Trends Watch: Multifamily Investing

EisnerAmper’s Trends Watch is a weekly entry to our Alternative Investments Intelligence blog, featuring the views and insights of executives from alternative investment firms. If you’re interested in being featured, please contact Elana Margulies-Snyderman.   

This week, Elana talks with Bryan Muonekwu, Founder, Muonekwu Capital. 

What is your outlook for multifamily investing?

We are still in a dislocated market. If you have built a business based on multifamily arbitrage, you are likely viewing the market in one of two ways:

View 1: You anticipate that the Federal Reserve will lower interest rates, leading to positively leveraged situations. This outlook means you are purchasing deals at slightly compressed cap rates and are betting on a less restrictive monetary policy in the near future that will allow you to meet your pro forma projections.

View 2: You believe that inflation is persistent, and that monetary policy will remain relatively restrictive in the short term. With this perspective, you are cautious about making aggressive pro forma projections and might prefer to sit on the sidelines, waiting for clearer market direction.

Currently, most of my colleagues who run institutional-level businesses are not seeing amazing deals at the moment. In my opinion, most of the opportunities out there are relatively speculative.

We believe that the commercial real estate markets have not bottomed out yet. The Federal Reserve has put itself in a situation where monetary policy will likely need to remain restrictive for much longer than most anticipate. We are waiting for true market capitulation before re-engaging in acquisitions.

Where do you see the greatest opportunities and why?

In multifamily investing, I see the greatest opportunities in public-private partnerships. Two of my colleagues have recently completed impressive deals with universities through these partnerships. I like these deals because they offer additional levers to protect the downside. While there are still excellent opportunities available, they require diligent effort to uncover and often demand very specialized skill sets.

What are the greatest challenges you face and why?

The greatest challenge for every firm right now is acquisitions. Sellers are mostly well-capitalized during this cycle and are not willing to adjust their pricing expectations. Most are waiting it out until something breaks or monetary policy becomes less restrictive again. The only cracks I've seen have been at the institutional level, and there are not many of those deals available.

What keeps you up at night?

I wouldn’t say much keeps me up at night, other than the eagerness to get back to doing deals and engaging in the industry I love. We haven’t bought a multifamily deal since Q1 2022 when we sold most of our portfolio. Personally, I spend a lot of time analyzing our industry as well as others, which I enjoy. This period has been a good opportunity for introspection and improving our company internally.

We are ready for the next cycle and excited for what’s to come. 

The views and opinions expressed above are of the interviewee only, and do not/are not intended to reflect the views of EisnerAmper.