Maximizing Opportunities: Expert Insights for Investors in a Shifting Economy with Dakota Brown and Alex Zapata, Ep 115

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October 10, 2024 • 53 mins

Welcome to the Journey to Multifamily Millions podcast, where we speak with professionals on financial topics!

Dakota Brown and Alex Zapata examine the quickly evolving loan and equity markets in commercial real estate in this talk. Bridging loans, the effect of rising interest rates, financing and underwriting difficulties, and investor strategies for navigating market volatility are the main topics of debate.

In the face of economic turbulence, they explore the ramifications of rate increases, bridge loan methods, insurance and tax issues, and new trends in asset classes.

They emphasize the value of being both cautious and opportunistic in the current environment while offering a critical perspective on market dynamics and helpful underwriting advice. They also go over the prospects for 2023, pointing out areas that might give chances despite the difficulties brought on by an unstable economy.

Episode Topics

[00:41] Meet our guest, Dakota Brown and Alex Zapata
[02:56] Current Market Volatility and Trends
[04:56] Understanding Debt and Equity Transactions
[10:43] Impact of Federal Funds Rate on Treasury Yields
[19:43] Inflation, Labor Markets, and Economic Outlook
[26:241] Buyer and Seller Expectations
[31:18] Underwriting and Rent Growth Challenges
[37:42] Debt Strategies and Investor Returns

Notable Quotes

"Rates are composed of two metrics: an index and a spread." – Dakota Brown
"Banks are hedging their risk... no one’s really sure where rates will be." – Dakota Brown
"We arrange debt and equity transactions, not direct lending." – Alex Zapata
"Debt service coverage ratio is the biggest constraint as rates move, impacting leverage." – Alex Zapata
"Multifamily operators are using bridge loans to acquire, but it’s becoming less attractive right now." – Tim Little
"I've seen price drops of one to two million because debt has gotten so expensive that the seller has to acknowledge that." – Tim Little
"This is a really crucial time that not a lot of people have experienced in their investment careers. It's been about 11, 12 years since we've had a similar style economic volatility" -[Dakota Brown]
“Hotel to multi-family conversion is a very popular concept. I think it's a lot more conceptual than it has been executed in certain markets.” -[Alex Zapata]
“We always talk about multifamily being recession resistant, but I think it's important to note that it's not recession proof. It doesn't mean we won't get impacted by a recession, we will, and we need to think about that.” - [Tim Little]

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