Ep. 43: How to Find Apartment Deals in a Hot Market with Michael Becker

Michael Becker has built an impressive portfolio worth over $400 million in the Dallas/Fort Worth area. He’s done this primarily based on excellent industry relationships and thoroughly knowing his market. As the head of SPI’s Dallas, Texas office, Michael oversees all aspects of property operations. Michael co-hosts the Old Capital Real Estate podcast and on this episode, he shares why it’s not too late to invest in DFW and why he’s locked in on the Fort Worth area. 

Key Market Insights

• Life-long resident of North Texas
• Background is banking, primarily commercial real estate lending
• Purchased 25 properties 5,200 units
• Focused on light value add, 15% more below market rents
• Class B Apartments built in 1983-2008 is current focus
• Looking to be close to employment & transportation
• Key markets: Carrolton, Denton, Grapevine, Hurst, Garland
• Focused more now on Fort Worth side as opportunities are running west
• Independent School District – looking for first rung of suburbs than DFW
• Metropolitan area in US with most consecutive rental rate growth has been Seattle, #2 is Fort Worth
• DFW is #1 or #2 in building apartments (as many as NYC), concentrated in NW suburbs
• Fort Worth gets 15% of supply delivered, but represents 33% of market
• Lots of transportation blue collar jobs moving to Ft. Worth, while white collar jobs are going to Dallas
• Have gone full cycle on 14 of the 25 properties
• Cap rates in DFW 5 years ago would be a   spread is now much thinner, with older deals
• May see more cap expansion on the lower end of the scale
• While 20 of the deals were off-market, only 2-3 did not have a broker involved
• One of the biggest questions we get from investors is “Is it too late?”
• Getting investors from both coasts and international
• 1 MM new jobs in Texas since 2000
• 1 MM people added to the DFW metro since 2010
• Caution on net absorption – 5 years ago rental rate growth was 6%, but has slowed down to 3% (top of the market is dragging the market)
• Avoids the east side of Fort Worth
• Bullish on Northeast side of Tarrant County, Orchard Hills, Hurst, North Fort Worth – Facebook put over $1 billion data center
• Right off I-35 between downtown and alliance – 20 years, expect them to be fully developed and together

Bull’s Eye Tips:

Winning Your Market: Do what you say and get back to brokers

Tracking Market Changes: Constantly reading articles, talking to brokers

Daily Habit: Looking back at macro goals and return goals

Resources:

Best Business Books:

ABCs of Real Estate Investing by Ken McElroy

Digital Resources

ALN – Apartment Data 

CoStar

Tweet This:

“The first deal is hard, but going from 1 to 2 is exponentially easier” “Find the junior broker within an established brokerage group and grow and come up together” “Be smart and strategic about where you buy and what you buy”

Places to Grab a Bite:

Town Hearth 

Connect with Michael:

Old Capital Real Estate Podcast 

SPI Advisory

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