Happy New Year to you and your loved ones! 

It’s hard to believe we’re now five years removed from the onset of the COVID-19 pandemic. Time has flown by, and the world has changed profoundly since then. This period of rapid societal change has brought its share of challenges—but also countless opportunities.

As we step into 2025, we’re excited to share that we’ll be attending the annual NMHC conference in Las Vegas at the end of the month. If you’re planning to attend, we’d love to connect! Let’s schedule some time to discuss how we can collaborate and make the most of the opportunities that lie ahead.

Wishing you a prosperous and fulfilling year ahead. We look forward to hearing from you soon!

1. Multifamily Market Update: National and Midwest Trends

The national multifamily market continues to experience pressure from elevated interest rates, tighter lending conditions, and inflationary headwinds. However, demand for rental housing remains robust, driven by affordability challenges in the single-family market and a generational shift toward renting. Key data points include:

• Occupancy Rates: National average remains steady at 94.1%, with the Midwest outperforming at 95.3% in Q4 2024.
• Rent Growth: While rent growth has normalized, secondary markets in the Midwest (like Indianapolis and Louisville) saw a modest 3.5% year-over-year increase, indicating relative stability compared to volatile coastal markets.
• Cap Rates: Compression has eased, but Midwest cap rates remain attractive, averaging 5.7%, creating acquisition opportunities for disciplined investors.

2. The Midwest Advantage: Resilience Amidst Uncertainty

As economic uncertainty lingers, the Midwest is gaining prominence for multifamily investment. The region's strengths include:

• Economic Diversity: Markets like Indianapolis benefit from balanced industry bases, minimizing risk tied to specific sectors.
• Affordability: Housing in the Midwest remains attractive to renters and investors alike, offering a better value proposition than overheated coastal markets.
• Stability: Slower but steady growth shields the region from extreme volatility, making it a haven for conservative investors.
• At CF Capital, our focus on secondary Midwest markets continues to position us for resilience and long-term value creation.

3. Key Priorities for 2025: Positioning for Growth

As we move into the new year, our priorities include:

• Operational Excellence: Enhancing property performance through in-house management initiatives and improved KPIs to drive efficiency and profitability.
• Strategic Acquisitions: Identifying assets with value-add potential and strong fundamentals in high-growth Midwest markets.
• Investor Relations: Upleveling our monthly and quarterly reporting to provide greater clarity, actionable insights, and visual tools to keep you informed and confident in your investments.

Thank You for Your Partnership

Your trust fuels our mission to create long-term value through multifamily real estate. We're excited about the opportunities that lie ahead in 2025 and remain committed to navigating this market with discipline, creativity, and a steadfast focus on returns.

As always, feel free to reach out with any questions or to discuss new opportunities.

Warm regards,
Tyler Chesser & Bryan Flaherty
Co-Founders & Managing Partners, CF Capital