Top 4 Property Types to Invest in for 2009

1. Office buildings with medical or governmental offices in secondary markets.
Small town Ontario abounds with medical and government offices in buildings that range in age from new to 40+ years old. In recessionary times, government tends to spend more in small towns and rural locations to try to boost local economies, so the risk of closure is lower today. Doctors never go out of style, especially when you consider our aging demographic. Look for well located buildings with little maintenance required over the next few years and with long term leases in place.

2. Apartment buildings - everywhere.
When the housing market gets shaky, first time buyers tend to put off buying houses and stay in their apartments longer. The unfortunate reality for established home owners is sometimes not much better - many are forced to sell after losing their jobs and move back into apartments as a less expensive alternative to ownership. Both of these factors mean that apartment properties tend to do well on the downswing of the housing market. Look for locations with younger populations, university towns are great, and buildings that have been well managed or come with management in place.

3. Storage properties in underserviced locations.
The storage business is another one that tends to do well on a downswing. As people move back into apartments or stay in them longer, they still have 'stuff' that they just can't part with. Things like a family heirloom, extra furniture, collectibles, etc. that people have an attachment to, but no place to store. Look for properties with vacancies no higher than 25% and expect a hefty return in the range of 9-11% annually depending on competition, condition, and location. Also try to find locations where there is a lack of land for competitors to come in and build new storage businesses - new players will undercut your price and put you out of business! Be forewarned, this kind of property can be tough to finance, so do your homework and try to get a line on some capital early in your search.

4. Distressed older plazas in good locations.
This one will be tough to find in today's market, but worth the effort. Over the last ten years, a lot of older product in this category was refurbished or torn down altogether and replaced with modern storefronts. When you can find them, however, they often make great investments provided that the existing cashflow justifies the price. If you can find plazas with some vacancy and upside potential in terms of some cosmetic improvement that will drive new tenants to your location, and you aren't afraid of some hard work, this property type can return excellent profits.

Why is my list so short? Security is the name of the game in 2009. Each of these is a fairly secure bet - there are no guarantees in real estate investing, but you should be able to reduce your risk if you're careful. There is a lot of uncertainty out there right now, and making a decision to get into real estate at this time takes guts. Lower your risk by choosing a secure investment (read: cash flow now, not capital appreciation later!) with long term upside to succeed.


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