Multifamily Investors Face a Tougher Road to Returns

In a Multifamily Executive commentary, Mike Aiken, SVP of Investments at Fogelman Properties, explains that multifamily investors face a more challenging path to returns as elevated borrowing costs, low initial cash flow, and softer fundamentals replace the tailwinds of the prior cycle. Aiken notes that many deals remain in negative leverage territory, pushing returns toward value creation at exit rather than current yield and making disciplined underwriting and selective acquisitions essential. He highlights slower household formation and persistent concessions as constraints on rent growth, even as new supply tapers, and argues that expense management has become a key source of opportunity—particularly where proptech costs, deferred maintenance from peak-cycle buys, or long-held assets have widened performance gaps between operators. Ultimately, Aiken concludes that in today’s environment, investors who rigorously analyze asset-level costs and operations are best positioned to uncover returns others overlook.

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