Welcome to Apartment Building Trader

Will slashing interest rates really stimulate the market? We have witnessed it devaluize our dollar, but not do much for the market. In fact, the week that rates were cut, lenders did not pass on those savings to consumers.

With creative loans a thing of the past i.e. tighter loan restrictions, the pool of qualified buyers has shrunk. Prices have yet been reduced to a point where the average person can afford to buy. Therefore, the only direction that makes sense is down!

The key word Bernanke used after cutting interest rates was, “price correction.” That is exactly what we are seeing, a price correction. The inflated values that were placed upon homes due to “no money down loans” and speculators, are now returning to a normal state. Until prices become more reasonable, I do not foresee the market picking up.

Nonetheless, in any market both Sellers and Buyers exist. It is those individuals that live within their means that are able to build wealth and own real estate. Those who attempt to take on too much and do not have the reserves to weather a storm, should one present itself, are the individuals who find themselves in difficult situations.

On the other specturm, owners of multi-family property are reaping the benefits of the current market. High prices and tight restrictions force people to rent, while foreclosesures and Condo-conversions have displaced occupants. The vacancy rate in Los Angeles is lower than ever and the cost to rent has continued to increase. Multi-family owners are in a great position.

Despite all this negative talk about the market, when put into perspective the market is not that gloom. Interest rates remain at a historic low, vacancy rates are at an all time low, and sellers are becoming more reasonable. If you can afford to get into the multi-family sector, NOW is the time. Multi-family is 5 units and above. It usually requires more money down than single-family (one to four units) approx. 35% down as an average, depending on how much income the building is producing.

For more information on Multi-Family investing, please contact us.

This entry was posted on Wednesday, October 3rd, 2007 at 9:24 am and is filed under Commercial Real Estate. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.