When To Take Multifamily Investment Opportunities: Recovery, part 2

Over the last few months I’ve been telling folks that if they wanted to be a genius in 5 years they should take advantage of smart real estate investment opportunities now.  My other refrain is that they were in no danger of profiting from multifamily investments until they take action.  The focus of this article is the fundamental question: “When should I invest in multifamily?”

Just as in nature where Fall is followed by Winter which is in turn followed by Spring, multifamily investment opportunities follow a cycle.  And cities have an investing climate, too.  Las Vegas tends to be real hot or real cold.  The same with Phoenix. A great deal of institutional money is being pumped into those two cities.  The amount of money to be made and risked is much greater than in more moderate investment climates like Portland and Seattle.

RECOVERY

Recovery is to Investing what Spring is to Nature.  They are both about great potential being born.  There’s no guarantee that your garden will grow…but it has the best chance if planted at the proper time.  It’s a great time to invest too.  Many investors sit on the sidelines during the Recovery phase to make sure that things have really hit bottom.  As a result they buy during the Expansion phase and don’t reap all of the rewards that are available for “trigger pullers.”  The Recovery Cycle is characterized by:

  • Decreasing Vacancy Rates
  • Low build rates
  • Moderate absorption
  • Low to moderate employment growth
  • Low to negative rental rate growth
  • LOW prices relative to potential upside

A broad spectrum of investment strategies are viable during Recovery. “Buy and Hold”, Refurbish, Flip, Repurpose, Build and “Convert” all have their place at this time.  Unlike Nature, the Recovery Cycle is not set in the time it will take to move into the next phase, Expansion.  But just as we know the rains of Spring will yield eventually to the sunshine of Summer, so shall Recovery turn into expansion.

NEXT POST: We’ll cover the attributes of the Expansion Phase of the investment cycle.

More posts in our Timing Your Multifamily Investment Series:

 

Comments

6 Responses to “When To Take Multifamily Investment Opportunities: Recovery, part 2”
  1. D. Lindahl says:

    I love your series on the cycles of investment. Your comparing them to seasons of the year is spot on!

Trackbacks

Check out what others are saying about this post...
  1. […] When To Make Multifamily Investments-Recovery-Part 2 of a series […]

  2. […] When to Make Multifamily Investments – Recovery – Part 2 of a series […]

  3. […] When to Make Multifamily Investments – Recovery – Part 2 of a series […]

  4. […] When to Make Multifamily Investments – Recovery – Part 2 of a series […]

  5. […] When To Make Multifamily Investments-Recovery-Part 2 of a series […]



Leave a Comment

*