Apartment Investing – Expect Turbulence
In times of turbulence, apartment investors, just like all investors question where is the market heading? Is it time to hold ‘em or fold ‘em? The answer is, it depends. Read on to see if it’s time for a strategic portfolio review, divestiture or acquisition.
There is over 100+ years of collective apartment leadership at Better World Properties LLC and the Better World Companies including apartment property management, multifamily deal structure, apartment operations, apartment financing solutions and multifamily asset management. The team has weathered a variety of formidable storms including the savings and loan crisis, dot.com bubble, a worldwide credit crisis, multiple Category 4 hurricanes, war, terrorism, oil crises and a global pandemic.
One thing that has stayed steady throughout all of these turbulent times is investors continued to invest in apartments.
Stay The Course
When we remain calm in the midst of chaos, and we stay the course, the longer-term view evens out short-term volatility. Trying to time the investment market can be fleeting. When we do our professional apartment due diligence correctly, we find that the deal is often made on the buy. Prudent multifamily portfolios are further enhanced by strategic asset improvements that meet market demand without exceeding return on investment objectives. Herein, lies the art of successful apartment investing.
Professional apartment property management helps to remove the emotional component that can often hinder apartment ownership. There is a delicate balance to successful property management, multifamily asset management, cash flow, ROI and the human touch.
Throughout all of the ups and down of the past several decades, we have found these principles of apartment investing continue to prove valuable.
- Diversify your apartment portfolio among quality multifamily properties.
Select an appropriate mix of quality apartment properties rather than guesstimating which one may perform the best. Consider including multiple asset classes and laddering your apartment portfolio for strategic growth. Create a partnership with an experienced operations partner to help guide restructuring, refinancing, bridge loans, and asset improvements.
- Review your apartment portfolio regularly.
It’s important to review apartment operations and rebalance multifamily portfolios when appropriate. Markets and demographics change. Competition changes demand. Regulations affecting the apartment industry can add to operating costs. Staying invested doesn’t mean being frozen in fear. It means staying informed. Regular apartment portfolio maintenance helps to keep the apartment portfolio objectives from veering off course from long-term financial goals.
- Stay invested.
Prepare to stay invested as other investment markets become more volatile. Stocks go up and down. The good thing about real estate is, you can physically stand on it. People need roofs over their heads and a sense of community, especially during volatile times. Actively monitoring demographics and market data helps to understand where the multifamily market and submarkets are trending. This is where professional apartment property management far outshines DYI.
- Avoid falling in love with a single apartment property.
An investment is not necessarily meant for a lifetime. If equity is large and the submarket is trending out of favor, a divestiture may be in the cards. If tough times force changes of competition ownership, being in the know in opportunistic markets with an ear to the ground gets you to the front of the acquisition line. Sometimes, who you know in the apartment industry is a good thing to know.
Buy-and-hold is a simple strategy and works for some, but it’s not always easy to execute. It means staying invested when the headlines scream “RUN!” and you can’t sleep at night. It means letting go of those residents who have been part of your community where you invested sweat equity. This is when professional apartment property management helps separate fear and emotion from educated investment decisions.
We are inarguably experiencing unprecedented times right now. For some, this this presents new challenges. For others, there are new investment opportunities to be uncovered. Can you identify the differences in the submarkets? Do you have access to Tier 1 and Tier 2 investment data? A level head, a trusted operating partnership and a strategic plan that is revisited on a regular basis is where long apartment investing success is found.
Is It Time for Strategic Planning in Your Apartment Portfolio?
Let’s walk through your existing strategic plan and see where we can find hidden value and add higher returns to your apartment portfolio’s bottom line. No strategic plan in place? It’s time to create one.
Give us a call. Better yet come visit. We’ll pour some sweet tea and chat while practicing social distancing. We love to make it a better world and we love to talk apartments.
Your Better World Properties LLC Team