Multifamily Real Estate Investment or “How Not To Lose $1T In A Day”

Here are some good reasons why multifamily real estate investment is a good strategy for those seeking conservative investment opportunities.

On May 6, 2010 NYSE stock values took a roughly $1,000,000,000,000 (trillion dollar) hit in about 20 minutes. Fortunately we discovered it was only a glitch in the automated trading programming and not a reflection of broader investor sentiment.  Stocks rebounded in short order.

Yesterday, August 8, 2011 it took much longer (all day) for the Dow Jones Industrial Average to drop 635 points, losing 5.6% of it’s value. Again that’s roughly $1,000,000,000,000…a trillion bucks.  Today investors bought back in and the market rebounded, regaining all but a few hundred billion dollars of the past day’s losses. Ouch!

It’s almost like we have our 401K’s and our stock portfolios being tended by a blindfolded drunk careening around.  Hang on, we might make or lose a ton of money.  Now on the more conservative side we have our bond holders.  Yesterday’s close at 2.182% for 10-year Treasuries is scarier in a way than the NYSE: At least with stocks you could make some money. Take a million dollars worth of bonds, pay taxes on the 2% profit and lose 2.7% due to inflation and you’re guaranteed a loss.  Nobody won the Warren Buffet Excellence in Investing Award by only losing .8% a year.

I am not trivializing the large losses of the one group, nor the guaranteed loses of the other.  It’s just that I believe investing in commercial real estate has an answer for each of them.  Over the next few posts I will detail varied multifamily acquisition strategies.  The next in the series is: Multifamily Acquisition Strategies for the Conservative Investor.


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