Real Estate Investment for 2009

Investment sales in the commercial market are down. Banks have money to lend, but are looking for good cash flow and a solid down payment from the buyer, as I wrote about the last month. The National Association of Realtors® recently reported that some sectors of the investment market will come out better than others in 2009, quoting Ken Riggs, CRE, president and CEO of Real Estate Research Corp.

His Predictions:

Student housing. The combination of two factors—universities facing a financial squeeze and the surge of college-bound Generation Y members, the second largest demographic in the United States—creates strong demand for student housing.

Medical offices. Aging boomers and their readiness to spend on health care make this a solid investment, especially if located near hospitals and nursing homes.

Tax-credit housing. An unmet need for affordable housing, combined with the federal government’s willingness to provide funding via low-income housing grants and tax-exempt housing bonds, may make this an attractive niche for conventional multifamily developers.

Residential building lots. Smart developers are compiling parcels now so that approvals can be in place.

Neighborhood centers. Retail is risky at best, but people will always need staples, even in the tough times. That’s why neighborhood retail centers are a winner, especially in mature trade areas with a strong grocery or drug store anchor.

My Experience:

In 2004, when my son first went to Virginia Tech, my husband and I purchased a townhouse in Blacksburg which we rented out to 3 additional students (our son was the 4th tenant). The rents from the 3 students covered all our costs. Three-and-a-half years later we sold it for a decent profit. Had we decided to hold it, there is an excellent property management company in Blacksburg that does a great job. In fact, the party who purchased the townhouse was an investment buyer (former Tech student) who lives in California.

Health care industry continues to fare well. My clients who are in health-related industries, such as medical, dental, and all wellness type businesses (such as exercise including gyms, yoga studios & tanning salons) are prospering. Many report their earnings are up from last year, which shows that people do take care of themselves even when they don't eat out as often or cut back on non-essential purchases.

Builders are always looking for residential building lots especially in highly developed areas of Northern Virginia where such lots are hard to find, closer to to Washington DC.

Retail strip centers with long-term leases and solid tenants are a good buy. I also know of several with approved site plans ready for development, the land available for purchase.

There are some good buys out there!