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The only problem with multifamily right now in your more popular MSA’s is that there is no inventory. I predict rental rates will increase annually at a faster pace then the typical proforma of 3% inflation until Q2 2016. Things should/have to quiet down and the trajectory should become less steep by then. That said, multifamily cap rates are so suppressed right now that investors are building new to rent and those that do, I believe will have a high quality investment vehicle by taking on the risk of buildout and stabilization. When those investors choose to sell, they can compete with other assets in terms of pricing but offer a newer product in good locations.
In comparison, if you look at multifamily from Tampa to Naples (Florida), C-Class multifamily assets trade at about 7-7.5% cap rate in so-so areas. Investors who have vision can buy land and build Class A in Class A locations for the same return. The risk is stabilization.
CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MeW-W-WHAT??!! Falkner, come to me with some respect my man! I'm a real estate agent. I NEVERRRRR EVER ONCE TOLD A LIE!!
Let's be clear as to who is capable of qualifying for No-Income loans. NINA (No Income No Asset Verficiation) does NOT exist…ANYWHERE….IN THE WORLD!! Unless it's hard money. . SIVA does exist (Stated Income / Verify Assets). This is not available to W-2 employees, however if you are a 1099 independent contractor AND a business owner, then you have a chance of qualifying for HCSB's program for SIVA. You need 35% down and 12 months of reserves put in escrow. The rates suck too. It makes no real investment sense to use this type of loan in my opinion.
Show me a lender who does W-2 employees on a Stated Income loan with competetive rates, and I'll show you a portfolio lender that won't last 3 years…And that's being generous. Fannie/ Freddie won't offer this product anytime soon and if the economy is lucky, never ever again. You want a house. Show us you can afford it. These subprime loans almost wiped out the US Economy by itself! Ain't happening on a concerning level in my lifetime. I would say in Jay Hinrichs lifetime, but he's old and that's not sayin much…
COME ON JAY, I'm joking Wednesday afternoon humorCheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MeJay: Perhaps it's a condotel? But if so, in my condotel experience, the management company takes 40-60% of the revenues so I just can't see an ROI close to 40's.
CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MeCan't believe I'm saying this, but I agree with Freckle.. I kid, Freck! What happens when the oil production stops or dwindles and we find other resources. It's a game of hot potato. I don't know if I'd necessarily burn the money though
CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MeSunDirtWater: Correct. The cash on cash return would be surplus after debt and expenses. Australians or foreigners for that matter won't get rates in the 5's….
CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MeJay –
I agree with you that 14-17% net cash flow don't exist much unless in the dumps (we know what happens on pro forma vs reality). I think Nigel was saying 14-17% Cash on cash which is reasonable. From what I gathered he was saying 60% loans so your 14-17% ROI would be based off of the 40% down plus acquisition costs.
Funny, someone said to me the same thing the other day comparing TX to FL and said the obvious comparison was land mass and how much is available. LOL. Come to Florida and try telling the Armed Corp of Engineers that you want to cut down some wetlands to build a development. They will pull your pants down and spank you so hard you won't know what hit you. In SW Florida, the amount of developable land is WAY WAY less then what the aerial shows on a map that is vacant. You can't kill owls, panthers, birds, pigs, deer, etc….Look up what "protected mangroves" are in FL. If you even so much as brush up against one and a leaf falls off, you are facing 100000000000 years in prison!
CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MeOn the surface, I would presume this was a hard money deal. If that is the case, then you can walk away with no recourse. Of course you'll lose the deposit but if you are invested into a black hole, it's more of a business desision on your end.
Management wants you to walk probably because they are tired of managing perhaps because of the location, which indicates mass inferiority from your post about bad tenants. They they would possibly try to get the listing once you are out of the deal. Who knows.
Seems the lender has no recourse here. I read a lot about how bad Buffalo is. I was offered a really good value opportunity (on paper) as a JV. I went to visit Buffalo and although I really liked their chicken wings, I'm not investing money there. I wasn't sold at all. Not even close and I made up my mind within about 2 hours from landing.
CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MeMy brother's fund absolutely killed it the last 2.5 years in CA with hard money rehab funding. They started exiting that market though about 4 months ago with concerns that prices are getting too crazy. You see that too? I've seen some files and it reminds me of each area I know the market. Investors swooping in and OVERPAYING on almost everything. It's fueled preconstruction whispers.
I love Bucky Showalter. I met him many times when I played and he is a very smart man. I wouldn't put it past him to take Balt to a World Series in the next 3 years if he stays. Yanks keep grinding despite being old and injured.
CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MeHinrichs: You still sitting on your wallet? When did they let you out ? I'm representing a new ALF in town. I have a room picked out for you, with a window. Let me know if you're interested.
CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MeSo Florida relies on external driving factors? Yeah I can live with that. Employment is always a leading indicator. UP. Population growth is typically 1.5% annually. UP to 5% for consecutive years (although I don't think that's sustainable, I believe we will see 2.5% consistently until 2030)… Bankruptcy's DOWN. Your chart on BK's certainly show Florida as one of the tops in filings, however Florida showed one of the biggest improvements in lesser BK filings. From 2011 to 2012, BK's are down 20%. In fact, if you take Miami-Dade County out of the equation, the improvement numbers would be far more dramatic. From a micro perspective, SW Florida from Tampa to Naples is showing the strongest economic improvements in FL.
Yup, Hertz is hurting NJ and other areas by closing up shop, but the long term economic effects will undoubtedtly be positive for a company who is looking to consolidate in the short term to expand in the near future. Campbell's Soup is doing the same thing. So is Merck Pharmaceuticals and so are many other Fortune 1000 companies. The firms are well funded again and will build Headquarters full of state incentives to build energy efficient campuses and offer employment to the LOCAL workforce.
Tourism in 2012-2013 season is near record numbers dating back to 1995. Construction prices are up 15% since November and expected to be up across the board by much more in 18 months. Investors of Multi Family is where the smart money is in Florida right now, a huge hedge against inflation which is definately going to be happening.
Freck: Your charts are misleading because it doesn't show annual improvements. Lastly, when does a Fortune 300 firm Headquarter relocation happen on an "everyday basis" as you say? You're a jokester and in my professional opinion can't be taken seriously here.
For 3 years I told investors NOT to buy in FL dating awhile back and it was before the GFC while I was working with a bank on the executive side when I got a feel that the craziness was not sustainable.. I called it the day I saw a school teacher in Michigan on a 40k fixed income qualify for 3 homes in Florida. I don't mind telling people NOT to buy. I can do that because I represent institutions on distressed dispositions so no matter where the pendulum swings, I have business. I'm not a cheerleader where my pitch is to buy all the time. It's timing and it's now.
CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MeThat's right. Up to 700 "RELOCATED" in 2 year period. That doesn't include the 300 jobs they are offering to the local SW Florida workforce. I'm not going to really argue this point. It's a huge economic shot in the arm to an area that shows a very promising future.
CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MeFreckle –
I can't even dignify your imbeselic responses sometimes and I've stuck up for you for awhile here. You just proved to me you're just a troll. Where did you read they are shifting 700 jobs from NJ? It will be less then that, but the overall job creation in FL will be well over 700 The president of my firm is on the committee for the Economic Development Office which directly assisted Hertz land in Florida, in fact she knew who the company relocating was when the anonymous negotiations with county and state were ongoing and in a sales meeting 2 weeks ago she discussed the research that went into this and why a huge company is likely selecting SW FL for a new HQ. The trickle down effect will be even greater. The struggling retail and office industry will certainly pick up steam and the Coconut Point Shopping Center which has struggled for 2 years will get a huge shot in the arm. After Hertz announced their change, a manufacturing company just went hard on a building in Lehigh Acres to create 250 jobs. A tech company is committing to 400 more jobs. Direct impact from Hertz. Also, another important reason they chose SW FLorida…Their research showed that the workforce is highly educated and underemployed. They have assessed that each new employee in Florida, they would save an average of $13,000 in salary from what they paid in NJ to offset cost of living. Multiply that by 700 jobs.
Chico's, the areas second largest empoyer just assisted Florida Gulf Coast University on a partnership with the Fashion Institute of Technology in NYC which will be a huge boost to new graduates in SW Florida looking for NYC education experience.
Keep on moving your deck chairs freck
CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MeNigel:
I understand your bias, but with regard to the weather, it has holds very little weight. Orlando is Disney. The economic draw is positive and the trajectory arrow is pointing up like most areas of Florida. You like it because you've been there and may be a fan of Buzz Light Year. I am.. The weather comment is old and not once in the last 2 years have I had a developer or investor concerned about the weather. Hurricane Charlie was 2004 and the worst storm since 1992 Hurricane Andrew. I was here for Hurricane Charlie and lived on the water where the storm surge was supposed to be over my house. It didn't even break the top of my seawall. Hurricane Wilma in 2005? What a joke. I was baking brownies in my house later that evening watching satellite TV.
You may think I'm being sarcastic, but I'm really not. Orlando is a good area. But to say that it favors other areas due to weather is an indication that you just don't know the area or the true weather patterns.
CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MeThese are 2 articles where 2 major Fortune 300 companies are investing in Florida. Where? My own backyard. This is very exciting for the local economy which has already spurred interest from developers. Our inventory of localized vacant commercial and favorable land use properties are practically all tied up with developers since these announcements. We have a massive interest from ALF developers (assisted living facility), multi-family, etc.
Florida provides low cost of living, emerging and re-emergine metropolitan areas, and no state sales taxes. To boot, you also get to be within minutes of some of the most reknown beaches and tourism areas in the world.
CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MeHi Ziv,
If you send me a PM with your e-mail, I will gladly send it to you. I sent it to Freckle to upload since I'm bad with Google Docs. Thanks
CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MeFreckle – Of course the numbers are based on projections. If there was more of a guarantee then projections in real estate, everyone would be a bazillionaire. There is calculated risk in investing. I'm basing my inflation numbers off of a bell curve analysis of what has happened over 100 years and factoring that into trends I've seen over the last 10 years..also fed rate guessing, inflation, etc…. It's not easy coming up with 3% inflation and feeling comfortable using that number. It's not arbitrary, it's assessed. You may use a different number. The purpose of this spreadsheet was to give insight as to how I evaluate properties, which could be different from you.
Trust me.. This spreadsheet is very very similar as to what the big players use here. Losing is an alternative to winning and being good at what you do combined with guesstimating figures based on knowledge can alleviate the risk. Nothing more. Like I said previously, I've made business decisions and lost a bundle….but I was ok with that going in because I was able to quantify average risk. I made what I thought was an educated decision and lost. Big deal. This is my life, and I'm sharing how I go about it for me and what my clients expect of me. It's simple. No need to complicate it more then this. If you can't make an educated decision after using this spreadsheet, then good luck to you.
When I said "Education without Application Nets you Nothing", that means physically buying something or applying your education to make a decision NOT to do something. It can go either way, but if you don't invest and can't come up with a solid plan that includes inflation, discounted cash flow models, discount rate, then stick to your day job. I've lost before and I'll lose again. Fortunately I'm plus more then minus.
CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MeFor me, this spreadsheet would change on a client to client basis, depending on loan terms issued from the bank. Unfortunately, foreigners typically won't get this deal over in the US. You can, but it would take a lot of bending over backwards.
I can customize any financial analysis for anyone. This is just an example of how I do things on the commercial end of things. For a single family home, this is too complex.
CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MeOk, now I'm convinced you are either just pulling my leg or have been drinking….heavily..
But I'm baited to answer because it's kind of funny at this point. SDW = SunDirtWater ….. 1 + 2 = 3.
This doesn't make sense to you clearly because you aren't educated in finance or banking whatsoever. To most on this forum who have knowledge, they will respond the way I am over and over and over again. When I say that "banks don't have the appetite", that means that they just don't want to do it. COULD they collateralize your property as equity or contribution? Sure they COULD if they WANTED to, but they don't want to. PERIOD.
You are a foreigner. You stand absolutely zero chance with your arguments in the US, or any outside country you seek financing. In fact, I have perfect credit, a portfolio of PERFORMING properties, and cash in the bank….AND I'm a U.S Citizen.. I cannot get 80% financing on commercial loans.
SDW: Are you pulling my leg?? Are you teasing me?? LOL…. You can't be this naive. If you are, I have a bridge that I can sell you in Brooklyn.
CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MeSDW: Do yourself a favor and just accept what I am telling you. US CITIZEN…NOT US RESIDENT….NOT FOREIGNERS….NO NO NO….NO EXCEPTIONS. Joel mentioned recourse. It's called PERSONAL RECOURSE. Your other property paid in full is not leverage with them. This is my last response to this as you will just need to let it go. NOT HAPPENING. Write Obama and the US Treasury a letter. Maybe they'll change for you.
CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone MeIt DOES exist. Everything you say exists!! But only for U.S citizens! Not a foreigner
CheevesFinancial | Cushman & Wakefield - Commercial Property SW FL
http://www.CommercialRealEstateVoice.com
Email Me | Phone Me
COME ON JAY, I'm joking 
