While the loan assumption process is not for the faint of heart, the effort and cost it takes to complete can quite possibly result in underlying financing that is far more favorable than where debt markets have gone today.
Activist investor Jonathan Litt has tried to portray the sector as heading for a similar fate as traditional office buildings. Market data and investor activity paint a much more complex picture.
While much of the sector continues to be dominated by small owners/operators, its solid property fundamentals, credit tenants and low capital expenditures are beginning to bring in institutional money.
With solid property fundamentals and plenty of potential demand, both institutional and high-net-worth investors have been working with firms that specialize in BTRs.
The “denominator effect” put institutions in a position where real estate allocations exceeded target levels, but observers expect that issue has begun to resolve itself as values of other investments have recovered.
Third-party surveys are often relied on for valuation purposes; however, one must be cautious in their use when actual trades in the public market are confirming a value that is substantially different.
