What do the latest roundup of statistics and trends mean for multifamily property investors?
The U.S. real estate industry is seeing a series of dramatic pivots all converging at the same time. Most are predictable steps in historically proven housing cycles, others represent changes according to larger macro trends, that make things a little different this time around.
So what do multifamily real estate investors need to be clued in on as we move into the fourth quarter?
It’s a Great Time to…
It’s becoming a prime time to sell for many multifamily apartment building owners. Those that have held onto their properties for a while now have less competition from distressed foreclosures and REO. At the same time UT San Diego reports the top ten markets in the country seeing property appreciation jumping 14 to 40% for the 12 months to August, 2013. Simultaneously interest rates are on the rise.
This makes for the best conditions many owners have seen for selling in almost a decade, and when taking cap rates into consideration; perhaps the best time in the next decade to come.
It’s still a sweet time to be a landlord to though. Experts consider this a ‘landlord’s market’; with low vacancies and rising rents. With a large percentage of the next generation of what are normally first time home buyers being priced out of the market, or simply turned off from homeownership expect these trends to continue in the same direction.
However, still being on the front end of a new upward cycle with plenty of growth on the horizon and interest rates still near record lows the timing couldn’t be better to buy for many other commercial real estate investors. Returns look great right now, but those in acquisition mode should also see their total returns gradually increasing over the next 10 years too.
Mad Money Searching for a Home
Despite the fact that conventional home loan underwriting is still ridiculously constrictive there is currently a ludicrous amount of capital eagerly seeking to be loaned to investors for commercial real estate deals.
From established commercial mortgage lenders to new shops and giant hedge funds multiple sources of financing are virtually trampling on each other to put their capital in investors’ hands.
This means plenty of liquidity on attractive terms for those seeking to utilize leverage.
Surprisingly, it Pays to…
At the height of the previous U.S. property boom and for many during the beginning of the downturn there was a big rush to try and save money by going the DIY route and shunning professional help.
Real estate professionals have constantly come up with many arguments to why their services are so essential and valuable from liability protection to increasing net proceeds from investments. Still, in the past little research was done to back this up in black and white, or to put a solid dollar figure on it. At least until now…
According to new statistics published in the Wall Street Journal it doesn’t just pay to use a real estate professional, but using a veteran pro can be even more profitable. The numbers show that licensed veteran professionals sell properties 32% faster and for 12.4% (or an average of $25,000) more; easily more than covering their own compensation.
Clearly the same applies to using third party professionals for property management too. So whether you are selling, buying, leasing out or holding multifamily property today, take another look at the numbers and in addition to all of the side benefits you could find your net returns dramatically higher from enrolling pro help.