Low interest rates and an extension of Bush-era tax rates will entice more investors to purchase apartment properties this year as the credit markets improve, said Rick Krause, a senior associate with CB Richard Ellis/Hubbell Commercial.

But Krause, who spoke last week at the Institute of Real Estate Management’s and Certified Commercial Investment Member Institute’s Market Survey Update in Des Moines, said investors should be prepared to make down payments of at least 25 percent, to accept high debt service coverage ratios and to be rejected.

“Most investors, in my opinion, should have two lenders at this point in time,” Krause said. “If you are working with a bank that is particularly aggressive at one point, and their situation changes – a lot of times they might become more passive and not be willing to lend you money and consequently you’re cash poor and equity rich – you might be an investor, but not a buyer.”

Krause said the rental market, which is gaining steam as more people put off buying a home, is showing strong signs of improvement.

Citing a survey by Harris Interactive Inc., Krause said 76 percent of adults in the United States think renting a home is a better value than owning one. Besides, low credit scores would stop nearly one-third of Americans from obtaining a mortgage, said Krause, referring to a survey by Zillow Inc.

“In today’s economic recovery, young people are trying to remain flexible in their search for employment and will continue to choose renting over buying,” he said. “All these fundamentals will drive rents and improve net operating incomes. This will bring buyers, sellers and, mostly, lenders to the market.”

According to Krause, the apartment vacancy rate in Greater Des Moines stood at 5.2 percent at the end of the third quarter of last year, a decrease of 80 basis points from Jan. 1, 2010.

As of Oct. 31, overall average rents in the Des Moines metropolitan area were $702 per month, according to Reis Inc.