The greed in the United States has not only driven this country to a deep and long recession, but also sparked a global financial crisis of unparalleled proportions. This fact is well known and documented. It is also well documented that the commercial real estate market have been severely hit leading public traded REITs like General Growth Properties and large commercial property owners like the Lembi Group out of San Francisco to file for bankruptcy protection. The herd mentality says “sell, sell, sell.” During these times of great uncertainty, it will be the contrarians that will ultimately take advantage of the steep declines in commercial properties and actually be the catalysts to turn the economy around. So, if you have money and are ready to invest in real estate, where are the best markets and opportunities that promise to yield optimal risk adjusted returns?
The first market to invest in is urban in-fill locations. You may have been expecting me to offer up a specific city, but you’ll find great opportunities in a myriad of urban in-fill locations. Urban infill locations are places like Seattle, San Francisco, Los Angeles, and New York to state the obvious. These locations have large existing populations, strong job base and limited available properties. There are less obvious cities, but equally filled with opportunities like Redmond or Bellevue in Washington and San Mateo, Burlingame, and Los Gatos in California. Look for cities within 15 miles of the most urban city in your region.
The second market to invest in is tourist locations. When hurricane Katrina hit New Orleans, the real estate market in Louisiana was devastated. Properties sold in the French Quarter were selling for 1/3 of the price before the hurricane. Once the flood and the chaos quelled, real estate in the French Quarter tripled. There are other places to consider like Mexico. Mexican cities like Cabo San Lucas or Cancun are excellent cities in Mexico. While the Mexico flag flies in those cities rather than the American flag, there are great opportunities in this depressed market to buy real estate.
The third are college towns. Places like Westwood near UCLA or Berkeley next to UC Berkeley yield some of the highest and inelastic rents in the country. You can even buy depressed properties near state colleges like West Virginia or Fresno State. Even though the prices are low, the rents are high because students want to be near campus.