"Never interfere with an enemey who is in the process of committing suicide." - Napoleon Bonaparte (1768-1821)
This is a good quote today because so many deals were done over the past few years that really made no sense. We knew that and stayed away and now the problems are coming to a head. Unsold condos, short term loans that can't be refinanced and increased cap rates on properties are just a few issues we will see for the next few years. These will be excellent buying opportunities for us.
These times are very similar to the early 90s when I first started in the apartment business. No one wanted to be in the real estate business at that time. Sellers were taking significant losses on their sales and there were few buyers out competing for the properties. These are the times when you want to be a buyer.
Also, with new more conservative lending criteria novice landlords will have a difficult time financing deals. And with no subprime financing our resident base that was leaving in droves to find the so called "American Dream" will now be required to save untill they have a substantial (20%) down payment. This means longer term residents and higher occupancy rates for our properties.
Income based buying (our model) is going to be the only option for the next few years. Our buying opportunities look good but we must also be cautious. No one knows how big this problem is or when the real estate recovery may start.
Nickolas W. Jekogian
917 763 3500
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