Most Investors Hold their Property Too Long

Things are good, generally, for apartment owners in the Palm Springs area. Vacancies are low, rents are steadily increasing, and employment is going up.

But it's a lot of work to invest. It takes thinking, research, and the ability to consider new ideas. These aren't easy for most people; and since most commercial real estate investors are older, it's particularly hard to summon up the energy to look at an issue that seems to be working okay. My parents used to say, if it ain't broke, don't fix it.

The economy is different, a lot different. Most people don't want to think about China, or Greece, or oil prices. But the changes are fast, and getting faster. The experiences we had in previous decades don't give us the right patterns to predict the future. People who get it right, are really rich (Elon Musk and Steve Jobs saw the future and acted).

Prior to the last Recession, I remember the complacency. No one I talked to predicted the collapse of housing prices, and the immense pain it caused individuals and families.

We're somewhere on the "rising cycle" side of this curve. So the question is, how much of the "up" is left?

Not that much, in my opinion. We're closer to the next top than we are to the last bottom, and I'd point out that commercial real estate is not liquid, meaning that it takes six months to make a meaningful change.  Refinancing, selling and exchanging, or liquidating is slow, and it takes a determined investor to act before the pain starts. Because then it's too late.