Tens of billions of dollars are going up for grabs for Massachusetts real estate investors looking to make new acquisitions. Will you capitalize on the opportunity?
Real estate investors are finding incredible opportunities for reeling in attractive yields and locking in strong equity positions in Massachusetts, especially in Worcester County. However, many have reported growth constrained by liquidity and access to mortgage credit. That now appears to be a problem of the past as new announcements put billions of dollars in working capital in the hands of investors.
Industry experts report that while both residential and commercial real estate have been on fire for the last 18 months, the inventory of attractive investment opportunities in primary markets like Boston have dwindled. According to a CCIM Institute report on ‘Small Market Valuations’ this is pushing more to look outward to secondary and tertiary markets where far higher cap rates can be found.
CoStar’s Commercial Repeat Sale Indices show a dramatic uptick in commercial property prices, which is coming in line with residential housing. The indexes for office and multifamily properties grew over 11% year over year as of the end of Q2 2013.
While areas like Worcester County, MA still boast a steady flow of deals coming online the challenge for both residential and commercial investors has been navigating the competition and access to all the capital they’d like to have to strike to lock in the best spreads.
However, last week saw a major pivot for investors as giant hedge funds and private equity firms announced they were making their billions available to smaller investors and investment firms as loans to buy more properties.
Among these fund giants were Blackstone, Colony and Cerberus, which add to the likes of Apollo Financial Group and Vortex which offer funding to investors. While some of these lenders restrict these multimillion dollar loans to commercial real estate investments, others will fund smaller multifamily deals, and those looking to buy distressed properties in bulk and build sizable rental portfolios.
The second beautiful thing about this is it means less competition, as these giants turn to lending instead of bidding directly on properties, which opens up better discounts for small to medium investors.
The only catch here of course is property management. All the stars may be aligned to go big fast, but net returns all come down to execution.
So look into full service property management companies, save on services, reduce time drain on operational tasks, and increase profitability and net returns…