Investing in real estate is the last thing that most people are thinking about right now. homeowners were stung when residential values collapsed. As unemployment rises and consumer spending continues to be weak the commercial market is also full of uncertainty.
Greg Rand, managing partner at Better Homes and Gardens Rand Realty said,”Florida is in a storm right now, it’s overdeveloped, overspeculated and overleveraged.” He has a “house rich” theory to guide investors. If you want to make money in real estate you will have to do extensive research and expect to hold the property for at least a decade. Don’t buy distressed property but “find your Florida” by investing in a hard-hit place that has to rebound.
Is this a once-in-a-generation opportunity to buy property? A good proportion of the 78 million baby boomers expected to retire in the next two decades will want to be someplace warm and sunny so Florida’s prospects are solid.
Hessam Nadji, managing director at Marcus & Millichap, a commercial real estate investment adviser said,”we are now looking at one of those rare opportunities to invest in commercial real estate, there are plenty of properties in the $5 million to $20 million range, whether they’re apartments or shopping centers, that are located in places where supply is constrained.”Nadj also said, “that these properties were for sale now because losses elsewhere were forcing their owners to raise money.”
While many investors may not believe that real estate is returning as a steady,performing asset, Nadji offers the following criteria to guide those ready to re-enter the market.
DUE DILIGENCE Don’t buy your dream home without knowing how its price compared to either historical levels or the prices in nearby neighborhoods.
THE COSTS “Investors need to know how they are going to cover the amount they have to pay, whether the property is rented or not.” There are times when a property may have vacancies and the costs will fall on the investor.
YOUR GOALS “If your goal is to make money now, you will probably have to buy an older property and fix it up. This requires a more active role, and still, the return will not be what it was at the peak.”
THE RISKS “Hard assets like real estate historically do well when there is inflation. The longer your time horizon for investing in property, the better your chance of achieving real returns.”