I would like to present to some and introduce to others the Urban Land Institute (ULI). It is widely considered to be the most reputable source of information for real estate investors. Their 72-page report, 2011 Emerging Trends in Real Estate, can be found by following this link: ULI
On page 13 of the report, ULI recommends buying or holding multifamily apartments saying, “rental apartments will outperform everything else. In addition to positive demographic trends, even the dampened recovery and housing market shambles are pluses because more people cannot afford to buy or stay in homes…. and interviewees expect rent spikes by 2012”.
On pages 44 – 45, the authors predict:
- Improving fundamentals with legs at least to mid-decade
- Sellers with established assets can reap big gains. But why sell if you have a good income generator that should improve when the economy gets [back on] track?
- Barrier-to-entry markets, particularly the 24-hour metro areas, offer excellent opportunities
- Value-add investors can boost performance through classic fix-up strategies on older products as markets improve and tenant demand intensifies
Restating ULI’s predictions from an Innercity Landlord perspective would read as follows:
- We’re at the beginning of an upward trend in apartment rents. Fundamentals should be great for the next five years, therefore Innercity Landlords have about five years to improve their properties and transform their neighborhoods so they can exit in a seller’s market. Sidebar: Rents will go up if inflation ticks up. Yesterday, May 20, 2011, Gap Inc. (GPS) shares fell17.5% due to the rising cotton costs. So, NEWS FLASH, we officially have inflation in America – plan accordingly.
- If you own an under-performing multifamily property, you stand a good chance of getting it to cashflow by applying best practices in a strong rental market. In my 16 years of being a landlord, I notice my cashflow grows in proportion to my knowledge and skills. So keep reading our weekly posts; we’re going to round up the best of the “best practices” for you.
- “Barrier-to-entry markets” could mean pricey areas or difficult-to-mange assets located in poorer neighborhoods – otherwise known as domestic emerging markets. In both cases, there is less competition for prized assets.
- We believe the fix-up strategy that includes, the property and neighborhood, is the safest approach to profiting in the upcoming seller’s market.
ULI presents a wealth of guidance and case studies that benefit Innercity Landlords. We’ll highlight other articles that agree or disagree with our philosophy in upcoming months.
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