Tag: commercial property

Why now is the right time for CRE and Apartment Building Investment. Video via Tom Barrack at Colony Capital

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.

1st Video:

Tom Barrack on Commercial Real Estate and Apartment Building Investment

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

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.LumaCorps Apartment Building Investment Strategy

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.

Seattle Area Apartment Building Investment

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.

What drives changes in operating expenses (OPEX) for CRE and Multifamily? Nice research from CBRE Econometric Advisors

As every landlord knows, operating expenses (OPEX) are an important element of commercial real estate investment performance. In spite of the important role OPEX plays in investment performance, there is very little research that analyzes the structure of these costs or identifies what drives the differences in these costs across markets. This article aims to share the latest findings on the drivers and structure of OPEX.

… That industrial variable costs have a lower elasticity than those of the other property types accords with what investors in this asset class generally experience: that these properties are usually cheaper to operate. A perhaps more surprising finding is that the elasticity coefficients for office, multifamily, and retail—property types with significantly different operating structures—are fairly similar to one another. We are conducting further research to better understand this finding.

See the whole piece here: What Drives Operating Costs in Commercial Real Estate?

30 story building built in 15 days- amazing video. 5x more energy efficient…

… 20x purer air,  magnitude-9 earthquake resistant and only 1% construction waste. Pretty cool.

 

FHA Makes Strides on Speeding Up Its Multifamily Tax Credit Loan Process.

[The FHA] is ushering in the long-awaited Tax Credit Pilot Program, mandated by the 2008 Housing and Economic Recovery Act.

The pilot program aims to drastically speed up the processing time of FHA-backed deals that use low-income housing tax credits (LIHTCs). In the past, LIHTC developers had difficulty using the FHA—the LIHTC program carries strict deadlines, and affordable housing owners and developers just couldn’t wait around for the FHA’s notoriously slow turnaround times.

This new program aims to fix all that. “Expediting our delivery system is a big agenda for us,” says Head. “And it’s one of my biggest priorities.” See the whole MFE Mag article here: FHA Makes Strides on Speeding Up Its Tax Credit Process

Canadian Multifamily Bubble? Sadly the US can watch from hindsight.

Interesting peek at multifamily in Toronto and Vancouver, worth a read to see how many rationalizations you recognize (or have uttered yourself).  Nice quote: “If builders stopped building today, there’s five years worth of supply that is about to be delivered, relative to what normal population growth is.” Sound familiar? They’re even starting to do NINJA liar’s loans.

Toronto home and condo prices are amazingly high, the average price for a detached home C$543,993; for condos it’s ‘only’ C$343,835. In Vancouver the Continue reading Canadian Multifamily Bubble? Sadly the US can watch from hindsight.