Multifamily real estate investments drive wealth generation. Heaton Dainard Commercial specializes in value-add and opportunistic real estate investments in the greater Seattle, WA and Puget Sound region. Investors who work with Heaton Dainard Commercial discover the upside of multifamily real estate investing, regardless of the market climate.
Potential investors see each project has a unique story and the expected return is often relative to the level of risk. Understanding the differences between the characteristics of the deal will help investors choose a project that is the right fit. Short-term flip projects are going to pencil differently than multifamily investments designed to generate a high capitalization (CAP) rate and may work best for keeping to enjoy the rent return over time. Longer term flip projects may require zoning or planning approvals that take time, and involve a full re-design of the property. Heaton Dainard Commercial works closely with the city and county planning entities in the entire region, as well as top contractors. This awareness of projected cost per changes saves investors in the long run, because knowledge going in is going to save money and bring in a greater value for the investment dollar.
Most investors search for opportunities to invest in commercial real estate as an alternative to stocks and bonds. Real estate and in particular, multifamily investments, provides diversification as well as a different risk and return profile. Each opportunity comes with a variety of deal characteristics. These characteristics will define the risk. Multifamily properties can be evaluated for location, property type, zoning, potential, tenant profile, and future projection. Heaton Dainard Commercial, with over a decade of Seattle multifamily investment experience, is particularly gifted at visioning the future potential of an area. In particular, areas near universities provide a great place to expand the number of beds and baths for multifamily investment properties.
Investors who work with Heaton Dainard Commercial have access to a variety of different types of commercial real estate but at this point, the laser focus is on multifamily apartment complexes of five units or more. Investment opportunities such as student and senior housing facilities are particularly interesting. Each type of property has a unique set of features that guide how the property is managed. The level of a risk takes into account the dynamics of the sector, the relative profitability, and its expected return.
The cost and risk analysis will take into effect how close a property is to a major metropolitan neighborhood. Over the years, the capitalization rate often decreases in highly popular communities near major metropolitan areas like downtown Seattle. The demand stays high and the older, antiquated housing projects have often already been remodeled to achieve the highest rent possible. For the adventurous investor, Heaton Dainard Commercial may look to smaller markets such as the outskirts of Bellevue as it moves into Redland or Kirkland, Washington.
Picture the disparity in demand in downtown Manhattan or San Francisco for a residential or office space. If we compared it to smaller, then we will find that the less densely populated markets are in more remote areas. The high level of demand drives core opportunities. Highly desirable markets will often see a smaller fluctuation in rents and vacancy rates in a declining economy.
Investors with Heaton Dainard Commercial can work on a plan that is comprehensive and tailored to the investor’s choices around development risks. This can be as simple as buying and holding an asset that already has occupation, happy tenants, and a known return on investment, or as complex as constructing a new building keeping some of the framing intact. The marketing strategy is drawn up before the purchasing of any multifamily investment property. Often the plan will include several levels of potential outcomes in economics. The plan will generally include property adjustments, potential costs, expected increases in rent, and an approximate timeframe or hold date.
Investments in commercial real estate can be divided into separate categories. That categorizes them broadly, based on the deal’s different characteristics. These segments are also defined as Core, Value Add, and Opportunistic investment strategies. Each of these investment philosophies lies at a different point on the risk vs return spectrum with core investments considered to be the least risky with the lowest expected return and opportunistic investments offering the highest level of risk along with the highest expected return to investors.
When to Invest in Core Multifamily Apartment Complexes in the Seattle Region
Core investments are seen as the least risky. Mostly that seek stable, completely leased, safe investments in major markets. These include properties with long term leases in place to high credit tenants and Class A buildings in highly desirable locations. Such properties are mostly well preserved and require little to no modifications on behalf of the new owner. Thus, these kinds of real estate investments typically do not experience significant growth in value but instead have stable, predictable cash flow with fairly low risk. This kind of investment best fits investors who seek capital preservation and long hold periods. These forms of investment can appear less attractive in comparison with higher-yielding commercial real estate assets because many investors prefer a higher rate of return that is generally seen alongside higher risk. Core commercial real estate investments usually aren’t as liquid as shares traded on an exchange. In general, however, core projects are considered more liquid than value-add and opportunistic commercial real estate projects because they are stabilized, attractive, marketable assets.
When to Invest in Value-Add Multifamily Properties in the Seattle Region
Value-add multifamily property investments ordinarily target properties that have income, but have not been optimized. The Heaton Dainard Commercial investment strategy will always be to grow the income value of the property over time. This includes making enhancements designed to raise the capitalization rate. The Heaton Dainard Commercial approach will be to look at the greatest and possible use for the property. In an apartment complex near a university, for instance, it’s possible the numbers of bedrooms could be increased to serve more of the student population.
Heaton Dainard Commercial is always on the lookout for properties that could be improved for a greater return, and greater service to its neighborhood and community. Neglected places with old antiquated appliances are ripe for value-add investment opportunities. Commercial multifamily investment properties that are poorly designed are also potential fruit for future return on the investment. The gift for working with value-add investments in the multifamily apartment space is to see the diamond in the rough.
When to Invest in Opportunistic Multifamily Investment Property in the Seattle Region
Opportunistic real estate investments suit the value-add strategy but take the risk a step forward. Opportunistic properties tend to require extensive rehabilitation for recognition of their potential. Often at the time of the acquisition, these properties will be completely vacant or the developer will seek to develop raw land from the ground up.
If the business strategy is successful, those kinds of projects offer the highest level of return. But the length of time between investment and recoup of investment can be less appealing to the less determined investor. These sorts of multifamily investment opportunities carry the most risk as the properties have little to no in-place cash flow at the time of purchase, and have the most complicated business plans.
Investors for opportunistic multifamily projects in the greater Puget Sound region typically employ the use of high leverage and are often subject to less favorable debt terms and higher interest rates than more stabilized properties. Through significant value inflation, if opportunistic investment approaches are successful, they typically produce better returns for investors than core or value-add opportunities if handled well from start to finish.
Heaton Dainard Commercial puts into place a comprehensive plan for multifamily property investors. Whether you prefer a low, moderate or high level of risk and return, Heaton Dainard Commercial will work with you to put into motion a plan that serves your investment objectives. Commercial real estate buyers understand these various types of approaches and select investments that best suit their investment timeline, perceived risk thresholds, and projected returns. The Heaton Dainard Commercial approach is to work closely with investors to understand the potential risks and rewards of multifamily property investing in Washington state.