![million-dollar-view-276843_640[1]_opt](http://www.peterharrisrealestate.com/wp-content/uploads/2015/10/million-dollar-view-276843_6401_opt.jpg)
I have coached over 1000 new and experienced investors on apartment deals since I began coaching in 2003. I truly believe that what you teach you become extremely sharp at. Training and coaching apartment investing has truly aided my own investing significantly. The marketplace has altered radically since 2007, but coaching investors are still going solid. For this article, I believe it would be beneficial to share my understandings from a coach’s viewpoint of what apprentices nowadays are doing and what they are up against.
5 Observations I Currently See As a Coach
Observation #1:
From the 10,000 foot level, I see lots of misunderstanding and distress on both sides – sellers and buyers.
The inquiries I get from apprentice investors most frequently are: have we gotten to the bottom yet, what if I purchase and the market crumbles even more, and what is it I should invest in – apts., retail, self-storage, duplex, etc.
Sellers fall into two categories: ones that are doing well and two, ones that are frantic to sell. The ones that are frantic to sell are being guided by brokers who have essentially given up on them. These sellers need imaginative student investors to salvage them! That could be you!
Observation #2:
Banks and loaning institutes are producing the most barriers to getting a deal completed. Enough said on this point.
But truthfully, the answer to this problem is: avoid using the banks and use Master Leases or Land Contracts to purchase apartments. As I stated in Observation #1, sellers are being stranded by brokers, but sellers still want to sell. This is where you come in. Make those deals happen!
Observation #3:
Values of properties in many areas are down to 2002-2003 prices. I also see cap rates from 2004 levels in amazing cities to capitalize in.
Big office buildings here in SF are retailing for 2003 prices per square foot. In Texas, areas that were 7 or 8 cap a couple years ago are now 9 and 10 caps. I presume cap rates to sneak up even more. Check out the website www.loopnet.com to see what I am talking about.
Observation #4:
You must think long-term now for financial growth purposes. A 7 year grip on cash flow is a wise strategy to have.
As an alternative to buying and flipping apartments right away, you’ll want to hold onto it to make the most of your earnings. This is a transformation in our personal outlook, but it’s how things were done in the olden days (when things were stable). You must realize, the economy and the way we do things has transformed forever. Don’t give up, just make modifications.
Observation #5:
Students and others I meet at seminars must be extra aggressive in making offers to sellers. We are in a buyer’s market which means we set the market price, not the seller or lender. The apartment is only valued by what you are willing to pay for it.
BONUS Observation:
Don’t give up! The bumpiness and coarseness of today’s market is a “smoothing out” course. This down market is a strainer so to speak and will significantly repay those who stay in the game. It’s okay to sit out for an inning or two to catch your breath, but don’t leave the game. Never give up.
