Multifamily ARM Reset Opportunity: How Rising Rates Are Creating Distressed Deals in 2026 | Eran Reizer

Eran Reizer (00:00)

But what happened to those people, and I see a lot of articles, it’s gonna be a lot of foreclosure. Maybe not a crisis. I don’t know, I’m not a prophet, but definitely it’s already happened. A lot of foreclosure because of those reasons. Now, when people took between twenty to twenty two these COVID rates it were between zero to four percent, now the bank knocking literally on your door

And said, I have a friendly reminder for you, sir. In sixty days, you’re at seven percent, or seven point two, or seven point five, or six point seven five, or six point five if you’re lucky.

Dylan Silver (02:02)

Hey folks, welcome back to the show. Today we’re joined by Eran Reizer, known as The Multifamily Doctor. He’s a multifamily investor based out of Florida. Eran, thank you for joining us here today.

Eran Reizer (02:16)

Thank you. First of all, I wanna say that I’m v really flattered that you even think about me and it’s an honor to be on your podcast.

Dylan Silver (02:24)

It’s great to have you on here. I want to talk about what is coming across your desk these days. What types of deals are you seeing these days?

Eran Reizer (02:33)

Okay, first of all, I’m doing also single family portfolios and multifamily. And today, if I want also to help people in this podcast, it’s as you were it’s very challenging to get a deal because the interest rate make the cash flow either negative or very low. Okay, and the DSCR don’t work in most of the deal, especially the deals on the market. Okay, I think

In today’s market, if I can give a tip to someone whatever whether if he’s a beginner or an experienced successful entrepreneur in real estate, is we need to understand in each market where is the opportunity. Okay? Actually the high rates is the opportunity. As me and you talked before the podcast, that what especially in America people take it for granted, believe me, I born in other country and I travel the world.

And the fact that we have the ability to have everything in public records or to use some kind of software like famous, PropStream Batch Lead on the multifamily sector, you have Costar and of course Rionomy and LoopNet and Craxy. So I came I’m only looking for where is the motivation? Like where is the blood, like a shark smelling a blood, right? Yeah. So the biggest motivation.

In today’s market, it’s especially in the multifamily, if people not aware, in the single family sector, you have an option that most people does, it’s a fixed rate. Meaning for twenty five to thirty years, whatever you lock the rate now, that will be your rate. So if you bought something in two to three percent four years ago, amazing, right? You’re never gonna you’re never gonna refinance even because why would you refinance in seven percent when you’re locked in, right?

Right. But in the multifamily sector, this is a lot of mistake people do, they don’t prepare themselves. It’s most of the time five to seven to ten years a adjustable rate mortgage, ARM or ARM as we call it in the US, meaning your rate will adjust every five, seven to ten years based on the plan you got to today market. So what happened

And this is where the blood is or the motivation is. It’s people, remember the corona time, twenty one. You have sixty people across any multifamily or single family waiting online and bid higher. Why they did it? Not because the price was lower, because the money was free. To get two to four percent, you don’t care to make another hundred thousand dollar higher offer because monthly wide it’s nothing. Right.

But what happened to those people, and I see a lot of articles, I it’s gonna be a lot of foreclosure. Maybe not a crisis. I don’t know, I’m not a prophet, but definitely it’s already happened. A lot of foreclosure because of those reasons. Now, when people took between twenty to twenty two these COVID rates it were between zero to four percent, now the bank knocking literally on your door

And said, I have a I have a friendly reminder for you, sir. In sixty days, you’re at seven percent, or seven point two, or seven point five, or six point seven five, or six point five if you’re lucky.

So what it means, now you didn’t raise your rent enough. And even if you did, we experienced especially in the class C to C minus area, give or take, and also in the B, because of cost of living, actually, especially where I invest in Florida and other places, the rent’s going down.

Going up. Yep. The tomato costs three times more in publics. People feel it. Okay? So now the bank knock on your door and said, by the way, just hypothetically, now you’re paying two thousand dollars or three thousand dollars if you have ten to twenty dollars your PITI. Now it’s six thousand. Your DSCR, your ratio become negative and it’s okay. But now as the bank you need to give me half a million dollars.

I’m like, what the hell? Well, gonna bring half a million dollar. Or even worse, how do I call Dylan as my LP, my investor, and sell Dylan, I’m a good guy. I didn’t trick anyone, but this is reality. Dylan, I need from you and from Joe and from Moses a hundred thousand dollars each, or we’re going to foreclosure. And this is the opportunity for us as entrepreneurs. You can track down through reonomy or public records people who took their

mortgages on multifamily between twenty two and twenty two, ’cause now the bank the bank neck on our knock on our doors and this is the people I will call to. Another opportunity that I see, you see the days on the market, both for single family or multifamily are way, longer. Yeah. Because of the rates. How can I buy something from Dylan even if you give me a good price, if after I’m paying seven percent rate, my cash flow is negative.

So now you need to be either come with cash and make a and make a lower offer. Okay? And as I tell to my student, the most important thing in real estate or any sales business, but let’s talk real estate, it’s follow up. See, start with the start with the long days on the market, call them first and go higher, okay? And be relentless on your follow up. People who’s gonna say no now.

gonna say maybe ninety days and gonna say yes to any scenario in one hundred and fifty days.

Dylan Silver (08:14)

Yeah, because there’s blood in the water at that point. I wanna touch on something you mentioned earlier. th this idea of these arm notes, these arm loans that have ballooned and now people are paying double or sometimes more their initial mortgage payment on these multifamily properties. We’re seeing in real time, right? We’re talking it’s September in twenty six that today, that

People are having to figure this out in real time. And we were talking in the green room, are we gonna see a wave of foreclosures or are people gonna work things out with the banks? But then also you have this other element, which is people will seize this opportunity. And you will as well, as someone in that spot. When you insert yourself into a deal, are you talking with the bank that is going to or does now own this property because they foreclosed it?

On it or are you talking with the owner as they’re trying to sort through what do they do next?

Eran Reizer (09:11)

That’s that that’s a great question. because everything is in public record or through softwares. So you have two options and you can combine both of them. Okay, you have option number one, do direct to seller. Okay, you can just go wide and call anyone you want, or you can choose a motivation like pre-foreclosure, like people who took mortgages, like a high equity, okay, or maybe low equity, but the rate gonna change. So this is where I see the opportunity. I give you an example,

Even if we go to the single family section to explain people about what happened in the economy. For example, in Florida, there is certain places that call South West Florida, which is I don’t know if people want to know, like Fort Myers, Leah’s and the surrounding, which a lot of big builders, small me small builders and medium builders went like crazy because the cost of the lot

was so cheap and it’s still Florida. Okay? It cost way cheaper than Austin, Texas to be in the middle. And it’s still Florida. Nice palm trees, nice weather. Yes, everybody wants to live here. That’s true. They see the potential and they bid like crazy. But they took construction loan, okay, in lower in lower rate and then the rate goes up, And now their buyers, the end buyers cannot afford it. So they were s they still stuck.

With a huge inventory, building like Lenar can sell the property and they have the best prices per square foot because of their abilities and the scale and everything, right? So now you can go by the way to Dallas or to Southwest Florida and buy a freaking three two to four three with a quarter acre with the canal view. They started five hundred, now you can find them at two hundred eighty to three twenty.

Dylan Silver (10:47)

Crazy.

Eran Reizer (10:48)

So now it’s actually for me.

As an entrepreneur, it’s even it’s even why would I even build? I can buy I can buy it. I can buy it and wait for the equity. So we need to understand each market where is the opportunity. Now people are bleeding, contractors, owners. But I need to ask myself as an entrepreneur or an investor if I know how to handle it when I’m buying it. Because it’s gonna happen to me too. Cause if I’m now so

Other option is to really I really advise people to learn from me or any kind of mentors that they feel like the creative finance deal. Because now it’s even more than ever than people are stuck. Yeah. And you can come with a solution as creative finance instead of someone going to foreclosure, not only is gonna go to foreclosure, he’s gonna get some money from day one, then losing everything, but now he’s gonna make money.

without the headache of the of the tenants, the plumbing, the roofs, the code enforcement and the tenants. So this is where I put my focus on those three on those three issues. Like if you want to be if you want to buy something quality, go to the new build, the very distress, make your five, six percent, but the equity will come one day, even if it’s gonna take time. But you’re gonna have a quality product. You’re gonna have new plumbing, new roof.

Great neighborhoods. Okay, so the capprate will be more stabilized than to buy something in a v in a war zone which is ten, twelve percent on Excel, but in real life with all the issues and the nineteen eight nineteen eight built, like in the Midwest that I’m b that I’m buying a lot, so the challenges, it’s gonna go down to four, five, six percent anyway because of those issues. So new construction, like don’t build. Buy it from the

Builders, they’re also gonna give you amazing incense incentive. This is true. Okay? I’m sure you see it in Austin too. I I’m Go to the people that took mortgages in multifamily at the COVID, because now it’s time for them to lose or bring money from their pocket and s one of those will happen. Okay, and creative finance. That’s what I put my three things to focus on.

Dylan Silver (12:53)

We were talking in the green room as well about property management, right? And how this becomes a serious point of pain and distress for operators, even if the property itself, the bones, might be in not the worst condition or might be in good condition. All different asset classes and grades of properties can become distressed by the management. And certainly when we talk multifamily, with the way these large

properties with b a hundred or more tenants or maybe hundreds of tenants can function, that can become a serious pain point, especially when there is competition. where I’m licensed in Texas, you see places that will literally pay peop pay tenants to move in. So they’re offering concessions and a Visa or Amazon gift card to move in, why would I stay in the place right now where the rent’s too high, right?

Eran Reizer (13:44)

Right. You actually mentioned maybe one of the most important points that people don’t talk about enough and they’re not educated sorry, not educated enough there may be students when you are mentor. And I realize through the years, by the way, my wife Sivan, she’s a property management. We have our own property management in South Florida, a little bit in South West Center, and also Tampa Bay area. We come we came from Tampa Bay, not born and raised but

We started away in Tampa Bay and now we live in South Florida. And when I started my real estate academy, I said, what’s really important? Because I see all those people learning real estate. And I I I was a student myself. Some of my mentors were great, some less, but it’s okay. It’s put me in this position, even in even when I didn’t like the course. But it makes me at this point. But I thought myself.

How can help people in a better way? Because I see so many people lose money in real estate and it’s okay. But I don’t think they understand the process and the step prioritize. Avalogic told us through the years that what’s important if I if I if I stop a guy in this in the street and I tell him, Hey, sir man, what is the most important thing in real estate? What are they gonna say? Location, location, location.

Dylan Silver (14:51)

Yep.

Eran Reizer (14:51)

Other person like Rich Dad Poor Dad.

by buy cheap set I this is not a mistake that’s obvious and today it’s even easier to learn it because we have all this technology and jet chat GPT which I didn’t have when I started in 2010. I realize today that real estate it’s not walls it’s not corporate okay it’s people and people don’t realize it when I teach my student today what’s the first step?

They’re in shock a bit. Could be starting for other from other people think it’s the last step and teaching them that this is the first step. What’s gonna indicate in 100% or at least majority of cases, if not all of them, how much profit you’re gonna make, okay? Or how or how much you’re gonna lose, unfortunately? It’s gonna be two factors your contractors.

Slash maintenance guy, whatever, in the contract in the contractor business sector. And most important, after you buy, the way you manage your property, is your property management.

Dylan Silver (15:49)

Yeah, absolutely.

Eran Reizer (15:50)

Like when I go into a room and every time I ask people, are you happy with your property management? 99% says no. Okay? Because nobody will manage it like yourself. Because nobody has the best interests. At the same time, let’s be honest.

Most of the investors or entrepreneurs they hire property management, they don’t manage them. They think you have property manager, now you have a cash car, you have an ATM. No, real estate its tenants, it’s maintenance, it’s mold, it’s rats, it’s raccoons, it’s everything. It’s fires. So it’s a lot of things, but not passive. So I’m teaching people that you need to manage.

your property management. You need to understand where your money goes. You need to know if there is doubt. There is no doubt. If you have certainty or uncertainty on your property management, you need to fire them immediately. And people are scared. I live in San Diego. I have 50 properties in whatever in savannah what I’m gonna do now don’t be scared

You’re in a way better position than I was or my parents were when we didn’t have technology. You give them a notice and you look for other you look for other. But you need to know how to interview a property management. We have we have a set of twenty plus questions. You don’t just hire anyone. And who’s gonna promise you they’re gonna be better? No one. It’s part of real life business. But you need to focus on two major factors that gonna indicate if you’re gonna lose or make money. Contractors

And property managers. And you it just came across my mind, how do I find good deals?

Dylan Silver (17:21)

Yeah.

Eran Reizer (17:21)

Call property managers. Because if they’re gonna tell you, so they manage now let’s say 50 pro 50 multifamily in Ohio, and you tell them, Can I ask how much is the vacancy? Yes, only twenty only twenty are rented. Somebody’s losing a lot of money if twenty is rented out of fifty, right? Yeah my vacancy.

Also, property manager, if we if we talk about this, when you really want to understand how the what’s the market, and people make these mistakes, they to zillotorent.com, these are great tools that give you an indication, but it’s not rented. If you really want to know what’s the vacancy, if an area is very bad, high crime, call to a property manager, at least three of them, when you’re new to the market. Because they’re gonna tell you the truth. They’re gonna tell you.

Hey, in this pro in this area you have high vacancy. Hey, it’s a lot of crime. Or in addition, you can take from them information. Sometimes the property management, one of my best deals, I call a property manager and I told him, Hey Joe, why do you have so much vacancy and it’s for a year? Because I know he’s a good property manager. So he told me I run. I hate to say it, but the owner is a slumrod. He’s cheap. You don’t want to fix nothing. So it’s hard to rent.

So now I know I haven’t I have an opportunity. I called I called actually the seller and I made one of the best deals of my life. So you need to be creative in today’s marketing or in any market, but today you need to be way more creative and understand what the blood is and focus on who’s gonna manage your property or manage it yourself if you can.

Dylan Silver (18:47)

you mentioned screening the property managers and you mentioned a set of questions that you ask in order to ensure that you’re bringing on the right people. I wanna talk about what happens next. Once you have a new property manager in place, you mentioned managing them on a on a granular level here, Eran, without maybe giving away all of the gold here. What does that look like? What does managing the property manager look like?

Eran Reizer (19:12)

That’s a really, good question I don’t put enough intention to it. I give you an example, whether if it’s my wife or not. My wife specializes in asset management. What it means in multifamily, it’s common when you have a GP and LP, right? Okay. And you can either if you are one of the GP, you either manage it yourself, but sometimes I give you an example. We have twenty four units in a Savannah Georgia that we bought three to four years ago.

Okay. And my wife was in asset management. So she actually need to find the renovation crew. Okay. Then she needs to find a property management. And we actually fired the first one. Okay? So it’s critical in a multifamily that you have an asset management because an asset management have the best interest for the company only.

That’s what she’s hired for. And sometimes the asset manager, it’s one of the GPs. So of course she. But how it looks in real life, you need someone that goes over the monthly report. That understands real estate and ma and many maintenance. It’s not anyone. That once you see, hey, I see an ongoing plumbing issue. Why? To call the property manager. Why we have an ongoing issue? Why you didn’t tell me after two times?

I prefer to spend now five thousand dollars than to make a plaster of eight hundred dollars each time and eventually do the five thousand. Right, And this is critical because whoever control the expenses control the profit or loss. A good asset management, whether if it’s you or some on your BF, his job is to focus on monitor where the loss are too big or where can you imp

improved by value add or by getting a new property management. Okay? So it’s very critical that on a weekly or a monthly basis, someone on your BF gonna be on top of the property management. Because management company, even the best one, they’re not gonna negotiate for you. They’re gonna work with their vendors and they’re not gonna negotiate, they’re not gonna bring other vendors, and that’s okay. That’s the business model.

I’m a property manager myself, my wife, we have company. But we’re trying to be unique by taking decision from an investment point of view, investor point of view, and not a property manager point of view. Okay? So it’s very important that you have an asset management or do it yourself. And every month make a call on every quarter, jump on a call with them. Hey guys, what’s going on? How can we improve this, and this?

let’s prepare for the winter time. In the Midwest. Florida, we don’t have this issue as much as the Midwest. In the Midwest, people don’t buy and don’t rent when it’s super freezing. So let’s prepare for it. Let’s maybe make a let’s make a special. One of the other things that people in real estate don’t do, especially beginners. I called to my friends someday and said, Hey, what’s going on with your house in Tampa? run, it’s vacant for three months. Why? Is the property look like hell?

No, it’s actually brand new. So why? I don’t know. No. Every seven to ten days set the expectation. Set the expectation with the property management. Every seven to ten days I want to report how many people see it. What was their feedback? I will lower the rent. I prefer to lower the rent by twenty five to fifty bucks a month and rent it fast than lose fifteen hundred a month. Right. Right? Right.

You need to not take granted your property management. You need to manage them on the dot. If not, this is where people lose money, because the expenses have become crazy.

Dylan Silver (22:28)

heard folks who are multifamily operators and syndicators say often that it’s challenging to make money as a property manager, as a standalone business, that property management is a tough business. agree or disagree with that.

Eran Reizer (22:43)

From the point of view of a of a management company.

Dylan Silver (22:46)

Right.

Eran Reizer (22:47)

Okay, I think if you’re transparent, you can make you can make a lot of money. First of all, the business model is amazing. Because the amount of expenses and marketing, it’s not a lot. people open a restaurant, it can take them three years to make the first bucks, right? And they need to invest like a million dollars into it. So there is there is pros and challenging. I’m not even gonna say the word cons because

It’s up to you how does your mindset work. So I’m telling you what. If you charge fifteen percent on top of every maintenance call, your bread, your money is not from the eight to ten percent. Eight to ten percent goes to their operation. But you have to make money. So I’m choosing the transparent and honesty way, because it’s my reputation, to tell people, hey, I’m gonna fight for every dime and every decision I’m gonna make is gonna be.

Like it was my property. Okay? My vendors are vendors work with me 15 years and they give me the best prices. So I’m gonna charge 15% on top of it. But when it comes to AC, when it comes to roofs, when it comes to I don’t know, the major stuff, I’m not gonna charge nothing. Okay, so you make first of all it’s have to work on quantity. I think if you if your vision and your strategy to manage less than 400 dollars

Don’t do it. But beside the factor of the money, you need to know who you are as a person, as a property manager, operator. I’ll give you an example. I make it in a funny way. I tell people before I before I manage property, meanwhile, I have started, we didn’t know nothing from s from scratch. I have a long hair. Look at me now. This is a life of property management. Okay? That’s why I decided

I will be the marketing guy. I will be the sales guy. But I never, be involved in the business itself. It’s not good for my peace of mind. In a property management, unfortunately, this is real life. You are the bad guy. You’re always the bad guy. There is no good scenarios. What is your days? Tenants complaining, maintenance issue, and

the property owners that you need to expand and why it costs why they think it costs so much. You need to have the right character, you need to have the ability to see it from above, and your job that you committed to yourself is solving problems and deal most of the time with unpleasant scenarios. Don’t open it, don’t open a property management at the beginning if you need to be involved in this. If you need to be involved in this.

Make sure you have the right character for it. If not, either be like a CEO type and let people do this job.

Dylan Silver (25:09)

Yeah, I mean that’s some great points, right? And I’m thinking about this out

the tenants coming to you with issues that they need to solve immediately because it’s impacting the quality of life. The investor is coming to you saying, Why did this cost so much? And you’re there dealing in real time with something that’s got a time deadline that no one’s happy with, and that’s every day, right? You’re not exactly getting gifts at your door from anybody saying, thank you so much for being, the person that I go to lodge my complaints.

And so it i it it’s challenging, right? You have to understand that every day is gonna be a new problem. You’ve gotta be level headed. And frankly, a lot of people aren’t great at that, right? And so you mentioned, having to either be the person at the top or, be prepared to do it yourself. And that that’s a great point. We are coming up on time here though, Eran. I know that you have an academy. We were talking about that in the green room, but also anything you’d like to mention directly to our audience.

Eran Reizer (26:42)

Yes, if I need to summarize especially people who thinking about starting real estate, I want you to understand that real estate if you if you will be an active investor or slash entrepreneur, first of all you need to ask yourself who you are. Okay? There is a huge difference between investor and entrepreneur. Entrepreneur is active, okay? He’s buying the deal, he needs to find the right crew, which is very challenging, okay? He needs to manage it or manage the property management. This is gonna be

Is a profession, real estate. Okay? If you don’t want to go this route, so the different the big difference to summarize between an entrepreneur or an active investor to a passive investor, a passive investor and ask him ask himself one simple question. How much? be part of syndication, right? Be part of a group. Don’t be involved if you don’t have the character or you have a nine to five jobs that it’s great.

Or you’re CEO of an IT company and you just want to relay money. Who you are. But if you want to have to be an entrepreneur, understand what you’re getting into. It’s a great life. I do it with a lot of passion, but it comes with challenges. To be a re to be an active investor slash entrepreneur, you need to be the guy who solves problems. And to understand, to take decision when you make less money or lose money, that it’s okay. You need to mentality.

Which I didn’t have at the beginning, I took it very hard to move on to the next one. Okay? And the most important thing, generally speaking, I just will break a meat for you. Like I said in the beginning, the most important thing gonna be who’s managing your property or are you managing your property, whatever you choose, and who’s gonna be your conduct or maintenance guy. Focus on those two and you have less stress in life, better results.

and higher income or higher profit. Remember, who’s gonna manage your property or how to manage your property and who’s gonna be your crew and boots on the ground. If you gonna build this in the right way, you’re gonna have way more opportunity and you’re gonna make way more money and less stress.

Dylan Silver (28:33)

Eran, thank you so much for joining us today. Thank you for your time.

Eran Reizer (28:37)

Thank you, man. I appreciate it.