Everyday I hear about the current and coming issues in the commercial real estate market. The fear of a “double dip,” housing starts are off, the U.S. has been downgraded. Fear can paralyze us quickly. But when I look at the fundamentals of investment property I quickly realize that there’s really never been a better time to buy multifamily apartment buildings. Why the stats telling us to buy these investments are not published as widely as the fear touting is, I don’t know.
So why is it such a good time? It’s a great time because tenancy of apartments is rising and expected to rise for the forseeable future. More people, for a variety of reasons, are moving out of their homes into apartment buildings. Another reason is a combination of very little development combined with obsolescence (apartments being taken off the market). The third factor is the value of debt. With interest rates at an all time low, borrowing is cheap right now. Lastly, inflation is expected when the economy swings back and there is no better hedge against inflation than investment real estate.