Is the Time to Buy an Apartment Passed?

[Karen Schimpf]

Do you think it is a good time to buy an apartment building? Or will we see more renters buying homes?   According to Bloomberg 11.3 million renters are competing for 7.3 million units that are affordable to them.  Click here to see the article http://www.bloomberg.com/news/articles/2015-09-21/the-rent-crisis-is-about-to-get-a-lot-worse   What are your thoughts?

[Mike R.]

It depends....I know not that helpful but hear me out

Regional focus 

The Pacific Northwest is experiencingsolid  population growth and that should lead to increasing prices but Seattle area cap rates are not attractive in MHO. Other areas of the country have great cap rates.  South of Chicago (Bradley, monee area ) can see caps that are good but growth prospects are average at best

Valuations

Getting crazy but there are always pockets of value.  For example we're closing on a place with 7.0 cap rate and that is with below market rents and a building in great shape. No work needed !!

Strategy 

Buy and hold approach offers better prospects  given longer term focus but will take longer to find a "deal". A flipper is a tough spot to be in given increasing prices and huge interest in rentals from all the newbies coming to market.  The competition  is only picking up