Some Real Estate Investors Are Putting More Money in One Basket

Ms. Arthofer and Mr. Starrett invested through a sponsor, Lion Real Estate Group, which finds the buildings. The group is betting that an emerging trend before the coronavirus — the attraction of young people to apartments in cities like Austin, Texas, and Nashville — will be a long-term winner.

That strategy has benefited from the uneven spread of the coronavirus, which has left those cities relatively spared, and from the drop in mortgage rates.

“You have to say, ‘I don’t know what is going to happen in three to five years,’” said Jeff Weller, managing principal and co-founder of Lion Real Estate Group. But if you can lock in a 2.5 percent interest rate, he added, this is the lowest your rents are going to be, so you can also say, “My cash flow in Year 6 or 7 could be phenomenal.”

Unlike investors in real estate funds, which often

Read More