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Archive for Postive Cash Flow

Per Apartment Realty Advisors, “The markets are now virtually unanimous in announcing the apartment recovery.”

Effective rents are up or not changed in all markets and occupancies have risen in 73% of the markets ARA monitors when compared to last quarter. Just 15 months ago they reported that “23 out of 24 markets had decreasing effective rents” and “occupancies are unchanged.” 

“Existing product offered for sale is bringing many, many qualified offers. More buyers are focused on Year 3 cap rates rather than a going-in target; sort of a replacement for the rent trending dinosaur. Developers, often public REITs with owned land, are targeting new construction in markets like NY, DC and Southern California where acquisition discounts to replacement cost are disappearing.”

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REITs are a surprising bright spot for investors.

The “Traded” REITs referred to in this article have generated stock growth over the past year, as well as current income to investors. The key point made by the article is that the real estate market was not “over built” during this last cycle as a result of construction costs.  Vacancies are up, however, and rental rates are down. Even though investor sentiment is positive, real estate fundamentals have a way to go. When investing in a REIT, one should also look carefully at their strategy, legacy assets (those that they acquired during the height of the cycle), and the composition of their portfolio.

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What to look for when investing

When investing in Retail, particularly single tenant net leased properties, it’s imperative to understand the tenant. Check out this article on Walgreen’s  vs CVS. A lot to learn here. They are also public companies, so you can check out their financials on line. During this economic crises, each of these tenants have fared well. If you own a property where they are the tenant, odds are very high that you have not missed a beat in your cash flow.

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