Some Baby Boomer apartment investors are starting to sell these investments as they get closer to retirement.
In a survey conducted for The Wall Street Journal, Marcus & Millichap found that its apartment investor clients who have recently sold their assets plan to move 59% of that equity to other properties, investments and cash.
Many of these investors bought their properties between 1990 and 2000. In recent years, apartment investors began to experience tremendous equity growth. The median price per unit of apartments in the US rose 87% to $112,000 from 2,000 to 2006. "A number of them found that they were 10 years older and had a much larger tax liability because of the tremendous amount of appreciation," says Harvey Green, chief executive officer of the Encino, CA, real estate investment brokerage firm. "Now, they are thinking of the tax impact and coming up with exit strategies."
They are also just looking for less intensive investments. Some investors who are cashing out "are more passive in terms of management," Mr. Green says. They are seeking stable, long-term cash flow and not necessarily as much equity buildup.
Source: The Wall Street Journal, July 19, 2006
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