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Cove Investments Blog

Multifamily Valuations Too Complacent?

Here we go. Fancy new title. Broader mandate. Yet somehow, I can’t move forward without first sharing some thoughts on multifamily real estate valuations. Mainly, that’s because I don’t get it. Please note that nothing I write should ever be considered investment advice. The current investing environment must be one of the most difficult in decades. The following comments represent my current gut reaction to the current pricing environment for multifamily assets. Over the coming weeks, I plan to update this view by adding rigor (more analysis, references, and charts) and subtracting fluff. At that point, I hope to have

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Investment Returns Incentive Important Work

In my journey as a real estate investor, I’ve focused primarily on properties with below-market rents. I’ve assumed that both rising costs of construction and competing housing options would pull rents higher over time. I’ve also counted on some downside protection on purchase price given the significant discount to replacement cost. The basic strategy has been to invest in neglected assets and earn a reasonable return on that investment. If we do our jobs well, our residents will thank us for improving their homes. For this, they’ll often gladly pay an additional $50-$100/month, knowing that they’re still enjoying some of

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Class C Delivers

The April Apartment Advisory from Berkadia-RealPage highlights the resilience of more affordable rents during the pandemic. Between March 2020 and March 2021, Class C assets were the only product type to average any rent growth. Additionally, the average occupancy rate among Class C assets in the past year has run about 60 basis points tighter vs. Class B and 170 basis points tighter than Class A. The relative strength in Class C surprised many who expected widespread weakness in employment to hammer this segment. This is especially true given its outsized exposure to leisure and hospitality. Unlike white-collar residents in

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Back to the Cities

With a bit more evidence, it’s clear that last year’s “urban exodus” was always a bit more complex than this neatly labeled theme implied. By now, we all understand that lots of people left the largest, most expensive cities for cheaper, less dense markets. But an “urban exodus”? Did everyone leave Manhattan for a spacious suburban home in Fairfield County? That’s ridiculous. An early mentor often said that reality is never as good or as bad as it seems. Things are messy. We try to simplify complex issues to make sense of them. Since we don’t always have the time

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