Maturing Loans Are Pushing Texas Multifamily Assets to Sell Below Market

Written by:

Alejandra Rodriguez

Date:

12 Aug 2026

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For much of 2023 and 2024, Texas multifamily operators were fighting a war of attrition; new supply flooded Sun Belt markets, concessions became standard practice, and occupancy rates slipped across the board. Now, as that supply wave recedes and short-term loans originated in 2021 and 2022 reach maturity, a different dynamic is emerging: lender-owned assets are hitting the market at steep discounts, and operators positioned to buy are finding pricing they haven’t seen in years.

“We bought a property where the lender was really who we were negotiating with,” says Arleen Garza, Co-Founder & Principal of REEP Equity, a vertically integrated multifamily firm based in San Antonio that operates exclusively in Texas. “We were able to buy it for the loan balance, which means you bought it at a much lower price, a 25- 35% discount to the market.”

The Supply Correction Is Already Underway

The oversupply that pressured Texas multifamily markets is correcting faster than many anticipated. New multifamily construction dropped 71% in 2025, according to Garza, meaning the pipeline of competing units is thinning considerably. Debt originations for multifamily were up 46% year over year in the first quarter of 2026, a signal that lenders are actively seeking to place capital in the sector again after pulling back.

The combination matters for pricing. Properties financed with short-term debt three years ago are now facing loan maturities that lenders are unwilling to extend further. “Lenders are really getting serious about it,” Garza says. “We’re seeing a lot of these come to market at lower prices.”

The firm underwrote over 400 transactions sent by commercial brokers last year and closed two acquisitions. One was a property previously purchased for $21 million that REEP acquired for the loan balance of $15.9 million.

Why the Four Major Texas Metros Aren’t Moving in Lockstep

A common mistake, Garza argues, is treating Texas as a single multifamily market. The four major metros – Dallas-Fort Worth, Houston, San Antonio, and Austin – are at different stages of recovery. Dallas-Fort Worth and Houston, with their larger apartment inventories, are further along in stabilizing occupancy and pricing. Austin and San Antonio are still working through excess supply.

That divergence is shaping acquisition strategy across the state. REEP Equity currently owns roughly 4,400 units across San Antonio, Houston, and Austin, and is now looking at Dallas-Fort Worth specifically because of discounted pricing on distressed assets there. “DFW alone ranks number one in job creation, adding 650,000 jobs over the last two years,” Garza notes.

Together, the four metros are projected to grow to over 35 million residents and house over 70% of the state’s population, a concentration that explains why operators with a Texas-only thesis remain committed to the state.

What’s Cooling and What’s Not

The luxury Class A segment is where the oversupply problem is most acute. Those properties, built in large numbers during the development boom, are still offering concessions to fill units. Garza says 89% of institutional investors are looking at adding senior housing to their portfolios, driven by demographics as the boomer population ages. Workforce housing – properties built in the 1980s through late 1990s serving teachers, police officers, and similar renters – faces less direct competition from new construction and benefits from a structural gap between renting and owning.

That gap is currently around 35%, meaning it costs roughly 35% more to pay a mortgage than to rent an apartment in these markets, according to Garza. “That’s what’s keeping more people as renters,” she says.

The firm also tracks new construction within a five-mile radius of any acquisition target, treating forward-looking supply data as more important than backward-looking rent growth figures. “Rents will grow, but rent growth is backward-looking,” Garza explains. “Supply data and new construction are forward-looking.”

How Value-Add Works at Scale

Operators pursuing distressed workforce housing rely on a predictable set of levers to create value after acquisition. REEP Equity’s model depends on vertical integration, owning and managing every property in-house. That control allows the firm to renegotiate vendor contracts immediately upon acquisition, typically producing 14 to 17% savings on services like trash and pest control by leveraging scale across its portfolio. Properties acquired at low occupancy – sometimes in the mid-70s – are driven to 92 or 93% through an in-house marketing and leasing operation.

Physical improvements focus on curb appeal and amenities: fitness centers, dog parks, and business offices where residents who work remotely can go to work outside their apartments. The goal is to make the property competitive with other options in the area at a rent level workforce tenants can afford.

The firm has taken 12 properties full cycle, producing a 2.0x net equity multiple for investors across those exits. Garza describes the current market as a buyer’s market but expects it to shift within a defined window. “Once these assets are sold, I think we’ll see a different market in the next two years, where it’ll be a much stronger market if we decide we want to sell some assets that hopefully we buy today at a lower price.”

For investors evaluating Texas multifamily now, the calculus is straightforward: the supply correction is underway, lender-owned inventory is creating entry points well below replacement cost, and the window is defined by how quickly that distressed inventory clears. Operators buying today at 25 to 35% discounts are positioning for a market that, according to Garza, will look materially different within two years.

About the Expert: Arleen Garza is the Founder of REEP Equity, a vertically integrated multifamily firm based in San Antonio that operates exclusively in Texas, with approximately 4,400 units across San Antonio, Houston, and Austin.

This article is based on information provided by the expert source cited above. It is intended for general informational purposes only and does not constitute legal, financial, or real estate advice. Readers should conduct their own research and consult qualified professionals before making any real estate or financial decisions.