Overlooked opportunities : small Class B multifamily in secondary sun belt markets

Abstract

This thesis examines an underappreciated asset class -- small Class B multifamily in secondary Sun Belt markets -- to see if it is a suitable entry point for junior real estate investors and developers. Due to the small size and low price points of these properties, as well as their location outside of gateway markets, these assets tend to escape the attention of highly-sophisticated capital. This lack of attention creates market inefficiencies with strong upside potential for-junior real estate investors and developers at reasonable entry-point prices. This thesis examines the economics of small Class B and C multifamily assets; the resiliency of these assets in an economic recession; and the optionality inherent to Class B and C multifamily as it pertains to various holding and exit strategies. This thesis also explores the trends driving growth in secondary Sun Belt markets, and why these markets are attractive to junior real estate investors and developers. Incorporated within this thesis are case studies of a secondary Sun Belt market (Tampa Bay, Florida) and a small, Class B multifamily asset (the Caprice).