Author: Suraj Shrestha

Suraj Shrestha is an associate at Harborside Partners. He has been taking the lead role on research projects; to develop and implement online marketing strategies for search engine optimization and social media marketing. He is one of the core parts for helping to grow business revenue and the company’s online presence.

Ranking the Top Multifamily Markets

A look at the cities that topped this year’s Marcus & Millichap’s National Multifamily Index.

Taking into account factors such as employment, construction, vacancy rates, rents and investment, Marcus & Millichap constructs its annual National Multifamily Index as part of its 2019 Multifamily Investment Forecast.

The twin cities of Minneapolis-St. Paul climbed two spots to top the firm’s index. It is the only Midwest market to break into the top 20, according to the firm. San Diego climbed into the second place spot, one of several California markets to sit near the top of the list. In addition Florida metros Orlando and Tampa-St. Petersburg posted the largest advances in this year’s index from last year’s, jumping 11 and nine places, respectively.

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7 Property Management Pitfalls

Proper preparation can take the sting out of your daily grind and propel your business to success! Here are seven things to avoid.

Property management is tough. Every day can feel like shooting at a moving target, that is invisible, and may decide to shoot back at you at any movement. Proper preparation can take the sting out of your daily grind and propel your business to success!

Below are seven common property management pitfalls with suggestions on how to fix them.

1.Horrid High Turnover Whether it’s residents or staff, high turnover is a bad sign.
Jen Piccotti of multifamily housing consultant group Manag Inc., defined high resident turnover as anything over the national annual average of about 50 percent. High staff turnover exceeds the national average of 32 percent per year. When your numbers hover near the national averages or higher, it’s time to regroup.

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Top 10 Seriously Underwater Metro Areas

ATTOM Data Solutions just released its Year-End 2018 Home Equity and Underwater report, which showcased graphics on historical data for the nation as well as heat maps narrowing in on zip code level data. However, what about those metropolitan areas that speak to the larger group of people? Areas where homeowners are still feeling the lingering effects of the housing market crash or areas that are seeing great value in their home.

With this latest report, ATTOM Data found that one in four homeowners were considered ‘equity rich’ while one in 11 remained seriously underwater. The number of equity-rich homeowners ticked up to its highest level in five years. However, homeowners in more expensive western states continued doing far better than those in the Midwest or South. In areas where the median home price was at least $300,000 last year, owners were far more likely to be equity-rich and far less likely to be seriously underwater than those in other parts of the country.

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The Tightest Industrial Markets in the U.S.

A look at the major industrial markets currently with the lowest vacancy rates.

The continued proliferation of e-commerce remains a boon for the industrial sector. In all, North American industrial absorption is forecast to register 495 million sq. ft. in 2019 and 2020, with 550 million sq. ft. of new product delivered by year-end 2020. IN addition, vacancies will remain at around 5 percent and average asking rents will rise from $6.24 per sq. ft. all the way to $6.68 per sq. ft. by the end of 2010.

Those were some of the conclusions in Cushman & Wakefield’s recently released 2019 North American Industrial Outlook, which line up with the sentiment expressed in NREI’s recent industrial research study.

According to the firm, “Market conditions will encourage development in port-proximate markets, intermodal hubs, and inland population centers but supply will not overwhelm demand.”

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MBA: Mortgage applications decline as economic uncertainty grows

Applications for 30-year fixed rate mortgages fall 3.7%

Mortgage applications fell even further for the week ending Feb. 8, 2019, according to the newest data from the Mortgage Bankers Association’s weekly Mortgage Applications Survey.

“Application activity fell last week – even with rates decreasing – as renewed uncertainty about the domestic and global economy likely held potential homebuyers off the market,” MBA Vice President of Economic and Industry Forecasting Joel Kan said. “Despite the recent decline in applications, we still expect that the continued strength of the job market and lower rates will support more purchase activity in the coming months.”

On an unadjusted basis, the Market Composite index retreated 3.7% from the previous week.

“The 30-year fixed-rate mortgage dropped to its lowest level since last March and was 52 basis points lower than its recent high last November,” Kan continued. “Government refinances provided a bright spark, picking up over 10%, as both FHA and VA refinancing activity saw increases over the week.”

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Is Cost Segregation Analysis Worth It?

It has long been a question that has puzzled many commercial property owners. Many accountants suggest it, but it’s worth is still rarely clear.

Many owners barely even understand how it operates and is thus unable to determine its worth. As that’s the case, we’ll thoroughly explain what it is and what’s it for, but more importantly, whether or not it is worth it in the overall picture.

What Is Cost Segregation?

First of all, cost segregation is used by commercial real estate owners to reallocate property into personal property, to achieve accelerated depreciation methods and a shorter depreciable tax life.

It is a practice that involves determining the exact assets an owner has and their costs, then classifying them for federal taxes.

By using cost segregation analysis, you get the chance to determine which of your building’s costs that were classified with a 39 years depreciable life could now count as personal property or land improvement, subject to a 5, 7, 15, or 27.5 (for residential and multi-family buildings) years depreciation rate.

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Provident Financial abandons mortgage banking

Plans to layoff 122 staffers in the coming months

Provident Financial Holdings announced its exit from mortgage banking earlier this week.

In a released statement the firm said challenging economic and operating conditions made it difficult to make a profit in home loan originations. The company’s CEO also cited “required investments in expensive technology” as another reason.

The company plans to layoff 122 full-time-equivalent employees, presumably working in the now-abandoned Provident Bank Mortgage brand, in the coming months, though it will not exit the mortgage lending industry entirely. PBM will be retired by the end of June.

“The company plans to continue to originate single-family mortgage loans for retention on its balance sheet, both within its market area, the Inland Empire region of Southern California and other locations in California,” the statement said. “Also, the company will continue to purchase these loans consistent with its historical activity.”

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Why Specialization is an Asset in Multifamily Brokerage

What can residential agents learn from their commercial counterparts? For one, they can pick a geographical area or a price point and get to know it really well.

Although residential and commercial real estate differ in many ways, I have often found that residential brokers don’t adopt as many tactics from the commercial side as they could. As a result, they fail to take certain actions that could prove to be quite useful to them. Many of these actions are essential in commercial brokerage and while the same can’t necessarily be said for residential brokerage, the tactics are certainly useful in our business. Namely, specialization and cold calling are two ideas that residential brokers should take from their commercial counterparts.

A common mistake that residential brokers often make is spreading themselves too thin, either geographically by trying to do business in every neighborhood or when it comes to pricing by attempting to be an expert in sales at every price point. The brokers who survive year after year have found an area to specialize in, whether that’s a specific neighborhood, price point, or even just one particular block. This way, they really get to know the inventory with which they are working instead of trying to do everything and actually accomplishing very little. After brokers close a sale, they should start spending ample time in the area and try to get to know the neighborhood residents and what’s going on with nearby listings and sales. One would be surprised by how small of a geographic area that brokers can make a living off of, provided that they are successful at using such a specialized approach.

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Fannie Mae: Tech companies threaten to edge banks out of the mortgage market

“Now is the time for banks to step up their digital game”

In the era of the digital mortgage, banks are facing increased competition from big tech companies looking to flex their muscles in the financial services realm, and they may need to invest more deeply in tech to stay on top.

According to a Fannie Mae’s Perspectives blog post authored by Steve Deggendorf, director of Market Insights Research, banks need to “step up their digital game” and figure out how to streamline financial tasks to enhance the customer experience before big tech beats them to it.

Citing data from Fannie Mae’s National Housing Survey from the third quarter of 2018, Deggendorf said more consumers have expressed a willingness to trust their favorite tech firm with their financial needs, including obtaining a mortgage.

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The U.S. Apartment Sector Would Continue to Remain Strong Even in a Recession

In the current cycle, property fundamentals are strong enough to withstand a shock to the system.

Even if there is an economic downturn in the near future, the apartment sector is likely to hold up, according to industry experts.

“Apartments are still resilient against a possible recession,” says Andrew Rybczynski, senior consultant for CoStar Group Portfolio Strategy.

Though the high end of the market may be feeling the strain of overbuilding, the sector overall is benefitting from long-term trends that should continue to fill apartment units for the foreseeable future.

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