Multifamily Investing: The Dangers Of Getting Caught In Trends
It’s trendy to talk about trends in apartment design, real estate technology, and new construction though there can be costly dangers of getting too fixated on trending topics too.
We frequently cover multifamily trends, new green building features, technology, positioning like coliving and even what’s fashionable in design. All of this has potential value. Some of these factors can add a lot of marketing appeal. Others may genuinely help improve efficiency and investment performance. Some are truly good for the environment, local communities and residents, as well as investors.
However, trends fade and change. They are changing faster than ever. Watch your investment. Especially when there are any signs of potential softness coming to the real estate market.
The truth is that many ‘upgrades’ or ‘improvements’ may add very little tangible value. Many are destined to lose money. This is even more important in slower economic times. Times when renters can have very different priorities. They may prioritize affordability, ease, and speed of moving in and application qualifications.
Getting too caught up in being trendy may erode your flexibility to deliver on those things if you spent too much on the wrong things at the wrong time. Or if your floor plans rapidly become undesirable.
While we hope for an exciting 2019 and 2020 for the multifamily space, yet, bread and butter rental apartments that are well managed in good locations may be the trend more investors should be looking at. What’s sexiest, and never goes out of fashion is assets where the numbers work, units are full, the cash flow is coming in, and returns are consistent.
Don’t confuse your multifamily investments with decorating your own custom dream home or even flexing your artistic skill in a new luxury condo development for sale. There are nice to have, and must-haves. Know the difference. Add those when you can, but don’t hurt your bottom line in the process.
Remember why you are investing. Make sure you are investing in alignment with those ultimate goals.
ABOUT THE AUTHOR
Bill Zahller is the Managing Partner of Park Capital Partners, LLC and resides in Asheville, NC. As a Multifamily Real Estate Investor and Syndicator, he founded Park Capital Partners, LLC in 2016 after 14 years involvement in real estate investment. He works with accredited investors and professionals who are interested in real estate investment, diversification, and financial freedom.
Bill has been flying since high school. His father was a Naval Aviator and Captain for TWA. Bill has been flying professionally for over 25 years, 23 of those at his current company. He has accumulated over 12,000 hours and 7 Jet type ratings. He has also held Instructor, IOE Instructor and NRFO pilot positions with a large fractional flight company. He is currently flying the Global 6000 in a long range mission capacity. This keeps it interesting – one week its Beijing or Sydney; the next Rio or Rome.
Bill is also the founder of the Asheville Multifamily Investor Club. Visit www.ParkCapitalPartnersLLC.com for more information.