Deal Sourcing, Raising Equity, & More

release edition [034]

read time [5 minutes]

Welcome to The Multifamily Download, a weekly newsletter where I provide institutional insights to help you build an exceptional Multifamily career.

Today at a Glance:

• Deals: Buying in 2025
• Equity: 10 Popular LP Questions
• Weekly Listen: America's CRE Show

Deals

For most of us in the Multifamily world, acquiring new assets in 2025 has proven to be challenging.

According to CBRE's Q2 2025 U.S. Multifamily report, volumes in H1 2025 have increased by +2% YoY to $63.6B.

While many market participants expected a strong rebound in 2025, I was not convinced, and even predicted negative sales volume growth in 2025 in TMD 002, when I wrote the following:

Recent Treasury relief will most likely lead to an uptick of volume in Q3, especially if long rates continue to rally after a widely-anticipated Fed cut in September.

Regardless of how the remainder of the year plays out, I thought it might be helpful to share a few things that I'm thinking about in terms of sourcing new investment opportunities for the remainder of the calendar year.

1. Relationships take time.

Entering a market and expecting to immediately get the first look at the best deals is foolish thinking. Receiving great off-market deals from brokers is a luxury that must be earned. The best way to earn it is by providing quick, thoughtful, and educated feedback to brokers when they send you a new deal. You'll get major bonus points for getting on an airplane to go meet the broker and tour the property. Great industry relationships are built on trust, and trust is built through action.

2. Markets are dynamic.

What works today may not work tomorrow, especially with Equity capital still trying to decipher the near-term direction of the economy based on various factors like Fed policy, tariff policy, macro trends, market momentum, and individual investor appetite. This is all the more reason to remain active in your target markets even if you don't think you'll acquire any new deals for the remainder of the year. Pick up the phone and call brokers. It's the only way to stay engaged and educated on market trends.

3. Underwriting is crucial.

Everybody has an underwriting model, but not everyone uses it appropriately. Some levers are only meant to be pulled when certain convictions emerge. For example, investor do not want to see cap rate compression underwritten on exit for a commodity asset in a landlord friendly, growth market. Also, please don't assume that an embedded gain-to-lease will persist after takeover of an asset in a softer market; instead, evaluate recent trends and ensure that the underwriting is both realistic and defensible.

4. Remember the game you're playing.

LP investors want both (a) preservation and (b) growth of capital. GPs want (a) current fee revenue and (b) future profit participation. If you're a GP, don't risk both of the two LP goals just to achieve one of your GP goals (fees). If you're an LP, take the time to get educated on the investment opportunity before investing. My rule of thumb when it comes to LP investing is that I must be educated enough to pitch the deal to friends and family as if the deal were my own. Remember, the business of Real Estate is an infinite game, and the goal of infinite games is to play them forever.

How are you thinking about deal sourcing in 2H 2025?

Equity

Raising capital to acquire Real Estate is challenging, until it's not.

We've all seen and heard stories of the company that can send one email to raise $10M+ dollars for an investment opportunity, and while that does happen, it takes time to get there.

What questions are professional investors asking in 2025? And how can you position yourself as an expert so that Equity providers (individuals and/or institutions) will invest with you in your deals?

Here are 10 common questions that every GP/Sponsor should be able to answer when pitching a new investment opportunity.

1. What's the story? Why invest in this property at this price at this time?

2. What's the current discount to replacement cost?

3. How does the underwritten exit pricing compare to previous peak pricing?

4. What's being used for rent growth, and why?

5. How do Yr-1 rents compare to the competitive set?

6. Who is the most likely next buyer, and why?

7. What assumptions are made in the go-forward OpEx?

8. How was the Capital plan formed, and why?

9. What are the downside risks during the hold period?

10. How is the debt being underwritten, and why?

There are tons of questions that could have made this list, but these are the questions that I've heard repeatedly from institutional capital provider this year.

The big picture takeaway from this section should be this:

Professional investors in 2025 require both downside risk protection and upside value creation.

Show them why both are achievable and you'll be well on your way to raising capital for great deals.

Weekly Listen

This week's episode is a recent episode of America's CRE Show with host Michael Bull and guest Chris Finlay, founder & CEO of Middleburg Communities.

In this shorter 23-minute episode, Chris speaks to his perspective of Multifamily and Build-to-Rent after 20 years in the business.

You can listen to the full episode here.

Wrap Up

That's it for this week. I hope you found this edition of The Multifamily Download insightful and enjoyable.

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