Is Now the Best Time to Invest in Apartments?

Industry experts say consider investing in a duplex, triplex or small apartment building.

"Smaller units are typically older ... and during a downturn people prefer lower-quality properties with fewer amenities," says Hessam Nadji, managing director of research at real estate brokerage Marcus & Millichap.

Nadji also pointed out that young people are the most likely tenants in these older units and that segment of the population is growing. The baby boom peaked in the 1950s and those boomers’ children, born in the 1980s, are just going out on their own. While they have one of the highest unemployment rates now – 12 percent – they will likely be the first hired when the economy improves, says Reis Research Director Victor Calanog.

Reis identifies San Diego and Sacramento as areas expecting strong growth, as well as San Antonio, Texas, and Fairfield County, Conn., a suburb of New York City.

Nadji urged investors to buy now while prices are down. "There is a good chance that if an investor waits for a recovery to materialize, they'll see prices go up again," Nadji says.

Source: Investor’s Business Daily, Amy Reeves (02/26/2009)