Whitepapers
A watershed moment
According to Experian’s Hotwise Report which was quoted in the Sunday May 30th Oregonian, the Internet search clicks for “Apartment for Rent” are up 162% from 2 years ago. Visits to real estate for sale websites are down 22%, and visits to home and apartment rental websites are up 45%. These numbers signal a watershed change in the housing industry as a growing number of individuals rent rather than own.
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Local Portland Apartment Market Update
Vacancies have risen from 3.8% to about 6% across the Portland area market, just above the 5% that is considered normal vacancy. The increase in vacancy is largely due to economic uncertainty as more tenants double up and younger individuals stay home longer. This is evidenced by lower vacancies in 3 bedroom apartments. Hardest hit are higher end properties that are now competing with failed condo conversion projects. In previous recessions, Portland has endured much higher vacancies.
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Back to the basics
In today's economic climate we are reassessing risk on nearly every asset type. One of the key reasons we are facing the current economic crisis is because as a society we have forgotten the basics of personal finance and investing. Currently the U.S. Government’s credit rating is being questioned. Even the U.S. government has let go of many sound financial principals in favor of short term gains. Because of this our government’s credit rating is at risk of being downgraded. Going back to the basics is necessary to extricate ourselves from the mess we are in as a nation, and will also allow those with foresight to capitalize on one of the greatest transfers of wealth in recent history.
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An Apartment Building Investment Strategy
With an apartment building investment strategy, it is possible to make a very large profit from one deal. It does, however, require a lot of work and a few years to complete. If you know what you are doing, buying, improving, and then selling an apartment building can be one of the surest ways to make a large profit in real estate. Why? The size of the investment helps. Making a 10% profit on a million-dollar property is more profitable than on a $100,000 house. But it isn't just the size of the deal.
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The Four Engines of Investment Real Estate
As a homeowner you are aware of your home’s increase in value over time due to appreciation. Additionally, the mortgage balance gets paid down and you receive tax benefits by deducting the mortgage interest paid each year. Apartment dwellings give you these same benefits, except the apartment generates income to pay the mortgage, taxes and expenses, and generally gives you income. In addition, they can be depreciated so that you can decrease your personal tax liability when the investment appreciates in value.
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