Tag: Apartment Building Investing

Financing still tight in secondary and tertiary apartment markets says NMHC.

The April 2012 National Multifamily Housing Council’s Quarterly Survey of Apartment Market Conditions was conducted April 16-23, with 91 CEOs and other senior executives of apartment-related firms nationwide responding.

Capital availability lacks uniformity. Only 17 percent of multifamily firms reported that capital is available for all property types in all markets. By contrast, 36 percent said it is constrained in secondary and tertiary markets and 34 percent said it is constrained for all properties other than top-tier ones – even in primary markets.

The Debt Financing Index declined to 65 from 74. As the only index that dropped below 50 in the past nine quarters (48 in Q4 2010), borrowing conditions continued to improve for the industry. Just four percent believed conditions worsened from last quarter, compared to 34 percent who reported improving conditions.

The Equity Financing Index grew slightly to 62 from 60. One third of respondents reported quarter-to-quarter equity financing as more available, compared to nine percent reporting less availability.

See the excellent exec sum on Joseph Bernard Investment Real Estate’s blog here: Market Conditions Improve For Apartment Industry

Essex Prop. Trust on Seattle Apartment Building Investment: rents up 6.5%, NOI +11% but 10k new units coming

My Exec Sum: Seattle apartment building investment results from Essex Property Trust Q1 call:

  • Seattle demonstrated exceptional same-store NOI and revenue growth of 11.2% driven by very limited supplies of housing and job growth that exceeds national averages
  • On operating expenses we expect a 2.3% increase for the second quarter ’12 over the second quarter in ’11
  • Seattle rents were up 6.5% compared to the first quarter of 2011. So depending on the submarket, we are now 4% below to even with our prior rent peaks.
  • renewal offers for June and July averaged +6% to 8% in Seattle
  • As of April 30, its occupancy was 96.1% with a net availability of 5.1%.
  • We view this turnover activity (50-55% YoY) as healthy because it provides us with more opportunity to grow rents. Additionally, we only saw a nominal increase in move-outs due to home purchases and affordability.
  • Cap rates continue Continue reading Essex Prop. Trust on Seattle Apartment Building Investment: rents up 6.5%, NOI +11% but 10k new units coming

Stealth concessions in large US cities = falling apartment building rents? See the list via MFE Magazine

This was an eyeopener for us in the apartment building investing business: Large US cities with falling rents. The table is from TransUnion, I wonder what their sampling methodology is- And I wonder how that breaks out by asset class.

US cities with falling apartment building rents

Yes of course there are cities with rising rents but Denver rents down almost 9% in a year? In 2011? Even Chicago down almost 5%? And DC the apartment hotbed has falling rents? Supposedly their data comes from managers supplying info for tenant screening and if that’s the case it seems like there are some serious concessions being given.

Don’t blame Continue reading Stealth concessions in large US cities = falling apartment building rents? See the list via MFE Magazine

Are we overbuilding multifamily already? Or just the wrong kind? Research from CBRE Econometrics

At a Seattle apartment building investment conference recently one of the main speakers was saying that everyone who’d ever held a hammer, and their brother, was trying to build apartments in that market. That really struck a nerve in my market cycle conscious brain and was looking to get some perspective on that when a CBRE piece crossed my desk with this chart on it:

apartment building unit new construction starts 1959 to 2012

So while new unit construction starts are up significantly from the 2009 lows they are still well below the 89-08 average of about 250k. More importantly in relation to demographics we will be seeing increasing demand from growth in two of the prime renter groups, my exec sum from the piece below: Continue reading Are we overbuilding multifamily already? Or just the wrong kind? Research from CBRE Econometrics

How to manage online apartment reviews. From the Apartment Internet Marketing Conference last week.

“People are going to have these conversations with or without you,” Wade Hewitt, vice president, apartmentratings.com said. “Engagement can really be a difference maker.”

AIM panel discusses apartment reviews and how to manage them.

In addition to steering the conversation about your property, reviews can also be used to see what other communities are doing right. “Use reviews to find out about your competitors and about what people like,” Erica Galos-Alioto, vice president, local, Yelp, said.

Negative reviews can also be useful to property managers. “Every review has some truth,” Patrick Grandinetti, head of real estate, Google, said. “If not, someone wouldn’t have posted it. Getting a bad review is a fact of life… so if you get a bad review, it helps ground you in reality,” he said.

Ultimately the panelists agreed that the most important thing is to engage your residents. Continue reading How to manage online apartment reviews. From the Apartment Internet Marketing Conference last week.

Apartment Building Investment Sales Jump 31% in Q1 2012 says Real Capital Analytics.

Apartment building investment sales continued their ascent in the first quarter of 2012, jumping 31 percent over the same time frame in 2011, according to New York–based commercial real estate research firm Real Capital Analytics (RCA).

  • Garden properties, totaling $7.1 billion in sales, drove most of the volume
  • High-rises rose $4.8 billion.
  • Both sectors jumped 30 percent from a year ago.
  • Portfolio deals also boosted the first-quarter totals, with 52 transactions involving 185 properties adding $2.6 billion in volume.
  • Distressed sales provided 13 percent of total sales, a 9 percent increase from the fourth quarter of 2011.

The volume trends are consistent across tertiary, primary, and secondary markets, but cap rate trends vary. In secondary markets, they remain unchanged; in tertiary markets, they’ve increased slightly; and in major markets, they’ve compressed.

See the whole MFE article: Apartment Sales Jump 31 Percent in Q1 2012

Tertiary markets still represent a value opportunity and at Ashworth Partners we’ve identified a few markets with unique drivers that catch the upswing. Contact us to find out more.

 

The secret to owning income producing apartment building investments in your IRA.

From the NY Times:

THE past couple of years have left many people staring in disbelief at the returns on their individual retirement accounts. Consider last year, when the Standard & Poor’s 500-stock index finished the year essentially where it started.

So it makes sense that people are looking for ways to earn more for retirement — or to make up for losses. Yet when I heard that an increasing number of people were moving money from traditional I.R.A.’s to self-directed I.R.A.’s that focused on real estate, I was skeptical that this was a good idea.

First, I wondered, how could this be done with retirement money? Was it even legal? And were people who had worked and saved money for their retirement really putting it into real estate so soon after the bubble burst?

Could you really have a conservative investment in your IRA today that earns 6, 7, 8% or higher? That’s legal? Yes you can, here’s the secret that your Wall St. broker and banker don’t want you to know: You can open a Self-directed IRA. That is an IRA account set up with an independent Custodian who makes the investments you direct it to (clever name huh?) instead of steering you into the products that earn them the biggest commissions and bonuses.

Own income producing aprartment building investments in your IRA

Of course there are some limits on the kind of investments but we’re not looking to corner the market on Greek reverse CDO squared repos (whatever those are). We’re looking for good income, inflation protection and Continue reading The secret to owning income producing apartment building investments in your IRA.

Denver Job Growth catching up with Apartment Building occupancy and rent gains.

Apartment building investment buoyed by job growth in Denver

Video via Property Management Insider: http://youtu.be/uFjpYSbVdRg

Apartment fundamentals are strong essentially across the board in Denver, which ranked among the nation’s best with year-over-year rent growth of 6.5%

The 10 Commandments of Network Building by Duke Long

Duke is one of the top thought leaders on how commercial real estate (CRE) and online social networking should work together… and where they don’t. HE posted this on his blog 10 Real World Examples of How I Built My Commercial Real Estate Network and in an ironically karmic sort of way I just saw it on Klout’s homepage today. It is so good and to the point in true Duke style that it would be a great guest post. I believe these steps work online and off, in CRE or any other industry so take it away Duke:

Duke Long commercial real estate investments

1.What are the relevant commercial real estate communities of interest?  What are the needs wants of the participants within these communities?

I started simply looking for the groups and associations that I already had and affiliation with. My state commercial board.  NAR because I had already made several connections over the years. CCIM,SIOR,IREM,BOMA etc. Why connect? Hell, why go to the meetings and get on the conference calls, why volunteer? I needed build and cultivate a network. Online connection was a revelation. I would listen learn and ask simple questions. The needs and wants were pretty obvious.People wanted to connect to make deals. But then something interesting started to happen.Human interaction.

2.Participate where your presence is advantageous and mandatory, don’t just participate anywhere and everywhere or solely in your own domains (Facebook,LinkedIN, Twitter conversations related to your brand, etc.)

Seems pretty obvious does it not? Let me give you and example. I do everything in my power to eliminate and and all feeds emails discussions and spam from lenders. You say What? We need that lender connection. Not me. All and I mean all they do is spam and pitch. How does this help me or my clients. You would think lenders pitching brokers is a natural fit. Wrong. Go find the client before they get to me and leave me the hell alone. The “we only are taking clients in the 30-75 mil bracket ” pitch is total bullshit. So, your are in commercial real estate who and where should you be ? Start-ups, Logistics Companies, Medical Associations,Industrial Data Centers…let your brain flow.Maybe some other brokers also they need to know what your stuff is but not in a spammy way!

3. Determine the identity, character, and personality of your Continue reading The 10 Commandments of Network Building by Duke Long

M&M Apartment Building Investment call: Opportunities exist in secondary mkts & value add, tertiary still lagging

Marcus & Millichap Q1 call on the apartment building investment climate this morning:

  • Year over year manufacturing jobs grew 238k. Manufacturing = 20% of GDP but gets no press, where as single family housing < 2% gets all the coverage.
  • There is a historic % of 18-34 Y/Os still living ‘with the parents’ but they are also getting a larger proportion of the new jobs. (See chart) Good for apartment building investors as these people typically become renters when they do move out.

pent up apartment building demand