Apartments Likely to be Disposition Top Heavy

October 22nd, 2009

Multifamily buyers look for more product to come to market over the next year as struggling property owners unload assets.

Apartment deals aren’t for the fainthearted these days. Escalating costs amplified by unrealistic rent expectations are dragging some buyer’s bottom line down like anvils. So they sell, or foreclose.

Coming down the pike, expect more distressed sellers, some with the willingness, or need, to be creative in their financing. This coupled with low interest rates, gives anyone with money sitting on the sideline a great opportunity to buy.

As the economic picture begins to look rosier, expect the transaction pace to increase, and those who purchased during the “down time” will have a very healthy equity position.

So far 2009 has had a total of 1,388 units sold that were considered distressed sales. This gives a total sales price of $15,037,500, with an average per unit price of $10,833.

Even with low occupancies and low income, any savvy investor can see the value in purchase prices this low. As long as the property has core fundamentals in place and there are no major issues, you can increase the value dramatically over a year or two of property management and maintenance. Then when the market turns around, these properties will be sold once again.

Creating the cycle we all know so well.