The panel, “Do You Want to Know a Secret? The View from Investors,” at the 2015 NMHC Apartment Strategies Outlook Conference centered on strategies from the multifamily investor perspective. Undoubtedly, all the panelists agreed that allocation of resources and deciding what to invest in is one of the key factors to success in the investing environment. For the institutional investors, cash flow continues to be king - investors want and demand cash flow.
Who needs who? Investor panelists emphasized that they need the multifamily industry as much as the industry needs them. And, ultimately, when there is a significant amount of deal flow, they breathe a sigh of relief. For mutual success, however, they need to ensure the quality of execution, a comprehensive understanding of the investment and an alignment of the right capital with every strategy. They are also making risk-return decisions that start with deep research from the top down.
What should we know about investors? Some things never change. Hands down, relationships was the right answer. All the panelists agreed that good relationships are vital to their current and future business success. They are all competing with one another and, at the end of the day, they are choosing with whom to do business largely on relationships. In addition, investing is about being in the right place at the right time, as well as the ability to raise a lot of capital. And the multifamily industry also needs to remember that with all the new bank regulations, the door for small investors is open.
What’s next? Panelists pointed out that the industry may see a pull back in the near term in new multifamily investing so that investors can manage what they already have. Essentially, there are some markets where investors are going to be more exposed. Where there are these more challenging spots, there will be a tendency to pull back and reassess. This will definitely have a chilling effect on those who haven’t yet secured their capital. Without question, investors will forever be mindful of volatility and, as a result, they have a distinct understanding of how critical it is to be careful when it comes to choosing the right investment.