In this issue, we share our latest view on the apartment market, highlight Harbour Lake, a Charleston acquisition where Steadfast is adding an affordability structure, feature a new investor resource on the tax advantages of direct apartment investing, and more behind the scenes.
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What’s Happening in the Apartment Market?
The Math Is Tough Due to Debt Costs
The apartment market is moving from excess supply toward rebalancing, but the recovery is taking time. CoStar reports that national deliveries exceeded absorption over the past 12 months, keeping vacancy elevated and pushing the potential for a broader recovery further into 2027.
Rent growth remains limited. Asking rents are close to flat, and effective rents are softer once concessions are included. In many markets, owners are protecting occupancy first by using free rent, selective pricing, and slower rent increases.
The cost of debt remains a central underwriting constraint. As seen in the chart above, the 10-year Treasury has stayed elevated, which is keeping long-term apartment financing expensive. Because many fixed-rate apartment loans are influenced by longer-term rates, a Fed rate cut alone would not automatically move the needle. What matters more is whether the all-in cost of debt falls low enough relative to a property’s cap rate to create positive leverage.
What does this mean for Investors? Conventional acquisitions are difficult to underwrite today unless the purchase price reflects current income, current financing costs, and the time needed for recent supply to be absorbed. Steadfast continues to evaluate select submarkets in places such as San Antonio, Nashville, and Knoxville, where we believe long-term demand drivers remain favorable, even though near-term rent growth can vary by market and supply conditions. Our team is focused on assets where the cap rate and current income can support today’s debt costs, effective rents support the business plan, and the acquisition basis is meaningfully below replacement cost. Until more deals meet that standard, we are staying patient, focused on operational efficiency and asset management, while allowing the market time to absorb recent supply.
Harbour Lake offers a useful look at how Steadfast approaches unique multifamily opportunities. The Charleston property is being transitioned through an affordability structure, creating a path that ties housing need, tax treatment, financing, and operations together to solve a distressed situation.
📈 Residences at Salado: Scores High on Inspection
Steadfast acquired Residences at Salado as a rehabilitation opportunity, with the goal of improving the property’s physical condition, resident experience, and operating performance. The property recently scored 96.52 on its National Standards for the Physical Inspection of Real Estate inspection, or NSPIRE, a strong result on HUD’s 0–100 physical inspection scale. The score reflects measurable progress at the property level and is consistent with the capital work and day-to-day operating discipline underway at the community.
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Your Resources Hub
🔎 Resource: Tax Advantages of Apartment Investing
Several investors have asked how taxes are handled in direct multifamily investing, so we created a new FAQ to explain the basics. The guide covers:
How depreciation may reduce taxable income reported from a property
When cost segregation may accelerate depreciation into earlier years
Why many private multifamily investors receive a K-1
How passive loss rules can affect when reported losses may be used
Why 1031 exchange availability depends on the structure and timing of a specific offering
The FAQ is educational only. Investors should review their personal tax situation with their CPA or tax advisor. The goal is to give investors and their advisors a clearer starting point for understanding tax considerations before reviewing any multifamily opportunity.
Live Offering
Current investors in Estraya received their quarterly cash distribution on April 30th, reflecting a 6.5% annualized cash yield.
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This email is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities. Any securities offerings will be made only to persons who are verified as Accredited Investors, pursuant to Regulation D, Rule 506(c), of the Securities Act of 1933, as amended, and only through the delivery of definitive offering documents, including a Private Placement Memorandum. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. Forward-looking statements contained herein are not guarantees of future performance and involve risks and uncertainties that may cause actual results to differ materially. Prospective investors should consult their legal, tax, and financial advisors before making any investment decision. Steadfast Direct is the business name used by Steadfast Investment Management LLC.
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