We think it’s a great time to invest in multifamily and other income producing commercial real estate. While interest rates remain below their historical averages, it affords the owner and investors a unique opportunity for positive leverage, and thus better than usual cash flow returns. The key is to choose the right assets within areas that we believe have good long-term demographic trends.
Typically, for short-term holds (2-4 years), we look toward a “value-add” opportunity to cure physical and economic problems at the building level. For longer-term holds (5-10 years), we look to both the building and the growth trends of the immediate sub-market, for signs of long-term growth and stability.
Work Force or blue-collar housing is our sweet spot because it tends to have fewer rental dips in down markets, assuming a solid sub-market from the beginning. We also acquire nice “Class A” and “Class B” assets that we typically like to hold for longer-term cash flow and appreciation.