The multifamily market has faced substantial headwinds in the last few years. From high interest rates to record new construction deliveries, some investors have found it challenging to make the numbers pencil for acquisitions. CWS Capital Partners, however, says that a targeted strategy is the key to navigating uncertainty in the market.
The company is actively acquiring select properties adding to its portfolio of 30,000 units under management, and expanding its investment platform. Gary Carmell, partner, and Marcus Lam, vice president of Investments, say that the firm's use of 1031 exchanges to raise capital and its "sharp shooter" focus on well-located high-quality assets has helped the company seize on compelling investment opportunities.
Navigating Multifamily Headwinds
Although the multifamily market is seeing its fair share of challenges, CWS Capital Partners believes that therein also lies opportunity. Carmell says that a targeted strategy prioritizing the right properties will ensure the company can continue to acquire more assets this year.
"We have a sharpshooter strategy," he says. "While there are still some operational headwinds and a little bit more stress and ultimately distress in the market, we're really trying to buy properties with a healthy margin of safety so that if our assumptions proved to be maybe a little too rosy early on, we still have a comfortable investment basis and cash flow margin."
And they are acquiring. The firm recently bought three properties in Houston and Austin.
CWS's strategy favors suburban Texas markets in Austin, Dallas, Fort Worth, Houston and San Antonio. They also like markets in Phoenix, Charlotte and Raleigh, N.C., Atlanta and Nashville. "Our strategy focuses on buying good quality assets at a good price and without a lot of execution risk," adds Lam.
Expanding Capital Access
CWS has taken an innovative approach to capital raising by utilizing 1031 exchanges. Lam notes that a successful 1031 exchange demands specialized expertise and coordination. CWS works with existing property owners who want to sell and transition out of the operational side of the business.
"A lot of our clients come to us because they have highly appreciated real estate that they do not want to manage anymore," explains Lam. "By these investors taking on a more passive management role, CWS can take over the day-to-day operations and provide them mailbox income from the properties." The 1031 exchange strategy also employs a selective, precision-driven mentality, according to Lam. "There is definitely a skill required in executing a 1031 exchange in a property that you know has a good likelihood of doing well."
Looking further ahead into 2026, the firm is looking to expand its capabilities and capital access. It will be pursuing opportunity zone fund deals in addition to its core strategy of using 1031 exchange capital. CWS is also preparing to launch a private investment vehicle to be offered under Rule 506(c) of Regulation D.
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Disclosure
References to prospective investment vehicles are provided solely for informational purposes and do not constitute an offer to sell or solicitation of an offer to purchase securities.
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