Month: April 2019

When a Resident Starts Shopping Around, You Lose Control Of The Renewal

When it comes to a renewing resident, nobody would want that person out shopping the competition, learning about all the great bells and whistles that they offer and putting them in the hands of our competitor’s trained sales force. So in that sense, although it may sound callous, your biggest advantage in renewing that resident is their ignorance of what else is out there! Unfortunately, in our business, we often increase rents, which ends up driving our residents to do just that. And once they start shopping around, they enter the dreaded Buying Cycle.

What is the Buying Cycle? I’m sure many of you have gone through the phenomenon where you never really notice car commercials, billboards, etc until you finally decide you are ready to buy a car, and then suddenly they are everywhere! Of course, that’s a silly thought – it’s not as if a billboard was suddenly thrown up because you decided you wanted a car – the reality is that they were always there, but you just didn’t notice because you were not in the Buying Cycle.

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Waterfront Properties Earn Extra Rent

Apartment buildings on the waterfront command rent premiums for their views and extra amenities.

Apartment buildings located near rivers, lakes and ocean shores earn extra money in rents.

“Renters pay an overall premium for waterfront apartments,” says Bob Thallander, president of Florida development for Bainbridge Companies, a multifamily developer headquartered in Wellington, Fla.

To build these properties, developers like Bainbridge fight off competitors and pay extra for land. Once they have the control of a waterfront site, they try to build units that give residents both views and access to the water and surrounding amenities—from walking paths to beaches and kayaking. “They want to see it and get out on it,” says Thallander.

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This is how America’s housing affordability is impacting credit quality

Affordability has returned to average historical levels, and it’s having a ripple effect.

It’s official: The era of unusually affordable housing has ended. Well, according to a recent Moody’s Investors Services analysis.

The organization claims that America’s housing affordability has returned to average historical levels, therefore impacting credit quality across numerous housing-related sectors.

“Homes are no longer relatively cheap on a national basis, and certain market segments are in worse shape, reflecting supply-and-demand imbalances stemming from the 2007 through 2012 housing slump, as well as demographic changes and the long U.S. economic expansion and its unevenly spread benefits,” Moody writes. “Reduced affordability is also a lingering issue in the rental market, where the effects are in some ways more severe.”

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The Cities with the Most Multifamily Rent Growth

Arizona cities dominate the list of the cities that posted the biggest apartment rent jumps in the past year.

National average apartment rents continued to go up in March, rising by 3.2 percent to $1,430, according to research firm Yardi Matrix. As always, however, some markets experienced rent growth that was far above the national average. Using data provided by Yardi Matrix, we take a look at the 24 cities that saw apartment rents spike the most in March 2019 compared to the period a year earlier.

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Real Estate Crowdfunding Firms Push Further into the Mainstream

Long-time real estate investors and lenders appear to be growing more comfortable with crowdfunding platform offerings.

When the first real estate crowdfunding firms launched about five years ago, they were met by plenty of skeptics. Yet the sector has continued to shake off uncertainty and win over a growing base of sponsors and investors.

“The initial stigma of crowdfunding is long gone and everyone in our industry, even the largest groups, recognize it as a viable source of capital raises,” says Stephen Cassidy, president at Denholtz Associates, a Piscataway, N.J.-based private investment company that has been in business for more than 60 years. For Denholtz, crowdfunding has proved to be a very effective way of sourcing equity.

The company completed its first crowdfunding equity raise on the CrowdStreet platform in early 2016 for a Downtown Orlando office building and now uses the online platform to source capital on three to four deals per year, raising anywhere from about $500,000 to $3 million in equity.

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Not Your Grandfather’s Mobile Home Park

The investment opportunities in the mobile home sector have grown enormously in recent years.

What other multifamily rental property type enables investors/owners to collect monthly rental homesite lease payments; PITI home loan payments; and when present, apartment rent on homes sited throughout this unique, income-producing community?

Answer: None!

That’s the reality of today’s ‘land lease community’–a contemporary trade term used to account for more than six types of shelter commonplace in this property type nationwide. No longer just ‘mobile homes’ & ‘manufactured homes’ on-site, but also modular homes, park model RVs, RVs for a season, stick-built homes erected in-community to imitate manufactured homes; and of late, the occasional Tiny Home or other Accessory Dwelling Unit (‘ADU’).

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Slower, More Sustainable U.S. Economy Emerges

The Federal Reserve’s dovish pivot has been reinforced by the abundant liquidity in the capital markets, according to David Shillington of Marcus & Millichap Capital Corp.

Amid ongoing strength in the domestic economy, concerns over the global economy present a more balanced approach to the growth outlook for this year. Weaker data in Europe and Asia, coupled with the risks associated with a broader U.S. trade war with China, represent potential economic downsides.

As a result, the rapid economic expansion that dominated the U.S. economy in 2018 has largely been replaced with a slower and more sustainable scenario. The Federal Reserve has eyed these developments, putting further rate hikes for this year on hold at its latest meeting in March. The Fed also announced plans to end quantitative tightening, its process of reducing its balance sheet, by September of this year. This follows a tumultuous fourth quarter in financial markets, with spiking volatility in equity markets leading to a steep drop in 10-Year Treasury yields from nearly 3.25 percent to 2.5 percent, the lowest level since the beginning of 2018. The yield curve has begun to price in a much more dovish Fed, with flattening interest rates across a range of maturities leading to a partial inversion in some short-dated issues.

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Industrial Sector Remains ‘Red Hot’ Despite Headwinds

Ongoing trade tensions do not concern investors in the industrial sector.

Investors still see industrial properties as favorably as they did six months ago, despite global trade tensions and labor shortages.

Trade talks between the U.S. and China are looming over the industrial sector. Due to these ongoing trade tensions, retailers are importing larger quantities of products than normal, in an attempt to beat potential hikes in tariffs on goods from China.

Barring successful negotiations, the U.S. plans to raise the 10 percent tariff on $200 billion worth of Chinese goods that took effect in September 2018 to 25 percent this spring. The U.S. has already imposed 25 percent tariffs on $50 billion worth of Chinese goods. On the other hand, reciprocal tariffs imposed by the Chinese government lowered Chinese demand for American-made goods. If this trend continues, demand from manufacturing occupiers could decline, according to real estate services firm Colliers International.

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Top 5 Ways To Increase The Revenue On Your Rental Properties

1. Increase Occupancy (Smartly)

Each month you have a vacant unit sitting you lose about 8.3% of the potential yearly revenue from that unit, which means that every month it sets vacant it starts to add up quickly. As soon as you find out that you will be having a vacant unit you need to do a market survey to confirm the current market rate on your unit. Have your lead maintenance person that does your final walkthrough prepare the list of repairs/maintenance issues (if any) as they do the walk through so they can order the needed material that day and they can be prepared to start the turn of the unit as soon as it becomes vacant. Once the unit is vacant begin placing your ads so that as soon as the crew has the unit ready for market you can show the unit immediately. Make sure your market survey is current allowing you to set the best price for your available units and know the specials (if any) that are working the best in your area, if you need to fill several units consider running an aggressive special to get your units filled but be sure you don’t give money away that you don’t need to. Always offer your residents a referral for bringing someone. Most importantly listen to the market, if you are not getting interest in the unit, you may need to lower the price.

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Owners will spend almost $21,000 to sell their home in 2019, Zillow says

8 out of 10 will finish at least one project prior to listing

Homeowners in the U.S. will spend an average $20,851 to sell in 2019, according to a report released Tuesday from Zillow. That includes real estate commissions, taxes and projects such as painting and landscaping to prepare for listing.

The total transaction expense will include an average $14,281 in agent commissions and transfer taxes, according to the report. Those are based on sale price, and will range from about $76,015 in San Jose, California, one of the nation’s priciest markets, to about $9,046 in Cleveland, Ohio.

Some of the other markets covered by the report included San Francisco, where sellers will spend an average $58,534 this year just for commissions and transfer taxes; Philadelphia, where the average will be $16,296; Chicago, at $13,825; Dallas, Texas, at $14,580; and Boston, at $30,085.

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