Most apartment investors look to generate profit through an expected general appreciation of real estate. That does not always work. Last year we published the appreciation trends for all of the sales in the market in The Apartment Advisor. Our study found 20 percent sold for less than their original acquisition price. Two primary strategies for actively creating value are condominium conversion and renovation.
Few investors have the time or expertise to take advantage of either strategy.
Make sure the property is one you want to buy and the syndicator is someone you want as a partner. Most syndicators in the early 1980s followed the general pattern of buy and hold, waiting for appreciation. Many extolled the tax benefits of real estate investing. Indeed, tax benefits were significant back then. That happened, but many of the investments were unsound, leaving investors without profit or even their original investment and hitting them with a large recapture bill as well.