July 2023 Market Data
During the month of July, six properties traded for a total volume of $15.33M. The median price per unit of these transactions was $318,750 and the average CAP rate was 3.99%. The average days on market (list date to contract date) of the deals that traded was 47 days as compared to the average days on market of the properties that are currently listed of 113 days.
The notable sale of the month was 1430 Wilder Avenue, a rehab project that sold in April 2023 for $2.9M and then flipped three months later for $3.988M, a handsome profit in today’s market.
Download the market comps below!
Inventory Snapshot
The inventory on the market has been holding steady with 43 properties consisting of 485 units for a total consideration of $148M. The average CAP rate of properties listed is 3.51% which means the gap between where deals are getting done and where sellers’ expectations are is roughly 50 basis points a part. Investors are also considering the risk-free rate of return of alternative investments such as US Treasury Bonds, as of this writing, the yield is 4.25%. We’ll continue to see upwards pressure on cap rates due to the high cost of capital, relative to where treasury yields currently stand.
Asset Management Tip
In light of the tragic wildfires on Maui, there has been a lot of talk about how property owners can recoup their losses through insurance, however, this is only the case if you have adequate coverage. Be sure to properly protect your real estate investments!
Here are a few items multifamily property owners need to consider when evaluating your current insurance policy:
- Property insurance should include both fire and hurricane protection.
- Obtain adequate coverage, no less than the replacement cost of the property. It’s wise to obtain an up-to-date replacement cost appraisal as construction costs are constantly increasing.
- Your policy should also provide “business income” coverage, also referred to as “business interruption” or “loss of use” coverage. This type of coverage will replace the loss of rental income if the property is out of service for an extended period.
- A general liability policy will also protect you from claims filed by tenants for events such as faulty fire alarms, smoke detectors, and sprinklers. The amount of coverage is dependent on the size of the property, the larger the property, the greater the risk of claims.
If you need a referral to a commercial insurance agent, feel free to reach out!
Multifamily in the News
Below are links to several articles and events relating to the multifamily and affordable housing sectors in Hawaii:
“Affordable Housing” Projects In Hawaii are Unaffordable to Many
Can An Emergency Proclamation Solve Hawaii’s Housing Crisis?
Affordable Housing Coming to Kailua
Chinatown Affordable Housing for Seniors Accepting Applications
Do you know someone interested in investing or selling a multifamily property? Let me know!
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