There's still reason for a positive outlook as we watch the stock market rise and fall like a gut-wrenching roller coaster and Americans hold their breath as they lose and re-gain millions in their stock portfolios. Never have I been so glad about my own diversified real estate investments as I have been during this time of economic crisis. The Marcus & Millichap Research Department has recently released an Economic Outlook report explaining what has happened to our nation's economy, and what impact these changes are likely to have on apartment investors. Please request your copy by phone or email.
Queen Anne and Magnolia Apartments Continue to Be Safe and Attractive Investment Although Price Growth Has Stagnated and May Fall
The good news for Queen Anne and Magnolia apartment owners is that Seattle's in-city apartment sector should remain well-protected, even in the face of falling employment rates. High gas prices and short commutes will help keep rental locations close to the city in high demand. However, we likely won't see the same 8% annual rent increases we've enjoyed for the past few years and vacancies are starting to rise toward a (still low) 3% vacancy rate.
The period of euphoria that our real estate market experienced through the 2005 run-up has ground to a halt, and values have stabilized. Many savvy investors are taking advantage of this "breather" and "flight to safety" in the real estate market place to sell or refinance their buildings, and take some money off of the table. They are then poised with cash available, to take advantage of the opportunistic marketplace we are now experiencing.
Great Opportunities Available in the Marketplace to Exchange into Investment Property with More Cash Flow, Less Management, and More Appreciation
There are a lot of great buys availble locally and nationally, and your Seattle branch of Marcus & Millichap is closing deals left and right. We have hundreds of great listings right now including a Walgreens in Shoreline, government-leased Social Security Administration buildings, established mini-storage facilities, and free-standing fast food restaurants like KFC, Taco Bell, Pizza Hut, and Wendy's (by the way, inexpensive chains like these are expected to do very well in a period where families have less money available for expensive restaurant dining). We also have performing apartment buildings and a few turn-around opportunities from condo conversions that were unable to sell their units when the market shifted.
Evalute Your Property Regularly To Ensure Your Portfolio Continues to Perform At The Highest Level Possible For Years To Come
If you haven't taken the opportunity to look at your property's value lately, this would be a great time to do so. We forecast rising vacancy, stalled rents, rising cap rates and stable/falling prices. When our clients ask us when to sell, we respond, "If you're thinking about selling any time in the next five years, you should seriously consider selling now, rather than let your equity sit dead in a property with weak appreciation, while the market softens further."
Whether you plan to sell in the next five years or hold your property long term, I would be happy to talk with you about the performance of your building in today's marketplace. Re-examining rents, prices, and your return on equity is a great way to give your property a "financial check up" and make sure that your real estate portfolio continues to thrive, not just survive, during the current economic gyrations.
Warmly,
Emily Cressey
P.S. To request your complimentary Property Check-Up, or get your copy of our Economic Outlook Report, please call 206-826-5760.
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