How do apartment building residents actually want to live? Do they want sidewalks in front of their apartments and actual places to walk to—“Leave the car in the garage!” is a common refrain on real estate sites—or are Americans happy, as transportation analyst Alan Pisarski puts it, to “drive to where they can walk?” The truth is there are relatively few places in America that today would pass what architect Hal Box has dubbed the “Popsicle Rule”—“a child must be able to walk safely from home to buy a Popsicle within five minutes.”
How ‘walkable’ is your property? Your next apartment building investment? How do you figure that out?
Walk Score is a website that takes a physical address—enter yours here—and computes, using proprietary algorithms and various data streams, a measure of its walkability. More recently it’s started tracking how transit-friendly neighborhoods are too. What drives the score is choice and proximity—the more amenities (restaurants, movie theaters, schools) you have around you, and the closer they are, the higher your Walk Score.
“In most metropolitan areas, only 5 to 10 percent of the housing stock is located Continue reading Do you know the Walk Score for your Multifamily property? Should you check before your next acquisition?
Apartments are a little easier to come by in the Portland area, but that’s not slowing down rent increases across much of the market.
According to the Metro Multifamily Housing Association which released its latest survey Wednesday:
- Vacancy across the metro area grew to 3.72% from 3.34% late last year.
- Rents climbed 3% in the same period, reaching $1 a square foot per month across the metro area.
- Average two-bedroom unit now rents for $771, up $28 a month compared with six months earlier.
The Portland area has one of the lowest Continue reading Portland Apartment Building Market: occupancy drops but rents still rising according to report
Greg Willett, VP of research over at Real Page wrote a nice piece on that which covers it nicely; take it away Greg:
Thanks to one sentence uttered by Warren Buffett and some major overplay by the media, single-family rentals are a hot investment choice now. Thus, the analysts at MPF Research are fielding a constant stream of inquiries about whether the bulk sale of bank-owned single-family homes to investors who will operate them as rentals will impact the apartment sector.
Our take is that Continue reading Will REO-rentals Really Compete With Apartment Building Investments?
[Urban] TOD (Transit Oriented Development) has performed better and has a sexier image with many institutional investors. But while equity investors continue to favor urban TOD, developers are having a more difficult time finding construction debt at leverage levels that would make those deals pencil out.
Meanwhile out in the ‘burbs: “On suburban sites, you see yields in the 7 to 8 percent range. On the core infill, you’re really building to a 5, 5.25 percent, maybe, and that’s getting dangerously close to acquisition cap rates.”
“We’re in an interesting situation now, where anytime you have a Continue reading The Yin/Yang of Apartment Building finance: Urban Equity v. Suburban Debt.
Bonds backed by Fannie Mae and Freddie Mac tied to apartment investments soared to a record as the government-supported mortgage companies made low-cost loans on rental properties amid a continued slide in home values. Fannie Mae, Freddie Mac and Ginnie Mae sold $13.5 billion of securities tied to apartment buildings in the first quarter of 2012, an 81 percent increase from the year-earlier period and up from $5.2 billion issued in all of 2008, according to data compiled by Bloomberg. It’s the highest quarterly issuance since records began in 1993.
The interest rate for a 10-year, fixed multifamily loan Continue reading Fannie, Freddie and Ginnie do $13.5B in apartment investment lending biz during Q1, +81% YoY.
Here are some interesting transaction statistics for 1st Quarter apartment building investment transactions:
- Average price per unit was up 11% from Q1 2011
- 6.86% was the average cap rate, vs. 7.07% in 2011
- 77% of properties sold had between 5-50 units
Click on the image to see the list of Q1 apartment building investment sales in Portland:
For more on PDX apartment building investment see City Rents Rise As Buyers Wait Out Housing Bust from Joseph Bernard Investment Real Estate.
Tom is one of my mentors and I follow what he’s doing closely to learn from a pro in apartment building investing. Here’s a video 3fer with Tom on why now is the time, if you have any contrarian testosterone as he puts it (in other words you are a true value investor). See also my notes below with the exec sum in bold.
Tom Barrack on CNBC last week
Stock markets rise and fall, but investors with a long-term view will make money, real estate investor Tom Barrack of Colony Capital is a “slow money guy”. Barrack has $27 billion invested in real estate and $45 billion in assets around the world.
Overall in the US
Where I think we are is actually a great Continue reading Why now is the right time for CRE and Apartment Building Investment. Video via Tom Barrack at Colony Capital
Successful apartment building investing is about knowing where and when to buy and when to sell. The apartment building investment cycle sends very clear signals to those paying attention and one of the biggest and clearest is when existing properties begin to sell for more than the cost of building new apartments. As I mentioned here this line was crossed about a year ago in the Seattle market and now we can see how the peak is formed, when every developer and their brother starts building new apartments.
The biggest surge of Seattle-area apartment construction in a quarter century is threatening to undercut the growth in rents. Seattle went from “dead last” in rent increases three years ago to 13th out of 88 markets last year. “We went from almost a desert to a big pipeline” in two years, said David Young, the Seattle-based managing director who oversees western U.S. apartments for commercial broker Jones Lang LaSalle Inc.
Encouraged by hiring at local employers such as Amazon.com, Boeing and Nordstrom, developers are building almost 10,000 apartments in Washington state’s King and Snohomish counties, Three- quarters of the total are in Seattle, with 4,619 of those units in or near downtown.
Dupre + Scott Apartment Advisors Inc. said the building boom may last through 2016.
“If in fact we come to market when there’s excess supply, we’ll just have to be aggressive on rents,” said Continue reading Now you can watch the Apartment Building Investing Cycle Unfold In Real Time- Much easier than deciphering technical stock charts!
Seattle Apartment Building Investment update video Translation: We would never overbuild or get started too late in the apartment building investment cycle 😉
In their RECON report The Real Estate Center @ Texas A&M quotes The Dallas Morning News on apartment building investment in the DFW market:
“Apartment leasing in Dallas-Fort Worth dipped for the first time in over two years.
Net leases fell by 270 during first quarter 2012, with most of the declines occurring in the northern suburbs.
Greg Willett of apartment analyst MPF Research believes the slight dip is nothing to worry about.
“I don’t think one quarter of slight resident loss should be viewed as a big deal, especially when demand in first quarter usually is pretty mild anyway,” he said. “The job numbers still look good, and a comeback for the for-sale housing sector actually could drive them higher.”
The North Texas area has added about Continue reading Is the Dallas/Fort Worth Apartment Building Investment Cycle Peaking or just taking a breather?