Latest / Own More Doors / #32 Multifamily (4Plex) Market Update: Insights, Trends, Insights, and Opportunities

Transcript

#32 Multifamily (4Plex) Market Update: Insights, Trends, Insights, and Opportunities · Own More Doors

• 0:00
  SPEAKER_00: What's up everyone?
• 0:01
  SPEAKER_00: Juan Weezar here with the Own More Doors podcast.
• 0:04
  SPEAKER_00: This specific episode was first shared on our YouTube channel, Sage Real Estate.
• 0:08
  SPEAKER_00: Check it out.
• 0:09
  SPEAKER_00: And we're excited to bring it to you here.
• 0:11
  SPEAKER_00: Hey everyone, if you're an apartment owner or if you're an apartment investor or an inspiring apartment investor, I want you to tune in today because today I'm going to do a deep dive into the four-plex market in the city of Long Beach.
• 0:23
  SPEAKER_00: This is going to be your 2024 market update.
• 0:27
  SPEAKER_00: So let's hop right into it.
• 0:28
  SPEAKER_00: How's the market doing?
• 0:30
  SPEAKER_00: Well, if you've been watching my videos, you know that that is a tough question.
• 0:34
  SPEAKER_00: Because are we talking about the four-unit market?
• 0:37
  SPEAKER_00: Are we talking about the five-unit market?
• 0:40
  SPEAKER_00: Are we talking about retail, office, self-storage, medical office space?
• 0:45
  SPEAKER_00: When it comes to real estate, are we talking about single-family homes?
• 0:49
  SPEAKER_00: Every specific um market type is going to perform differently.
• 0:55
  SPEAKER_00: Sometimes they might be going in the same direction, but there's not just one simple answer.
• 0:59
  SPEAKER_00: And so today's video, we're going to be talking about the fourplex market.
• 1:02
  SPEAKER_00: And you know, here at Sage Real Estate, I sell more fourplexes than anybody else.
• 1:07
  SPEAKER_00: This is our bread and butter.
• 1:08
  SPEAKER_00: We are tracking this more than anybody else.
• 1:11
  SPEAKER_00: No one has cared about the fourplex market until we came along.
• 1:15
  SPEAKER_00: So I hope you appreciate this information.
• 1:18
  SPEAKER_00: Why is it that I love the fourplex market?
• 1:21
  SPEAKER_00: It's kind of the gateway investment.
• 1:24
  SPEAKER_00: If I could get someone to commit to buying the first fourplex and they see that it's not that hard, they see that there's tons of demand for the rental, tenants aren't so bad, repairs don't bury you.
• 1:37
  SPEAKER_00: You start building this confidence, and you're like, if I could do four, I could do more.
• 1:41
  SPEAKER_00: And so um just want to remind you, this is this is exactly the way that we that I got started, the way that I was taught.
• 1:48
  SPEAKER_00: And the the fourplex is the way to go.
• 1:50
  SPEAKER_00: For some of you watching, you're thinking duplex, triplex, I love that as well.
• 1:54
  SPEAKER_00: But if you can, let's start with four and we'll go from there.
• 1:56
  SPEAKER_00: So today I'm gonna talk about what happened in 2024 versus the number of sales in 2023, Long Beach specifically.
• 2:05
  SPEAKER_00: Long Beach has more fourplexes than any other city in California.
• 2:09
  SPEAKER_00: And so um it's it's a great city and it's great to track this.
• 2:13
  SPEAKER_00: This is data you won't get from anybody else.
• 2:15
  SPEAKER_00: No one else cares to bring this to you.
• 2:17
  SPEAKER_00: So here you go.
• 2:19
  SPEAKER_00: In 2023, there was 48 forplexes that sold.
• 2:24
  SPEAKER_00: 2024, 54.
• 2:27
  SPEAKER_00: Okay, hey, so people keep saying, hey, the market's tough, nothing's selling.
• 2:32
  SPEAKER_00: Well, we had an increase of 12 and a half percent in sales.
• 2:35
  SPEAKER_00: So again, 2023, 48 sales, 2024, 54 sales.
• 2:40
  SPEAKER_00: Okay, so slight increase.
• 2:43
  SPEAKER_00: And so what do I make about this?
• 2:45
  SPEAKER_00: Well, in 2023, I felt a lot of investors sat with their uh arms like this, just waiting.
• 2:53
  SPEAKER_00: And they were waiting for what?
• 2:54
  SPEAKER_00: Well, they were waiting for values to drop further.
• 2:57
  SPEAKER_00: They were waiting for values to drop further, so that so there wasn't a lot of transactions.
• 3:02
  SPEAKER_00: What happened in 2024?
• 3:04
  SPEAKER_00: There were more sales, but why?
• 3:06
  SPEAKER_00: I'm gonna get into this next, but is that we saw a slight dip in value.
• 3:10
  SPEAKER_00: We saw a dip in value, and investors realized, well, that might be the best it's gonna get.
• 3:17
  SPEAKER_00: They were, listen, investors.
• 3:19
  SPEAKER_00: I represent a lot of them, they wanted the deal to be sweeter, and so they were waiting patiently.
• 3:25
  SPEAKER_00: People, it's a it's amazing.
• 3:27
  SPEAKER_00: People have so much money, or investors have so much money, and they want to invest.
• 3:33
  SPEAKER_00: And that's how they have fun.
• 3:35
  SPEAKER_00: They this is like a lifestyle.
• 3:37
  SPEAKER_00: They love to be negotiating deals and and they love to hear from me like, was my offer accepted?
• 3:42
  SPEAKER_00: Oh, geez, I wish I would have offered more.
• 3:44
  SPEAKER_00: They love the thrill of it.
• 3:45
  SPEAKER_00: It's a game, they love it.
• 3:48
  SPEAKER_00: And so they've been waiting.
• 3:50
  SPEAKER_00: 2024, they saw a slight dip, they seized on it.
• 3:53
  SPEAKER_00: But I don't think that they believe that that's um there, I think they realize it's not gonna go any further.
• 3:59
  SPEAKER_00: So if I'm gonna buy something, if I'm gonna invest, it's better than sitting in the bank, I might as well do it now.
• 4:05
  SPEAKER_00: And so that kind of explains the slight increase in sales.
• 4:09
  SPEAKER_00: Now let's get into average sales price.
• 4:12
  SPEAKER_00: Again, this is just the average.
• 4:13
  SPEAKER_00: This is not the end all be all, but it gives us a data point.
• 4:17
  SPEAKER_00: In 2023, we were right about 1,400,000, but exactly 1,395,000, but let's round up 1.4.
• 4:27
  SPEAKER_00: In 2024, we've seen a 10% decrease, 1,225,000.
• 4:33
  SPEAKER_00: That's where you got the motivation is we had a 10% decrease in fourplex values and we had more sales.
• 4:40
  SPEAKER_00: Direct correlation.
• 4:41
  SPEAKER_00: Values went down.
• 4:42
  SPEAKER_00: The interest rates overall pretty much stayed the same.
• 4:45
  SPEAKER_00: They would go down, they would come up, but be due to the fact that there was a slight increase, 10%, you had investors get off the sidelines and pick up a few more investments when it comes to the fourplex market.
• 4:58
  SPEAKER_00: Days on market, this is critically important.
• 5:00
  SPEAKER_00: People will hire me and they'll say, how long is this gonna take?
• 5:03
  SPEAKER_00: And obviously, there's there's the marketing period, and then there's gonna be the escrow period.
• 5:08
  SPEAKER_00: But looking at the um marketing period in 2023, 64 days on market.
• 5:14
  SPEAKER_00: This is on average.
• 5:15
  SPEAKER_00: So if someone put their property, it's possible, and if it's an average property, it's probably gonna sit on 64 days.
• 5:23
  SPEAKER_00: 2024, 42 days.
• 5:25
  SPEAKER_00: So an increase or call it a decrease of 34%.
• 5:30
  SPEAKER_00: So 2024, we had more sales, and properties were on the mark market less.
• 5:37
  SPEAKER_00: Why is that?
• 5:38
  SPEAKER_00: Well, going back to the fact that investors did not believe that values were gonna drop any further, they wanted to go ahead and pick up the assets that they liked at that time.
• 5:51
  SPEAKER_00: And let me give you a perfect example.
• 5:53
  SPEAKER_00: I just listed uh Forplex uh on Carson Avenue.
• 5:56
  SPEAKER_00: We had 11 offers.
• 5:58
  SPEAKER_00: Interest rates are still 6.85.
• 6:01
  SPEAKER_00: We had 11 offers.
• 6:02
  SPEAKER_00: So, does this high interest rate stop investors?
• 6:05
  SPEAKER_00: Not at all.
• 6:06
  SPEAKER_00: If there's perceived value, if there's a property that they want, because it's in the right location, the square footage is there, uh, the year built is what they like, they're gonna jump all over it.
• 6:17
  SPEAKER_00: 11 offers competing for this property.
• 6:19
  SPEAKER_00: A lot of people were disappointed that they didn't get it, but that kind of shows you is days on market is down because if it's the right property, it's gonna move quickly.
• 6:29
  SPEAKER_00: Now, another reason why days on market is down, investors, brokers like myself, when they're being hired or selected to sell these fourplexes, they're being a little smarter.
• 6:43
  SPEAKER_00: They're not pushing the value, they're not telling the sellers, they shouldn't be telling the sellers that it's a seller's market.
• 6:49
  SPEAKER_00: It's not.
• 6:50
  SPEAKER_00: It's kind of a buyer's market.
• 6:52
  SPEAKER_00: Now, in certain situations, it could still certainly be a seller's market.
• 6:57
  SPEAKER_00: But in overall, I would say it's a buyer's market.
• 7:00
  SPEAKER_00: The buyer is in a stronger position to negotiate.
• 7:04
  SPEAKER_00: Moving on to active inventory.
• 7:06
  SPEAKER_00: This is critically important.
• 7:08
  SPEAKER_00: Uh again, no one tracks this.
• 7:10
  SPEAKER_00: You you can't even Google this, it doesn't exist.
• 7:13
  SPEAKER_00: It's just that we make it a point to make a note of this every single day is how many fourplexes are on the market at one time.
• 7:21
  SPEAKER_00: In 2023, there was 24 forplexes throughout the year, more or less.
• 7:27
  SPEAKER_00: So if I was working with you and you wanted to buy a forplex, there was depending on the day, there was only 24 to look at.
• 7:35
  SPEAKER_00: In 2024, more people put their property on the market.
• 7:40
  SPEAKER_00: And on average, it was about 40 to 42.
• 7:44
  SPEAKER_00: So if you're an investor, there's more to look at, prices are down.
• 7:48
  SPEAKER_00: I don't know, if you're an investor, that seems pretty promising.
• 7:51
  SPEAKER_00: More inventory, and prices are down.
• 7:55
  SPEAKER_00: That means you have more options and you're not paying the premium you had to pay in 2023.
• 8:00
  SPEAKER_00: So I think that that's a plus.
• 8:02
  SPEAKER_00: So there you have it.
• 8:03
  SPEAKER_00: So there you have it.
• 8:05
  SPEAKER_00: How's the fourplex market?
• 8:07
  SPEAKER_00: It depends.
• 8:08
  SPEAKER_00: Sales are up, prices are down, and I expect in this coming year, 2025, here's what I expect.
• 8:18
  SPEAKER_00: And this is not just Long Beach specific.
• 8:20
  SPEAKER_00: I would expect that inventory is gonna go up.
• 8:23
  SPEAKER_00: You're gonna have sellers that have been in this game for a very long time who are now ready to sell.
• 8:29
  SPEAKER_00: They're gonna watch this video or they're gonna communicate with me and they know values are a little down, but heck, 10%'s not a lot.
• 8:36
  SPEAKER_00: 10%'s not a lot.
• 8:37
  SPEAKER_00: This is not a bloodbath or you lost all this equity.
• 8:41
  SPEAKER_00: You know, we gained equity through the last couple years and and and then we lost some, but that's okay.
• 8:46
  SPEAKER_00: So I expect that inventory is gonna be up.
• 8:49
  SPEAKER_00: I also expect that investors are gonna want to continue placing money.
• 8:55
  SPEAKER_00: They hate it sitting in the bank.
• 8:58
  SPEAKER_00: And people who buy real estate want to buy and they want to buy it now and they want to grind a good deal.
• 9:04
  SPEAKER_00: That's the way they are.
• 9:05
  SPEAKER_00: I know them.
• 9:06
  SPEAKER_00: I'm one of them.
• 9:08
  SPEAKER_00: And so I expect 2025 to have more sales, more inventory.
• 9:16
  SPEAKER_00: Um, prices should remain the same.
• 9:19
  SPEAKER_00: If interest rates drop, and they should some, you will have prices pick up.
• 9:26
  SPEAKER_00: But that's still to be seen.
• 9:28
  SPEAKER_00: But I'm very optimistic, very optimistic of what 2025 has in store for both buyers and sellers and multifamily.
• 9:36
  SPEAKER_00: So I hope you'd like this video.
• 9:37
  SPEAKER_00: Um, I do want to remind you, we have an um investor summit for multifamily investors February 27th.
• 9:45
  SPEAKER_00: It's a half day event.
• 9:46
  SPEAKER_00: Make sure to get your tickets.
• 9:48
  SPEAKER_00: The event's here in Long Beach.
• 9:49
  SPEAKER_00: I've assembled a great lineup of speakers that are going to provide you value.
• 9:54
  SPEAKER_00: So whether you're new, whether you're experienced, get your tickets today.
• 9:57
  SPEAKER_00: It's only$99.
• 9:59
  SPEAKER_00: Use promo code SAGE.
• 10:01
  SPEAKER_00: Get 50% off.
• 10:03
  SPEAKER_00: Make sure to like, comment, and subscribe.
• 10:05
  SPEAKER_00: Until next time.