Investment properties around the country

People have always felt, as Tip O'Neill famously said, that "all politics are local".  Many say the same about real estate, as a variant on the "location, location, location" theme.  It turns out, though, that investment real estate is becoming national, or even global.  Sellers looking to do 1031 tax-deferred exchanges are looking far and wide for the best matches, and there are many opportunities all over for such transactions.  Every day, I receive bulletins for investment properties from everywhere imaginable, with cap rates and returns spelled out.


We find that, as people move to other locations, they often want to move their investments as well.  For example, a shopping center in Milford may be exchanged for an office building in Florida, as the second home becomes the primary residence.  This blog post is just a friendly reminder that we can find you property anywhere in the world, through our connections and networks, so feel free to call us if you have a hankering for medical space in Topeka, an Arby's in San Antonio, or an apartment building in Spokane.  You may not even know that you want any of these properties, but it's an increasing part of our global outlook these days.

Cap Rates Falling

Investment properties in most markets are increasing in value.  One good measurement of this is the cap rate, which is a proxy for the riskiness of the project--the lower the cap rate, the higher the price that an investor will pay.  In four of five major categories measured for commercial and investment properties, cap rates declined from 2013 to 2014.

Why is this happening?  There seems to be a surge in the market of 1031 exchange buyers; i.e., people who are trading one investment property for another, in order to defer taxes.  The rules are very strict, and there is currently more demand than available product, which pushes up asking prices.  That, in turn, causes cap rate to decline.  Other factors that affect cap rates are lease length, tenant credit worthiness, and interest rates for long term money.  If you are planning to buy, you'd better start looking now!