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Apartment Foreclosure Investing

I have great news. Foreclosure apartment investor extraordinaire, Michal Ballard, is back sharing his wisdom. He’s been extremely busy buying apartments this past year and sees tremendous upside in the apartment investing market. I’ve asked him to write some posts on the opportunities for foreclosure apartment investors for the rest of this year and next. Enjoy! Alexis

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I’ve highlighted a few of the key points from Marcus & Millichap’s Apartment Research Report for 2013. This should convince a lot of aparment investors that are “all in” during this current cycle that they have made a wise choice – and that the their chosen engine of wealth still has a lot of gas left in the tank. Michal

Apartment Research National Report, Marcus & Millichap, 2013

• The housing sector turnaround and a robust increase in residential investment, along with international trade, will support GDP growth of about 2.0 percent in 2013.
• The U.S. has recovered half of the jobs lost since the employment trough, adding 4.5 million jobs since then. Approximately 2.1 million jobs are forecast for 2013, helping reduce the unemployment rate to 7.7 percent in November 2012.
• The alignment of powerful demographic and economic trends continues to fortify nationwide apartment performance, driving the sector into another year of expansion.
• U.S. vacancy should reach 4.3 percent by the end of 2013, resulting in 4.0 to 5.0 percent effective rent growth.
• The oldest echo boomers just turned 28 years old and will create a significant number of households over the next two years. Additional households will form with the arrival of 1.2 million and 1.6 million immigrants annually through 2017.
• Investors will aggressively deploy capital into real estate given the clear guidance of sustained, low treasury rates.
• Underwriting will become increasingly aggressive, with lenders willing to provide construction to permanent loans and flexibility in loan terms, such as recourse that burns off as milestones are achieved. Still, lenders will focus on cash flow rather than value when evaluating investments.
• The operational recovery across a variety of markets and all product tiers will drive investors to explore markets beyond core metros. CMBS originations will be a key source for financing acquisition in higher-yield markets.
• Cap rate compression in secondary markets and for Class B/C assets reflects investor confidence in the sustainability of improved operating fundamentals.

The fact is that this current cycle in the apartment business would make an excellent economics study. Only where you see rampant governmental intervention will you see the market having to work so hard at equilibrating. This is what us non-governmental luddites (sarcasm button) call an opportunity.

At the last Multi-Family Executive conference it was made clear that it will be at least 2 more years until current construction equals the annual increase in rental demand. This will still leave a major gulf in the total number of units demanded and the total units in supply. Good operators buying and operating in this environment should have a much easier time than in any other in memory to significantly increase NOI and asset values.

The other great news is that a lot of the people with money who have been sitting on the sidelines have recognized this and are eager to get some of their money to work in this sector.

While I am tired of the term “Perfect Storm” I am afraid that that overworked term applies here in spades. Happy Investing, Michal Ballard

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Michal will be sharing why he is still very bullish about apartments and is actively investing throughout the US right now. He has made himself available to our clients and will share how you can get started in the lucrative foreclosure aparment business, using outside private investors to fund all your deals… this Wednesday, June 12th, at 6pm Pacific, 9pm Eastern “Earn Huge Profits Investing in Apartment Foreclosures in 2013 and Beyond”.

This is a free event, with limited space, on a highly popular subject. Please register early to secure your seat. More Here.

Apartment Foreclosure Investing