The market feels different

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Regular readers know that I often complain about the lack of deals in the market. I’ve been doing it for years and I’m sure I’ll never stop. (I can hear Mr. Lyons, my old faculty advisor at the Phillipian, repeating his joke about the whiny Kagan brothers…)

But, right now, the LA multifamily market feels different than it has since I really began following it religiously approximately 10 years ago.

For the past decade or so, if you put a gun to my head and told me to buy the best deal I knew of, I could do something tolerable. Not great, necessarily, but tolerable.

Right now, with the exception of an opportunity zone deal or two (where investors ought to be willing to tolerate worse numbers to get the tax benefits), I am unable to point to a single thing that comes close to making sense.

That’s not to say that the market has seized-up. Far from it. People are still buying, even at today’s prices.

But, because I intimately know the numbers behind these deals, I am categorically certain that the juice on these babies will not be worth the squeeze, so to speak.

Fortunately for us, between the deals we already have in our pipeline and our existing management business, I can now say, for the first time since I got into this business, that I don’t really care if we do another deal this year.

Would I prefer to? Of course. Would my investors prefer I do one? Of course. But the deals Mr. Market is offering make no sense right now, so I’m going to sit on my hands.

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