wealth is created during economic downturns, when jobs are scarce and
are afraid to invest.
How can that
be? The reason is
that profit is created
when you buy a property, not when you sell it.
In difficult economic times,
owners default on their mortgages,
businesses fail, and properties are available for discounted prices. Debt is
the reason most of these properties
become available at much lower prices.
For example, in the last two
years, I have seen so many multi-family and
storage properties sell for a fraction of the price that was paid only
years before. The most
is a large apartment complex that sold for $35M in 2005 and was sold by
bank again for $2.5M cash in 2010!
expect the original buyer was a REIT (Real Estate Investment Trust) and
the price was inflated. But,
whoever bought it in 2010 got a great deal!
the multi-family and storage property sector, there were
lots of deals available in 2010 and 2011, but now is a good time to secure
future financial freedom since prices/unit are likely at their
will include diagrams later in
this article. This
segment of income
properties has recovered quickly because of increased demand for rental
due to foreclosures and tightened lending, the down-sizing rental needs
of the aging
baby-boom generation, and the demands of natural population growth.
looking at hundreds of REO multi-family and storage
properties, I am buying
two bank-owned storage facilities in an area with
recent job growth. The
consist of 520 units, built in 2003, located within 20 minutes of each
with a total acquisition price of $1M.
The deal has exciting upside
potential! When I
am able to bring the property to 85% occupancy (the average in
the local market), the property will be worth $2.8M or more. Cash flow is so good,
based on current and
projected future occupancy, I could pay respectable interest on the
pay back the full initial invested amount with additional interest, and
then continue to pay monthly interest
(even though all principal and interest have
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