Lloyd Jones

Investors are always encouraged to have a well-diversified portfolio. This includes investments in different assets with different risk profiles – and not just traditional stocks and bonds. Many investors will eventually add alternative investments to their portfolio. One of the most popular alternative investments is commercial real estate.

Commercial real estate comes in many shapes, sizes, property types, and forms. There are small, individual rental properties such as single-family rental homes. At the other end of the spectrum, there are 500+- unit apartment buildings, commercial office towers, hotels, retail strip centers, senior living facilities, industrial warehouses, and more. The diversity of the sector is one of the reasons it attracts so many investors. There is a property type to meet the risk tolerance of virtually every investor, regardless of how much capital they have at the ready.

That said, the breadth of commercial real estate can be overwhelming to those who have never invested in this asset class before. Today, we provide a brief primer about commercial real estate, including the pros and cons of investing in the sector.

What Is Commercial Real Estate?

Commercial real estate refers to any income-generating property. It can include residential (i.e., multifamily) properties as well as properties used for business activities (e.g., office buildings, hotels, retail centers, warehouses, senior-living facilities and more).

On the residential side, any property with 1- to 4-units is considered “residential” property. It is only when a property has 5+ units that it becomes classified as “commercial” property and therefore, must seek a commercial loan instead of a more traditional residential mortgage.

Commercial real estate can be owned individually, by groups, or by companies organized to oversee the investment on others’ behalf.

Most people invest in commercial real estate as a way of earning consistent cash flow and/or to earn a return after a property has appreciated in value. Ideally, they earn income both ways. There are also tax benefits associated with owning real estate, another financial benefit described in more detail below.

We find and create investment opportunities for our partners. Learn more about what we do here at Loyd Jones.

The Pros and Cons of Investing in Commercial Real Estate

There are many benefits associated with investing in commercial real estate. However, despite the benefits, there are some drawbacks, as well. We explore these pros and cons below.

Pro: Portfolio Diversification. Adding commercial real estate to one’s portfolio is a great way to diversify away from traditional stocks, bonds, and mutual funds. This is because real estate generally has a low correlation with the stock market. The stock market tends to ebb and flow, sometimes dramatically, even on a daily basis. Real estate value takes longer to respond to economic turmoil, and therefore, is less likely to experience regular volatility. Those looking for stable investments will often invest in commercial real estate as a way of otherwise mitigating their portfolio’s risk.

Pro: Asset Diversity. As noted above, commercial real estate is a large sector with many product types of varying sizes and scales. Someone looking to further mitigate portfolio risk can do so by investing in real estate of varying risk profiles. For example, ground-up development (i.e., “opportunistic” development) is considered the riskiest of all real estate deals. Investing in a stabilized, core asset is much “safer” though the costs will be higher, and returns will be lower. Investors might decide to invest their capital proportionately depending on their specific risk tolerance and investment horizon.

Pro: Ability to Leverage. A primary draw to investing in commercial real estate is the ability to use leverage (i.e., financing) to fund the acquisition and/or redevelopment of a property. This ability to leverage offers a real estate investor several advantages.

1) He can purchase more real estate with less of his own capital. (Note, the following examples are very simplistic and do not consider the effect of debt and other expenses. They are offered solely to illustrate the concept.)

Assume he has $1 million to invest. He can put it all into one, $1 million purchase. Assume it increases 10%. He will have earned $100,000.
Or with leverage, (i.e., a mortgage), his $1 million can probably buy a $3 million property. Assume it, also, increases 10%. Now he has earned $300,000 with his same $1 million investment.
As another option, instead of buying a more expensive asset, he could invest in several With leverage, his $1 million investment capital could buy three $1 million properties. Again, assuming the properties all increase in value by 10%, he will earn $100,000 on each one for a total of $300,000. Again- with that same $1 million investment.

2) He can spread his investment risk across multiple properties.

If this same investor purchases several assets, he spreads his risk by not putting all his eggs in one basket. If one doesn’t perform to expectations, his capital is still protected by the others – which hopefully will compensate for any loss in the unsuccessful one.

3) At the same time, as the property value increases, so does the investor’s equity in the asset.

4) But investors must be aware that leverage also carries risk if the value of the property/ies declines. Leverage must be used with prudence.

Pro: Passive Income. Most of those who invest in real estate do so as passive investors. In other words, they invest their capital with a sponsor or development partner (the “general partner”) who then oversees the transaction on the investors’ (the “limited partners”) behalf. GPs earn a premium for their role in spearheading the deal, but the LPs are free to go about their daily business while still earning passive income. This passive income usually takes the form of cash-flow distributions that are paid out on a monthly or quarterly basis.

Pro: Appreciation Potential. While there is no guarantee that real estate will appreciate in value, historically, long-term investors will realize some gains associated with the property upon stabilization and re-sale. While real estate values may ebb and flow over the course of an individual real estate cycle, over multiple cycles, values typically climb upward.

Pro: Multiple Investment Vehicles. There are many ways to passively invest in commercial real estate, including but not limited to investing in REITs, syndications, or real estate funds.

The most conservative investors may opt to invest in a publicly traded real estate investment trust (REIT). When investing in a REIT, you are purchasing a share of the company that owns the investments held by that REIT—you are not purchasing shares of the real estate asset itself. The benefit to investing in a publicly traded REIT is that, like buying stocks or bonds, shares are liquid and can be easily purchased or sold with little to no investment minimum.

Meanwhile, other investors might opt to invest in a syndication or fund. A syndication is an entity formed for the purpose of aggregating capital to invest in a specific real estate deal. A syndication is overseen by a sponsor, or general partner, who usually has some degree of its own capital invested in the deal as well. The sponsor collects certain fees for managing the deal on investors’ behalf, and often earns bonus payments (“promotes”) based upon certain success metrics. Most syndications will have a minimum investment amount, but that may be as low as $50,000 or less.

Similarly, a real estate fund is a way for sponsors to aggregate capital to invest in one or several assets, some of which may not yet have been identified. For example, a sponsor may raise a $50 million fund to strategically deploy based on certain investment criteria. It might focus on value-add multifamily deals in outer-urban markets. Those who invest in a fund are putting faith in the sponsor to identify appropriate deals and then execute their business plans accordingly (vs. those who invest in a syndication who have a better sense for what an individual deal will entail).

Pro: Tax Benefits. Real estate is a highly tax-advantaged industry. Investors are able to offset their earnings through what’s known as “depreciation.” Depreciation is an annual tax deduction that the IRS allows owners to take as “a reasonable allowance for exhaustion or wear and tear, including a reasonable allowance for obsolescence.” Only the value of buildings can be depreciated, including eligible appliances, fixtures, and equipment. Land is not considered depreciable.

Depreciation is generally based on the “useful life” of a property. The IRS has deemed residential real estate to have a 27.5-year lifespan. Commercial property has a 39-year lifespan. Of course, most properties will still be standing well after their “lifespans” – but they will likely need significant improvements during this time in order for the property to remain competitive and lucrative. Depreciation is intended to offset the costs associated with these improvements, thereby preventing the property from becoming obsolete.

In reality, many properties appreciate in value while simultaneously being depreciated each year. Depreciation is effectively a paper loss used to offset the actual gains earned from the asset. This lowers an investor’s tax burden without impacting profits.

Some investors will also utilize what’s known as a “cost segregation” study as a way of accelerating depreciation. Rather than depreciating the asset equally each year, a cost segregation study assigns a useful life to each individual building component, which allows an owner to frontload depreciation in the first few years of ownership, which puts money back into investors’ pockets sooner. These “losses” often exceed the earnings from any given year and may be applied to prior year earnings or carried forward and applied to future earnings.

Real estate investors can also utilize something known as a “1031 exchange,” which allows investors to roll the proceeds from the sale of a real estate asset into another “like kind” property of greater value. Those who do this are able to defer paying capital gains tax. Many will continue to leverage 1031 exchanges in perpetuity to continue growing their real estate portfolios. They can then pass down the real estate to their heirs at a stepped-up basis, which again, results in significant tax savings.

Con: Illiquid Asset Class. One drawback to investing in commercial real estate is that it is an illiquid asset (unless one invests in a publicly traded REIT). The time it takes to conduct due diligence, acquire, close on, and then stabilize a property can take months if not years. Therefore, real estate does not trade as quickly and easily as other asset classes. This means that real estate investors often have large tranches of their capital tied up for years at a time.

Con: Market Risks. While commercial real estate has historically performed well relative to other asset classes, it is not a foolproof investment. Its performance is still subject to market risks that could impact the property’s value. Market risks include changes in rental rates, interest rates, property taxes, and absorption rates. These changes can happen quickly and unexpectedly, so investors must be sure their pro forma has sufficient padding to absorb potential financial hits like these. Experienced investors should be able to anticipate these changes well before they occur, but occasionally, black swan events like the pandemic are beyond the realm of what investors might have imagined.

Con: Limited Control. Those who invest in a REIT, fund, or syndication usually have very little direction over how real estate decisions are made. As passive investors, they are merely contributors of capital. All decisions are otherwise made by the sponsor or operating entity overseeing the transaction on investors’ behalf. This requires investors to put significant faith in the company with whom they invest – faith that that company has the knowledge, resources, and experience to execute their business plans as originally intended.

Is Commercial Real Estate a Good Investment?

As you can see, there are many benefits associated with investing in commercial real estate, regardless of what type of property you select. These benefits are becoming more widely known, and in turn, real estate is increasingly becoming more of a mainstream investment (compared to an “alternative” investment in decades past). This is especially true now that institutional investors are adding commercial real estate to their portfolios at record speed. In turn, demand for commercial real estate is hovering at all-time highs.

The outlook for commercial real estate remains strong, for some product types more than others. For example, multifamily demand continues to outpace demand for office, hospitality, and retail. Senior housing is also anticipated to outperform other sectors as the baby-boomer generation ages and seeks age-restricted and supportive housing of all kinds.

If you are considering adding commercial real estate to your portfolio, contact us today. Our value-add investment platform has opportunities for investors of all kinds. We would be happy to match you with opportunities that best suit your specific investment needs.

We provide quality housing that makes lives better. Meet the people that make the difference at Lloyd Jones.

ESG initiatives, also known as socially responsible investing, incorporate environmental, social, and governance concerns into a company’s business model to deliver both financial and socially beneficial results. While ESG philosophies are applicable to any forward-thinking industry, they can be particularly meaningful within real estate.

Contrary to the popular belief that ESG development is an instance of businesses forgetting their primary purpose–to generate profits–the specific actions guided by ESG-thinking often result in an improved experience for customers and greater returns for investors.

At Lloyd Jones, we’ve implemented specific initiatives related to environmental, social, and governance policies, each with measurable goals, to create a program we call Impactful Investing. Impactful Investing is how our investment, development, and multifamily management divisions each do their part as a socially responsible facet of our vertically integrated real estate firm.

When and Where Did the ESG Movement Begin?

ESG as a movement is not attributed to any one industry, company, or time period. Instead, there is a growing understanding of both companies and investors that socially conscious developments are not just trending; they add value to companies’ brands as well as their returns to investors.

Contrary to the past in which the only consumer concern seemed to be how competitive prices were, and the only investor concern was the levels of returns they were seeing on their investments, both consumers and investors now demand more.

All parties want to know that the businesses they support are improving the quality of life for their employees, the environment, and the surrounding community. As seen in the chart below, ESG investments are growing quickly in the U.S., reaching nearly $17 billion in sustainable investments through ESG in 2020.

Source: https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/the-esg-trends-that-will-drive-2021-8211-podcast-61980796

What Is the “E” in ESG?

There are numerous ways in which real estate companies can change their operating procedures to make a positive impact, and one pertains to “environmental,” the “E” in ESG. Almost all of these decisions will fall into three categories: construction, maintenance, and administration, where energy conservation, through implementation of innovative, cost-efficient systems, can be beneficial for the environment and at the same time contribute positively to the bottom line, driving up returns for investors.

Energy Conservation Starts From the Ground Up With Better Materials

Conservation policies can be enacted through simple replacement of common building and property features. Light fixtures, water faucets, and strategically deployed modern technologies save money and provide added value to consumers they may be unable to find elsewhere.

Efficient light and water fixtures like LED lighting and low-flow toilets and showerheads will substantially reduce utility costs for both residents and management. These improvements need not be limited to the interiors of individual apartments, as LED lighting for hallways, parking lots, and walkways can deliver building operators substantial savings across entire developments.

These simple upgrades to common household fixtures can make residential communities more environmentally sound, and by ensuring that the cost of implementing these upgrades can be recovered through cost savings (e.g. utility bill reductions from LED lights) and enhanced rental income, they can also prove profitable.

Residents Expect Smart Tech Amenities

Smart thermostats, electric-car charging stations, and in-apartment hygrometers are all examples of cutting-edge technology that can simultaneously attract higher-credit residents who are willing to pay more rent and stay longer in their units while also providing cost savings to building operators. Keeping ahead of the market with these kinds of technology-driven energy- efficient innovations puts multifamily operators at a competitive advantage to other communities in their area that do not embrace them.

Smart home technologies like Nest thermostats have pierced the public’s consciousness, but these opportunities are just beginning to be implemented in commercial real estate. In addition to thermostats, hygrometers (humidity and water-leak detection devices) can be strategically placed within an apartment to alert tenants and maintenance staff to potential mold or water intrusion issues. These features not only reduce utility costs, but they can also prevent costly repairs down the road.

Source: https://www.statista.com/chart/15736/smart-home-market-forecast/

As shown in the chart above, demand for smart tech for the home is growing at a significant pace. As part of its Impactful Investing initiatives, Lloyd Jones recognizes the demand for environmentally friendly technology solutions and is leading the way in the apartment industry by implementing these systems across its multifamily and senior housing portfolios.

Ongoing Utility Audits

After developments are upgraded with energy-saving features, the conservation work continues with utility audits that monitor usage levels to determine when waste is occurring and what repairs are required to return to levels of efficient usage. This serves bottom-line revenues in two important ways: one, with improvements to conservation technology, utility usage levels are reduced with each passing year, and two, it helps to cut building maintenance costs in the long run.

As outdated systems are replaced with smart technology, residents also benefit by seeing a reduction in their own utility expenses, minimized downtime for maintenance of the systems in their units, and an enhanced standard of living and comfort.

Small Administrative Changes Make a Big Difference

Another simple, important, and often overlooked aspect of ESG practices is switching to digital record keeping whenever possible. Beyond contracts, the tasks of paying rent, renewing leases, and effecting transactions that used to require paper are now being conducted digitally to the delight of residents, owners, and the environment.

The frequency and acceptability of digital transactions increased during the COVID pandemic as individuals were unable to or uncomfortable with meeting face-to-face with their on-site property management staff.

Eco-Friendly and Cost-Saving Landscaping Practices for Property Owners

Landscaping is an important part of owning large-scale multifamily residential communities as it forms part of the first impression prospective tenants will get when considering where to live.

To attract residents, developers often implement exterior landscape designs that look stunning but that do not always account for local climate conditions, for example, planting exotic, water-demanding trees and shrubbery in drought-ridden areas. To maintain the non-native plants, grounds staff must use a wide variety of harmful chemicals and excessive irrigation to encourage plant growth while discouraging undesirable weeds. Switching to environmentally sound landscaping practices that conform to the local climate can be more aesthetically pleasing, allow plants to flourish, cut costs, and increase recreational space for residents.

For example, opting for organic weed killers, switching from gasoline-powered to electric equipment, and encouraging more native-plant landscape architecture are all ways to beautify properties while mitigating environmental damage.

Beyond kindness to the environment, these initiatives are also more cost-efficient in terms of water, waste, and labor, as this study below by the city of Santa Monica, CA, shows.

Source: https://www.smgov.net/uploadedFiles/Departments/OSE/Categories/Landscape/GG.DisplayAd5.e.res%281%29.pdf

What Is the ‘S’ in ESG?

ESG-focused businesses strive to improve the communities where they are involved and in so doing, bring the “S” for “social” responsibility into practice. While historically limited to volunteer work or fundraising, often called “Corporate Social Responsibility” or CSR, the depth of social development has grown to include partnerships with non-profit organizations and an emphasis on personal and professional growth opportunities for employees.

The possibilities and actions taken by ESG-focused businesses are growing in scope and complexity. Beyond specific partnerships, social responsibility grows at companies through sponsored involvement in traditional volunteerism with food banks, beach and park cleanups, and offering employees personal time off to volunteer with organizations that speak to them personally.

Promoting From Within Builds Stronger Organizations

One of the biggest concerns of modern workers is the chance to grow professionally. Many jobs can lead to dead ends, so initiatives to change this perception of a business is essential. Staffing management positions with internally promoted workers can transform a company from simply a place that provides a paycheck into an organization that provides a meaningful, lifelong career.

Commitment to providing opportunities to workers can take many forms, by offering training programs, certification programs, or even subsidizing continuing education.

Even more simply, and at times most effectively, junior employees are trained by their immediate superiors simply through exposure to the next level of challenges they will face professionally, should they get promoted. Working closely together also allows management to assess employees’ abilities and drive, ensuring that the next opportunity goes to the best possible person for the job.

What Is the “G” in ESG?

Ever growing in importance, potential employees and investors review a company’s internal governance, the “G” in ESG, as a measure for understanding it. Responsible businesses such as Lloyd Jones consider personal conduct and financial accountability essential components in a company’s success.

Both residents and investors want positive outcomes, but they also need to know how the outcomes were achieved, and ESG-conscious companies are aware of that.

Real estate firms that are serious about growth will need to increase transparency and detail the policies they rely on to enhance the work-lives of their employees, and the home-lives of their residents. As the chart below shows, a tremendous amount of a company’s value is attributed to its public reputation worldwide and by extension, the positive impact employing ESG policies can have on the overall perception a company has in the marketplace.

Source: https://cuttingedgepr.com/good-corporate-reputation-is-vital-especially-during-covid-19-times/

Companies that hope to attract the next generation of talent, long term, loyal residents, and the next round of funding from environmentally conscious investors will need to continue implementing and updating their training and internal review programs to stay current with social trends and ethical expectations.

Do ESG-Conscious Real Estate Companies Provide Greater Returns?

While initial investments for building and retrofitting properties involve additional costs, these investments quickly produce higher returns because of the resulting increases in rents, longer tenancies, and cost savings overall. Furthermore, as society expects more environmentally friendly and socially conscious standards, companies that embrace impactful investing will be better positioned to attract this growing body of consumers.

In many ways, ESG-focused developments actually result in lower expenditures than had been required in the past. Environmentally friendly landscaping practices with more natural designs demand less maintenance. Lower electric and water usage results in lower utility bills for residents and operators, allowing for more competitive rents and higher occupancy rates.

While their involvement in the communities of their markets is not the primary reason investors choose to put their money with one company over another, there is a tremendous amount of hidden value for all parties in this.

Connection to local communities and charities delivers returns in unique ways that are not noticed by many.

The community comes to see the brand as a collection of individuals, not a corporate behemoth. This can have various benefits, including a reduced need for advertising and marketing expenditure as positive word of mouth, either in-person or via online reviews, helps promote the brand and its assets.
The company can attract employees who would be excited and willing to spend their time (some paid, some volunteering) to help the community in which they live and work.

This willingness to give back is an excellent filtration method to identify employees who are interested in growing with the business and who are committed to a connection with their community.

The amount spent on hiring and training is dramatically reduced as those who fit the business’s persona (a company that gives back) will embrace the corporate culture more readily and be happier in their work knowing they are contributing beyond just their workday to the community also as a result.

The company saves on recruiting costs through internal promotions and commitment to their employees.

Instead of hiring a third-party talent scout or dedicating an internal employee to perpetually hunt for potential managers, talent can be found within the current employee roster. Further, the knowledge that a company does promote from within encourages entry-level talent that might otherwise take their job search elsewhere.

Strict and clear internal governance policies serve to ensure investors that employee integrity is maintained to the highest degree, communicating to investors that the company is run by professionals who are willing to spend time, money, and effort to do everything possible to protect the health of the company and the integrity of the brand.

Sustainable Companies Will Trailblaze While Others Simply Follow

Not every company is fully committed to ESG practices, but here at Lloyd Jones, we recognize the growth possibilities of this mindset, the importance to our people on a personal level, and the value it brings to our residents and investors.

While Impactful Investing may remain less prevalent in corporate America than the drive solely for profits, we believe it better to stay ahead of trends, and prefer to lead the way in our industry for the common good.

What Is Commercial Real Estate?

Commercial real estate can be owned individually, by groups, or by companies organized to oversee the investment on others’ behalf.

We find and create investment opportunities for our partners. Learn more about what we do here at Loyd Jones.

The Pros and Cons of Investing in Commercial Real Estate

There are many benefits associated with investing in commercial real estate. However, despite the benefits, there are some drawbacks, as well. We explore these pros and cons below.

Pro: Portfolio Diversification. Adding commercial real estate to one’s portfolio is a great way to diversify away from traditional stocks, bonds, and mutual funds. This is because real estate generally has a low correlation with the stock market. The stock market tends to ebb and flow, sometimes dramatically, even on a daily basis. Real estate value takes longer to respond to economic turmoil, and therefore, is less likely to experience regular volatility. Those looking for stable investments will often invest in commercial real estate as a way of otherwise mitigating their portfolio’s risk.

Pro: Asset Diversity. As noted above, commercial real estate is a large sector with many product types of varying sizes and scales. Someone looking to further mitigate portfolio risk can do so by investing in real estate of varying risk profiles. For example, ground-up development (i.e., “opportunistic” development) is considered the riskiest of all real estate deals. Investing in a stabilized, core asset is much “safer” though the costs will be higher, and returns will be lower. Investors might decide to invest their capital proportionately depending on their specific risk tolerance and investment horizon.

Pro: Ability to Leverage. A primary draw to investing in commercial real estate is the ability to use leverage (i.e., financing) to fund the acquisition and/or redevelopment of a property. This ability to leverage offers a real estate investor several advantages.

Assume he has $1 million to invest. He can put it all into one, $1 million purchase. Assume it increases 10%. He will have earned $100,000.
Or with leverage, (i.e., a mortgage), his $1 million can probably buy a $3 million property. Assume it, also, increases 10%. Now he has earned $300,000 with his same $1 million investment.
As another option, instead of buying a more expensive asset, he could invest in several With leverage, his $1 million investment capital could buy three $1 million properties. Again, assuming the properties all increase in value by 10%, he will earn $100,000 on each one for a total of $300,000. Again- with that same $1 million investment.

2) He can spread his investment risk across multiple properties.

3) At the same time, as the property value increases, so does the investor’s equity in the asset.

4) But investors must be aware that leverage also carries risk if the value of the property/ies declines. Leverage must be used with prudence.

Pro: Appreciation Potential. While there is no guarantee that real estate will appreciate in value, historically, long-term investors will realize some gains associated with the property upon stabilization and re-sale. While real estate values may ebb and flow over the course of an individual real estate cycle, over multiple cycles, values typically climb upward.

Pro: Multiple Investment Vehicles. There are many ways to passively invest in commercial real estate, including but not limited to investing in REITs, syndications, or real estate funds.

Pro: Tax Benefits. Real estate is a highly tax-advantaged industry. Investors are able to offset their earnings through what’s known as “depreciation.” Depreciation is an annual tax deduction that the IRS allows owners to take as “a reasonable allowance for exhaustion or wear and tear, including a reasonable allowance for obsolescence.” Only the value of buildings can be depreciated, including eligible appliances, fixtures, and equipment. Land is not considered depreciable.

Con: Illiquid Asset Class. One drawback to investing in commercial real estate is that it is an illiquid asset (unless one invests in a publicly traded REIT). The time it takes to conduct due diligence, acquire, close on, and then stabilize a property can take months if not years. Therefore, real estate does not trade as quickly and easily as other asset classes. This means that real estate investors often have large tranches of their capital tied up for years at a time.

Con: Market Risks. While commercial real estate has historically performed well relative to other asset classes, it is not a foolproof investment. Its performance is still subject to market risks that could impact the property’s value. Market risks include changes in rental rates, interest rates, property taxes, and absorption rates. These changes can happen quickly and unexpectedly, so investors must be sure their pro forma has sufficient padding to absorb potential financial hits like these. Experienced investors should be able to anticipate these changes well before they occur, but occasionally, black swan events like the pandemic are beyond the realm of what investors might have imagined.

Con: Limited Control. Those who invest in a REIT, fund, or syndication usually have very little direction over how real estate decisions are made. As passive investors, they are merely contributors of capital. All decisions are otherwise made by the sponsor or operating entity overseeing the transaction on investors’ behalf. This requires investors to put significant faith in the company with whom they invest – faith that that company has the knowledge, resources, and experience to execute their business plans as originally intended.

Is Commercial Real Estate a Good Investment?

We provide quality housing that makes lives better. Meet the people that make the difference at Lloyd Jones.

What Is Commercial Real Estate?

Commercial real estate can be owned individually, by groups, or by companies organized to oversee the investment on others’ behalf.

We find and create investment opportunities for our partners. Learn more about what we do here at Loyd Jones.

The Pros and Cons of Investing in Commercial Real Estate

There are many benefits associated with investing in commercial real estate. However, despite the benefits, there are some drawbacks, as well. We explore these pros and cons below.

Pro: Portfolio Diversification. Adding commercial real estate to one’s portfolio is a great way to diversify away from traditional stocks, bonds, and mutual funds. This is because real estate generally has a low correlation with the stock market. The stock market tends to ebb and flow, sometimes dramatically, even on a daily basis. Real estate value takes longer to respond to economic turmoil, and therefore, is less likely to experience regular volatility. Those looking for stable investments will often invest in commercial real estate as a way of otherwise mitigating their portfolio’s risk.

Pro: Asset Diversity. As noted above, commercial real estate is a large sector with many product types of varying sizes and scales. Someone looking to further mitigate portfolio risk can do so by investing in real estate of varying risk profiles. For example, ground-up development (i.e., “opportunistic” development) is considered the riskiest of all real estate deals. Investing in a stabilized, core asset is much “safer” though the costs will be higher, and returns will be lower. Investors might decide to invest their capital proportionately depending on their specific risk tolerance and investment horizon.

Pro: Ability to Leverage. A primary draw to investing in commercial real estate is the ability to use leverage (i.e., financing) to fund the acquisition and/or redevelopment of a property. This ability to leverage offers a real estate investor several advantages.

Assume he has $1 million to invest. He can put it all into one, $1 million purchase. Assume it increases 10%. He will have earned $100,000.
Or with leverage, (i.e., a mortgage), his $1 million can probably buy a $3 million property. Assume it, also, increases 10%. Now he has earned $300,000 with his same $1 million investment.
As another option, instead of buying a more expensive asset, he could invest in several With leverage, his $1 million investment capital could buy three $1 million properties. Again, assuming the properties all increase in value by 10%, he will earn $100,000 on each one for a total of $300,000. Again- with that same $1 million investment.

2) He can spread his investment risk across multiple properties.

3) At the same time, as the property value increases, so does the investor’s equity in the asset.

4) But investors must be aware that leverage also carries risk if the value of the property/ies declines. Leverage must be used with prudence.

Pro: Appreciation Potential. While there is no guarantee that real estate will appreciate in value, historically, long-term investors will realize some gains associated with the property upon stabilization and re-sale. While real estate values may ebb and flow over the course of an individual real estate cycle, over multiple cycles, values typically climb upward.

Pro: Multiple Investment Vehicles. There are many ways to passively invest in commercial real estate, including but not limited to investing in REITs, syndications, or real estate funds.

Pro: Tax Benefits. Real estate is a highly tax-advantaged industry. Investors are able to offset their earnings through what’s known as “depreciation.” Depreciation is an annual tax deduction that the IRS allows owners to take as “a reasonable allowance for exhaustion or wear and tear, including a reasonable allowance for obsolescence.” Only the value of buildings can be depreciated, including eligible appliances, fixtures, and equipment. Land is not considered depreciable.

Con: Illiquid Asset Class. One drawback to investing in commercial real estate is that it is an illiquid asset (unless one invests in a publicly traded REIT). The time it takes to conduct due diligence, acquire, close on, and then stabilize a property can take months if not years. Therefore, real estate does not trade as quickly and easily as other asset classes. This means that real estate investors often have large tranches of their capital tied up for years at a time.

Con: Market Risks. While commercial real estate has historically performed well relative to other asset classes, it is not a foolproof investment. Its performance is still subject to market risks that could impact the property’s value. Market risks include changes in rental rates, interest rates, property taxes, and absorption rates. These changes can happen quickly and unexpectedly, so investors must be sure their pro forma has sufficient padding to absorb potential financial hits like these. Experienced investors should be able to anticipate these changes well before they occur, but occasionally, black swan events like the pandemic are beyond the realm of what investors might have imagined.

Con: Limited Control. Those who invest in a REIT, fund, or syndication usually have very little direction over how real estate decisions are made. As passive investors, they are merely contributors of capital. All decisions are otherwise made by the sponsor or operating entity overseeing the transaction on investors’ behalf. This requires investors to put significant faith in the company with whom they invest – faith that that company has the knowledge, resources, and experience to execute their business plans as originally intended.

Is Commercial Real Estate a Good Investment?

We provide quality housing that makes lives better. Meet the people that make the difference at Lloyd Jones.

What Is Commercial Real Estate?

Commercial real estate can be owned individually, by groups, or by companies organized to oversee the investment on others’ behalf.

We find and create investment opportunities for our partners. Learn more about what we do here at Loyd Jones.

The Pros and Cons of Investing in Commercial Real Estate

There are many benefits associated with investing in commercial real estate. However, despite the benefits, there are some drawbacks, as well. We explore these pros and cons below.

Pro: Portfolio Diversification. Adding commercial real estate to one’s portfolio is a great way to diversify away from traditional stocks, bonds, and mutual funds. This is because real estate generally has a low correlation with the stock market. The stock market tends to ebb and flow, sometimes dramatically, even on a daily basis. Real estate value takes longer to respond to economic turmoil, and therefore, is less likely to experience regular volatility. Those looking for stable investments will often invest in commercial real estate as a way of otherwise mitigating their portfolio’s risk.

Pro: Asset Diversity. As noted above, commercial real estate is a large sector with many product types of varying sizes and scales. Someone looking to further mitigate portfolio risk can do so by investing in real estate of varying risk profiles. For example, ground-up development (i.e., “opportunistic” development) is considered the riskiest of all real estate deals. Investing in a stabilized, core asset is much “safer” though the costs will be higher, and returns will be lower. Investors might decide to invest their capital proportionately depending on their specific risk tolerance and investment horizon.

Pro: Ability to Leverage. A primary draw to investing in commercial real estate is the ability to use leverage (i.e., financing) to fund the acquisition and/or redevelopment of a property. This ability to leverage offers a real estate investor several advantages.

Assume he has $1 million to invest. He can put it all into one, $1 million purchase. Assume it increases 10%. He will have earned $100,000.
Or with leverage, (i.e., a mortgage), his $1 million can probably buy a $3 million property. Assume it, also, increases 10%. Now he has earned $300,000 with his same $1 million investment.
As another option, instead of buying a more expensive asset, he could invest in several With leverage, his $1 million investment capital could buy three $1 million properties. Again, assuming the properties all increase in value by 10%, he will earn $100,000 on each one for a total of $300,000. Again- with that same $1 million investment.

2) He can spread his investment risk across multiple properties.

3) At the same time, as the property value increases, so does the investor’s equity in the asset.

4) But investors must be aware that leverage also carries risk if the value of the property/ies declines. Leverage must be used with prudence.

Pro: Appreciation Potential. While there is no guarantee that real estate will appreciate in value, historically, long-term investors will realize some gains associated with the property upon stabilization and re-sale. While real estate values may ebb and flow over the course of an individual real estate cycle, over multiple cycles, values typically climb upward.

Pro: Multiple Investment Vehicles. There are many ways to passively invest in commercial real estate, including but not limited to investing in REITs, syndications, or real estate funds.

Pro: Tax Benefits. Real estate is a highly tax-advantaged industry. Investors are able to offset their earnings through what’s known as “depreciation.” Depreciation is an annual tax deduction that the IRS allows owners to take as “a reasonable allowance for exhaustion or wear and tear, including a reasonable allowance for obsolescence.” Only the value of buildings can be depreciated, including eligible appliances, fixtures, and equipment. Land is not considered depreciable.

Con: Illiquid Asset Class. One drawback to investing in commercial real estate is that it is an illiquid asset (unless one invests in a publicly traded REIT). The time it takes to conduct due diligence, acquire, close on, and then stabilize a property can take months if not years. Therefore, real estate does not trade as quickly and easily as other asset classes. This means that real estate investors often have large tranches of their capital tied up for years at a time.

Con: Market Risks. While commercial real estate has historically performed well relative to other asset classes, it is not a foolproof investment. Its performance is still subject to market risks that could impact the property’s value. Market risks include changes in rental rates, interest rates, property taxes, and absorption rates. These changes can happen quickly and unexpectedly, so investors must be sure their pro forma has sufficient padding to absorb potential financial hits like these. Experienced investors should be able to anticipate these changes well before they occur, but occasionally, black swan events like the pandemic are beyond the realm of what investors might have imagined.

Con: Limited Control. Those who invest in a REIT, fund, or syndication usually have very little direction over how real estate decisions are made. As passive investors, they are merely contributors of capital. All decisions are otherwise made by the sponsor or operating entity overseeing the transaction on investors’ behalf. This requires investors to put significant faith in the company with whom they invest – faith that that company has the knowledge, resources, and experience to execute their business plans as originally intended.

Is Commercial Real Estate a Good Investment?

We provide quality housing that makes lives better. Meet the people that make the difference at Lloyd Jones.

What Is Commercial Real Estate?

Commercial real estate can be owned individually, by groups, or by companies organized to oversee the investment on others’ behalf.

We find and create investment opportunities for our partners. Learn more about what we do here at Loyd Jones.

The Pros and Cons of Investing in Commercial Real Estate

There are many benefits associated with investing in commercial real estate. However, despite the benefits, there are some drawbacks, as well. We explore these pros and cons below.

Pro: Portfolio Diversification. Adding commercial real estate to one’s portfolio is a great way to diversify away from traditional stocks, bonds, and mutual funds. This is because real estate generally has a low correlation with the stock market. The stock market tends to ebb and flow, sometimes dramatically, even on a daily basis. Real estate value takes longer to respond to economic turmoil, and therefore, is less likely to experience regular volatility. Those looking for stable investments will often invest in commercial real estate as a way of otherwise mitigating their portfolio’s risk.

Pro: Asset Diversity. As noted above, commercial real estate is a large sector with many product types of varying sizes and scales. Someone looking to further mitigate portfolio risk can do so by investing in real estate of varying risk profiles. For example, ground-up development (i.e., “opportunistic” development) is considered the riskiest of all real estate deals. Investing in a stabilized, core asset is much “safer” though the costs will be higher, and returns will be lower. Investors might decide to invest their capital proportionately depending on their specific risk tolerance and investment horizon.

Pro: Ability to Leverage. A primary draw to investing in commercial real estate is the ability to use leverage (i.e., financing) to fund the acquisition and/or redevelopment of a property. This ability to leverage offers a real estate investor several advantages.

Assume he has $1 million to invest. He can put it all into one, $1 million purchase. Assume it increases 10%. He will have earned $100,000.
Or with leverage, (i.e., a mortgage), his $1 million can probably buy a $3 million property. Assume it, also, increases 10%. Now he has earned $300,000 with his same $1 million investment.
As another option, instead of buying a more expensive asset, he could invest in several With leverage, his $1 million investment capital could buy three $1 million properties. Again, assuming the properties all increase in value by 10%, he will earn $100,000 on each one for a total of $300,000. Again- with that same $1 million investment.

2) He can spread his investment risk across multiple properties.

3) At the same time, as the property value increases, so does the investor’s equity in the asset.

4) But investors must be aware that leverage also carries risk if the value of the property/ies declines. Leverage must be used with prudence.

Pro: Appreciation Potential. While there is no guarantee that real estate will appreciate in value, historically, long-term investors will realize some gains associated with the property upon stabilization and re-sale. While real estate values may ebb and flow over the course of an individual real estate cycle, over multiple cycles, values typically climb upward.

Pro: Multiple Investment Vehicles. There are many ways to passively invest in commercial real estate, including but not limited to investing in REITs, syndications, or real estate funds.

Pro: Tax Benefits. Real estate is a highly tax-advantaged industry. Investors are able to offset their earnings through what’s known as “depreciation.” Depreciation is an annual tax deduction that the IRS allows owners to take as “a reasonable allowance for exhaustion or wear and tear, including a reasonable allowance for obsolescence.” Only the value of buildings can be depreciated, including eligible appliances, fixtures, and equipment. Land is not considered depreciable.

Con: Illiquid Asset Class. One drawback to investing in commercial real estate is that it is an illiquid asset (unless one invests in a publicly traded REIT). The time it takes to conduct due diligence, acquire, close on, and then stabilize a property can take months if not years. Therefore, real estate does not trade as quickly and easily as other asset classes. This means that real estate investors often have large tranches of their capital tied up for years at a time.

Con: Market Risks. While commercial real estate has historically performed well relative to other asset classes, it is not a foolproof investment. Its performance is still subject to market risks that could impact the property’s value. Market risks include changes in rental rates, interest rates, property taxes, and absorption rates. These changes can happen quickly and unexpectedly, so investors must be sure their pro forma has sufficient padding to absorb potential financial hits like these. Experienced investors should be able to anticipate these changes well before they occur, but occasionally, black swan events like the pandemic are beyond the realm of what investors might have imagined.

Con: Limited Control. Those who invest in a REIT, fund, or syndication usually have very little direction over how real estate decisions are made. As passive investors, they are merely contributors of capital. All decisions are otherwise made by the sponsor or operating entity overseeing the transaction on investors’ behalf. This requires investors to put significant faith in the company with whom they invest – faith that that company has the knowledge, resources, and experience to execute their business plans as originally intended.

Is Commercial Real Estate a Good Investment?

We provide quality housing that makes lives better. Meet the people that make the difference at Lloyd Jones.

What Is Commercial Real Estate?

Commercial real estate can be owned individually, by groups, or by companies organized to oversee the investment on others’ behalf.

We find and create investment opportunities for our partners. Learn more about what we do here at Loyd Jones.

The Pros and Cons of Investing in Commercial Real Estate

There are many benefits associated with investing in commercial real estate. However, despite the benefits, there are some drawbacks, as well. We explore these pros and cons below.

Pro: Portfolio Diversification. Adding commercial real estate to one’s portfolio is a great way to diversify away from traditional stocks, bonds, and mutual funds. This is because real estate generally has a low correlation with the stock market. The stock market tends to ebb and flow, sometimes dramatically, even on a daily basis. Real estate value takes longer to respond to economic turmoil, and therefore, is less likely to experience regular volatility. Those looking for stable investments will often invest in commercial real estate as a way of otherwise mitigating their portfolio’s risk.

Pro: Asset Diversity. As noted above, commercial real estate is a large sector with many product types of varying sizes and scales. Someone looking to further mitigate portfolio risk can do so by investing in real estate of varying risk profiles. For example, ground-up development (i.e., “opportunistic” development) is considered the riskiest of all real estate deals. Investing in a stabilized, core asset is much “safer” though the costs will be higher, and returns will be lower. Investors might decide to invest their capital proportionately depending on their specific risk tolerance and investment horizon.

Pro: Ability to Leverage. A primary draw to investing in commercial real estate is the ability to use leverage (i.e., financing) to fund the acquisition and/or redevelopment of a property. This ability to leverage offers a real estate investor several advantages.

Assume he has $1 million to invest. He can put it all into one, $1 million purchase. Assume it increases 10%. He will have earned $100,000.
Or with leverage, (i.e., a mortgage), his $1 million can probably buy a $3 million property. Assume it, also, increases 10%. Now he has earned $300,000 with his same $1 million investment.
As another option, instead of buying a more expensive asset, he could invest in several With leverage, his $1 million investment capital could buy three $1 million properties. Again, assuming the properties all increase in value by 10%, he will earn $100,000 on each one for a total of $300,000. Again- with that same $1 million investment.

2) He can spread his investment risk across multiple properties.

3) At the same time, as the property value increases, so does the investor’s equity in the asset.

4) But investors must be aware that leverage also carries risk if the value of the property/ies declines. Leverage must be used with prudence.

Pro: Appreciation Potential. While there is no guarantee that real estate will appreciate in value, historically, long-term investors will realize some gains associated with the property upon stabilization and re-sale. While real estate values may ebb and flow over the course of an individual real estate cycle, over multiple cycles, values typically climb upward.

Pro: Multiple Investment Vehicles. There are many ways to passively invest in commercial real estate, including but not limited to investing in REITs, syndications, or real estate funds.

Pro: Tax Benefits. Real estate is a highly tax-advantaged industry. Investors are able to offset their earnings through what’s known as “depreciation.” Depreciation is an annual tax deduction that the IRS allows owners to take as “a reasonable allowance for exhaustion or wear and tear, including a reasonable allowance for obsolescence.” Only the value of buildings can be depreciated, including eligible appliances, fixtures, and equipment. Land is not considered depreciable.

Con: Illiquid Asset Class. One drawback to investing in commercial real estate is that it is an illiquid asset (unless one invests in a publicly traded REIT). The time it takes to conduct due diligence, acquire, close on, and then stabilize a property can take months if not years. Therefore, real estate does not trade as quickly and easily as other asset classes. This means that real estate investors often have large tranches of their capital tied up for years at a time.

Con: Market Risks. While commercial real estate has historically performed well relative to other asset classes, it is not a foolproof investment. Its performance is still subject to market risks that could impact the property’s value. Market risks include changes in rental rates, interest rates, property taxes, and absorption rates. These changes can happen quickly and unexpectedly, so investors must be sure their pro forma has sufficient padding to absorb potential financial hits like these. Experienced investors should be able to anticipate these changes well before they occur, but occasionally, black swan events like the pandemic are beyond the realm of what investors might have imagined.

Con: Limited Control. Those who invest in a REIT, fund, or syndication usually have very little direction over how real estate decisions are made. As passive investors, they are merely contributors of capital. All decisions are otherwise made by the sponsor or operating entity overseeing the transaction on investors’ behalf. This requires investors to put significant faith in the company with whom they invest – faith that that company has the knowledge, resources, and experience to execute their business plans as originally intended.

Is Commercial Real Estate a Good Investment?

We provide quality housing that makes lives better. Meet the people that make the difference at Lloyd Jones.

Mandy Doucet is executive vice president of Lloyd Jones Multifamily Management, which has 5,500 apartment units under management throughout Florida, Texas, and the Southeast. Throughout the pandemic, as other property management companies struggled with delinquent rent collection, Lloyd Jones has beaten the national collection averages—consistently collecting at least 95% of rents. Doucet shares a few strategies she and her leadership team implemented to maximize rent collection in the properties managed by Lloyd Jones.

Be understanding

As the pandemic unfolded and residents were faced with unemployment, reduced hours and furloughs, the financial impact was overwhelming. Many residents were embarrassed and anxious about their finances and hesitant to come forward. I met with our leadership team and had each community create a video from the property manager—sent via email—with the message that “We haven’t heard from you, and we want to work with you. We’re here to help.” It was a personal approach that resonated with residents and helped boost our rent collection percentages.

Offer flex payment options

We worked with residents by offering flexible payment options and updated our system to be able to accept partial payments. In addition, we paused any increases on renewals, offered shorter-term leases, if necessary, and didn’t require any break-lease fees. We also let people use part of their deposit as payment, and waived the minimal online processing fee. These measures demonstrated our compassion and empathy for our residents and helped keep people in their apartments.

Use creativity

Because of COVID-19, residents were apprehensive about letting maintenance crew into their apartments for small repairs, so we encouraged managers to create DIY guides to common repairs (accessible through the online resident portal). The guides provided instructions on basic maintenance issues such as the proper way to plunge a toilet, giving residents the option to make the repair themselves. Of course, maintenance was always available if the resident requested service. The residents appreciated our concern for their safety.

Share information about resources

Through their online resident portals, our communities let residents know about resources available to them, whether through local charities, or government agencies. We also had several properties conduct their own food drives, so residents could stop by the office for pantry essentials. And in some cases, where residents were intimidated by the complexity of applications for federal funds, we helped complete the paperwork for them.

Kindness goes a long way

Keeping our residents and our teams safe was one of our first priorities, and we were among the first property management firms to install plexiglass in managers’ offices, institute virtual tours, and make the investment in electrostatic sprayers to be able to sanitize quickly. These measures conveyed our care and concern and helped build a relationship of trust and good faith with our residents.

While there isn’t a single silver bullet to improve rent collection during a crisis, these strategies and tactics reflect our core values as a company: passion, compassion, and optimism. Our goal is always to make lives better and create communities where people feel truly at home.

Mandy Doucet has been in the real estate management business since 1995, and has a diverse background in marketing, training and resident services. In her role as EVP, she directs property operations and training development for Lloyd Jones Multifamily Management. Mandy is a CPM and holds CAPS, ARM, HCCP and C3p designations.

What to Look for in a Post-Pandemic Multifamily Investment Property – by Dawn Allcot

What Is Commercial Real Estate?

Commercial real estate can be owned individually, by groups, or by companies organized to oversee the investment on others’ behalf.

We find and create investment opportunities for our partners. Learn more about what we do here at Loyd Jones.

The Pros and Cons of Investing in Commercial Real Estate

There are many benefits associated with investing in commercial real estate. However, despite the benefits, there are some drawbacks, as well. We explore these pros and cons below.

Pro: Portfolio Diversification. Adding commercial real estate to one’s portfolio is a great way to diversify away from traditional stocks, bonds, and mutual funds. This is because real estate generally has a low correlation with the stock market. The stock market tends to ebb and flow, sometimes dramatically, even on a daily basis. Real estate value takes longer to respond to economic turmoil, and therefore, is less likely to experience regular volatility. Those looking for stable investments will often invest in commercial real estate as a way of otherwise mitigating their portfolio’s risk.

Pro: Asset Diversity. As noted above, commercial real estate is a large sector with many product types of varying sizes and scales. Someone looking to further mitigate portfolio risk can do so by investing in real estate of varying risk profiles. For example, ground-up development (i.e., “opportunistic” development) is considered the riskiest of all real estate deals. Investing in a stabilized, core asset is much “safer” though the costs will be higher, and returns will be lower. Investors might decide to invest their capital proportionately depending on their specific risk tolerance and investment horizon.

Pro: Ability to Leverage. A primary draw to investing in commercial real estate is the ability to use leverage (i.e., financing) to fund the acquisition and/or redevelopment of a property. This ability to leverage offers a real estate investor several advantages.

Assume he has $1 million to invest. He can put it all into one, $1 million purchase. Assume it increases 10%. He will have earned $100,000.
Or with leverage, (i.e., a mortgage), his $1 million can probably buy a $3 million property. Assume it, also, increases 10%. Now he has earned $300,000 with his same $1 million investment.
As another option, instead of buying a more expensive asset, he could invest in several With leverage, his $1 million investment capital could buy three $1 million properties. Again, assuming the properties all increase in value by 10%, he will earn $100,000 on each one for a total of $300,000. Again- with that same $1 million investment.

2) He can spread his investment risk across multiple properties.

3) At the same time, as the property value increases, so does the investor’s equity in the asset.

4) But investors must be aware that leverage also carries risk if the value of the property/ies declines. Leverage must be used with prudence.

Pro: Appreciation Potential. While there is no guarantee that real estate will appreciate in value, historically, long-term investors will realize some gains associated with the property upon stabilization and re-sale. While real estate values may ebb and flow over the course of an individual real estate cycle, over multiple cycles, values typically climb upward.

Pro: Multiple Investment Vehicles. There are many ways to passively invest in commercial real estate, including but not limited to investing in REITs, syndications, or real estate funds.

Pro: Tax Benefits. Real estate is a highly tax-advantaged industry. Investors are able to offset their earnings through what’s known as “depreciation.” Depreciation is an annual tax deduction that the IRS allows owners to take as “a reasonable allowance for exhaustion or wear and tear, including a reasonable allowance for obsolescence.” Only the value of buildings can be depreciated, including eligible appliances, fixtures, and equipment. Land is not considered depreciable.

Con: Illiquid Asset Class. One drawback to investing in commercial real estate is that it is an illiquid asset (unless one invests in a publicly traded REIT). The time it takes to conduct due diligence, acquire, close on, and then stabilize a property can take months if not years. Therefore, real estate does not trade as quickly and easily as other asset classes. This means that real estate investors often have large tranches of their capital tied up for years at a time.

Con: Market Risks. While commercial real estate has historically performed well relative to other asset classes, it is not a foolproof investment. Its performance is still subject to market risks that could impact the property’s value. Market risks include changes in rental rates, interest rates, property taxes, and absorption rates. These changes can happen quickly and unexpectedly, so investors must be sure their pro forma has sufficient padding to absorb potential financial hits like these. Experienced investors should be able to anticipate these changes well before they occur, but occasionally, black swan events like the pandemic are beyond the realm of what investors might have imagined.

Con: Limited Control. Those who invest in a REIT, fund, or syndication usually have very little direction over how real estate decisions are made. As passive investors, they are merely contributors of capital. All decisions are otherwise made by the sponsor or operating entity overseeing the transaction on investors’ behalf. This requires investors to put significant faith in the company with whom they invest – faith that that company has the knowledge, resources, and experience to execute their business plans as originally intended.

Is Commercial Real Estate a Good Investment?

We provide quality housing that makes lives better. Meet the people that make the difference at Lloyd Jones.

Lloyd Jones’ Chris Finlay and Starwood Capital Group’s James Kane discuss market dynamics and expectations for the area’s multifamily market.

by Evelyn Jozsa
Multi-Housing News

Thanks to a favorable tax environment and a relatively low cost of living, Central Florida’s economy has been steadily advancing in the past few years. The COVID-19 crisis, however, has shaken market fundamentals and put the region’s growth on hold.

Nevertheless, the bumpy road ahead hasn’t intimidated Central Florida multifamily investors, who rely on the region’s favorable demographics to sustain housing demand going forward. “Despite all the challenges 2020 presented, Orlando’s population grew by 61,000 residents, which outpaced fast-growing metropolitan areas like Atlanta; Austin, Texas, and Tampa, Fla.,” Lloyd Jones CEO & Chairman Chris Finlay told Multi-Housing News.

In the interview below, Finlay and Starwood Capital Group Managing Director James Kane provide insights on Central Florida’s multifamily market and share business strategies that might help investors stay afloat under current economic conditions.

https://www.multihousingnews.com/post/how-central-florida-investors-are-recalibrating-their-strategy/