How to Invest in Real Estate for 2019

TL;DR

Paul Moore outlines a 2019 real estate strategy focusing on multifamily, self-storage, and mobile home parks. He highlights the benefits of these asset classes, including tax advantages and stability, especially during potential economic downturns. Moore emphasizes due diligence and diversification across asset classes and geographies to mitigate risks and maximize returns.

Transcript

alright hey everybody good morning I am Paul Moore and I'm so glad to be here with you today let me know if you can hear me I'm live here on YouTube live Facebook live and BiggerPockets live and I think I think you can hear me but I just want to make sure I've been wrong before so let me mute the speakers so welcome everybody I'm Paul Moore and tod... Read More

Key Insights

• Multifamily investing offers a balance of risk, return, and stability, and is favored by wealthy investors.
• Commercial real estate provides significant tax benefits, second only to oil and gas.
• Mobile home parks are unique as their supply is contracting while demand is increasing, making them a valuable investment.
• Self-storage is resilient during economic downturns as people need space to store belongings when downsizing.
• Value-add opportunities in real estate can significantly increase property value and investor returns.
• Diversification across asset classes, operators, and geographies is crucial for risk management.
• The new tax law allows for significant depreciation benefits, especially for mobile home parks.
• Investing with experienced operators who have weathered past recessions can provide stability and expertise.

Questions & Answers

Q: How does multifamily real estate investing provide stability?

Multifamily real estate investing offers stability through a balanced risk-return profile and consistent demand for housing. It performed well during the last recession, with foreclosure rates significantly lower than single-family homes. Multifamily properties benefit from economies of scale and professional management, making them a reliable investment choice.

Q: What makes mobile home parks a unique investment opportunity?

Mobile home parks are unique because their supply is decreasing while demand is increasing. This is due to factors such as an aging population and economic constraints. They offer affordable housing solutions, and the scarcity of new parks being developed enhances their investment value. Additionally, they provide significant tax benefits under the new tax law.

Q: Why is self-storage considered a resilient investment?

Self-storage is resilient because it remains in demand during economic downturns. People often need storage when downsizing, relocating, or managing life transitions. The business model benefits from low overhead and the ability to raise rents without significant tenant turnover, making it a stable investment choice.

Q: How can investors leverage tax benefits in real estate?

Investors can leverage tax benefits through depreciation, which reduces taxable income. The new tax law allows for bonus depreciation, enabling significant write-offs in the first year for certain asset classes, like mobile home parks. This can offset income and enhance after-tax returns, making real estate an attractive investment.

Q: What is the importance of diversification in real estate investing?

Diversification in real estate investing reduces risk by spreading investments across different asset classes, geographies, and operators. This strategy helps mitigate the impact of localized economic downturns and enhances portfolio stability. It allows investors to benefit from various market conditions and asset performance.

Q: How do value-add investments increase property value?

Value-add investments increase property value by improving operational efficiencies, enhancing property features, and increasing rental income. These improvements can lead to higher property appraisals and increased cash flow, providing significant returns to investors. The strategy leverages the potential for appreciation beyond market trends.

Q: Why is partnering with experienced operators beneficial?

Partnering with experienced operators is beneficial because they bring expertise, established processes, and a track record of success. They can navigate market cycles, manage properties efficiently, and identify value-add opportunities. Their experience reduces investment risk and enhances the likelihood of achieving targeted returns.

Q: What are the potential risks of investing in real estate during a downturn?

Investing in real estate during a downturn can be risky due to declining property values, increased vacancy rates, and tightening credit markets. However, investing in resilient asset classes like multifamily, self-storage, and mobile home parks, along with thorough due diligence and diversification, can mitigate these risks and provide stable returns.

Summary & Key Takeaways

• Paul Moore's 2019 real estate strategy focuses on multifamily, self-storage, and mobile home parks due to their balance of risk, return, and stability. He emphasizes the importance of diversification across asset classes and geographies to mitigate risks. Moore also highlights the significant tax benefits available, particularly for mobile home parks, under the new tax law.

• Mobile home parks are increasingly valuable as their supply decreases and demand rises, driven by an aging population and economic factors. Self-storage remains resilient during downturns, offering opportunities for value-add investments. Moore stresses the importance of partnering with experienced operators who have successfully navigated past economic cycles.

• Due diligence and diversification are key components of Moore's strategy, allowing for stable, predictable returns even during potential downturns. He advocates for investing in asset classes protected from economic fluctuations and leveraging tax advantages to maximize investor returns.