For every boom, there’s a bust. In most cases, those periods of decline are caused by broader economic factors. However, apartment owners can risk hastening their downfall if the market turns sour. How? By committing one of the Seven Deadly Sins. Translated into multifamily terms, the missteps of greed, wrath, sloth, lust, pride, envy, and gluttony usually result from one activity: Overreaching when times appear too good to be true. And that’s exactly the environment we are in now. Perhaps you’ve already sinned by spending too much on a portfolio or starting too many projects. Whatever the case, there’s a reason these sins are dangerous—they can lead to the demise of even the largest and most noteworthy companies. “When everyone says the same thing, you better watch out,” says Grant Montgomery, a vice president at Alexandria, Va.–based research firm Delta Associates.
True, some of these sins aren’t fatal. In a rising market, apartment owners can recover (and actually profit) from overleveraging themselves on their own assets or buying too much at too high of a price. The market provides a safety net. But when things stop, the trap door to hell opens very quickly, and the flames are hot.
Whatever the sin, this special report looks at how you may be putting yourself at risk when the market turns without some moderation. Take heed.