Amazon just announced it will be investing another $2B in real estate. This time, on affordable apartments.
After a year of consistently cashing out billions of dollars in Amazon stock, Jeff Bezos latest play for his business is to invest billions into more rental apartments. Bezos himself already owns a variety of expensive properties. Amazon is one of the biggest landlords in the country, and the biggest in hyper expensive Seattle.
This latest initiative aims to acquire tens of thousands of rental apartment units, which will likely be used to house Amazon workers, as well as others earning less than $110,000 per year and needing more affordable, under market rate housing.
Why Bet On Rental Properties In This Market?
After a year of lockdowns and eviction bans many may believe the rental housing sector is dead, and want to shed any properties they can as soon as possible.
This is one of the reasons the timing to invest is so good. Asset prices and deals are improving. There is less competition, and certainly fewer amateur investors who normally run up the market by overpaying.
The Demand: Tens Of Millions Of Movers
Good investments and business are all built on the balance of supply and demand. America faces a massive tsunami of tens of millions of movers who need to rent a new place in the next 24 months.
For many it may be a case of finally being evicted or foreclosed on after not being able to catch up after a year or more of lockdowns and business closures. This many homeless people would be too much of a crisis for the nation.
New Living Spaces Needed
Even those not being forced to leave their current residences or who want out of cities will need new types of living spaces going forward. They need spaces for home school and often multiple work from home spaces.
Issues Will Be Worked Out
Sooner or later eviction issues will be worked out. Evictions will pass, freeing up units for rents at new market rates. Or multiple layers of government will be stepping in to pay the rent or buy properties as government housing. Look at LA and you’ll see they often pay crazy amounts of money. Sometimes as much as half a million dollars per unit to house the homeless.
The Flip Play
In addition to buy and hold, there are also opportunistic and value add investment plays to be made right now. Big funds and tech companies need to invest. They have to put a lot of capital to work, are willing to accept low yields, and the security of real estate is hugely attractive right now. Acquiring and positioning buildings to be sold to them can be incredibly profitable.