Written by: Cam BorgesRead the full article here
The economy is booming, unemployment continues to fall, and global equities are at record highs. But there are signs that we’re headed for a shift that will impact commercial real estate, and business in general. So what is the best strategy for these uncertain times? We continue to believe that investors should always be on the lookout for opportunities that allow them to add significant value. It’s a strategy that’s allowed our company to prosper in good times and in challenging times.
Follow The Cycle
In the current real estate market, returns are very low and prices and risk are high. In my experience, a property purchased today will yield, on average, a 5.5% return on your money, but your true take-home profit may be much lower after taxes and inflation. In fact, your profit could be close to zero depending on the level of the asset risk. Construction costs are high, cap rates are compressed, and investors are spooked and looking for safe places to park their money with some level of return. So how did we get here?