Russ Appel Interview: Market Risk and Risk Mitigation

February 26, 2020

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Our Founding Principal, Russ Appel, was asked to share his thoughts with IREI about market risk and risk mitigation. This video is an Institutional Real Estate, Inc. video production.

Please see the video below.

In this video, Russ points out that:

  • Historically, concentration in primary markets has been perceived as synonymous with less risk.  However, in light of domestic migration patterns—further magnified by the Tax Cuts and Jobs Act of 2017 which limited state and local tax deductions—the significant domestic migration into certain secondary markets may make those markets attractive for diversification and risk mitigation.
  • Traditionally, the highest physical quality assets – often luxury – were considered the least risky, but these assets are often at the highest rental price point.  An alternative view is focusing on the quality and durability of cashflow, which may currently be achieved at more affordable rental level price points.
  • Finally, although leverage adds financial risk, using prudent and responsible leverage can help meet actuarial return needs.