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Apartment Inventory Age: Small Properties Are Older, Ready For Upgrades

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Ivan Kaufman explains how as the small asset stock ages, the potential for value-add investment increases.

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Apartment Inventory Age: Small Properties Are Older, Ready For Upgrades

  1. 1. APARTMENT INVENTORY AGE: SMALL PROPERTIES ARE OLDER, READY FOR UPGRADES Small balance multifamily loans are typically between $1 million and $5 million. Chandan Economics defines small-cap properties as 5 to 19 units, mid-cap properties as 20 to 50 units, and large-cap properties as larger than 50 units. Both small-cap and mid-cap properties can fall into the small balance spectrum. Source: American Community Survey; Chandan Economics See the full report on ALEX Chatter here: www.arborloanexpress.com/chatter Multifamily construction is focused on large, amenity-rich properties. As the small asset stock ages, the potential for value-add investment increases. 52% of units in both small and large properties were built before 1980. 16% of the total units in small properties were constructed after 1999, compared to 22% of units in large properties brought online during that time. Small Multifamily (5 to 49 units) Inventory by Year Constructed 3.9% 11% 31.5% 11.6% 31.9% 10.1% 1939 or earlier 1940 to 1959 1960 to 1979 1980 to 1999 2000 to 2008 2009 to 2014 Large Multifamily (50+ units) Inventory by Year Constructed 6.8% 10.6% 26.4%15.2% 30.2% 10.8% 1939 or earlier 1940 to 1959 1960 to 1979 1980 to 1999 2000 to 2008 2009 to 2014 Apartment Stock Age - Small vs. Large Assets 1,250,000 0 2,500,000 3,750,000 5,000,000 1939 or earlier 1940 to 1959 1960 to 1979 1980 to 1999 2000 to 2008 2009 to 2014 Small Assets (5-49 units) Large Assets (50+ units)

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