Tuesday, November 27, 2012
The old adage, "Don't wait to buy real estate, buy real estate and wait" is very true today as it was when it was first spoken by the great guru of real estate Donald Trump (actually probably not him, maybe Warren Buffett, or perhaps it was Joe Blow - this part is not relevant!)
There are a crazy number of private equity funds, family trusts with lots of cash, hedge funds and single investors in the marketplace looking for that bank owned, 12% cap rate deal in the best of the best neighborhoods with stable cash flow and a corporate 10+ year lease. This asset does not define the word "distressed". It is also non existant.
What is available are stabalized apartment deals with 6% cap rates in decent neighborhoods that you can finance with 4% money. Positive leverage all over those numbers.
Also, think about 1031 exchanges of high equity properties that have a low rate of return. Get that equity working again. A single family home rental with a 3% cap rate can be sold and traded into the 6% cap rate apartment building just mentioned. You get more tax sheltering with additional depreciation and added leverage too.
And in non-residential investments:
1. Single Tenant NNN deals with strong tenants and 6%+ cap rates
2. Neighborhood strip centers with 7% cap rates - this add diversity of tenants and invests in stable mom and pop businesses that tend to stay well occupied.
3. Do you own a business? Time to use amazing SBA financing and buy your own space.
4. And there are more - talk to us about all the options.
The actual topic of this post is this: It never seems like an amazing deal today. Next year you will look back and be very happy.
Let's talk options now.