Posted on 04/16/2023 4:17:12 PM PDT by CFW
Big money investors pumped billions into buying up apartment buildings in the pandemic era.
The deals were often based on the assumption that rents would continue to increase.
But rents are flatlining and expenses are increasing, leaving landlords to face big losses.
While offices have been going through a paradigmatic shift as more workers do their jobs remotely, apartment buildings have experienced robust demand from tenants.
But fault lines have emerged for investors who paid top dollar for assets that depended on substantial rent increases and persistent low interest rates to achieve profitability.
Those kinds of optimistic projections became increasingly necessary in the booming markets of 2021 and 2022, when investors grew voracious for apartment-building acquisitions, boosting competition and prices. In those years, investors purchased $355.5 billion and $299.2 billion worth of apartment buildings, according to MSCI — unprecedented sums that far surpassed the previous $194 billion record of multifamily sales in 2019.
"To win a deal in that hypercompetitive market, investors needed to make ambitious predictions how they could grow rents and control expenses," said Will Mathews, a mutlifamily-investment-sales broker at Colliers. "What they've found is that rents have plateaued or have even come down in some markets and expenses have skyrocketed."
(Excerpt) Read more at finance.yahoo.com ...
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“...apartment buildings have experienced robust demand from tenants.”
Mandatory Section-8 Housing in currently nice neighborhoods in Blue Cities and Towns.
Illegals.
Anyone who invested in rent apartments because of what happened during the pandemic should have their heads examined.
People often do things well after the economic justification for them has passed. It’s how bubbles sometimes happen.
In every economic decline or stress, you learn who know what they are doing - and who was just along for the ride up.
Money transfers then, from weak hands to strong hands.
“Illegals”
Correct. I suspect government NGOs or firms such as Blackrock will buy these vacant apartment buildings and then charge the tax-payers to house illegals. More and more Americans will end up homeless as all available housing goes to illegal aliens.
I think BlackRock will definitely step in to buy it up.
Everything you need to know about BlackRock, the company that owns the world
https://freerepublic.com/focus/f-news/4146074/posts
“Money transfers then, from weak hands to strong hands.”
Yes, it’s always worked that way. Hubby and I have always tried to position ourselves to where we could manage to ride an an emergency for a year, or at least six months. Also, there are deals that can be made during emergencies that five years down the line will have a great return on investment. However, it depends a lot on the type of investment and what type of emergency is occurring. The uncertainty on all fronts right now has us about ready to go into “hunker down” mode.
No pity whatsoever.
The landlords don’t have to worry. Millions of “new people” are slipping across our wide open border. They’ll need somewhere to live and Fedgov will gladly pay whatever the landlord has the guts to ask for.
How easy was it to evict someone during the pandemic? I’ve heard different things. There was a moratorium, but then the landlord had to evict for something besides nonpayment of rent. I’m not sure how easy that was.
I’m glad I got out of the rental business before the pandemic started.
Never count on “good times” lasting.
I looked into Section 8 and decided against it. As far as I could tell, you get what the government decides to pay you after their inspection.
We only have 7 units 3 of which are being currently rehabbed. We bought the last two for 11K and 4K. But we are in NYS and the tenants are entitled, emboldened via the eviction moratoriums and litigious. Takes about 2 months to find a decent, stable tenant. The vast majority are bums.
I looked into Section 8 and decided against it. As far as I could tell, you get what the government decides to pay you after their inspection.
For you the smallholding citizen, yes, you have to obey the rules. They’ll do anything for the illegals, the rules and law be damned. They’ll use leftist NGO’s as fronts and the big corps and municipal housing authorities will be in on it.
How could they afford to do that when a lot of them weren’t getting rent from their tenants because of the rent moratorium by the government?
While at the same time governments are doing their best to make eviction illegal.
“How easy was it to evict someone during the pandemic? “
I’ve heard it was nigh on impossible. Tenants were given extensions and chance after chance to clear back rent or resolve problems with the landlord.
Location, Location, Location.
From Indiana to GA, FL and TX there is a housing shortage ad landlords can expect relatively low overhead and profit.
In many other markets the lack of job creation results in the lack of home buyes....meaning unemployed renters. And those who do pay the rent are moving to metro Atlanta......
And nobody is facilitating their education to economic reality.
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