Vivek Singh, Singh Properties, Talks Knowing How to Spot a Downturn at CapRE’s NJ Apartment Summit
by Josh Anderson
NEWARK, NJ – One of the most promising and welcome aspects of any conversation about New Jersey multi-family real estate has got to be the localness of it all. No matter how big or brassy the high rises across the Garden State get, you can’t get too deep into a discussion without touching upon one of the local families who have been instrumental in creating the skyline of today. And more often than not, the stories of those families start off twenty years ago or more. That’s why CapRE invited Vivek Singh, Principal at Singh Properties to the New Jersey Apartment Summit and asked him to share how his family’s firm got to where it is today, as well as where they came from. Below is a snippet of the Q&A Singh provided to the gathering of 400+ New Jersey insiders.
Brian Klebash, CEO & Founder, CapRE:: Tell us about the total portfolio now. What do you have in development right now?
Singh: We own a few hundred units. We have one property remaining in Union City. Union City I’m not very fond of, which I’m sure many investors are not. We are going to leave that municipality. We have some in Hoboken. We have condos and multi-family there and in Weehawken as well. But Bayonne and Jersey City, predominantly Jersey City, that is where we primarily will be focused. The smaller municipalities are not operating, I don’t think, at the same professional level that Jersey City does. Jersey City is an easier place to do business. There’s more development.
Klebash: Tell us about the growth over the last five years. You’ve been a net buyer in the last five years but you stopped buying a couple of years ago?
Singh: Right. We stopped buying. There were several indicators that led us to stop buying. So we were very active probably seven years ago to four years ago. We are very strategic on what we buy now. When the prices were escalating, when the interest rates were rising, we saw our lenders becoming more conservative. Unaffordability of homes across the county. There were several indicators that led us to think a downturn was coming.
I think that, [when it comes to] investment in Jersey City, these are multi-year, multi-million dollar projects that span several years. They have that, in addition to local lenders, moderating the pace of growth. They have a stabilizing effect and I think they’ve not allowed so much over-development that a downturn has come.
And several years ago, we were starting to see the fixers and the flippers come into the market. We were seeing a lot of capital chasing every project. There was a time you were looking at properties and there were fifty people looking. We don’t get involved in those types of transactions. That was indicating to us that a lot of people are not sophisticated. They have that fear of missing out, and they’ve missed out, so they’re coming in, they’re driving up basis. We’re generally low-basis buyers.
I think that’s what led us to the slow-down on the attrition side, including the fact that rental rates had been flat for the last three years. So, that combined basically tells us that at the price on a per-basis, per-unit, for the most part, they’re not making financial sense for us.
For more coverage of this panel, check out an earlier CapRE Insider Report: Up-Close with Vivek Singh, Singh Properties: Reflections on a Success 25+ Years in the Making