Apartment Building Investing | Ashworth Partners

Two Key Factors for Apartment Building Investment Growth.

1) The availability of attractive financing. Plus, the spread between fixed-rate financing and actual year one cap rates is certainly the widest that it’s been in recent history, perhaps ever. (There’s rumor that there was a bigger spread during the Roman Empire, but that may just be an old wives’ tale.)

From a macro perspective, the spreads between the treasury indexes and the premium on multifamily interest rates will almost certainly widen in the near term, but cap rates should remain stable in Class-C properties. They will probably continue to compress to a certain degree for Class-B assets.

2) Job growth Continue reading Two Key Factors for Apartment Building Investment Growth.

This recovery is “basically normal if not a bit better than expected” historically speaking says Hassam Nadji in GlobeSt.com

“History reminds us that a recovery from the simultaneous shocks of a financial crisis and a major recession require significantly more time and stimulus than a cyclical contraction, a process that could extend five to eight years compared to the more typical two- to three-year span following a cyclical recession. The pattern observed thus far since the recovery began is basically normal if not a bit better than expected.”

Remember that 2.5 million of the jobs lost were in construction and financial services (including mortgage origination mills and RMBS/CDO/CDS manufacture) so that returning to the same level of employment in those sectors would imply another bubble formation.

Now on the other handif job creation continues to fall off… See the whole GlobeSt. piece here: Weak Jobs Report Another Bump in Road to Recovery

Top 10 US Cities for new apartment building permits.

Coming soon to these big MSAs, lots of new apartments:

New York-Northern New Jersey-Long Island
Dallas-Fort Worth-Arlington
Washington, D.C.-Arlington, Alexandria
Los Angeles, Long Beach-Santa Ana
Houston-Sugar Land-Baytown
Seattle-Tacoma-Bellevue
Austin-Round Rock-San Marcos
San Francisco-Oakland-Fremont
Chicago-Joliet-Naperville
Miami-Fort Lauderdale-Pompano Beach

For details see: MFE Mag online

Will they be able to fill them all? How will older properties in these markets fare? Let us know what you’re seeing-

The 5 Most Important Property Tax Questions for Apartment Building Investing

Property Taxes can be one of the largest fixed costs in apartment building investing. Properly accounting for them when running the numbers on a potential purchase (called the ‘underwriting’ process) can make the difference between a nicely cash flowing property and an expensive headache. Multi-Housing News has a good article with the five key questions investors should have answered before making an apartment building investment:

How often are values reassessed? Is there an automatic reassessment triggered by a transaction?
What is the exact millage rate? How are they set? How often do they change?
Are there limitations to the increases in assessed values during the hold period (a la Prop 13 in California)?
What is the timing of the assessments and when exactly are bills due?
What is the appeal process and how long does it typically last?

Don’t let this happen to your deal: Continue reading The 5 Most Important Property Tax Questions for Apartment Building Investing

Apartment Building Investment: People aren’t buying homes anymore but still need shelter.

In the aftermath of the worst housing crisis in a generation, more people are eschewing the American dream of homeownership and embracing apartment rentals in the still-fragile economy.

Surging demand for apartments, particularly by younger consumers, has given a boost to the nation’s apartment landlords. Multifamily properties represent one of the few corners in the commercial real-estate industry where rents are rising rapidly. As such, lenders are giving the green light to multifamily construction projects even as development grinds to a halt in other property sectors.

“People weren’t buying homes anymore, but they still needed shelter, Continue reading Apartment Building Investment: People aren’t buying homes anymore but still need shelter.

Commercial Real Estate added $260 Billion to GDP last year- Hessam Nadji video via Marcus & Millichap

See the video here: http://bit.ly/JpqMck Sorry, couldn’t figure out how to load their video directly into this post. Any suggestions? Thanks.

5 Tips on how to choose the best internet listing service (ILS) for your apartment building advertising.

With so many online ad sources to choose from, how can you be sure which is best for your apartment building investment? Below Jason Velazquez, VP of Strategic Initiatives at Colliers of offers 5 tips for choosing a great ILS:

Does their traffic measure up? Most Internet Listing Services (ILS) will happily provide you with their web statistics. Take the time to thoroughly review any report offered to you before you sign on the dotted line.

Check whether they’re popular in your city. Simply because an ILS is nationwide, doesn’t necessarily mean they have high web traffic in your city. A simple way to gauge an ILS’s regional market penetration is to google the keywords – apartments in city name, and then scroll through the search results until you see their site. Don’t just search using the city you are located in; type other city names that your prospects move from.

If the ILS isn’t on the front page of Google, you may want to find an alternative ad source. Studies have consistently shown the majority of renters look for their apartment using search engines.

Before you run a Google search: Continue reading 5 Tips on how to choose the best internet listing service (ILS) for your apartment building advertising.

Q2 Local Metro Apartment Building Investment Reports Now Posted.

M&M tracks 40 metro apartment investment markets and delivers quarterly reports on occupancy, rents, absorption, new construction and permits (See list below). You may have to register with them to access the reports.

Apartment Building Construction Trends in Phoenix Q2 2012 — Apartment Construction Trends for Phoenix Q2 2012

If you have questions about a specific market Continue reading Q2 Local Metro Apartment Building Investment Reports Now Posted.

Happy Flash Crash 2nd Anniversary. Lack of trust in stock markets is scaring away investors…

… small and Large. Sunday was the 2nd anniversary of the May 6th Flash Crash of 2010. High Frequency Trading (HFT) insiders have hacked the stock markets so they get a sneak peak at your, and everyone’s trades before they’re executed. Think of it like one player at the poker table can secretly see your cards, and everyone else’s before they bet- Want to play in that casino?

When the HFT trading robots all lock onto the same pattern they can take a major market like the Dow Jones Industrial Average down 700 points in 10 minutes and thus we all remember the Flash Crash. Now it so happened that that time the market recovered about 70% of the loss shortly after but the damage to confidence was done.

Once bitten, twice shy. Or as Joe Saluzzi and Sal Arnuk at Themis Trading (a specialty company that trades equities for large institutions and hedge funds- stock traders not OWS supporters) put it: ” traditional retail and institutional buyers and sellers of stock have been steadily waking up to the dangers of drinking at the increasingly dangerous ”stock market watering hole”. Like the animals on the Serengeti, who for years were accustomed to sipping long and heartily at their favorite spot, retail and institutional investors now see what’s beneath the surface. And they are deciding that the drink they crave is just not worth the risk.

It isn’t hard to blame them. They have witnessed a radical transformation of the best capital allocation market system in the world, into one where:

– 13 stock exchanges cater to hyper traders who game the system, chasing exchange rebates, and leveraging speed for the purpose of a nanosecond scalping dance.
– More than 40 dark pools together trade more than 1/3rd of all shares.
– Conflicts of interest abound as exchanges own stakes in Continue reading Happy Flash Crash 2nd Anniversary. Lack of trust in stock markets is scaring away investors…

Portland Apartment Market to add 31,000 jobs this year, vacancy to fall below 3%.

As the next building cycle for the Portland area is still another year out, vacancy rates are expected to fall to historic lows across the metro. The overall vacancy rate will match the lowest on record at 2.7 percent, while the area’s lower-tier vacancy will fall to as low as 2 percent.

Marcus & Millichap notes that a lack of multifamily construction and the expansion of jobs in the region will be the prime factors behind the extraordinarily high rates of occupancy. Job growth is expected to rise 3.1 percent—from 20,500 positions created in 2011 to 31,000 positions created in 2012. Of particular significance will be the development of a new Intel facility, which is expected to create thousands of construction jobs and spur large demand for Class B and C apartments.

Cap rates for trophy buildings are likely to average in the high 4-percent range, with Class A and B assets in Continue reading Portland Apartment Market to add 31,000 jobs this year, vacancy to fall below 3%.