These past few months I've been paying particular mind to the inventory of multi-family homes on the market. It's becoming a far different market for investors than it was during the 1999 -2006 years. In 2005 I advised all of my clients holding onto these properties, hoping to achieve further gains, to get out - sell them immediately. Keep in mind that most of these properties were speculative "investments": the monthly incomes were less than the carrying costs. The clients balked at first, feeling that the longer they held on the higher they could sell the properties for. They finally saw the wisdom of not living in a house of cards and sold to other speculators who were not so well advised. The market still went up…for a few months… and then the bottom fell out. My clients still thank me.
Now, we are entering different times. Speculative properties have been sitting vacant or only partly rented for some time and often have fallen into disrepair. But, a new wave of investors are now coming back. Not looking for quick turnarounds or "Flips", these are serious buyers looking for a return on their investment and making sure the cash flow is enough to also improve and maintain the properties.
With inventories high, interest rates lowering and more folks considering renting for various reasons, today's investment buyer is looking for it all: location, price and return. They also want to know where their money is - unlike putting it into some investment fund operated by "Uncle Bernie".
It's time, again, to call some of those old investors… Are you there?
February 12, 2009
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