Commercial Real Estate's #1 Myth Exposed By Monte Lee-Wen At Isnare.com Ezine Articles

There it was in the Wall Street Journal last week. The headline in the Real Estate Section blared,
"Apartment Vacancy Rate Hits 22-Year High !"
and I murmured to myself ... here we go again.

It just reminded me why newspapermen are NOT Real Estate Investors ... they are just out to sell papers and a sensational headline will always beat out a rational article.

But wait ... there's more ...
If you read the last line of paragraph three you found that, "Of the 79 Markets tracked by REIS, 45 showed an increase in Vacancies." That sounds really BAD now doesn't it? We should panic ... right? Hmmmm ... Remember now, this is coming from a newspaper and there is most certainly more to this story. Hold on just a minute ...

As an Investor, what I find MOST interesting in this article is this.
- In the face of the worst economic downturn since the great Depression.
- In the face of the worst residential housing market in anyone's living memory
- In the face of hundreds of thousands of foreclosed / vacant / rental single family homes competing with apartments for renters
In the face of ALL of this ...

43% of the markets tracked by REIS showed STABLE OR DECREASING VACANCIES !!
That's right 34 of those same 79 Markets preserved or decreased their vacancy rates. That statistic is truly amazing given the national economic circumstances.

And that's not all ... In the next to the last paragraph we learn that suburban Maryland and Washington, D.C. even saw a 0.3% rent increase in the second quarter. WOW.

What is the Press Missing here?
The media propagates one of the big myths in Real Estate when they report on national statistics in this fashion.

Here is the Myth ...
There is a "National Real Estate Market"

That statement is simply not true ... never has been and never will be.

Here is the truth...
You can aggregate statistics and report on the national data with big screaming headlines, but All Real Estate Is Local.

There is no mythical "National Apartment Market" that moves in sync from coast to coast taking all Multifamily Projects up and down with its gyrations.

The Profit is in the details
The savvy investor is still doing the same things despite this article ...
- Working to find a market in the right phase of the market cycle
- Then finding well priced properties where they can make a profit by improving the performance under their management.

And those local markets exist right now.

The timeless rules still apply ... LOCAL market conditions will determine much of the profit in your Commercial Real Estate projects. One of the key skills for Commercial Property Investors is understanding Market Cycles and timing the markets to ride the LOCAL wave. (See our Double Your Profits training to learn more)

If you are invested one of the 43% of Markets where vacancies are stable or falling ... you and your investors are doing just fine. These headlines may cause your investors to give you a call with concerns ... AND the cash flow from your property is probably stable.

Here is the biggest challenge for Project Sponsors in Multifamily as a result of this article ... Your Investors and potential investors read this article too ... darn.

Now you have to provide some education about the myth of the "National Apartment Market" to bring them on board.

It won't be that difficult to do. Some local market research will quickly prove to them that you know more than the Wall Street Journal about your local market and why Apartments are still an excellent investment. The ability to find a profitable apartment project may actually be increasing in this economy because of distressed commercial property for sale in many solidly performing markets at once in a lifetime prices.

Here is my advice.
Don't believe ANY headline in ANY article claiming to report on ANY national trends in Real Estate in your chosen niche.

All Real Estate is Local ... from now until the end of time.

Your job is to find those local markets where you can make a buck. And there are a lot of them still out there despite the WSJ blaring, "Apartment Vacancy Rate Hits 22-Year High" last week. Then show your investors the difference between what you know about Real Estate as an Investor and what the Wall Street Journal says as a bastion of the media.

I am sure both of us would have written a different headline.

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