The Contrarian With Cash Is King

The Contrarian With Cash Is King
By: Nicholas A. Dunlap, CPM

It’s always a great time to own property. Especially now and in Orange County, California. Of course, there are other markets across the US that boast better investment opportunities and growth potential, like Austin, Dallas & Las Vegas to name a few, but some feel that Austin is in it’s own bubble and Las Vegas (hard as it is to believe) still has more room to drop. Dallas? Big things expected in 2012 and I’m obviously not talking about the Cowboys.

Consider the fundamentals on the acquisition side for a moment:
– Going in financing available in the mid 4% to low 5% range (better rates for the short term, of course).
– Distressed opportunities in the office & multifamily sectors in most markets (albeit, with heavy competition and possibly not the “distressed deal” you were looking for).
– Market rents increasing, existing rents increasing (in some markets/product types) and occupancy increasing.

And for sellers we are seeing: declining capitalization rates and rising per unit and per square foot pricing in most markets. But with the strengthening fundamentals, who would want to sell? The answer: Someone who is sophisticated enough to realize that the market they are cashing out of is likely not where they should re-park their equity. Orange or Los Angeles County sellers of multifamily should be looking at the distressed office opportunities in the same areas or the multifamily opportunities in Austin, Dallas & Las Vegas.

Of course, if you own property and you are not happy with your portfolio’s performance, you should probably shop around for a new management company. There are too many opportunities right now to be burdened with a lazy management company who cannot respond to the economic conditions facing our country. We have and our occupancy is through the roof. We have eight buildings at 100% occupancy and nearly a dozen more with less than 4% vacancy.

The opportunities are out there and there is a ton of money on the sidelines. For contrarians like myself, the time to buy is when nobody else is and that means…NOW.