The Biggest Investor Challenges of 2015

MIAMI—No one can know what to expect—or when. Those are the words of David Lynn, CEO and co-founder of Everest High Income Property, when asked about the challenges he sees for investors in 2015. Of course, he goes deeper than that in part four of this exclusive interview series.

Before we dive in, you may want to go back and catch up on what Lynn has to say about cap rates going lower. He also talked to us about investor interest in class B, class C, secondary and tertiary markets. In part three, he predicted which asset classes will grow in 2015 and more.

GlobeSt.com: What challenges do you see for investors in 2015?

Lynn: The main thing is there is always a potential of the recovery ending. No one can know what to expect—or when. Consider the effect of political or geopolitical events, terrorism, wars. I don't see a financial issue forcing the US into a recession, but the unknown is always a factor.

There is so much capital available, investors could overpay. Investors are buying high right now, so returns will be lower. Raising money is still challenging. Will there be enough deals out there to support the amount of capital available? That's an unknown.

GlobeSt.com: What fears remain for investors?

Lynn: People fear the unknown. People are shell-shocked from the Great Recession; a lot of people and investors have psychological scars—a fear of things turning bad quickly. That can drive decisions very differently than if there had been no recession.

GlobeSt.com: What advice would you offer to commercial real estate investors for 2015?

Lynn: Don't overpay. Do rigorous underwriting. Analyze all the factors. Don't place too much faith in pro- forma projections. Don't assume rent increases will be as high as they have been the past few years. Think about development in good economic markets where it makes sense. Don't follow the herd.  Be a good old-fashioned value investor, not a momentum investor. 

GlobeSt.com: Any other insights that you would like to share that I didn't ask you about?

Lynn: Real estate continues to rise as an asset class. Internationally, the U.S. continues to be an attractive investment, especially in gateway markets. That trend will undoubtedly continue.