Another benefit with investing in multi-family commercial real estate is that such an investment allows one to capitalize on the economies of scale.  With a single family investment, when the property is vacant, the owner is responsible to cover the mortgage, any repairs necessary, and all marketing costs and efforts to re-occupy the property.  When investing in apartments, vacancies can be more easily absorbed because multiple units are still producing income.  The same principle applies to property improvements and repairs; costs for such items are spread over all of the units in the complex.

In addition to the aforementioned safety characteristics of operations, apartments are also inherently safe in terms of market growth.  Economic downturns or recessions do not impact apartment rentals in the same way as other investments (i.e. the stock market, other real estate investments, etc.) are effected.  Apartments are affected differently because they are essentially the lowest form of housing available and are needed regardless of the current state of the economy.  In fact, downward turns in the residential housing market often spark rents to increase as fewer people are buying homes.

Why San Diego?  Barzal & Scotti focuses its efforts in San Diego because San Diego has yet another level of safety.  San Diego is an “infill development” type of area, meaning, for any development to occur, one must re-develop areas as opposed to expanding to lower populated, more affordable vacant areas.  The reason for this is because San Diego is bordered by the Pacific Ocean to the west, the Mountains to the east, Mexico to the south, and Camp Pendleton to the north.  This limits the opportunity for new development to infill development in which case building and land costs are much too high to ever compete with the type of commercial real estate assets we target.  We feel San Diego Apartments are a very conservative yet profitable way to invest in real estate.