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

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