

00:02

commercial real estate and related

00:04

services who have a close pulse on the

00:06

current market environment my name is

00:08

anton mattli co-founder and ceo of peak

00:11

financing and my co-host today is john

00:14

martinez one of our great senior debt

00:16

advisors at peak financing

00:19

we are honored to welcome mark allen

00:22

executive managing

00:24

director

00:26

with greystone investment sales group

00:29

uh welcome mark it’s a pleasure to have

00:31

you with us today

00:34

thanks anton yeah excited to be here and

00:36

uh thanks for having me yeah so why

00:38

don’t you give us a brief background

00:40

about you

00:41

uh obviously you have a a very

00:44

interesting

00:45

uh career right

00:48

from

00:49

uh from from a young age right out of

00:52

out of school

00:53

you’re a west point graduate so thanks

00:56

for your service right so that’s uh i

00:59

would say it’s always important but i

01:00

think it’s uh

01:03

we all know it’s not that easy to be to

01:05

get into west point and uh

01:09

i’m sure it’s not that that easy to get

01:11

through

01:13

through those years and uh graduate from

01:16

there so congrats on that

01:18

so why don’t you give us a little bit of

01:20

a background

01:22

yeah so they said if i can make it

01:24

through west point you know uh although

01:26

there’s going to be ups and downs but

01:28

the rest of the life should be you know

01:29

relatively easy

01:31

um yeah so i went to west point i played

01:34

football in college and that was kind of

01:36

my you know honestly it was my main

01:38

driver um although that you know there

01:40

was a service to the country aspect

01:42

there was a an aspect that it was

01:44

something a little bit different than

01:46

what the rest of my peers were doing

01:48

um so that you know that was enticing to

01:49

me at the time and uh you know at 18 you

01:52

really don’t know what you want to do um

01:54

so i was kind of figuring things out but

01:56

you know thankful that that i landed

01:58

there um just off the hudson river north

02:00

of of new york city at west point and uh

02:03

graduated was in the army for some time

02:05

but but uh you know i started my real

02:07

estate

02:09

um

02:10

i don’t know if you want to call it

02:11

career but i bought my first property my

02:13

junior year in college at west point

02:15

they give us a career starter loan

02:18

knowing that you’re going to come out

02:19

you have a guaranteed job and you’re

02:20

going to pay back

02:23

you’re going to pay back that that debt

02:25

or that career started loan

02:27

through your military paycheck

02:29

so i got a 35 000 loan at a half a

02:31

percent interest and it was uh prime

02:34

time to buy real estate at the depth of

02:36

the the great recession in 2009 2010.

02:40

i ended up buying a foreclosed condo for

02:42

20 000 in florida

02:45

two bed two bath about four miles from

02:47

the coast

02:49

and um yeah i mean that kind of got me

02:51

going and i i said hey this cash flow

02:54

thing is cool and started to dive in

02:56

when i got into the military i did you

02:58

know i was a little more active doing uh

03:00

single-family uh fix and flips and

03:02

mortgage wraps and a bunch of creative

03:04

strategies anything i could do with

03:06

uh you know with with uh living kind of

03:09

um

03:10

a little side hustle with military pay

03:12

and then you know that that led me to

03:14

want to to want to do um you know bigger

03:16

and larger deals which which uh caught

03:18

my you know the multi-family industry

03:20

caught my interest um in in about 2000

03:24

uh maybe into 14 early 15

03:27

and then i started to get networked in

03:28

once i moved to dallas and long story

03:31

short and here i am today with uh with

03:33

grace stone um as an investment sales

03:36

broker

03:37

yeah great story uh

03:40

what you mentioned right that you were

03:42

able to get that loan i think that’s a

03:45

good message to all the other service

03:47

members right so

03:49

uh some of some of them are whatever

03:52

free cash flow they they have they they

03:55

put in two toys right

03:58

and you did the right thing uh i think

04:01

uh

04:02

there are so many opportunities for

04:04

service members right to really take

04:06

advantage of

04:07

of where they are in life and buy

04:10

investment properties

04:12

uh so you you did you did that and uh

04:16

uh so that’s that’s great to hear and

04:18

obviously you’ve uh you you got that

04:20

investment back from early on and that

04:23

certainly has helped you in in your

04:25

career

04:27

so congrats

04:29

do that now

04:31

obviously

04:33

even though you had that

04:35

initial interest

04:37

getting into investment sales

04:40

is not that easy uh so i think you you

04:43

were also very

04:44

very hard charging early on with uh uh

04:48

in in your career and that was really

04:51

helping you to get to to the position

04:53

where you’re in today

04:56

now

04:58

what we would like to do is

05:00

you you’re in dallas fort worth

05:03

obviously you know the whole market but

05:08

i think you have certainly a very strong

05:10

uh

05:12

knowledge particularly fort worth and

05:14

and the mid-city so maybe we can touch a

05:17

little bit uh uh on that and go a little

05:20

bit deeper

05:22

uh what you see in uh in in that market

05:25

today

05:26

with corey 19 everyone uh was was scared

05:31

to death uh

05:33

when march 2020 hit and then four brief

05:36

period financing dried up uh other than

05:40

the agency financing and

05:43

a lot of people thought oh now we are

05:45

really in a in a massive amount of of

05:48

trouble going forward

05:50

and obviously that was just a very brief

05:53

period and

05:54

since then everything moved up so how

05:56

how did you experience that as a on the

05:59

sales

06:00

broker side that that period and how

06:03

quickly

06:04

did you realize that though this is just

06:06

a brief period of of concern and that

06:10

things go back up

06:12

i know i i mean there was a lot of

06:13

uncertainty i think you know brokers

06:15

were no different um

06:18

where i think you know i guess maybe

06:20

taking a step back so i’m i’m with

06:22

graystone investment sales group and we

06:24

have a team of i think 12 brokers right

06:26

now but we’re bifurcated into teams so

06:28

you know we’ve got a secondary markets

06:30

team what we call a small balance team

06:32

which would really be kind of 49 units

06:35

and under and then uh you know i lead

06:37

our dfw workforce housing team um so you

06:40

know we we’ve got a we’ve got a larger

06:43

team when you look at some of the other

06:44

um you know brokerages across the dallas

06:47

fort worth metroplex and we’d come

06:49

together you know through that time

06:51

through through the end of march april

06:53

um and even and even may we meet you

06:56

know three times a week and there was a

06:57

lot of there was a lot of uncertainty

07:00

and uh we were trying to stay you know

07:02

we made a commitment during that time

07:04

where we thought

07:05

and what we heard a lot of our

07:07

competition you know took it as a um

07:10

uh

07:11

took it as kind of a vacation time to go

07:13

out to you know lake houses or whatever

07:16

and just kind of enjoy the spring

07:17

weather

07:18

um because you know the market was dead

07:20

for the most part but we try to take

07:21

advantage and try to update um you know

07:24

those in the market that own

07:25

multi-family on on uh you know best

07:27

practices and the challenges you know to

07:29

understand the challenges they were

07:31

facing um you know solutions or creative

07:34

um you know options that they were

07:36

implementing operationally to help and

07:38

and so we really took the time to

07:41

you know make a lot of phone calls and

07:43

just try to get educated and just pass

07:45

on you know best practices

07:48

and honestly you know we had one of our

07:50

better years last year and i think part

07:52

of it was

07:53

um you know not not vacationing during

07:57

q2 and and stay in place in the pandemic

07:59

and and i think ultimately it really

08:02

paid off to

08:03

um you know just help our clients out in

08:06

general and ultimately lead to you know

08:09

helping out on the sales side

08:13

yeah that’s great um great to hear

08:17

uh have you seen a lot of buyers walking

08:22

away from

08:25

i deals at the time we had 13 deals

08:27

under contract we ended up losing three

08:31

um

08:32

and you know i i had i had one in

08:35

particular that i lost and it was a

08:38

syndication private syndicator you know

08:40

local syndicator

08:42

um who just didn’t think he could raise

08:44

the money because there was so much

08:46

uncertainty

08:48

and that deal is actually about to come

08:50

back to market about

08:52

i’m going gonna say 15 000 a unit higher

08:55

uh it was a property in waco so we’re

08:57

about to bring that back out to market

08:58

but i mean if you think about it i mean

09:00

it was a great buy then i think it was

09:03

on an assumption

09:04

and i was over a seven cap at the time

09:07

and it’s just you know

09:08

over north of a seven cap is unheard of

09:10

with interest rates around you know

09:12

three percent today

09:14

um but yeah we had three properties fall

09:16

out of escrow and uh i think all of

09:19

those for the most part were just those

09:21

that were either you know fearful scared

09:23

of what’s to come um didn’t want to ride

09:26

through the uncertainty or or two they

09:28

just

09:28

they would have purchased the property

09:30

they just didn’t feel like they could

09:31

raise the equity

09:33

yeah yeah

09:35

uh right john we have seen a number of

09:38

situations uh back then obviously bowers

09:41

were

09:42

pretty uh scared

09:44

uh message uh from from some of the

09:47

landers also was

09:49

we we need to take a break

09:52

on the agency side it wasn’t such an

09:54

issue but it’s only on the bridge side a

09:57

lot of bridge lenders

09:59

virtually stopped overnight so it’s

10:02

understandable right when you have

10:04

a lot of equity at

10:06

stake and hard money at stake that you

10:08

that you get scared right yeah it ends

10:11

up being what you see i think in many

10:13

crisis anton’s is

10:15

um you know solvency may not be your

10:18

issue it’s it’s often times you have to

10:20

solve for liquidity

10:22

and you know some of these deals you

10:24

know had varying success funding

10:25

liquidity but you know it’s great to

10:27

hear that most of your deals

10:29

were able to close their market

10:45

or or save a deal from falling apart for

10:47

those two months and uh you know we

10:50

for i mean we have we have a lot of

10:52

young brokers that have been in the

10:53

market for less than 10 years

10:55

um and you know many of those under five

10:57

years

10:58

but but todd franks uh is

11:01

uh you know my business partner and and

11:03

has

11:04

22 years of experience so

11:07

um you know he went through the great

11:08

recession and and uh you know had some

11:10

valuable insight and we were able to get

11:12

creative on a handful of deals and keep

11:13

those together so

11:15

yeah that’s great to hear

11:18

so now

11:19

uh

11:20

running it forward to today

11:23

i’m sure that

11:25

that prospective buy who walked away is

11:28

now sorry that they didn’t pick it up

11:30

yeah at that point right but uh

11:32

hindsight is always 20 20. right so

11:35

that’s just a reality so how how do you

11:38

see the the

11:41

the market today from a seller’s

11:44

perspective as well as buyer perspective

11:46

what are sellers and buyers

11:48

telling you when you talk to them

11:51

um yeah i mean so the market is is just

11:54

on fire right now you know both you know

11:57

operational perspective and sales

11:58

velocity and volume in dallas fort worth

12:01

is you know unparalleled across the

12:03

country rent growth i think we we

12:04

actually lag according to yardy we’re

12:07

roughly about 46 out of i think

12:10

almost 100 markets

12:12

um and and we’re you know

12:14

at least according to costar we’re

12:16

roughly about 13 rent growth

12:19

so that tells you you know rents across

12:21

the country are just booming i was on an

12:23

nmhc

12:25

uh panel yesterday with the morgans were




12:28

on there who you know i think they own

12:30

and operate

12:31

um getting pretty close i want to say

12:33

there were 80 000 units but you know he

12:35

said in his 40-year career he’s never

12:36

seen uh lease tradeouts and and and uh

12:40

you know the revenue growth on on

12:43

uh renewals and new leases you know

12:45

where it’s at today so from a seller

12:47

perspective i mean you got a couple of

12:49

different challenges

12:50

there’s obviously some tailwinds behind

12:52

you with rent growth but challenges

12:54

are um

12:56

you know the the big topic the last

12:58

couple of months are or the biden

13:00

administration um tax changes so you

13:03

know increased capital gains there’s

13:05

been talk that 1031 exchange is going

13:07

away

13:08

um so i think the expectation is as

13:10

taxes are going up uh it’s a question of

13:12

how much are they going to go up

13:14

and you know i think i think with um you

13:17

know that coupled with you know really

13:20

strong pricing right now as far as price

13:22

appreciation cap rate compression um

13:25

which are really frankly due to

13:27

low interest rates uh historically low

13:29

at you know like i said around i would

13:32

say they range and you would know better

13:34

than i but two and a half percent

13:36

all the way to you know maybe maybe four

13:39

um um on you know more of a traditional

13:42

loan whether it’s whether it’s hud

13:43

financing agency or bridge

13:45

um

13:47

so record low interest rates incredible

13:49

rent growth and then you know just just

13:51

an insane amount of liquidity that’s

13:53

been sitting on the sidelines a lot of

13:55

people need to put money to work so with

13:57

those forces prices are going up and i

13:59

would say in dallas fort worth i mean

14:01

year over year we’re probably seeing 15

14:03

to 20

14:04

you know price appreciation which is

14:06

which is just crazy um so you know you

14:09

got this the price increases and then

14:11

you kind of have um

14:13

potential tax changes on the horizon

14:16

so i think there’s a lot of owners that

14:18

you know haven’t been thinking about

14:20

selling for for a long time

14:22

and are now starting to consider are

14:24

definitely changing their mind so we’re

14:26

seeing you know a lot of sellers in

14:28

today’s market it’s a true seller’s

14:30

market

14:32

from a buyer’s perspective it’s very

14:34

competitive in dallas fort worth and

14:36

probably even the surrounding secondary

14:38

markets too speaking to our secondary

14:39

markets team i mean the terms the terms

14:42

are you know as aggressive as ever

14:44

from a buyer perspective and they’re

14:46

they’re seeing more bids and more more

14:48

tour activity

14:49

on those secondary market steel some of

14:51

the smaller markets in texas

14:53

um

14:55

but you know the same in the same um you

14:57

know respect for buyers i think we see a

14:59

little bit of buyer fatigue you know at

15:02

the end of the year um

15:04

you know it’s just prices are going up

15:05

they’re spending a lot of time they’re

15:07

getting outbid on on properties you know

15:09

the off market deals which it’s still a

15:12

big part of our market you know i don’t

15:14

know the percentage but um here at our

15:17

shop probably half of our deals are off

15:19

market so still a lot of off market

15:21

inventory happening so

15:22

um you know those that are missing out

15:25

on marketed and off market deals it’s

15:27

just you know spend a lot of time and

15:28

it’s frustrating

15:30

to get you know to get outbid um in

15:32

those scenarios and

15:35

uh there’s there’s been a lot of

15:37

inventory on market frankly as a as a

15:39

broker here we’ve seen less over the

15:41

last really two months

15:43

and it really started to happen over the

15:45

summer and i thought it was just because

15:47

you know summer travel people are

15:49

vaccinated

15:50

um and i think that was a little bit of

15:53

an aspect but you know talking to my

15:54

competitors as well it’s been tough to

15:56

get buyers focused on deals

15:58

because a little bit of buyer fatigue

16:00

but also just the amount of inventory on

16:02

the market

16:03

um

16:04

so you know

16:06

whereas it really depends on the asset

16:08

like you know an 80s vintage asset that

16:10

has been held for 20 years and has you

16:13

know 200 units is going to see a heck of

16:15

a lot more tours

16:17

than a 1970 chiller boiler property and

16:21

a c location uh that is traded three

16:24

times a cycle

16:26

um so you know it’s all about i think

16:28

the deal story and how how the assets

16:30

priced too as far as how much attention

16:32

it’s going to get but you know i’d say

16:34

our tours and offers have probably

16:35

decreased you know i’m going to say 30

16:38

40 percent um in the past couple of

16:40

months

16:41

uh so it’s it’s a challenging time you

16:44

know it’s a good time to be a an

16:46

investment sales broker but at the same

16:48

time it’s um you know it’s uh

16:51

challenging depending on the deal

16:53

yeah

16:54

that’s very interesting that you see

16:56

that the buyer fatigue uh

16:59

obviously from from our side we work

17:02

with with a lot of

17:06

various buyers from syndicators to

17:08

private buyers

17:11

and

17:13

we only see the frustration on a daily

17:16

basis right so

17:18

they there are strong teams that have

17:21

enough

17:23

cash that they can put in for earnest

17:25

money they are willing to close fast

17:29

and they’re willing to underwrite

17:30

aggressively but

17:32

they’re usually still being outbid right

17:36

so that

17:37

at some point

17:39

that frustration uh turns it into a bio

17:42

fatigue

17:44

so uh it will be interesting to see how

17:47

how it evolves over over the next uh few

17:50

months and how we enter into 2022

17:55

so how do you see the uh how that is

17:58

going to evolve again also obviously we

18:01

do not know where the tax

18:03

taxes ultimately will end up right we i

18:06

think as you said we can all agree that

18:09

they will go up in one form or another

18:12

how exactly real estate investors will

18:15

be affected still remains to be seen

18:19

uh in uh

18:21

to the full extent of it but how do you

18:24

see

18:25

how it will impact the sales side and

18:29

the seller positioning

18:31

uh and how buyers will react next year

18:36

um i think you know what we’re seeing at

18:38

the end of this year is probably going

18:40

to be pretty similar in the next year i

18:42

think i think the expectation for most

18:44

is interest rates are going to stay low

18:46

um rent growth is going to continue and

18:49

like i said i mean we’re at 13

18:51

year-over-year i think you know if you

18:53

look back four months ago we were

18:55

roughly

18:56

you know three four months ago ten

18:57

percent so you know we may even see in

19:00

dallas fort worth a little bit higher

19:01

rent growth through through the end of

19:03

the year although you know coming up on

19:04

the holidays um but you know rent growth

19:07

will be strong next year so i think

19:09

it’ll continue to be a seller’s market

19:10

there’ll be a lot of sales activity

19:13

um from a buyer perspective at the end

19:14

of this year we’re

19:16

i mean a lot more people are asking hey

19:18

are the sellers well you know open to a

19:20

preemptive offer um there are some

19:22

buyers that are just like i said the

19:24

buyer fatigue they’re not uh they’re

19:26

very they’re being much more selective

19:29

on where they spend their time

19:31

um and i think some of the more

19:33

sophisticated buyers are really trying

19:34

to spend their time on

19:36

you know preemptive offers if the

19:38

seller’s willing to engage and then you

19:39

know off-market deals

19:41

um

19:42

so i think we’ll see probably a little

19:44

bit more of that as well

19:47

that’s a good point uh

19:49

and that really points to towards the

19:52

the expertise that is required by buyers

19:55

right with preemptive offers you know

19:57

your market you know the property

19:59

already you may not have toured it but

20:01

you know the sub market really well

20:04

so you can make up your mind

20:06

uh well ahead of time which obviously

20:09

helps you to come in with that

20:10

preemptive uh

20:12

offer approach

20:14

uh and i think that’s it makes sense

20:17

right for someone who has a who has a

20:19

high level of expertise in a in a

20:22

particular sub market

20:24

yeah and from a broker’s perspective i

20:26

mean there’s a lot of different buyers

20:28

who um you know ask hey is the seller

20:30

willing or open to a preemptive offer

20:33

and you know that really just depends

20:35

because at the end of the day it’s you

20:37

know we’re all about probability

20:39

of closing um it’s our reputation on the

20:41

line so you know if it if it is a

20:44

preemptive offer and the seller’s open

20:45

to that it’s going to be someone that uh

20:48

you know has has a lot of experiences

20:50

you know is a sure deal and you know

20:53

what

20:53

the other big thing is obviously price

20:55

you know can they get to the price and

20:56

are the terms you know market terms or

20:58

strong terms

21:01

yeah

21:04

that makes sense uh

21:06

now what uh what we see on our end uh on

21:09

the financing side uh a lot of buyers

21:13

obviously are uh

21:15

see a challenge getting infor stabilized

21:18

properties getting

21:19

uh the leverage that they need

21:22

uh right sean we see that essentially

21:25

with every single deal right

21:27

when we look back a few years

21:30

particularly with any loans it was

21:32

normal to get 80

21:34

financing plus the rehab was closing

21:37

cost

21:38

baked in

21:40

and today one can be lucky in in dfw for

21:45

stabilized asset to get to 70 percent of

21:48

of leverage

21:51

so

21:52

have you have you’ve seen uh that with

21:55

with your clients

21:57

too and what was what approach are they

22:00

taking to take down these deals despite

22:03

that challenge

22:04

yeah i think we have i want to relook

22:07

the data i know this summer we had 17

22:09

escrows back in like

22:11

july time frame um so 17 properties

22:14

under contract and uh two of them

22:17

were under contract with agency debt uh

22:20

the rest bridge and that you know that’s

22:22

just because the you know dscr

22:24

challenges and and uh one of them was in

22:26

dallas fort worth the other one was in a

22:28

secondary market

22:29

in uh

22:30

wichita falls

22:32

north texas far north texas

22:34

and the one that was in dallas fort

22:36

worth was you know a buyer willing to uh

22:39

accept just lower leverage i think it

22:40

was 66 percent ltv

22:43

you know it was a freddie floater and uh

22:45

you know they wanted to take they wanted

22:47

to take uh you know i guess the the

22:50

short-term

22:51

debt risk off the table they bought you

22:53

know caps interest rate caps and um so

22:56

anyways that’s probably very similar to

22:58

what what you’re seeing i think you know

23:00

that’s that’s what i’m hearing really

23:01

across the nation speaking with some of

23:03

our investment sales teams you know in

23:05

atlanta or other markets like houston so

23:12

yeah

23:13

same here right so the advantage of all

23:16

this with all these bridge loans is

23:18

obviously

23:19

either to go into a permanent financing

23:22

two to three years from now

23:25

or if the market is doing really well

23:28

then you get you get an all around to

23:31

sell the same property again right so

23:34

so for you guys it’s

23:36

it’s it’s potentially is a it’s a

23:40

providing additional uh tailwind to to

23:44

your sales activities right right

23:48

yeah yeah i don’t think i don’t think

23:50

either of us on the transactional side

23:52

are are complaining but um

23:55

um yeah and i mean and a lot of these

23:57

deals are

23:59

um

24:00

you know some of the deals i don’t even

24:01

think are really bridge deals but

24:03

they’re they’re going bridge um and i

24:05

think there’s been so much bridge loan

24:07

activity and just hearing from uh

24:09

recently in the past two weeks hearing

24:11

from some of the active buyers and i’d

24:13

be interested to hear your take on this

24:15

but um i think maybe even the bridge

24:18

lenders are pulling back um on terms in

24:21

some cases or it’s becoming a little bit

24:24

of a harder market towards the end of

24:25

the year uh what are you seeing out

24:27

there in the with with some of the debt

24:29

funds or other bridge lenders

24:31

yeah generally we really haven’t seen

24:34





much of a of a pullback from from

24:37

for decent assets in good locations

24:42

the only time when we see that is when

24:44

the story just doesn’t make sense right

24:47

if you buy a property that is stabilized

24:51

and there is not really much of a of an

24:54

upside that that can be argued for

24:58

some bridge lenders are a little bit

25:00

more suspicious of of ongoing rank

25:03

growth right so if you buy it

25:06

and you still have projections of 10 15

25:10

rank growth

25:11

to make that bridge loan work

25:14

then that’s where where bridge lenders

25:17

are are pulling back so

25:20

we that we only see where in the past it

25:23

was at 80 percent virtually for all of

25:26

the deals

25:27

now we see that some of them are from a

25:30

debt deal perspective are coming in

25:33

more in that 75 mark

25:37

and 70

25:39

percent at stabilized value uh just to

25:43

be to be on the on the safe side so they

25:46

are they may not be as aggressive in in

25:50

in their view of of the of the sponsors

25:53

uh proforma as they were in the past so

25:57

that we we solely have seen but the

26:00

appetite itself

26:02

uh to do bridge loans i think is still

26:05

at record level right

26:08

yeah right

26:10

yeah right john i mean there is

26:13

there is no uh

26:16

no limitation you you can really find

26:19

financing for virtually any deal out

26:21

there it’s really only a question of

26:23

where you can push the leverage all the

26:26

way up

26:28

yeah yeah i think you know our challenge

26:30

sometimes mark is um we will interact

26:33

and advise you know varying degrees of

26:36

sophistication with regard to the buyers

26:38

and we’re having to kind of sometimes

26:40

educate them to understand um you know

26:43

out in the market just because you think

26:45

you’ve got a debt quote maybe it’s a

26:47

bridge quote you know do they understand

26:49

the moving parts and you know does it

26:51

pencil out on the back end to be able to

26:53

hit their exit hurdles and so um you

26:56

know it is a little bit tough sometimes

26:58

to communicate that but if we can get

27:00

those that leverage expectations baked

27:02

right

27:03

it gives them a better line of sight of

27:04

where the returns might really be

27:08

yeah

27:10

so

27:10

i would say what we have seen is that

27:13

obviously you always need an appraiser

27:15

supporting your performer right and

27:20

we have certainly seen some cases where

27:22

the appraisers are not as bullish and

27:24

that then translates also into the

27:26

underwriting by the by the bridge

27:28

lenders

27:31

what we also have seen is that it’s only

27:34

depending on the market

27:36

there are wide ranges of debt deals

27:40

stabilize that deals that they are

27:42

accepting

27:43

right in some of the markets we are in

27:45

the in the sixes six percent that yield

27:48

of stabilized

27:50

uh

27:51

noi

27:53

where whereas in some of the the tougher

27:55

markets they still want to be in the

27:58

upper sevens so and that is a challenge

28:01

for buyers right so they they look at

28:04

what they are able to get for a perfect

28:06

property in a perfect sub market

28:09

and they apply that same principle in

28:11

their underwriting for another property

28:13

that is is a

28:15

is in a lesser uh market

28:19

and they make that offer and then they

28:21

soon realize that in for a bridge they

28:23

may not get to that aggressive level

28:28

yeah that makes a lot of sense

28:30

yeah

28:31

what um

28:33

have you

28:34

where are you looking where are you

28:35

financing most of your deals in today’s

28:37

market and in the metroplex at all or

28:39

are you looking um in secondary markets

28:42

or

28:42

atlanta or other other

28:45

big active markets

28:46

uh yes some of them are only in in the

28:50

metroplex but a lot of our clients have

28:53

have

28:54

and you talked about the bio fatigue

28:56

right

28:57

they have decided that it’s just not

29:00

worth

29:01

their time to

29:03

uh

29:04

to compete in in a dfw market so they

29:08

they have moved

29:10

into into orders i would say

29:13

houston is only

29:15

uh the darling for for a lot of people

29:18

that were active

29:20

and have a strong interest in dfw but

29:22

just felt that

29:24

it’s not going to work right and i think

29:27

that’s probably also a function of

29:30

again of the leverage that you’re

29:32

actually able to get right as you may

29:34

know

29:35

uh for for feni houston msa is still a

29:39

so-called preview view so you uh you do

29:41

not get the high leverage on the on the

29:44

agency side there to begin with

29:47

so that was a disadvantage there but now

29:50

with with a stabilized uh

29:53

property in dfw you probably will end up

29:56

at 65 to 70 max anyhow for for an agency

30:01

loan so now

30:03

the attraction

30:04

is no longer really there for to go into

30:07

dfw

30:08

when that leverage is is not higher and

30:11

i think that’s why a lot of people have

30:12

picked up in in texas have picked up

30:15

houston

30:16

uh as well as

30:18

san antonio

30:20

naturally all the other markets across

30:22

the country they’re all

30:24

they’re all on fire right

30:26

i think a lot of

30:28

buyers we see the loft atlanta but when

30:32

we look at the price increases in

30:35

atlanta they were actually crazier than

30:37

than dfw

30:39

so a lot of buyers moved out of there

30:41

too right so

30:44

florida i think is still

30:47

even though the prices are are very high

30:50

the price increases have not been as

30:52

severe as as in atlanta and dfw

30:56

probably the worst what we have seen

30:57

right now with phoenix the phoenix msa

31:01

right

31:02

so

31:03

so you uh i think you also have a

31:04

property

31:06

listed in el paso right now right uh

31:10

or have it close on to the market so how

31:14

uh how do you see it there uh in terms

31:17

of of price increases and how how it

31:20

would compete with a market like maybe

31:23

san antonio

31:25

yeah um

31:27

i mean i really like el paso we we sold

31:30

a property 188 units there a little bit

31:32

earlier this year

31:34

and i mean when you look at the market

31:36

um i don’t know how many units are there

31:39

you know offhand i’m going to say it’s

31:41

somewhere around 10 000 units

31:43

but you know a good majority of the

31:45

market is owned by just a couple of

31:47

players

31:48

um and there’s there’s still uh i think

31:51

the challenge in the past has been third

31:53

party management you know going in there

31:56

with kind of limited uh you know third

31:58

party management and it seems like it’s

32:00

opened up you know a little bit over the

32:02

past two three years

32:03

um you know we’ve seen some some other

32:06

you know uh private syndication groups

32:09

uh that you know who we all probably

32:10

know you know going there and i think

32:12

they’ve done really well um you’ve got

32:14

two and a half million people between el

32:16

paso and and uh juarez they’re

32:20

they juarez um as uh

32:24

many call it but um anyways you know

32:26

huge trade and logistics hub and and uh

32:30

um you know it’s been it’s been strong i

32:32

think you know deals that were trading

32:33

for 30s 40s you know four years ago two

32:36

you know two years ago they were up in

32:38

the 50s and 60s and now

32:40

you know those workforce housing deals

32:42

are up in the 70s and 80s the door there

32:45

um we you know we traded the deal at

32:48

77 uh

32:50

thousand a unit roughly and uh i think

32:53

on a price per square foot there were

32:54

large units on a price per square foot a

32:56

little bit lower but you know had to be

32:58

you know roughly around 80 80 cents uh

33:01

or 80 a foot

33:03

um but uh the cap rate on that was

33:07

you know

33:08

when you looked at it from a tax

33:09

adjusted basis it was really no

33:11

different than probably what you get in

33:13

in dallas fort worth or

33:15

or uh houston you know there there was a

33:17

value-add component to it but i mean the

33:19

tax-adjusted cap rate was down into the

33:21

three percent range

33:22

i think the t3 t12 was right around four

33:25

and a half percent

33:26

um

33:28

so anyways i mean there are def i mean

33:31

that that was uh

33:33

maybe a little bit different case but

33:35

you know there are deals trading there

33:37

for you know i think probably today it

33:39

may be tough to find north with six cap

33:41

i mean they’re they’re definitely there

33:42

in el paso um but i’d say probably you

33:45

know it’d be in the higher mid to higher

33:47

five range as as you know cap rates have

33:50

continued to compress across the country

33:53

but

33:53

um yeah not as a lot of you know not a a

33:56

ton of uh you know buyer demand like you

33:58

would see in and you know some of the

34:00

other major metros but i think the

34:02

fundamentals are really good when you

34:04

look at kind of the vacancy and rent

34:06

growth um you know amazon adding 750

34:09

jobs at the end of this year with with a

34:11

new distribution center

34:13

so you know continued job growth

34:15

although it’s not a dallas fort worth

34:17

houston or austin job growth um but you

34:20

know i think the fundamentals are there

34:23

have you seen uh similar rank growth

34:26

there too

34:28

yeah i think they’re lagging behind i

34:29

want to say

34:30

the last i checked was somewhere sub 10

34:33

maybe maybe nine percent

34:36

so not like um

34:38

and honestly i i mean i stay i’m into

34:40

the really focus in dfw so that’s where

34:43

my focus is um i couldn’t tell you what

34:46

san antonio rent growth is off the top

34:47

of my head or houston but i i know

34:50

they’re north of 10 or at least i think

34:52

they’re north of 10 percent so um being

34:55

you know el paso probably the fifth

34:57

largest msa in texas it probably lags a

35:00

little bit behind on rent growth um than

35:02

some of the other major metros but you

35:04

know it’s still strong

35:06

yeah

35:08

yeah very good uh thanks for all your

35:10

insight uh john do you have any uh any

35:13

other common or

35:16

question that you want to bring up

35:19

no i’m i’m good i mean i think so thanks

35:21

again for your time mark it’s been great

35:23

and pleasure visiting with you

35:25

yeah yeah so yeah so really thanks again

35:28

mark

35:29

how can our

35:32

listeners reach you obviously or

35:34

a well-known

35:36

uh broker in in dfw so most people will

35:39

know you but there are always

35:42

orders that may not so how how can they

35:45

reach you

35:46

yeah um best is probably through

35:49

linkedin or email you know i try to stay

35:51

active on on linkedin um posting content

35:54

uh

35:55

so linkedin my email is mark.allen

36:01

greystoneisg.com which stands for

36:03

investment sales group our website is

36:05

www.graystoneisg.com

36:10

and um

36:12

i don’t know if this will air but if you

36:14

guys would love to have you there next

36:15

week we’re having uh our multi-family

36:18

forum just be a half day event

36:20

um

36:21

a lot of owners uh we’re gonna have an

36:23

owner panel and equity panel and dr dot

36:25

tower will speak in the morning i think

36:27

he’s the first speaker so we’ll speak

36:29

about the current economy

36:30

and uh you know his projections for the

36:32

future and if you haven’t seen him you

36:34

know he’s a really great speaker

36:35

um

36:36

you know he’s uh he’s humorous so i

36:39

would love to have you both there if you

36:41

can make it next friday and that’s a

36:42

free event

36:43

and um

36:45

yeah

36:46

yeah

36:47

great appreciate it again congrats on

36:50

all the

36:51

all your success and

36:53

so you’re the only the person to know uh

36:56

in in dfw for anyone who

36:59

who wants to sell or buy your property

37:02

so uh all the best to you

37:05

thanks no thanks for having me on and

37:07

you know same with you it’s it’s been

37:08

great to see you know

37:10

your your trajectory coming off and

37:12

starting peak financing which is awesome

37:15

um and would love to do another deal

37:16

with you again soon yeah same here

37:19

thanks mark thanks mark thanks guys