For Valentine’s Day we thought we’d muse on why the right real estate is easy to love.
Of course, the operative word is “right” … as in Mr. or Miss “Right” …
… because anyone who’s been in a bad relationship knows it’s hard to have the right relationship with the wrong person.
And the same is true with real estate.
Right now, stock investors are realizing their investment vehicle of choice is a little bi-polar. When it’s good, it’s great. But when it’s not … watch out below!
As we’ve already noted, we view the volatile stock market as a wonderful gift.
And while we don’t want to judge anyone else’s relationship … for us, it refreshes our love affair with the right real estate.
So let’s take a look at some clues in the news about where we might find the right real estate.
Retail vs Industrial vs Multi-Family
As is often the case, the flip-side of a problem is an opportunity. In the case of the allegedly Amazon fueled retail apocalypse, the flip-side winner is industrial.
In fact, this NREI Online article reports on their survey of commercial real estate investors … and some interesting points are raised …
“ … the industrial sector is giving multi-family a run for its money.”
“ … whether it comes to occupancy rates, rents or even cap rates, sentiment has improved …”
“A majority [of respondents] think [the expansion cycle] will last more than a year …”
Now if you’re not a commercial property investor (yet) … there’s still useful insights here for you too.
For residential real estate investors … both single- and multi-family … it’s smart to pay attention to the flow of industrial and office investment.
After all, your residential tenants need places to work.
So when you see capital flowing into industrial and office properties, it can be a good sign for local area employment.
The survey also found …
“… a majority of respondents (64 percent) said warehouse / distribution facilities in traditional locations would be most in demand going forward.”
And quoting one of the respondents …
“E-commerce has resulted in changes to product shipment from distribution centers, as opposed to from retailers.”
These surveys are interesting because they represent fairly current viewpoints of marketplace actors. These aren’t economists, researchers, or academics.
The respondents are the people with the checkbooks … who are deciding whether and where they’ll invest … or not.
So it’s one thing to listen to experts speculate on what decision-makers will do … and another to hear directly from market participants.
It’s just another of the MANY reasons why we attend live conferences where we can have “man in the market” conversations …
… often with people who have no marketing agenda … and are willing talk candidly about what they’re doing and why. Those conversations are gold.
While far from scientific, it’s a great way to get a sense of a market, sector, or demographic … and affirm whether or not some pundit’s prediction has any real-world validity.
As e-commerce changes how retail businesses operate, their landlords feel the pain too.
But as the retail business shifts from walk-in to delivery service … while challenging for mall operators, it means a big boom for distribution …
.. .and the markets, properties, and jobs that make distribution happen.
We’ve been longtime fans of distribution towns like Memphis and Dallas for this reason.
Other great things about distribution include the creation of working class jobs (great for tenants), in relatively affordable areas (better ROI on properties).
And those jobs are impossible to offshore because the work needs to be done near the consumers.
Of course, we hope President Trump’s pledge to bring manufacturing back to the United States works out “bigly”.
So we’re watching for the revival of rust-belt markets. If we see commercial money move in, then residential is probably not too far behind.
But until manufacturing brings the front-end jobs back to the U.S., distribution is the other end of the supply chain.
After all, when all the stuff made in China and Mexico arrives in the United States, it needs to be distributed to the local consumers.
Commercial Investing … Not Just for the Rich
If you’ve ever gone shopping for a warehouse, big apartment complex, or mobile home park, you probably noticed they’re a little pricey.
But you don’t need to feel left out.
The secret to going bigger is syndication. It’s a way to take your real estate investing hobby and turn it into a full-time enterprise … with a lot of upside.
It’s not as complicated as it seems because you can even hire the experts and mentors you need in whatever niche you choose.
We’ve seen many mom-and-pop investors build big multi-million-dollar portfolios simply by sharing their deals with private investors.
Of course, the other side of the opportunity is to be one of those “silent partners” in a syndicated deal.
So we created the Investor Registry to help private investors find the kind of opportunities they’re interested in.
Looking for Mr. (or Miss) Good Deal
Only the older folks will have any idea what that means … but everyone who’s ever date to find a good match knows it can be a minefield.
And yet, almost everyone does it anyway.
We realize the urge to invest isn’t as compelling as … well, you know …
But the point is there’s some work to do to find the investment markets, sectors, and opportunities best for you. No one can do it for you … and it won’t happen by itself.
But like true love … when you find it, it’s awesome and totally worth the effort.
Until next time … good investing!
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