I’ve been watching something fascinating unfold in the commercial real estate world, and it has everything to do with how we approach multifamily investing right now. While most investors are running for the hills, some of the smartest money in real estate is doubling down on what they see as generational opportunities.
The news that caught my attention involves Breakthrough Properties raising a $1.5 billion fund to target life sciences real estate at a time when vacancy rates have hit 23.4% and most investors are fleeing the sector. Quite the bold move. Their CEO, Dan Belldegrun, believes “the clouds that were over the industry are beginning to abate.” This contrarian approach got me thinking about parallel opportunities in multifamily real estate that most investors are completely missing.
The Contrarian Opportunity in Multifamily
Right now, multifamily investors are facing their own set of clouds. Interest rates remain elevated, construction costs are still high, and many markets are dealing with increased supply from projects that started during the pandemic boom. Sound familiar? It should, because it mirrors exactly what’s happening in life sciences real estate.
But here’s what I’ve learned after 27 years investing in real estate: the best opportunities always emerge when everyone else is too scared to act. When Breakthrough Properties talks about picking up “well-located properties for attractive prices,” they’re describing the same dynamic I’m seeing in multifamily markets across the country.
There are properties in Texas that would have sold for $85,000 per door two years ago. Today, the asking price is $65,000 per door, and I suspect the right offer at $58,000 would get serious consideration. The fundamentals haven’t changed. Texas is still growing, jobs are still being created, and people still need places to live. What’s changed is sentiment, and sentiment creates opportunity.
Following the Smart Money Strategy
The Breakthrough Properties approach offers a blueprint that multifamily investors can adapt. They’re not just buying distressed assets randomly. They’re targeting “core and up-and-coming markets” with strong fundamentals. This strategy translates perfectly to multifamily investing.
I’m focusing on secondary markets where job growth remains strong but where other investors have become gun-shy. Cities like Huntsville, Alabama, Colorado Springs, Colorado, and Boise, Idaho offer the kind of demographic trends that support long-term multifamily demand, but current market conditions have created pricing opportunities that won’t last forever.
The key is understanding that while current metrics might look challenging, the underlying drivers of multifamily demand remain intact. People are still forming households, millennials are still aging into their prime renting years, and housing affordability challenges continue to keep many potential homebuyers in the rental market longer.
Technology and Market Evolution
Just as Breakthrough Properties points to artificial intelligence and innovation driving their sector’s recovery, multifamily investors need to recognize how technology is reshaping our opportunities. The rise of remote work has permanently altered where people choose to live, creating demand in markets that were previously overlooked.
We’re seeing this firsthand in tertiary markets that suddenly became attractive when workers realized they could keep their jobs while dramatically reducing their housing costs. Properties in these markets that seemed risky three years ago now look reasonable. The same demographic shift that’s creating challenges in expensive coastal markets is creating opportunities in affordable inland markets.
Smart property management technology is also changing the game. Properties that implement effective revenue management systems, streamlined maintenance operations, and enhanced resident experiences are significantly outperforming those that haven’t adapted. This creates a clear advantage for investors willing to embrace technology rather than resist it.
Market Timing and Patience
The Breakthrough Properties story reinforces something I’ve believed for years: successful real estate investing requires the patience to act when conditions are right, not when they’re comfortable. When Belldegrun talks about fundamentals “once again shining through,” he’s describing the process every real estate cycle goes through.
We’re at the point in the multifamily cycle where fundamentals are starting to matter more than sentiment. Occupancy rates in most markets remain healthy, and rent growth, while slower than the pandemic boom years, continues to outpace inflation in many areas. Properties bought today at current pricing, with proper due diligence and conservative underwriting, should perform well over the next five to seven years. But due to the last 3 years of poor sentiment, psychological barriers are real.
Practical Steps Forward
For investors ready to act on these opportunities, the approach needs to be methodical. We’re focusing on markets with diverse employment bases, reasonable regulatory environments, and demographic trends that support rental demand.
Due diligence has become more important than ever. Investors are spending more time analyzing local employment trends, planned infrastructure improvements, and regulatory changes that could impact operations. Properties that would have penciled based on appreciation assumptions two years ago need to work based on operational performance alone.
Looking Ahead
The life sciences real estate rebound that Breakthrough Properties is betting on won’t happen overnight, and neither will the next phase of multifamily market recovery. But the investors positioning themselves now, while others wait for perfect conditions, will be the ones who benefit most when market sentiment eventually catches up with market fundamentals.
I’ve seen this movie before. The investors who buy quality assets at reasonable prices during uncertain times consistently outperform those who wait for clarity. By the time the clouds have completely cleared, the best opportunities will be gone.
The question isn’t whether multifamily real estate will recover. It’s whether you’ll be positioned to benefit when it does.
By Mike Krieg
About the Author
Mike is co-founder of Leadoutinvest. He earned his degree in Finance from the University of Montana. His real estate career began in the early 2000s as an expatriate in Samara, Russia, where he raised capital to purchase homes and helped other expats do the same. Since then, Mike has co-sponsored projects totaling over 7,000 apartment and self-storage units, been featured on the BiggerPockets Real Estate Podcast, and taught multifamily syndication to university finance students.
Mike is also the Founder of Storyline, an organization providing leadership training for local leaders worldwide. He lives with his wife Kristen and their three children.
Disclaimer: This article is for educational purposes only and does not constitute investment advice. All investments carry risk, including potential loss of principal. Past performance does not guarantee future results. Investors should consult with qualified financial and legal advisors before making investment decisions.
