Recession, depression, crisis, downturn, uncertainty, crash, burst: These are just some of the words often associated with a period of decreased economic activity.

An economic downturn refers to a prolonged period of time wherein a decline in economic activity results in the decreased value of assets. Downturns come from a known set of market data and involve unpredictability and difficulty in assessing future economic conditions. [1][2]

Economic downturns or recessions impact real estate as they can lead residents to seek more affordable housing, shifting demand toward certain asset classes or submarkets. [3] This article will provide mitigation strategies to combat the risks of economic downturns in multifamily real estate.

UTILITY & SCARCITY

A property’s survival amid an economic downturn depends on its ability to leverage its utility and scarcity—two foundational value drivers. Utility and scarcity heavily impact value fundamentals in multifamily real estate. Utility refers to the property’s ability to satisfy a future owner’s desires and needs, while scarcity represents the finite supply of competing properties. [4] Together, these two factors affect the value of a property. [1] Leveraging one’s utility in multifamily real estate can be as simple as market research or as complex as visualizing what isn’t directly in front of you. 

For example,  looking for emerging markets or up-and-coming areas rather than established ones could position sponsors/operators to achieve their desired stabilized yield on cost (YOC), a metric based on the net operating income (NOI), once the asset stabilizes and all the asset management initiatives succeed. [5]

Scarcity can benefit multifamily real estate owners/operators. However, investors should understand that deliveries and unit starts are vastly different. Deliveries represent completed properties available for occupancy, while unit starts are construction projects underway. In multifamily real estate, each unit within the property receives a unit start date. 

So, developers might have a lot of deliveries today, but shovels in the ground or shovel-ready projects are very low; this points to the potential for solid apartment fundamentals as a slowdown in future supply leads to tighter market conditions in coming years. In other words, shovels in the ground today can improve supply and demand dynamics in the future. Focusing on value fundamentals like utility and scarcity in multifamily real estate could reward the property’s overall return, equity multiple, and occupancy rates. [1]

JOINT VENTURES

One potential strategy is to pursue joint venture development deals in markets where unit starts pale compared to unit deliveries. A joint venture development deal is a partnership between either investors or sponsors and developers sharing resources, risks, and rewards. By investing in an institutional development product with a nationally recognized developer in a prime location with steady base fundamentals and where each partner adheres to disciplined investment criteria, exit strategies can be optimal when the project finishes. [1]

CROSSING 5 TOWNS & FLATS: A JOINT VENTURE WITH J.C. HART

BAM Capital heavily vets joint-venture partnerships before entering into business. Cultivated by leadership, its relationships help position BAM Capital with best-in-class opportunities. [6]

BAM Capital has partnered with J.C. Hart to present Crossing 5 Towns & Flats, a single-asset, ground-up development project in Plainfield, Indiana. J.C. Hart’s impressive development track record for Indianapolis projects, local expertise, award-winning floor plans, and generational development experience make this an exciting opportunity for BAM Capital investors. [6]

BAM Capital’s platform gives investors exclusive access to a J.C. Hart development, typically reserved for institutional investors, family, and friends. [6] Click here to learn more about this offering.

BAM Capital is a vertically integrated owner/operator that partners with accredited investors who want to enjoy passive income and all the other benefits of multifamily private placement. As the private equity arm of The BAM Companies, BAM Capital has been focusing on buying the most profitable assets and staying disciplined in its investment thesis. BAM Capital’s investment strategy aims to create forced appreciation while mitigating investor risk. To date, the brand has successfully managed over $1.7 billion in assets across ~9,000 apartment units.

Remember that no investment is risk-free. Before making financial decisions, consult your investment advisor and schedule a call with a BAM Capital investment team member.

Disclaimer: All investments carry risk, including potential loss of capital. This content is for informational purposes only and is not financial, legal, or investment advice, nor an offer or solicitation to buy or sell any security. Consult an independent advisor for personalized guidance and contact BAM Capital for details on current offerings. BAM Capital and its representatives are not fiduciaries or investment advisors. The information provided is general and may not reflect individual financial goals. Any financial terms, projections, or forward-looking statements contained herein are hypothetical in nature and should not be interpreted as guarantees of future performance or safety. Such statements reflect Bam Capital’s opinion and are subject to market fluctuations, economic conditions, and investment risks. Past performance does not predict future results. BAM Capital and its affiliates do not guarantee the accuracy or completeness of this information. Bam Capital offers investment opportunities under Rule 506(c) of Regulation D exclusively for accredited investors as defined by the SEC. Verification of accredited investor status is required prior to participating in any investment.

© 2025 Bam Capital. All rights reserved.

SOURCES:

[1]: BAM Capital. (2025). “Deploying capital in market uncertainty.” https://bamcapital.com/deploying-capital-in-market-uncertainty/ 

[2]: Quinlan School of Business. (n.d.). “Taking stock of market uncertainty.”  https://www.luc.edu/quinlan/whyquinlan/newsevents/archive/taking-stock-of-market-uncertainty.shtml#:~:text=Market%20uncertainty%20is%20when%20investors,volatility%20in%20the%20stock%20market.

[3]: MRI Software. (2024). “Risk management strategies for multifamily property owners.” https://www.mrisoftware.com/blog/risk-management-strategies-for-multifamily-property-owners-and-managers/#:~:text=From%20financial%20uncertainties%20to%20legal%20obligations%20and,ensure%20your%20properties%20remain%20profitable%20and%20secure. 

[4]: Investopedia. (2024). “What You Should Know About Real Estate Valuation.” https://www.investopedia.com/articles/realestate/12/real-estate-valuation.asp

[5]: EiP. (2023). “What is a Yield? Acquisition, Exits, and Stabilised Yields, Excel in Property.” https://www.linkedin.com/pulse/what-yield-acquisition-exit-stabilised-yields-farley-cove/

[6]: BAM Capital. (2025). “Current Offerings.” https://bamcapital.com/crossing-5/