2020 has been a tough year for finding deals—even for us. In fact, the Nighthawk Equity team is currently in the process of closing on our first and only deal of the year (so far). But that’s not for lack of trying! So, what are we looking for in a deal right now? How have we changed our underwriting criteria in the age of COVID? And how do we recover from the disappointment of losing a deal?
Garrett Lynch is the Director of Acquisitions at Nighthawk Equity, the investing arm of the Michael Blank organization. Garrett has been in the multifamily space since 2011, cofounding a firm that grew from zero to 3,400 units before successfully exiting that venture. Since taking on his role with us at Nighthawk in 2018, Garrett has built a portfolio that includes at 218-unit property in Little Rock, Arkansas a 276-unit in Huntsville, Alabama, and a 130-unit deal in Atlanta, Georgia.
On this episode of Apartment Building Investing, Garrett joins me to explain how his strategy for finding multifamily deals has evolved over the years and what we look for in a deal at Nighthawk Equity. He describes what he does to build rapport with brokers and stay in touch, sharing how strong broker relationships helped us land our current deal in Atlanta. Listen in for Garrett’s insight on recovering from the disappointment of losing a deal and learn how to adjust your underwriting to find good multifamily deals in the COVID era.
Garrett Lynch – Key Takeaways
How Garrett’s strategy for finding deals has evolved over the years
- Look for best price per door in D class neighborhoods early on
- More granular on underwriting today, focus on B and C class
How we dialed in our criteria for deals at Nighthawk Equity
- Look at capacity on equity raise and debt structure
- Gradual progression on size of deals
- Choose value-add properties in certain markets
The benefits of collocating deals in just a few markets
- Share resources (e.g.: staff)
- Hit several properties in one trip
How we select markets at Nighthawk Equity
- Resources available to operate and steady dealflow
- Population, job and overall economic growth
How Garrett builds rapport with brokers
- Stand out by responding whether like deal or not
- Meet in person and check in regularly, share successes
How Garrett recovers from the disappointment of losing a deal
- Channel hurt into next quest
- Commit to process
How we landed our current deal in Atlanta
- Follow up with broker re: deal another investor won
- Unobstructed shot when that deal fell apart
Garrett’s system for staying in touch with brokers
- Put regular check-ins on calendar (target markets of interest)
- Come with thoughtful questions re: specific deals
- Reach out when land deal in their market to build demand
How we have adjusted our underwriting at Nighthawk in the COVID era
- Tailor underwriting around few available debt products
- Set natural market appreciation at ZERO for Year 1
- Create cushion of 0.5% on reversionary cap rate
- Cash reserves minimum of 10% of total spent on deal
- Research tenant demographic to ensure cashflow from Day 1
Connect with Garrett Lynch
Resources
Learn More About Michael’s Mentoring Program
Submit a Deal to the Michael Blank Deal Desk
Access Michael’s Syndicated Deal Analyzer
Join the Nighthawk Equity Investor Club
