The great financial crisis resulted in the worst annual performance of the S&P 500 and is a reason many people are looking to guard their wealth and strive toward their financial goals, as well as setting up additional streams of income.
Working for long hours and picking up side gigs is one of the options, but investing in multifamily real estate may also be an attractive and smart solution for busy professionals. Investing in multifamily apartments provides a steady stream of rental income to individuals, along with the potential for appreciation.
In 2023, many factors will make investing in apartments attractive for busy professionals. Though, it may be a tricky task to find a good deal and put all the pieces together. As an example, the high-interest rates created a disconnect between buyers and sellers. To counter high-interest rates, investors can focus on loan assumptions, and fixed-rate debt, and invest in markets with strong rental demand.
Let us look at the ways to counter high-interest rates in 2023!
Creative Deal Structures
Being creative is the key when it comes to finding deals with local real estate agents, brokers, and wholesalers. They provide great leads and help you stay updated on new opportunities as they become available. Additionally, forming relationships with other investors allows you to bring ideas to the table that you may not have considered on your own — such as joint ventures or syndications — which could lead to unique investment opportunities that wouldn’t be available otherwise. Investors who can leverage creative structures like seller financing, loan assumptions, etc will have the advantage in 2023.
It is significant to note that the cost of capital is not limited to loans. Equity structures need to shift as well. Investing in syndications needs cordial relationships with limited partners. Due to current economic conditions, investors may need to expand their sources of capital. Crowdfunding can be one of the options that investors can consider to expand access to capital beyond their close social network.
Risk Mitigation
It’s important to assess the risks involved before getting involved in any real estate opportunity. Risk can be measured by researching the market thoroughly, and understanding the macroeconomics of the metropolitan statistical area (MSA), along with key demographic trends in the submarket.
Certain things to be kept in mind while evaluating a property are rental rates, vacancy rates, and rental trends for properties in the area. It is suggested to take note of all the red flags like high vacancy rates or rapidly declining rental rates and collections issues. To get a clear understanding of the property and market, it is critical to get in touch with a property manager that is an expert in the market that you are looking at. This will help you to devise a business plan to optimize the performance of the property.
A thorough inspection of the property will help you to understand any potential repair costs or renovations that may be necessary down the road. It is important to consult team members like attorneys, contractors, and insurance agents to help you protect the investment in the event that an unforeseen issue arises.
If floating rate debt is used for an investment property, making a mistake with any of the aforementioned topics could be costly.
Conclusion
At the end of the day, only you can determine whether real estate investing is right for you. As a starting point, think through your personal circumstances and the aforementioned considerations. Know that every investment strategy will be different, that each investment strategy has its own pros/cons, and that all investing carries a risk so as you continue to gauge whether you should invest in real estate, do your proper due diligence.
Investing in Real Estate comes with several advantages. Navigating the real estate investing process can be difficult, but you do not have to do it alone. We are here to help.
Recently we invited David Lindahl to talk about “The emerging markets outlook for 2023” on the Cash Flow Champs Real Estate Podcast. In this episode, you can learn about the new market conditions affecting the acquisition process, the emerging markets, the ways to overcome the challenges you face, and many more.
Watch the full episode here- https://youtu.be/TgdKd1kBHfM
How You Can Get in On the Action
Cash Flow Champs is a privately held investment company that focuses on acquiring and managing opportunistic and value-add multifamily real estate properties. The company specializes in repositioning well-located assets in emerging markets surrounded by positive demand drivers such as population growth and job growth.
Cash Flow Champs partners with entrepreneurs and busy working professionals interested in investing in real estate but who lack the time to navigate the process. Alongside our partners, we aim to bridge purpose and profits in a manner that allows us to improve the lives of the residents in our communities and the neighborhoods where we operate.
In the words of Robert Kiyosaki, the poor and the middle-class work for money. The rich have money work for them. If you are an individual that wants to build and maintain generational wealth through real estate, all while making a positive impact on the lives of residents and the communities where you invest, we’d love to explore opportunities for synergies.
Schedule a brief call with us so we can get to know you better, understand your life goals, and to determine where synergies may exist.
This information presented on this site is for informational purposes only and does not constitute an offer or solicitation to sell shares or securities in the company or any related or associated company and is not a recommendation to pursue a specific investment opportunity. Any such offer or solicitation will be made only by means of the company’s confidential Offering Memorandum and in accordance with the terms of all applicable securities laws and other laws.
