Crisis in the US real estate market: how to invest in a promising niche?
The commercial real estate market is headed for a collapse that could be as devastating as the 2008-2009 crisis, the CEO of a major real estate investment firm said. Patrick Carroll, founder and CEO of CARROLL, sounded an alarm about the state of the U.S. commercial real estate market in an interview with CNBC's April 2023. "Unfortunately, the party's over," he said. "The office sector will be destroyed, hotels will be destroyed - it's going to be devastating. "
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An alarm bell for commercial real estate
Carroll is not the first and certainly not the last to raise the alarm bell for the commercial real estate sector. Since the collapse of Silicon Valley Bank in March, experts have expressed fears about the giant wall of $1.5 trillion in debt hanging over U.S. commercial real estate. That mortgage debt, mostly held by small and medium-sized banks, is due by the end of 2025. "No lender is willing to lend because they don't know where interest rates are going to go," said''Carroll.
Carroll added that offices were experiencing "double unhappiness" and described the sector's fundamentals as "appalling". "After COVID, people were working from home.
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Shelter in real estate?
According to Carroll, there is one segment of real estate that is riding out this wave - multifamily properties. Unlike commercial real estate, the multifamily market has "strong fundamentals," says Carroll, whose real estate investment company manages more than 33,000 multifamily units in nine states. "I spoke with one of the''the largest landlords in the world yesterday, and he's telling everybody, "\'Live to 2025'\'". Right now, our fundamentals are great, people are paying rent [and] the market is healthy," he said.
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Because of inflated real estate prices and mortgage rates, renting has become the only option for many Americans. "It's all become kind of a perfect storm for the multifamily real estate business," Carroll told Fox Business in an interview last summer.
If you want to invest in multifamily real estate, here are two ways to get involved.
Invest in residential''REIT
Investing in a residential real estate investment trust (REIT) is a way to profit from the real estate market without buying actual real estate or managing tenants. REITs are publicly traded companies that own income-producing properties such as apartment buildings, shopping centers, and office buildings. They collect rent from tenants and pass it on to shareholders in the form of regular dividends. Here are two multifamily REITs you might be interested in.
Camden Property Trust (NYSE: CPT) owns, manages, develops and acquires residential apartments. As of June 30, it owned and managed 171 properties comprising 58,564 apartments in the United States. With a market capitalization of just under $12 billion,''Many platforms use a crowdsourcing model where you can join thousands of members with similar interests - in this case, multifamily real estate - looking to maximize returns and generate passive income. Through these easy-to-use platforms, often backed by a team of experts, you can browse selected offerings or join funds that invest in diversified real estate portfolios that maximize your returns while keeping fees low. If you want to invest in commercial real estate, you can find the options best suited to your needs by answering a few quick questions using Moneywise's investment search tool.
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