April -2024 Market Data
In April ’24, there were 4 properties that traded for $8.955M as the market plays catch up to its slow start to the year. April’s sales volume alone accounted for 44.43% of the total market volume through April. To put the market velocity into perspective, the market is still behind 2023’s pace by $48.58M. If we project out for the remainder of the year, sales volume is on pace to do 39.17% of 2023’s annual volume. The usual suspects such as construction/ rehab costs, insurance requirements, financing costs are making it tougher for deals to pencil. The average CAP rate of the deals that traded is up to 4.79% with the median price per unit up to $241K. As of this writing, the 10-year treasury yield is 4.22%, down from 4.59% last month indicating a 57 basis point spread between where deals are trading and the 10-year yield, which bodes well for multifamily investors. As long as market volatility remains at current levels, investors remain optimistic over the near term.
The notable deal for the month of April was 1242 6th Ave. Honolulu, HI. 96816. A 10-unit property on 13,965 SF of A-1 zoned land. The asset traded at a 3.39% CAP and $341,500/ unit. The seller was patient enough to endure a canceled escrow and just over a year's time to close. A great deal for the seller and a nice long term opportunity for the investor.
Download Sales Comp Below
Current Inventory Snapshot
There are 34 properties listed on the market for a total of $157M in opportunities. 4 of the properties totaling $11.89M in volume are pending / in escrow. The average days on market is just over 6 months at 183 days. The average CAP rate of properties on market is 4.02% presenting a wide gap between where deals are trading (4.79% CAP rate).
Over the past couple of months, there was a stretch of six weeks with no new listings hitting the market. If you’re considering selling your asset in 2024, contact our team today! Now is the perfect time to put your property on the market and achieve maximum exposure.
To receive our weekly Hawaii Multifamily Inventory Sheet, which compiles all active listings as well as off-market opportunities into one source, simply reply to this email requesting to be added to the distribution list.
June Fed Decisions – Higher for Longer
The Federal Reserve announced that it will keep its key interest rate unchanged in a range of 5.25% - 5.50% and signaled that just one rate cut is expected before the end of 2024, down from its March forecast which called for three rate reductions.
Inflation pulled back in May 2024 and moved closer to the FED’s target as the Consumer Price Index (CPI) declined to 3.3% down from 3.4% in April.
Despite the continued uncertainty surrounding the capital markets and macro economy, investors have dry powder to deploy towards the right opportunity.
Asset Management Tip –Thorough Due Diligence
Conducting thorough due diligence prior to acquiring a property is paramount to your investment strategy. By doing so, you’re protecting yourself from any issues that could arise in the future.
Here’s a short due diligence checklist:
Financial Review:
- Review the past 2 years of income statements.
- Verify income and expenses through rent roll and third-party contracts
- Recreate your own income statement. Trust, but verify!
Rent Roll Review:
- Review the current rent roll and leases if possible.
- Understand the tenancy and if there’s a variance between current and market rents.
- Confirm the true occupancy of the property.
Property Inspection:
- Assess the condition of the property’s electrical, plumbing, HVAC, roof, drainage, asphalt, landscaping, zoning, lot lines, and other large maintenance expense items that could arise.
- Best practice – hire a professional property inspector.
Market Analysis:
- Study the market – understand the demographics of the area, market rents, market vacancy, market sales comps, the competitive set of properties.
Legal Audit:
- Review preliminary title report.
- Confirm there aren’t any pending lawsuits or deed restrictions.
- Obtain insurance quotes.
By taking a proactive approach to “peeling back the onion” during your due diligence period on a property, you can proceed to acquiring the property with confidence, knowing that you’ve done your homework up-front.
If you’re interested in discussing your investment strategy and your goals for the remainder of 2024, let’s schedule a time to meet!
Multifamily In the News
Commercial Real Estate Roundtable
Green Signs Bills to “Unlock” Affordable Housing
City Launches $8M Grant Initiative for Affordable Housing Development
Court Upholds Affordable Housing Proclamation
Hawaii Insurance Chief Doesn’t see Carrier Exit as Costs rise
How CRE Can Rise to the Challenge of Escalating Insurance Premiums
Networking Events
CCIM General Membership Meeting June 28, 2024 – Featuring Governor Green
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Wishing you all a safe and fun summer! 😎 | 
