Month: October 2018

Digital Marketing Budget Planning to Increase Leads, Signed Leases

While critically important to any multifamily property company’s success, the two words “budget planning” evoke almost as much anxiety as Tax Day or root canal.

It’s often difficult to convince key decision-makers to invest in a digital marketing strategy when there are so many innovative online tools available to attract leads and increase leases, and so much data to consider. As with most business budgets, multifamily property managers know any money left untouched or marketing dollars spent unwisely this year means less money in the department’s available budget next year.

Digital marketing budget planning requires analyzing the property management company’s current strategy and pitching new ways to increase lead conversions based on quality leads and qualifiable metrics. Maximize the money allocated to your department by using data to prove return on investment and deliver solid projections for the coming fiscal year.

Here are some ideas to consider as you map out a budget proposal for your company’s executives to justify an increase in digital marketing spending.

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    Less Is More for Apartment Brokers

    Having been in the residential real estate business for almost 15 years now, I have been surprised to see the change in many brokers’ approaches to leasing and sales. Numerous brokers today often sell themselves and the properties in an overly aggressive fashion rather than just being congenial and friendly in the hopes of developing client relationships that way. Many newer agents don’t realize that it’s typically more effective to let the residence sell itself than to be pushy about closing the deal.

    It’s important to recognize that if people don’t have the need for what you’re offering, then there is no way to make them have that need. Thus, brokers should never employ begging as a strategy. When hiring potential agents, I always ask them whether they have the ability to make people rent or buy a listing. If they believe themselves capable of such a feat, then I know they are probably much more aggressive than I prefer my agents to be.

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      Landlords Get Innovative to Fill Vacancies

      With both the National Apartment Association and the National Multifamily Housing Council predicting that demand for apartments will soar over the next decade-plus, property owners throughout the U.S. are seeking innovative ways to set themselves apart in an increasingly competitive landscape for new development.

      For owners with vacancies that need to be filled, there are many options to minimize the time that their rental property sits empty. In the coming months and years, landlords that want to optimize occupancy and maximize income must pay attention to three rapidly emerging trends:

      Co-Living Partnerships

      “Co-living” apartments allow landlords and building owners to give renters the option to double- and triple-up with roommates in shared suites. Companies such as Ollie, WeLive and Common are now partnering with developers on co-living projects in markets across the country. This provides on-the-move millennial renters with access to convenience, comfort and community.

      While the prospect of renting out your building this way is enticing, there are some cities, such as New York, where it is illegal to allow unrelated adults to live together in single room occupancy, co-living suites. Securing funding for co-living as a landlord is also difficult. Banks need the certainty of a proven market when providing construction loans, and generally won’t consider co-living when filing loans for planned apartment communities. Regardless, modern renters enjoy the hassle-free online rental processes and fully-connected environments these co-living options offer. So, if a property owner can clear the legal and financial obstacles, the rewards are plentiful.

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        How HNW Investors Should Screen Online CRE Investment Platforms

        In recent years, dozens of online platforms have popped up to cater to commercial real estate investors—everyone from everyday investors to high-net-worth (HNW) investors and family offices. Given the plethora of platforms that have emerged and that continue to emerge, any investor, no matter his or her level of sophistication, might be befuddled by which ones to choose.

        One of these new platforms is operated by EquityMultiple, a start-up based in New York City. The EquityMultiple platform offers equity and debt deals to accredited commercial real estate investors; it leans toward investments in the multifamily, hotel, industrial, office, manufactured housing and self-storage sectors.

        Charles Clinton, a real estate attorney, and Marious Sjulsen, a real estate investment veteran, co-founded EquityMultiple in 2015 with the idea of bringing direct investment in commercial real estate to all investors, not just institutional players. By the end of 2018, the start-up expects to have corralled more than $1 billion in real estate investments since its launch. EquityMultiple, backed by New York City-based capital markets firm Mission Capital and former Wall Street executive Ken Pasternak, boasts that it seals fewer than 10 percent of the deals that it looks at.

        Clinton, CEO of EquityMultiple, and Sjulsen, its chief investment officer, talked with NREI about how HNW investors and family offices should approach online real estate investing, which Clinton says is in the “very, very early innings.”

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          World Trade Center Builder Silverstein Expands Into Real Estate Lending

          (Bloomberg)—Silverstein Properties Inc., the developer of prominent New York City buildings such as 3 World Trade Center, launched a real estate lending venture to profit from what it sees as a financing gap left by banks.

          Silverstein Capital Partners will provide loans for the full gamut of projects, from office and industrial to residential and retail, the company said. Silverstein has partnered with a sovereign wealth fund and a pension fund that together will provide most of the capital for the venture, Chief Executive Officer Marty Burger said in an interview, declining to name them.

          Burger wouldn’t say how much money the venture has to lend but said the partners have deep pockets and that there is no maximum loan. The minimum loan will be $25 million. The venture, which is prepared to start lending immediately, already has a pipeline of deals, he said, and he expects annual returns of 10 to 15 percent. This is Silverstein’s first foray into lending.

          “There were a lot of banks that couldn’t handle the loans,” Burger said. “We’re a developer at heart, and we usually do very large projects, and we found that there was just a gap in the financing markets where there were large loans needed for complicated projects.”

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            Multifamily Investors Continue to Accept Low Cap Rates, But for How Long?

            Experts keep waiting for the yield to rise on multifamily investments.

            At conferences, leading investors and industry analysts repeat the same question: “Are interest rates going to go up any more and will capitalization rates respond?” says Jim Costello, senior vice president with research firm Real Capital Analytics (RCA), who is currently making the rounds of the fall apartment conferences, most recently at the Association of Foreign Investors in Real Estate (AFIRE), held in September in Ellicott City, Md.

            Benchmark interest rates have already risen more than half a percentage point in the last year—and they seem to be rising further this fall. But cap rates for apartment properties seem frozen in place. New buyers continue to step forward, paying high prices that keep average cap rates fixed at record lows.

            “There are always new buyers,” says Brian McAuliffe, president of institutional properties with CBRE Capital Markets.

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              Subprime Sneaking Back

              Subprime financing is on the upswing, and for a lot of people that’s a problem. The mortgage meltdown is widely identified with subprime lending so why should the return of such loans be welcomed?

              “Riskier U.S. mortgages are creeping back into the bond market again,” reported Bloomberg in May. “The loans in question are nowhere near the toxic mortgages that brought down the financial system last decade. But they’re being made to people with lower credit scores and with more debt relative to their income.”

              Average wage earners purchasing a home at the U.S. median sales price of $245,000 in Q2 2018 would need to spend 31.2 percent of their gross income on the monthly house payment for that home — assuming 3 percent down and including mortgage, property taxes, and insurance, according to the ATTOM Data Solutions Q2 2018 U.S. Home Affordability Report.

              That 31.2 percent of average wages needed to purchase a median-priced home in the second quarter of 2018 is the highest in nearly 10 years. Back in 2008 the share of income needed to buy was 34.3 percent.

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                U.S. Foreclosure Activity Increases 9 Percent in August 2018 From Previous Month, Still Down 7 Percent From Year Ago

                Bank Repossessions Up 14 Percent From Previous Month, Down  1 Percent From Year Ago
                Foreclosure Starts Up 9 Percent From Previous Month, Down 6 Percent From Year Ago

                There were 70,166 U.S. properties with foreclosure filings in August 2018, up 9 percent from July but still down 7 percent from a year ago, according to the latest ATTOM Data Solutions Foreclosure Activity Report. Nationally one in every 1,910 U.S. properties had a foreclosure filing in August 2018, according to the report.

                States with the highest foreclosure rates in August were New Jersey (one in every 690 housing units); Maryland (one in every 918 housing units); Nevada (one in every 984 housing units); Delaware (one in every 1,012 housing units); and Florida (one in every 1,229 housing units).

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