Seattle Apartment Building Investment update video Translation: We would never overbuild or get started too late in the apartment building investment cycle 😉
Tag: Apartment building investment
Is the Dallas/Fort Worth Apartment Building Investment Cycle Peaking or just taking a breather?
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?
The Top 10 Fastest Growing US Cities. Own an apartment building investment in each.
Apartment investing is about where and when to buy properties; here’s 10 good ideas for the where part. Nice slide presentation via CNN/Money-
“Despite the housing bust and the recession, these 10 U.S. cities still managed to record population gains of 30% or more in the decade ending in 2010, according to the Census Bureau. The national average was less than 10% during that time.”
See the presentation here: 10 fastest growing U.S. cities
If you can’t Continue reading The Top 10 Fastest Growing US Cities. Own an apartment building investment in each.
Attention apartment investors: An entire generation has lost its interest in homeownership.
When it comes to apartment building investing one has to consider homeownership as competition for ‘our’ residents. But now in a post that’s part of his series on where the housing market stands today, Barry Ritholtz over at The Big Picture blog has this to say:
“There are many good reasons to believe that the 5.5 million foreclosures we have so far brings us only to the 5th inning of this real estate cycle. We are, in my best guess, barely halfway through the full course of foreclosures. By the time this entire unwind is complete, the United States may end up with a total of 8-10 million foreclosures. 
Therein lay the Psychology factor. Once we begin to see an increase in foreclosures, the data is going to be far less accommodating. Monthly prices start falling, fear levels rise, and a viscous cycle could begin. Consider the recent college grads, who typically form each wave of first time buyers. From their perspectives, this whole housing thing must seem absurd. Their observations about home ownership is not the American Dream, but rather, a nightmare. Yale professor Robert Shiller worries that we have lost an entire generation of potential home buyers.” [Emphasis mine] BTW, Shiller is co-author of the Case-Shiller index, a measure of the state of the housing market. Continue reading Attention apartment investors: An entire generation has lost its interest in homeownership.
National Apartment Building Vacancy Plummets, Defies Fourth-Quarter Seasonal Slowdown says report.
Marcus & Millichap’s latest report on Apartment Building Investment called “The Outlook” is just out today. In it they cover the usual national multifamily trends; rents up, vacancy down, economy slowly recovering, jobs growing but could be better. Then they take it a little deeper with these points (bel0w) then flesh it all out with charts demonstrating that things are really picking up for apartment building investors.
Here’s the exec sum:
- Expanding Production Capacity Signals Stronger Job Creation.
- Sustained employment growth underscores traction in the economy.
- Apartment demand surges, completions sink to new lows, and a sweeping recovery matures into an expansion cycle.
- Vacancy rates tighten across markets and asset classes, moving the sector into expansion.
- Foreclosed homes and government-sponsored REO-to-Rental program offer rental alternatives to apartments.
- Cap rate arbitrage and stabilizing operations create a compelling investment thesis for opportunistic and value-add strategies.
- Stronger job growth and household formation will provide a steady source of new entrants to the multifamily rental market. Continue reading National Apartment Building Vacancy Plummets, Defies Fourth-Quarter Seasonal Slowdown says report.
Life Companies up their Apartment Building Investment lending, competing with Fannie/Freddie on rates, quicker rate locks and easier terms
Life companies are increasing their lending on apartment building investments says MFE Magazine.
Life insurance companies upped the ante last year, processing apartment building investment loans hand over fist. And this year, most have increased their appetite and are charging through the first quarter at full speed, giving the government-sponsored enterprises (GSEs) a run for their money.
Most life companies today have the ability to be competitive with, and sometimes price inside of, the GSEs. This is particularly true for lower-leverage deals—and the most desirable assets.
But it’s not just attractive pricing—life companies also offer Continue reading Life Companies up their Apartment Building Investment lending, competing with Fannie/Freddie on rates, quicker rate locks and easier terms
Can you avoid these apartment building investment due diligence nightmares?
Apartment Building Investing Requires Diligent Due Diligence
Nowhere is getting your ducks in a row more important than in apartment building investing. See this quick MFE Mag article for tips from seasoned pros: Diligence Gut Check
The article covers topics like these:
- How’s the Weather Out There?
- The Case of Misplaced Ownership
- Over the Income Threshold
- Just an Accounting Mishap
What do these Niche Multifamily Teams know about battling the big guys (and winning) with Apartment Building Investment?
Great MFE article on apartment building investment niche strategies from teams who battle the big guys and win. Five different teams and strategies are profiled and they all have something to teach but I wanted to highlight one company whose strategy is very similar to ours. Here’s my exec sum in bluue:
LumaCorps Apartment Building Investment Strategy
LumaCorp. quietly owns and operates a 4,800-unit portfolio of 1980s, Class B properties managed to meet the needs of working-class renters.
These [renters] historically can’t buy a house, but they still want clean, quality, safe housing. We think it’s a much bigger slice of the market than other renter demographics.
Rent growth can be modest, but that’s OK. One of the advantages of owning property in small tertiary markets is that they are less active [in terms of new construction and competition, the rent growth is more predictable.
LumaCorp. begins with old-fashioned real estate research, looking for distressed or underperforming working-class properties with potential. “We make money by fixing problems.”
But the firm isn’t interested in just any Class B property with deferred maintenance and an attractive price.
We’re very picky about the properties we acquire
We know our market very well, and we know what works in terms of floor plans, unit mix, and architectural designs.
We pick a property with good bones, and then we invest the money to bring it up to our standards.
LumaCorp. runs some of the tighter costs, yet when you drive up to the property, it always looks terrific. Some multifamily firms spend lots of money, and their properties still look tired.
Only a few properties will make the cut for the LumaCorp. treatment. “We might look at 100 packages. Out of that, we’ll find 20 worth looking at, and 10 will get offers. One might get done,” says Kelly, who made “a couple dozen offers” in 2011 and got one—Bardin Oaks in Arlington, Texas.
See the whole MFE Mag article here: Niche Guys Win
Pathfinder Buys REO Multifamily Complex Near Seattle for $5.1M Via MHN Online. 78 units @ $65.4k+/unit
San Diego-based Pathfinder Partners LLC makes Apartment Building Investment in Seattle area.
San Diego-based Pathfinder Partners LLC has acquired the View at Redondo, a 78-unit apartment property in Federal Way, south of Seattle. The apartment complex, built on a …. [Cut to the chase]
Key Concept:
“We believe there are opportunities throughout the major markets in the western United States to invest capital in high-quality projects with distressed or fatigued ownership that will result in significant returns,” Lorne Polger, senior managing director of Pathfinder Partners, tells MHN. “To that end, Pathfinder focuses on smaller apartment building investment, sized below the radar of the largest institutional buyers.”
The company’s strategy, Polger adds, is to buy the loan on a small property that needs finishing, has a large vacancy, or is beset by other issues. “These are typically transactions that need to be concluded very quickly, on an all-cash basis,” he says. “We have a track record of closing this type of deal in 15 to 20 days, and frequently get the call when a financial institution is seeking to conclude a challenging deal quickly.”
A very good strategy indeed.
Where is Your Multifamily Market In The Cycle? Nice interactive map. Via @UrbanLandInst
Is Apartment Building Investment in the up cycle in your market? Job growth is the most important leading indicator of the market cycle. Check out the cool interactive map through Q4 2011 from The Atlantic here: MetroMonitor Economic Performance Maps
