Reduced Pace of New Development:
Due to tighter lending policies for new construction, new multifamily project developments are at multi-decade lows. Moreover, new developments tend to be Class A properties that many find unaffordable. This creates more demand for well-run assets.
Home Ownership Trending Downwards:
Demand for rental properties has steadily risen because home ownership is expensive. Particularly with the Millennial generation, consumers are putting off buying and opting for renting instead.
Class B & C Recession Resilience:
Regardless of the economy stability, B and C class multifamily properties tend to consistently maintain higher levels of occupancy.
Property Management Intensive:
Class B & C properties require a strong leadership team that can manage all aspects of property management, from renovations to customer service. Third-party property management companies do not have the same economic incentives and, therefore, may not be in line with investor expectations.
Attention to Detail:
Most management firms have an average or even poor system of checks and balances as well as procedures and policies in place. It takes a team with an ownership mentality to ensure that all aspects of the property are running smoothly.
Selection Criteria Highlights
Supreme, densely populated location in desirable areas of the Greater Houston area
Proximity to major employment centers
Favorable demographic trends
Potential for ratio utility billing system (RUBS) or utility bill back