Benefits of Real Estate Investment go well beyond your wallet

The U.S is now in its 128th month of economic expansion. Congratulations to those of you who jumped into real estate in ’08 and have benefitted from compressing cap rates and steadily increasing rents, I’m sure your returns are ridiculous. While I would love to continue to talk about the amazing returns real estate can offer over other investment vehicles, I would like to focus instead on how proper real estate investment can have a much bigger impact beyond your wallet.

• The U.S is now in its 128th month of economic expansion. Congratulations to those of you who jumped into real estate in ’08 and have benefitted from compressing cap rates and steadily increasing rents, I’m sure your returns are ridiculous. While I would love to continue to talk about the amazing returns real estate can offer over other investment vehicles, I would like to focus instead on how proper real estate investment can have a much bigger impact beyond your wallet. Activist real estate investing, should be a win-win for everyone involved, the investors, tenants, community, the City, even the environment. I choose to invest in distressed C class property occupied by hard working, blue collar families. From my experience, there is a profile of owners out there who choose to take advantage of these properties. You may know this owner as the slumlord. These owners disregard the needs of their tenants, do not respond to maintenance requests, defer capital improvements, paper over cosmetic problems, paint everything white, run the property into the ground, and raises rent in the process. While class C properties may be physically out of date, the business does not have to be. Working class families deserve an amenities rich property with inviting interiors and a staff who responds to their needs. Investing with more than the NOI in mind can create value in the families you house, staff you employee, improve communities, raise the tax base for the City, and reduce waste of natural resources. Here are just a few ways investing your money can help more than your pocket book:

• Improve the overall TENANTS experience

Improve the physical quality of the property in order to provide a cleaner and safer place to call home. Improve the operational practices by providing a skilled maintenance staff capable of responding to tenants’ requests in a timely manner and an inviting leasing staff to make the tenants feel welcome.

• Improve the quality of the local COMMUNITY

Deploy capital properly to beautify property and rid a community of eyesores. A quality product, run by a quality staff, brings in a quality tenant. Replace dilapidated buildings filled with a blithe tenant base for well-maintained buildings and gainfully employed, self-respecting individuals and you can begin to diminish stigma within communities.

• CREATE JOBS for hard working people within a healthy work environment

Slumlords not only take advantage of a property and its tenants; the workforce is also abused. Investing in distressed property can allow you to revamp the business practices and provide good paying jobs with benefits to your staff. Take care of your team and they will take care of your property and your tenants. Win-win.

• Good for the ENVIRONMENT through reduction of unnecessary waste

You will get your tax breaks through cost segregation and bonus depreciation and this will be a huge win for you, but mother nature suffers as a result of the old equipment left behind. Investing in modern fixtures and equipment can conserve natural resources. Purchasing low flow water fixtures to conserve water, replacing out of date AC units which use ozone depleting R-22 coolant can be replaced with modern systems utilizing R410A, and LED lights can replace halogen/incandescent bulbs to reduce electricity consumption.

• Good for the CITY

The physical improvements to a property will naturally lead to an increase in the property tax bill. While this compresses NOI, the higher tax bill will allow for more resources for improving infrastructure, resources for county hospitals, schools, and police and fire departments. I write this knowing full well that proper use of these tax dollars requires elected officials to make good decisions…

Real estate investment can have an incredible impact on your financial security and more importantly create more time in your life for you. I think it is important for all of us to continue to remember our investment decisions have a broad impact on hundreds of people beyond ourselves. Go out and make a profit, but remember to treat people right and make a positive impact on the communities you invest in.

#realestateinvestment #apartmentinvesting