Apartment Building Prices to High Today

[Jacob R. Crosby]

In the area I live the apartment building prices have risen dramatically over the past year. We are seeing a leveling off but I’m waiting for them to decrease to a non inflated price. What do you guys recommend in the mean time? I don’t want my capitol to just sit and not earn. Any suggestions would be greatly appreciated! Thank you!

[Tyler Kastelberg]

@Jacob R. Crosby

Jacob: A common and possibly incorrect assumption is that multifamily prices will fall. Throughout the financial crisis, the default rate on multifamily properties was less than 1%. There weren't many folks who had were forced to sell, and prices didn't globally fall. 

Valuations on multifamily property (aka the spread between cap rates and borrowing rates) is currently at record lows. If you want to wait to invest in real estate until valuations are better, consider investing in debt, as it will increase in value as borrowing rates drop (giving you more money to invest into real estate when valuations are better).