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Beating a down housing market
Even tough markets can open the door to real estate opportunities -- the key is to find ways to hedge your investment.
For instance, real estate professionals say that as markets dip, multifamily properties can become more profitable due to increased demand for rentals.
Indeed, for the past five years, the fastest-growing segment of the apartment rental market has been households making $50,000 per year or more, according to the Urban Land Institute.
"As the economy slows, families often downsize from a single-family home or townhome to an apartment to better manage their budget," explains Scott Casselman, co-chair of the Coldwell Banker Commercial Multifamily Group. "That creates opportunity for multifamily apartment owners."
But what about when markets turn back around? Casselman says multifamily owners are still covered.
"When the economy takes off, people tend to upgrade their lifestyle, allowing real estate developers to reposition older apartments and increase rents or build new apartments with higher rents," he says.
He offers these tips for investing in multifamily properties:
Location, location, location
The old adage remains true, but that's not to say you can only buy within a certain location of a city. Rather, buy within an area or submarket in which you (or your management company) feel comfortable operating.
Management matters
The most important part of the equation for a multifamily investment is asset management and specifically the on-site property manager. Provide the property manager leeway to make operational decisions to be successful.
Make money on the buy
You can make money by buying distressed assets, caring for them and then selling at market rate. You are also providing a service to the community by cleaning up properties that are undermanaged and have significant deferred maintenance.
Casselman also has tips for condo owners concerned about the fate of their investment. He says to not panic and to come up with selling incentives rather than dropping your price. "Offer lowest-price guarantee to reduce buyer's remorse," he says.
Finally, if you did make a mistake in buying a property, don't be afraid to admit it, as that can cost you more in the long run. Instead, seek a professional multifamily adviser who has a track record for solving your specific circumstance.
-- Courtesy NAPSI
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