5 years ago most real estate markets were thriving....all except for one. The commercial multi-family marketplace was taking a major hit. After all, anyone with a pulse could get a loan and purchase a single family home as opposed to renting. Vacancies were at an all-time high and many commercial apartment brokers were forced out of the market.
The recent paradigm shift has created huge opportunities for those who stayed in this segment of the market. As a potential homeowner it is now very difficult to get a loan. People who previously possessed good credit and owned huge homes are now forced to rent due to the loss of an income.
Commercial lenders have closed their wallets, put their feet on their desks, and are playing the waiting game. The commercial sector, has been officially upended. If you question my claims then take a peek at the recent news articles on Inman News or CoStar Group.
Here comes the good news. Huge deals in the apartment arena are taking place every day. Loans are being made and money is flowing....but you still need to be smart. There is no more dumb-money in the market place. Study the demographics of the region in question to make sure that there is a wide spread between the cost to rent and the cost to own. The greater the gap, the lesser the risk.
Opportunities are there. Some need to be created...others are to be found. What opportunities do you see in this coming year?
Warmest wishes,
Tim Bray
B.S. Real Estate & Urban Economics (UConn)
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