2012: Could the Mayans Have Predicted Economic Apocalypse? Part III

2012: Could the Mayans Have Predicted Economic Apocalypse? Part III
By: Nicholas A. Dunlap, CPM

The following is an excerpt from my 2012 Outlook on Investing that appeared in this month’s Apartment News & Apartment Management Magazines. I will be publishing it in segments here on my blog. Here is Part III.

Diversify Yourself: Location & Product Type

Us Californians have it tough. Our State Legislators relentlessly try to drive us out, either through the overregulation of our industries, the implementation of foolish policies that cost us more money and more time or perhaps the most repulsive of them all, the loose or seemingly careless operation of our state legal system that is exploited with ease.

Enough is enough!

Until our State gets it together, do not give them the benefit of any new property tax dollars. Consider diversifying yourself outside of California to neighboring markets such Arizona, Nevada or Texas. Here, you can still realize immediate cash flow that will beat the bank and substantiate your efforts for consummating a real estate transaction. Not to mention, these States actually want your business and both respect and reward the risks that you take as an investor.

If you must purchase in California, specifically in Orange or Los Angeles Counties, consider diversifying your holdings to include some of the distressed office assets that are available. Do not let the high vacancy rates discourage you. The corresponding purchase prices can often allow for flex room in your pro-forma rents. Other opportunities will continue to include the bank-owned SFR and 2 to 4 unit complexes. There is pent up investor demand so realize that you will likely get into a bidding war with multiple cash-heavy buyers. Come prepared and consider putting your best and final offer first.