Are you falling victim to these 3 common commercial real estate myths?

If you’re getting most of your investment advice from the media, you may have heard or even believed some of these myths. My goal is to give you information and education so that you will be a well-informed, sophisticated investor who can make the best investment decisions for your goals.

Let’s get started. ??

Myth #1: Rising Interest Rates mean that we shouldn’t be buying real estate right now.

Myth Bust: Commercial real estate is NOT single family real estate and I sometimes see investors conflate these two completely different asset classes.?

There are wise, time-tested strategies to follow during every phase of the real estate cycle and we can deploy these strategies to build our wealth and create a legacy.?

Here is what I have found that works to grow my wealth and hands-off income during times of higher interest rates: (Not investment advice - simply sharing what has worked for me)

(1) Buying in strong, stable, and economically diverse markets in the United States?

(I’m currently buying in the amazing market of Dallas Fort Worth, TX)

(2) Buying at the right price given current interest rates to make sure the property cash flows from day 1 of owning the property?

(The seller of the current property we are buying with our investors is losing about $6,000,000 in equity. Sad for them. But, it’s an amazing opportunity for us!)

(3) Implementing a strong and conservative business plan to execute once we purchase our property. Our goal is to preserve our capital through multiple layers of risk mitigation while also building a solid foundation for our investment to grow

Bottomline: Even when interest rates have increased, there are opportunities to buy real estate at a discount and set ourselves up for exciting wealth creation.

Myth #2: Rents Are Decreasing

Myth Bust: Let's begin by reminding ourselves that there is no single, unified real estate market in the United States

Each city is completely different - Los Angeles apartment investing isn’t the same as Dallas or Huntsville or Indianapolis. Are there apartment markets in the US where rents are decreasing? Yes! But not all. This is where market research comes in and understanding what drives apartment demand. We conduct extensive research when choosing markets and of course, we evaluate hundreds of investment opportunities before choosing just one to invest in.?

Furthermore, we must also understand what a value-added apartment investing strategy is. Let me walk you through this:

This strategy means we buy apartments with below-market rents. Here’s an example: let’s say for a given city in the US, the market rate for a 2-bedroom apartment is $1000/unit.

We buy an apartment complex within place 2 bedroom rent of $700/unit - that’s $300/unit below the market.?

If market rent falls to $900/unit, our apartment rents are still $200/unit below market.?

Real estate investing is all about buying the right property in the right market and the right business plan. Savvy investors understand that investing isn’t just about doom and gloom headlines - there is nuance and strategy to understand.?

Myth #3: A recession is coming and real estate is going to crash

Myth bust: Don’t let the media mislead you.

Single-family homes are not valued the same way multifamily real estate is valued. In addition, if the economy tanks (which it’s likely not going to), history shows us that demand for apartment units likely will hold steady. Why? People will always need housing. If salaries go down or folks are laid off, they are less likely to have the salary to pay their mortgage or buy a home. This leads to demand for apartments.

Apartment real estate has strong fundamentals.?

• Our country’s largest demographic group (millennials) is choosing to rent instead of buy - not because they can’t afford to buy, but because they want the flexibility and less headache of renting.?

• There is a massive housing shortage in the US that will take a decade or more (conservatively) to fix?

• Material and labor to build new housing is extremely expensive. This means that most of the new housing in the US is class A, top of the market, and higher rent. This translates to a continued lack of average-cost apartment units for everyday Americans

All of these points mean that demand for apartment units in strong cities throughout the US will remain strong

Here’s what I want you to take away today:?

Self-education on investing, particularly in real estate, is your best bet.

Do not let the media poison you with incorrect or incomplete education - because you could miss out on incredible investment opportunities that could set your family up for generations to come.?

If you’d like to learn more about hands-off investment income, watch our free training here.?

Until our next interesting article,

Amy Sylvis

P.S.? If you're ready to unlock the secrets to a truly abundant life, consider this: At Sylvis Capital, we believe money is not the end goal but a means to achieve giving back, optimal health, meaningful relationships, and geographic freedom. It's about creating a life rich with experiences, purpose, and joy.?

Tune in to the latest episode of the Secrets to Abundant Living podcast! What if success in life and business hinges more on giving than on getting? Join Amy Sylvis and bestselling author Bob Burg as they explore how building relationships and embracing gratitude can lead to true abundance.

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