There’s no doubt that improvements in the long term fundamentals for multifamily investments have made them the darlings of commercial real estate. I was talking yesterday with a researcher at REIS, one of the nation’s most respected real estate tracking firms. His company is predicting the East Portland and Gresham submarkets apartment values to increase by a minimum of 4% a year for years to come. To my delight Portland multifamily investments are starting to thrive. But it goes much further than that. I’ve recently been contacted by several investors who have been notably successful in other investment arenas who are looking at multifamily as a vehicle for future equity expansion. One felt that it would be hard to maintain the pace of growth he had enjoyed in the stock market and was looking for another venue. I think the stability of
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multifamily was enticing as well. I often tell people that real estate never went down by a trillion dollars in twenty minutes like it did May 6th of 2010…but I digress. Another investor who was heavily invested in bonds asked me for some guidance on what he could expect from multifamily investments. He was concerned that his current yield of 2.95% (annually, not monthly) would more than be eaten up between taxes and inflation.
I realize that these are just two datapoints…but I think they are emblematic of a trend I have been expecting for some time. There’s something like $6 trillion in IRAs and 401Ks…and much of it can be used for real estate investing without creating a taxable event. Yes, its important to have the proper professional advice to prevent constructive reciept of the funds. These new multifamily investors are savvy businessmen and women, but they have not been thoroughly exposed to multifamily investment fundamentals. In order to give them the service they deserve I plan on reviewing real estate investing fundamentals over the next few posts, with a focus on apartments.
NEXT: When to buy from a historical perspective.
More posts in our Timing Your Multifamily Investment Series:
- When To Make Multifamily Investments-Recovery-Part 2 of a series
- When To Make Multifamily Investments-Expansion-Part 3 of a series
- When To Make Multifamily Investments-Hypersupply-Part 4 of a series
- When To Make Multifamily Investments-Recession-Part 5 of a series
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