If you have taken out a mortgage on (or refinanced) your home (or business property) in the last 10 years or so chances are the title of your property is clouded so badly that no one can legally foreclose on your loan. This is the result of an illegal, little known operation that was specifically setup to expedite the rapid securitization and trading of mortgage securities. Further it was explicitly devised to circumvent the centuries old democratic process of recording property ownership and mortgages against those properties at county clerks offices across the country.
See the quotes below, read Barry Ritholtz’ take on it here: http://bit.ly/yGMaGc or read the whole article here: http://harpers.org/archive/2012/01/0083752 Not a subscriber? $15.00/year through Amazon: http://amzn.to/zQDafi Continue reading “… every MERS mortgage is defective” a NY State Supreme Court judge.
More of the same is the general outlook but opportunities exist in Class B and specific markets. See the video here: http://bit.ly/Avv9aj
Unemployment still 9% and tenants in C props having harder time keeping up with expenses and rising rents. Meanwhile developers will need three years of building to bring market back into balance. See more at: http://bit.ly/wxm5jf
New development is picking up but is restrained by lack of lender appetite.
Senior housing to see vacancy decline below 10% also.
Via Grubb & Ellis’ 2012 Real Estate Forecast available here: http://bit.ly/xfBnmd
Thanks to Jason Brumm of G&E San Antonio
AFT: When you look at some of the cap rates on recent transactions, do you feel like the multifamily industry is getting a little overheated in some markets?
Brickman: I do not. I think it is perfectly rational where cap rates are now. The cap rates are driven by financing costs, and what you’re really saying is, can cap rates go up? Of course they can, and if [interest] rates go up significantly, cap rates would likely go up, but it’s not one for one. What you have to look at is [that] the spread of cap rates to Treasuries is actually quite wide.
AFT: It’s probably more than 400 bps now, on average.
Brickman: Exactly, and historically it has not been anywhere near that wide—it’s been more like 250, 300. And so you’ve got a very healthy risk premium to real estate right now, and you’ve got strong growth forecasts. There are very positive influences lining up behind demand and a relatively anemic level of supply. So, I think you can legitimately sign up for pretty healthy rent growth. And that [in] itself justifies a low cap rate even independent of the interest rate.
See the whole interview at: http://bit.ly/xp9VM7
We have a herd of cattle. A flock of chickens. A school of fish, be they large or small. A gaggle of geese. A pride of majestic lions. Believe it or not, a murder of crows. An exaltation of doves. Wisely, a parliament of owls.
Then we are left with baboons. Baboons are, by most estimates of those that care about baboons, the loudest, most dangerous, most obnoxious, most viciously aggressive, and least intelligent of all primates. A collection of such horrible things is called, and you can’t make this stuff up, a Congress!!
Vince is an old hand who’s seen a few market cycles and his hard earned wisdom is well worth listening to in these times. Send him an email and ask to get on his list: email@example.com Or catch him on CNBC, Bloomberg, MSNBC, etc.
Composting food waste is an eco-conscious activity typically associated with single-family home neighborhoods rather than apartment complexes. But composting will be easy for residents of the green-centric apartment complex being built in Minneapolis, which will open later this year.See more at http://bit.ly/wJjcGI
After a recent speaking engagement I was asked about how and why I use the earnings multiple concept when evaluating apartment investments. It was a great question and so I’m sharing my answer here in this blog post.
As a value investor two of the fundamental questions I always ask is what am I buying and how much do I have to pay for it. With an apartment investment (or really any investment) I am buying current income and the potential for appreciation so the second question comes down to “How many years of earnings do I have to pay for these returns?” The question can be answered by converting the cap rate to an earnings multiple. The Cap Rate is the return in current income on an apartment investment you could expect if you paid all cash. To convert a Cap Rate into a Earnings Multiple use the formula: Continue reading Converting Cap Rates to Earnings Multiples
If you listen to any conversation about commercial real estate (CRE) within a minute the subject of cap rates will come up. Those who are just beginning to explore CRE are often thrown off by what one is and how it is calculated. A cap rate is really a simple thing that is often made overly complicated by the way it is explained. Let’s walk through what a cap rate is and then we’ll look at how they are used so that the next time the conversation turns to CRE you’ll be right there in sixty seconds when they get to cap rates.
A Capitalization Rate or Cap Rate for short is simply what you would earn on a property if you Continue reading Why are Cap Rate explanations so complicated?
With today’s stock and bond markets overrun by insiders and the volume of options, futures and other derivatives dwarfing actual investment in good companies while driving wild swings in their prices what is a traditional value investor to do? What about the accounting trickery that happens when CEOs raid their own companies for the short term results their huge bonuses are based on? Should you shrug your shoulders and be patient, very patient hoping eventually value will be recognized? What kind of income will you live on while you are being so patient? With interest rates so low and the Fed trapped into keeping them that way how can you earn decent current income without taking unreasonable or unknowable risks?
There is an alternative for conservative value investors: Apartment buildings.
- What if you could find good value stocks in a market where the price was dictated by the financial results, not market ‘sentiment’, momentum traders, short sellers, high frequency trading programs or what a butterfly did in Shanghai?
- What if you could find good value stocks in a market where the cycles were observable and understandable?
- What if your favorite value stocks paid annual cash dividends of 7, 8, 9% or higher while at the same time increasing their equity like clockwork?
- What if you could walk into the boardroom of your favorite value stock and dictate that they improve their performance? What if you could fire boardmembers who didn’t perform?
- What if you could buy a second stock with funds from your first stock without having to sell it or pay taxes on the capital gain?
- Plus Inflation Protection: What if the dividend went up when inflation did? Continue reading Apartment Buildings are the classic Value Investment