Having property is a good way of having an excellent income for the long-run, but sometimes that same leasing space won’t get you much unless you renovate from time to time.
Properties that don’t receive a makeover regularly will be less attractive and will be more difficult to lease, and you’ll thus lose money.
You can avoid this by doing some renovations or making changes that will cause the space to become more desirable. However, this can be quite costly, which is why we have prepared a list of tips for you to avoid unnecessary costs, and manage to make some effective makeovers for very little money.
Multifamily borrowers will have lots of choices on where to get permanent loans in the new year—despite worries about rising interest rates, high property prices and overbuilding.
Multifamily investors can get permanent loans from a growing list of lenders, including Freddie Mac and Fannie Mae lenders, banks and life companies. Many private equity fund managers have also created debt funds to provide loans on apartment properties.
“Rising rates aside, 2019 should feel the same as 2018 in terms of liquidity,” says Peter Donovan, executive managing director with CBRE’s capital markets multifamily group.
When it comes to real estate, it can be very difficult to get an edge on the competition in a tight market. One of the best ways to differentiate is through amenity offerings. It’s the extra “bang for your buck” factor that prospective tenants seek out, and it gives current tenants a reason to stay. The beauty of modern amenities is that the definition is very broad, meaning that property managers have a bit of wiggle room in determining the amenities that make most sense for their tenants.
While types of amenities can run the gamut, they all tend to fall under three umbrellas: physical internal amenities, external amenities and community branding amenities. While all are different, it’s a good idea to try to account for at least two of these types in your offerings to tenants.
Apartment rent in Austin during 2018 grew an average of $57 a month, or 4.4 percent, to yield an average monthly rent of $1,361, according to RentCafe.
Nationwide, apartment rent grew about $42, or 3.1 percent, to $1,419, the report found. Los Angeles saw rents increase by 6.6 percent while Chicago saw rents bump up 4.9 percent. The average monthly rent in Los Angeles comes out to $2,461 while Chicago’s average landed at $1,889. Small cities saw the most fluctuation, with double-digit growth in cities such as Midland and Odessa.
Around Texas, Dallas rents grew 2.7 percent, or about $31, to $1,182 and Houston saw rents grow 1.7 percent year-over-year, or about $18, to an average rent of $1,093 per month.
Las Vegas: 7.9 percent growth
Phoenix: 7.7 percent growth
Los Angeles: 6.6 percent growth
Jacksonville, Florida: 6.3 percent growth
Nashville: 5.8 percent growth
he American Pet Products Association’s 2017-2018 National Pet Owners Survey found that 68% of U.S. households own a pet. Last year, RentPath revealed research claiming that 66% of renters are pet owners. In an effort to cater to this growing renter base, many communities have adopted pet-friendly pet policies. Most of these policies allow renters to have up to two pets and they require additional pet rent and a pet deposit.
While much of the pet market is pet-tolerant, not as many communities encompass the true definition of pet-friendly. If your community embraces this pet demographic, there are many ways you can signal to pet owners that your community is a good fit for them. Here are some pet-friendly apartment marketing ideas your community can use to get the attention of pet owners.
We know that there is a demand for pet-friendly apartments, but are renters actually searching for apartments this way in Google? Emphatically, the answer is yes. Over the last five years searches for “pet-friendly apartments near me” has grown significantly in popularity. This Google Trends report nicely illustrates this growth.
(Bloomberg)—The Federal Reserve raised borrowing costs for the fourth time this year, looking through a stock-market selloff and defying pressure from President Donald Trump, while dialing back projections for interest rates and economic growth in 2019.
By trimming the number of rate hikes they foresee in 2019, to two from three, policy makers signaled they may soon pause their monetary tightening campaign. Officials had a median projection of one move in 2020.
Following the decision, stocks erased gains and 10-year Treasury yields fell while the dollar bounced off its lows of the day. Investors may have been swayed by the Fed’s generally upbeat analysis and expectation of more rate increases than markets anticipate.
Chairman Jerome Powell and his colleagues said “economic activity has been rising at a strong rate’’ in a statement Wednesday following a two-day meeting in Washington. While officials said risks to their outlook “are roughly balanced,’’ they flagged threats from a softening world economy.
The Federal Open Market Committee “will continue to monitor global economic and financial developments and assess their implications for the economic outlook,” the statement said. The unanimous 10-0 decision lifted the federal funds rate target to a range of 2.25 percent to 2.5 percent.
IRVINE, Calif. – Dec. 20, 2018 — ATTOM Data Solutions, curator of the nation’s premier property database, today released its Q4 2018 U.S. Home Affordability Report, which shows that the U.S. median home price in the fourth quarter was at the least affordable level since Q3 2008 — a more than 10-year low.
The report calculates an affordability index based on percentage of income needed to buy a median-priced home relative to historic averages, with an index above 100 indicating median home prices are more affordable than the historic average, and an index below 100 indicating median home prices are less affordable than the historic average. (See full methodology below.)
Nationwide, the Q4 2018 home affordability index of 91 was down from an index of 94 in the previous quarter and an index of 106 in Q4 2017 to the lowest level since Q3 2008, when the index was 87.
Among 469 U.S. counties analyzed in the report, 357 (76 percent) posted a Q4 2018 affordability index below 100, meaning homes were less affordable than the long-term affordability averages for the county. That was down from a 10-year high of 78 percent of counties posting an affordability index below 100 in Q3 2018.
Evan Gentry, founder and CEO of Money360, believes 2019 will be the year the California bridge lender hits $1 billion annually in loan volume. Money360, which launched in 2014, has been doubling or tripling in size annually despite the entrance of Wall Street hedge funds into the bridge lending space, Gentry says.
“There’s a lot of opportunity in the market,” he notes. “Transaction volume was strong in ’18; we think it will continue to be strong in 2019.”
Money360 is one of hundreds of U.S. bridge lenders that still see plenty of runway at this stage of the real estate cycle, despite growing competition that has fostered a new level of aggressiveness, including higher leverage, lower pricing, no appraisal loans, innovative loan structures and originators willing to lend on non-cash-flowing assets.
This year “was one of our best years, even though it was very competitive,” says Marissa Wilbur, origination associate with Archway Fund, a Los Angeles-based bridge lender that doesn’t require appraisals and allows higher leverage than some of its competitors. “By the end of June, we had hit our (year-end) target goal.”
Real estate investing is a multifaceted skill, and it’s important to understand that you can’t do it all on your own. Building a team is a crucial step in any real estate investor’s journey. Not only does it humble you to the fact that you still need to rely on others even though you work for yourself, but it gives you access to a panel of experts that can help with your transaction. A prudent real estate investor will have the following people on his or her team: a real estate agent, a mortgage broker, an inspector, a general contractor, a title company, a lawyer, and a tax accountant.
Unless you decide to pursue your real estate license for the purpose of making your real estate investments, you’ll need to partner up with a licensed real estate agent that you enjoy working with on a daily basis. Real estate investors have different risk appetites, needs, and desires than a normal buyer or seller, so it helps if your real estate agent has worked with investors in the past. If you plan on purchasing multiple investment properties at one time or several properties each year, discuss this with your agent in advance. They will need to provide constant input and potential property suggestions to keep up with your unique demand. They can also help weed out properties that don’t fit your investment criteria. Real estate agents are often experts in their local markets, so your agent may be able to help you hone in on a specific area that has good investment potential. They facilitate the entire transaction process and make your life easier. Here’s another bonus – an agent’s commission is always paid by the seller. Don’t let the fear of paying commission keep you from working with a great real estate agent. You can focus on the investment and let them do their job. You’ll be better off for it.
Unless you’re buying a property with cash, you’ll need a mortgage. And unless you live in an ideal world, mortgage interest rates change every single day. Any real estate investor should have two or three mortgage brokers with whom he or she can compare interest rates and discuss mortgage programs. Mortgage brokers are invaluable resources to help understand your transaction costs. Mortgage interest rates have a tremendous impact on the profitability of your property because they greatly affect your monthly mortgage payment. If you use an FHA mortgage, you’ll be paying private mortgage insurance. Your mortgage broker can help you figure out what program to use and whether it’s worth it to pay for points to lower the interest rate, and they can help you plan for closing. They are invaluable when it comes to understanding the financial side of things, and they can even offer lender credits that may help to cut costs. You’ll work with your mortgage broker throughout the entire closing process, so it’s important to work with someone you trust and can build a longer-term relationship with.
When you analyze the market for potential investment properties, your focus as a real estate investor is on the numbers. You will calculate your profitability, your return on investment, and other metrics to help you understand how successful the purchase may be. Once you narrow down your potential properties to the one that you’ll make an offer on, things get a bit more serious. Finding a profitable property is hard enough but be sure to always have property inspections done to confirm that the property is of sound quality. Having an inspector on hand that you can trust and rely upon to be available quickly is crucial. After your first few purchases, you’ll likely build a relationship with one inspection company that you will continue to use for all future purchases. A prudent real estate investor will work out a deal with the inspection company to get a loyalty discount, since you’ll likely be using their services multiple times per year. Once you build a relationship with an inspector, you can better rely on them for honest advice and feedback on the property. You’ll know what to expect even before you get the inspection report which saves you time and the headache of waiting for results.
As mentioned above, the state of the property you’re purchasing is just as important as its profitability. If you run into any major issues during the property inspection process, it would be helpful to have a general contractor that you can trust to help walk you through the issues and create a game plan. A general contractor is well-versed on major and minor issues related to construction, HVAC systems, electrical systems, plumbing, and others. They can give you an estimate on how much it would cost to repair certain issues you may come across with any given property. This would help you determine whether it makes financial sense to continue with repairs or abandon the investment property altogether. Save yourself the guesswork and invest in your relationship with your general contractor. They can give a more accurate estimate than a quick Google search would, and you’d be able to trust them to follow through on the work for which they’ve been contracted.
Another party that will be present throughout the closing process and which is absolutely crucial to the closing of the deal is the title company. It helps to build a relationship with a title company because they facilitate the entire transaction process from offer to closing. Many title companies are willing to offer a reduced service fee for repeat business, but more meaningful than this is the trust you’ll build with the team that delivers you the property deed. Title services are an important part of the purchase process because they determine whether the previous owner is truly delivering a free and clear title. This is the only way to ensure that the property you’re buying will be yours and yours alone. As an investor, this is a non-negotiable part of buying a property.
The benefits to having a lawyer experienced in real estate law on your team should be obvious. A practitioner in real estate law can help answer any legal questions you may come across during your real estate investment ventures, and there will be many. They can also help walk you through difficult conversations or situations with the other parties that are often involved in any given transaction. In the worst-case scenario, they can represent you in the event that you become involved in an illegal or unethical situation. While most real estate agents have access to a legal hotline through their local or national Realtor association, it’s best for you to have a lawyer on your side that you can trust and that you can reach out to without any hesitation or delay. As a real estate investor, you may run into circumstances that are legally questionable, and a sensible real estate investor would ensure that all of his or her boxes are checked and that nothing is being done that shouldn’t be.
Finally, as a real estate investor, your tax accountant will likely become your best friend. The tax system is baffling enough as it is – you’ll want someone you can trust to walk you through the annual tax return process and to give you general advice on how to conduct yourself in business and in finances throughout the normal course of business. There are a wide array of credits and tax deductions available to real estate investors, including mortgage interest deductions, benefits for having a home office, and mileage deductions for traveling to and from properties. Your tax accountant can help reduce your tax burden and maximize the benefits you receive from the business you’re already conducting. Instead of spending hundreds of hours learning the tax code and manually itemizing your tax return, work with a tax professional that you trust and can envision working with long into the future. As your real estate investing business grows more complex, your tax accountant can help you structure your business to be the most beneficial to you. Most importantly, they will help ensure your compliance with the tax laws and prevent you from getting into trouble with the tax authorities.
By now it should be clear that real estate investment is not a one-man (or one-woman) job. It involves a multitude of experts in order to get to the finish line. Having a team that you trust and that you enjoy working with can make all the difference. As a novice real estate investor, don’t feel overwhelmed that you have to do all of this yourself. You have plenty of people around you that are experts in what they do, so that you can be an expert in what you want to do. Building a team takes time, but it is a natural progression as you continue to do business with the same people. If one member of your team isn’t giving you what you need, don’t hesitate to move on to someone else. Real estate investment is a tough business as it is, and your team is meant to make your job easier, not more difficult.
(Bloomberg)—It wasn’t that long ago that retailers looking for space at shopping centers would get paperwork only for a multiyear lease.
These days mall landlord Macerich Co. is offering 180 days.
Last month, Macerich launched BrandBox, a leasing program that allows online sellers to dip their toes into the bricks-and-mortar universe with a temporary pop-up store. The first one, featuring six retailers, is up and running at northern Virginia’s Tysons Corner Center, with plans to expand to at least five more states. The leases are six to 12 months, and the store walls are flexible, meaning Macerich can switch up the layout to accommodate different numbers of shops.
“Instead of selling real estate, we’re selling a solution,” said Kevin McKenzie, Macerich’s chief digital officer. “That’s an entirely new process, culturally, for our company.”
Macerich, which owns more than 50 shopping centers, is trying to reclaim some of the industry’s mojo. Big-box stores such as Sears and Toys “R” Us, once anchors that drew crowds ready to spend, have filed for bankruptcy. Malls, over the years, have struggled to attract foot traffic. Signing retailers to long leases and hoping none of them takes a trip to bankruptcy court is starting to look like an outdated formula. Kids these days, at least the ones with the money to shop, aren’t into brand loyalty. They’re into Instagram.