The Good & Bad of Supply Constraints

Operating in secondary, supply-constrained markets can be a double-edged sword.

Supply-constraints can work on your behalf if you’re an existing owner in the market, but can also work against you if you’re looking to build a big portfolio.

With supply-constraints, comes less inventory, and less inventory ultimately leads to fewer transactions.

Need to work super hard to successfully enter the market and then even harder to stay top of funnel on anything that might trade.

Scale is the pain point within this scenario.

With that said, how do we solve for this?

1.)    Have a wider menu of investment strategies (within the multifamily space) that we’re willing to take on.

If we limited our criteria to turnkey properties, we’d maybe transact once every 2 years given our market dynamics.

Widening our criteria allows us to see more and provides more opportunities to create value.

2.)    Expand into new markets that exhibit the same characteristics that align with our thesis.

More neighborhoods, more inventory, more opportunities to dig out yield.