10 unit apartment LoopNet and Facebook

[Caleb Campbell]

So far I’ve only invested in single family homes. I’m looking to invest in something larger but was curious as to why it seems many of these properties seem to stay for sale for a long time? With single family houses they seem to fly off the shelves. I’m noticing many properties (10 unit) on LoopNet setting idle. Also I see many people post on Facebook about multi family units( a lot of times the same guy pushing a property). Is this something to do with occupied buildings and tenants not paying or is it harder to get commercial loans? Just curious if I’m missing something everyone else is afraid of?

[Don Konipol]

@Caleb Campbell

SFR sellers sell when they desire to move or need to sell, so they eventually listen to the market concerning price. If a commercial property is earning a good ROI, the owner can sit on the property forever. So many just list thinking if someone's crazy enough to pay their price they'll sell, otherwise they'll just be happy collecting rents. It's the negative cash flow properties where the pressure builds on the seller to sell at market pricing.

Also, for a number of reasons demand and supply are out of whack in the home market right now. Sellers whose home was worth $400k 12 months ago are selling for $500k and this is providing a lot of impetus to cash out.

Other than both commercial property and single family property are both real estate, they are in many ways two different animals. A commercial property is an investment, while a SFR can be an investment, but is more often a consumer good.