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Hi Nathan,
Couple of things to consider besides the obvious that are many.
1. Make sure you give a high level of consideration to the exit strategy and what the end goal is. Having the end in mind is very key otherwise it’s difficult to gage where you are to allow for course correction. Once you really have a clear picture in mind of exactly what kind of return and time frame to gain such return it will help in other areas that you may not have even considered yet such as tax burdens on the other side. What about survivorship if case something happens to you; where does you investment go and what happens to it?
2. Trust nobody. At least until you verify that who you are going to work with has a proven track record and a solid investment model. I see and hear so much BS out there from people and companies that may sound on the surface that they care but when you dig in you find out its all about lining their pockets with the profit; not yours…. Granted there are a few good ones but proceed with caution. Call and speak with other clients of these people and get their opinion and if a company or person is not willing to share a client list with you then watch out.John-USA-CommercialRE
Email MeThe Daytona Beach area is one of those areas getting ready to explode in values as well due to the Casino & Hotel activity coming. With the train/rail system being designed that will connect Daytona Beach to Orlando; this will have an extremely positive impact in these communities
Regarding this 52-unit property and the upside with the remaining lease up and then flipping the deal; these huge upside deals for apartments this size all almost gone. The US has enjoyed a good run with larger apartment communities beings purchased low and sold high but now a lot more investors are catching on that apartment investing is a very good and safe investment model. Lots of buyers and not as much inventory. That’s what makes this an awesome opportunity; because this 52-unit deal is direct with the seller and the property is not advertised on the open market. Being a seasoned and senior broker here in the US this type transaction makes all the difference in the world with buyers. Essentially there is less competition of other buyers and the direct with the seller allows even the complex deals to get done easier. With this property being purchased right and the trending CAP rates combined with the US Federal 10-year treasury index being low; it allows for a very nice set up to resale this deal in 12-18 months for a compressed CAP rate and a very high yield. I love these kind of deals.
The great thing about apartment ownership is the fact that any risk is spread out between the multiple tenants and the investor’s investment is not subject to loss in value should a tenant or few tenants vacate the property. The opposite of this is where a single tenant property (unless corporately backed) can turn into a distressed situation quickly.
This type of property reminds me of the ideal property where having a small partnership of owners that come together creating a unified front can put their purchasing power to work and hit a financial home run.
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This reply was modified 9 years, 11 months ago by
John-USA-CommercialRE.
John-USA-CommercialRE
Email MeYou are correct Nigel. Actually the State of Florida and the Building Code Counsel have constructed a zone map that reflects each area of Florida and the rated sustainable winds. This zone map is what the insurance industry uses to price insurance. That being said several companies are out there now that write this type insurance all day long. The FACT is; regardless if there is a hurricane or not that if an insurance property suffers from wind damage that the standard policy will not cover the loss. Most of the public is still unknowing of this.
John-USA-CommercialRE
Email MeEquity Residential is the largest publicly-traded multi-family real estate investment trust REIT in the U.S. The REIT was founded by billionaire Sam Zell (check out other billionaire managed REITs), with a portfolio consisting of 152,821 units spread out over 529 properties in 24 states and the District of Columbia.
Equity Residential is well positioned to capitalize on the current housing trend in the U.S. The real catalyst will be the fact that rental rates will remain elevated, as well as increase over the interim.
All other commercial property types are following the trend. Education in Commercial RE Investing is key.
John-USA-CommercialRE
Email MeU.S. Banking for Mortgages
Banks are slightly loosening standards for many kinds of loans, and cutting into their own profit margins to try to make more loans, especially to businesses and real estate developers, the Federal Reserve says.
The central bank's quarterly survey of bank lending officers said most banks haven't made it materially easier to get business loans and commercial real estate loans in the last three months. But more than half of banks said they are accepting interest rates that are closer to what banks themselves pay for deposits, or other sources of money they lend out, according to the survey released.
John-USA-CommercialRE
Email MeFlorida Housing
The state housing market gained strength in first quarter 2013 with increased closed sales, more pending sales, higher median prices and a tighter inventory of homes for sale compared with the same quarter in 2012, according to housing data released Thursday by Florida Realtors.
"The first three months of 2013 demonstrate that Florida's housing market is gaining momentum and continuing to bolster the state's economy," said 2013
Read more here: http://www.bradenton.com/2013/05/10/4519217/states-home-sales-gain-momentum.html#storylink=cpy
John-USA-CommercialRE
Email MeExxon Mobil expansion. Over 12,000 jobs and there will be over 40,000 jobs in North Houston. Also, in today’s Houston Chronicle there is a front page article in the Business section about the new Exxon Mobil campus. There are currently 20 structures under construction !!!!!!!!!!!!!!!!!!! I have attached the link to Chronicle article with pictures.
http://blog.chron.com/primeproperty/2013/04/new-photos-show-progress-on-exxon-mobil-campus/
John-USA-CommercialRE
Email MeTexas takes a jump ahead today. Over 12,000 jobs and there will be over 40,000 jobs in North Houston. Also, in today’s Houston Chronicle there is a front page article in the Business section about the new Exxon Mobil campus.
John-USA-CommercialRE
Email MeCommercial lending for all in coming back.
I would not necessarily say Florida leads the nation on the best financing of CRE but I do know that Florida is among the top and increasingly growing stronger. Here are three examples of aggressive lending in CRE. By the way EVERY BORROWER was a FOREIGN NATIONAL
1. 30,000+sf Retail Shopping Center priced at $5.2M located in the Tampa, Fl area: Buyer was from India. The LTV was 70% with 30-year amortization @ 4.25%. The lender is a life insurance company allowing non-recourse financing.
2. 5000sf Auto Tire Store priced at $1.9M located in the Jacksonville, FL area. Buyer was from Canada. The LTV was 70% with 15-year amortization @ 4.10%. The lender is a different life insurance company allowing non-recourse financing.
3. 82,000+sf Retail Shopping Center priced at $6.8M located in the north Orlando, FL area. Buyer was from China. The LTV was 70% with 25-year amortization @4.85%. The lender is a local community bank..
For historical purposes, these borrowers would not have been able to obtain this type financing a year ago. The market is changing in a good way on every front. And just to clarify, not every situation has to be a $-million plus deal to get this type financing. The facts are that some lending institutions have an appetite for larger deals but there is many financing possibilities for deals of all sizes and borrowers from all backgrounds.
John-USA-CommercialRE
Email MeAll very factual information Nigel; great post.
Being in the Central Florida marketplace daily I can certainly attest to the information you have shared. The Orlando market specifically has a resilient nature about it even through the down turn of this Country's economy 6-years ago. From the center of it all I am happy to report that housing is back on the rise, new construction is making a come back and redevelopment is happening throughout. With over 600 people per day moving to Florida in 2012 estimated to increase by 40% in 2013; this is of course a demand that moves real estate of any kind.
John-USA-CommercialRE
Email MeChina seems to like the USA Real Estate as well.
Chinese Politicians Are Buying Billions In U.S. Real Estate
Submitted by Tyler Durden on 01/22/2013 21:12 -0400
ChinaCorruptionGross Domestic ProductHousing BubbleHousing MarketMonetizationMortgage Backed SecuritiesNoneReal estateSwitzerland
Back in September, we explained that when it comes to "boom" in US real estate, there are three key driving forces: i) the Fed's monetization of mortgage backed securities whose impact however is at best to stabilize the demand floor (and judging by the recent collapse in refi activity even that is questionable), ii) an implicit subsidy as banks keep millions of units on their books (to get a sense of how much check out at the chart in "Six Month + Delinquent Mortgages Amount To More Than Half Of Bank of America's Market Cap") in some phase of the foreclosure process, and away from clearing in the market, and perhaps most importantly, iii) the fact that the NAR can legally launder offshore money courtesy of being exempt from anti-money laundering provisions. This allows billions in ill-gotten offshore cash, sourced primarily from Russia and China, to be "invested" in US real-estate, with no cost or pricing discrimation and without any questions asked from any authorities. Because, sure enough, the final result can be spun as a "boom" in real estate by the administration and the banks so very invested in reflating the housing bubble.
Read the full article: http://www.zerohedge.com/news/2013-01-22/chinese-politicians-are-buying-billions-us-real-estate
John-USA-CommercialRE
Email MeInvestors around the world seeking American real estate. Interesting article:
http://afire.org/sites/default/files/pdf/press/2013-foreign-investment-survey-pr.pdf
John-USA-CommercialRE
Email MeOne of the markers in economics for the U.S. and how people are spending their dollars is the occupancy of the hotel sector. Below is some data to understand this.
All Hotel Performance Measures to Advance in 2013
The year 2013 started positively for the hotel sector. Room demand rose 4.3 percent in January, pushing up occupancy 180 basis points from one year earlier, while ADR and RevPAR logged robust gains of 5.1 percent and 8.8 percent, respectively. Although one month does not constitute a trend, a 1.8 percent increase in room demand to a new record level will occur in 2013. Federal spending reductions could result in more modest growth in areas most dependent on federal spending, including Maryland and Virginia. Oil-and-gas states Louisiana, North Dakota, Oklahoma and Texas will continue to see high levels of demand from work crews in the field as long as oil prices remain above $70 per barrel. In addition, greater automobile production will support business travel in several states in the Midwest and South. Construction will remain subdued, generating a slight 0.9 percent gain in available rooms this year, and contribute to a 60-basis point rise in occupancy to 62 percent. A 4.8 percent increase in ADR to $111.24 will drive most of the gain in room revenue and trigger a 5.8 percent jump in RevPAR to $68.97.
John-USA-CommercialRE
Email MeGrowth in Jacksonville, FL. A near-dock rail facility at Jacksonville’s port will likely be open for business by April 2015, a port official said.
Joe Miller, the Jacksonville Port Authority's senior director of facilities development, shared the project's schedule at a luncheon meeting of logistics professionals Wednesday.
Jaxport will issue a request for proposals for the Intermodal Container Transfer Facility, or ICTF, May 1 and the board will approve a contractor in September. Construction is estimated to take another 18 months, Miller said.
The project is already fully funded by a $10 million grant from the federal government and a $20 million match from the state of Florida.
The ICTF will make Jaxport more competitive in the growing international container ship market by enabling the immediate transfer of containers from ships dockside to trains.
Asked how much an ITCF might increase the number of containers shipped through Jaxport, Dennis Kelly, general manager of Trapac, Jaxport’s container terminal, said a normal industry trend is 15 to 20 percent.
Jaxport’s board in March authorized staff to acquire by eminent domain, if necessary, a half acre of privately owned land overlapping the site. Ownership rights to the entire parcel has been disputed by a developer who sought to purchase the property, Jaxport staff has said. Eminent domain would be a quick way to resolve any third party interest.
Jaxport Senior Director of Planning and Properties David Kaufman on Wednesday said Jaxport is working first to settle the issue through mediation.
John-USA-CommercialRE
Email MeLake Nona’s commercial center near Medical City is getting closer to putting some shovels in the dirt.
Orlando City Council on April 8 approved Lake Nona Land Co. LLC’s master plan for a corporate campus, which includes 570,000 square feet of general office space in three buildings, a 150-room hotel, and two 10,000-square-foot restaurants, along with 2,830 parking spaces in two parking structures and surface parking lots.
The project would be built on 17 acres north of Lake Nona Boulevard, east of Medical City Drive and south of State Road 417.
The project is a big part of the more than $500 million worth of commercial projects planned for the 7,000-acre community in southeast Orlando this year and next year.
Be sure to check back for more details on this and other projects in Lake Nona.
John-USA-CommercialRE
Email MeColony House Apartments, a 20-unit apartment property in Tampa, has sold for $1,265,000, or $63,250 per unit.
Marcus & Millichap Real Estate Investment Services marketed the property for Colony House of Tampa LLC, a Brandon-based company run by Brian J. Clavering, state business records show.
The buyer was a California-based 1031-exchange listed in court records as Ray Joseph Enterprises Inc. The same buyer also recently purchased Church Avenue Apartments in Tampa for $665,000.
Earle Hyman and Nicholas Meoli of Marcus & Millichap represented the buyer in both deals.
Colony House, 4332 West North B Street in Westshore, was built in 1965 and completely renovated in 2007.
John-USA-CommercialRE
Email MeFreckle, I'm impressed that you personally are so intrigued by absolutely everything I post. I truly feel you add a nice balance to any positive data that is posted related to the United States. As any wise person would know, there is two sides to almost everything to include real estate and the economy.
I picture you as a person who sits at home all day with no job and is totally obsessed with the internet while you blame everyone else in your life and the world for why life has treated you so unfairly. But, I could be totally wrong; either way who cares.
After this post I plan to totally ignore any further post or comments that come from you. But what I will say prior to that is I have challenged you in the past for evidence of your personal dealings here in the USA be it good or bad. Because coming from someone like you; should you ever have invested one dollar in this country knowing as much as you do you must be the next Warren Buffet by now. I know, I'm just being a smart ass with you but REALLY???? Seriously Freckle, if you can please keep posting 3 to 4 times as much as I do with regards to everything I say; you will help my conversation traffic. What I'm saying is that since I have a career and responsibility and that makes it more difficult for me to set on this computer all day and night; that by you always being so infatuated with me you totally boost my post by drawing so much attention. I love it; keep going my friend.
Now on a more useful means of my time:
An new 1 million square feet of distribution operation could be coming to Jacksonville.
The City of Jacksonville is seeking permits from the St. Johns Water Management District for 400,000 and 600,000 square foot warehouse and distribution centers for an unnamed company at Cecil Commerce Center, according to an April 2 permit application.
The proposed facility would be on a 102-acre site near the intersection of Normandy Boulevard and 103rd Street and runs along Alcoy Road. Look at the map below to see the parcel inside the green line.
The unnamed company could be FedEx Ground Shipping Services or Amazon.com, both of which are scoping out Florida for distribution centers.
John-USA-CommercialRE
Email MeJust some data from other professionals in the CRE industry.
Real estate economists Hans Nordby, Shaw Lupton and Suzanne Mulvee of CoStar's Property and Portfolio Research (PPR) analytic and forecasting company were among the notable market analysts sharing their views in the latest semi-annual forecast from the Urban Land Institute (ULI) and Ernst & Young.
Rallying from the diminished expectations seen last fall when the economic recovery hit a soft patch, the consensus of leading real estate economists and analysts now expects steady improvement in commercial real estate fundamentals and capital markets, including a nearly 7% increase in commercial property transaction volume in 2013 to $310 billion, followed by increases to $340 billion and $360 billion in 2014 and 2015, respectively.
Commercial mortgage-backed securities (CMBS) issuance, a cornerstone of CRE financing, is expected to rise to $70 billion this year, a nearly 50% increase over 2012's $48 billion. CMBS will rise to $80 billion in 2014 and reach $100 billion in 2015.
Suzanne Mulvee, PPR's director of research, retail, was even more bullish on CMBS issuance than the consensus view, asserting that it will hit $100 billion next year, a year sooner.
"This is the first time in a number of years that all of the debt spigots are open," Mulvee said during a panel discussion on the findings Wednesday morning. "It's not a fire hose, but definitely a big change from a couple of years ago. I think you'll see transaction volume continue to accelerate."
Despite some tapering off of price increases and ROI, the forecast predicts commercial real estate will "be on solid footing for the next three years," with a revival of investor confidence following years of uncertainty about the economy, according to ULI Senior Vice President Dean Schwanke, executive director of the ULI Center for Capital Markets and Real Estate. And while strengthening property fundamentals and capital markets bode well for the market as a whole, question markes remain over such factors as government spending cuts through sequestration and other fiscal uncertainty.
"We've reached the point in the cycle where fiscal uncertainty seems to be the biggest hurdle," said Kevin Thorpe, chief economist and principal, Cassidy Turley, Washington, D.C. "If the full sequestration is allowed to take place, most economists predict it will slow growth by half a percentage point and 500,000 jobs would be lost. But we don't know if it's going to be fully implemented. Putting that aside, there are so many bright spots in this recovery, and you don't have to look any further than what's happening in housing and the equity markets. This economy really wants to go faster."
The consensus of economists now predicts that combined annual returns from direct investment in institutional-quality apartment, retail, industrial and office properties will continue a downward trend that started last year. Combined returns for the four major property groups will be 9.5% in 2013, falling to 9% and 8% in 2014 and 2015 — still within the range of historical averages.
Driving the projected CRE rally is a generally favorable outlook for the economic growth and employment by the panel of economists, which predicts gross domestic product (GDP) to rise by 2% this year, 3% in 2014 and 3.1% in 2015. The U.S. unemployment rate is expected to drop to 7.5% by year end, eventually falling to 6.5% by the end of 2015. Job creation will rise by 2.1 million this year, 2.4 million next year and 2.6 million in 2015 as the recovery hits full tilt.
While the U.S. recovery still has a ways to go, global cross-border capital is searching for the best risk-adjusted return and finding it in the U.S. real estate sector, a trend likely to continue for the foreseeable future, said Howard Roth, Ernst & Young’s global real estate leader.
As a further indication of the glass half full-half empty dichotomy, single-family housing starts and home values are expected to rise well above previous prediction — but so are inflation and interest rate as the economy heats up, which have a material impact on consumer spending and mortgage lending.
Economists expect the Consumer Price Index (CPI) to increase 2% this year, rising to 2.5% and 2.9% in 2014 and 2015. By the end of this year, 10-year Treasury rates are projected to rise to 2.3% by the end of 2013, 3% in 2014 and 3.5%in 2015.
While borrowing costs will go up, capitalization rates are expected to remain stable, boding well for commercial property values.
"It's no secret that with increased development on both the rental and for-sale side, we are seeing some building commodities start to rise," said Craig Thomas, vice president of market research, AvalonBay Communities, Inc. "If you want to look for the seeds of some higher inflation, you can look at construction costs, which are reflecting stronger development."
"With higher inflation, you can grow old waiting for it, but we're seeing some pressures on that side."
Among the CRE property types, the forecast includes the following:
Apartment vacancy rates will hold at 5% this year from 2012, edging up to 5.2% in 2014 and 2015. Rental growth is expected to be 3.8% this year, down from 4.1% in 2012, and decline to 3% in 2014 and 2.8% in 2015 as new supply hits the market.
Industrial/warehouse vacancy rates are expected to continue declining, reaching 12.2% at year end, and falling to 11.7% and 11.4% in 2014 and 2015. Rents will continue to strengthen, rising 2% in 2013, and 3% in both 2014 and 2015.
Office vacancy rates are expected to drop to 14.8% in 2013, 14.1% in 2014 and 13.6% in 2015, while rental rates will decline by 3.5% for 2013, and then rise by 4% for both 2014 and 2015.
Retail availability rates are expected to decline to 12.5% this year, then drop further to 12.2% in 2014 and 11.9% by 2015 as the economy and consumer spending improves. Retail rents are projected to rise by 1% in 2013, and 2% in 2014 and 2015.
John-USA-CommercialRE
Email MeWell I agree with you Freckle on a few fronts. Mainly, "the better things to do"….
But I do think the most intelligent thing (fact) you have ever mentioned is that There are opportunities to invest in any asset class in any market at any time. I could not agree with you more.
As far as me being the up-side guy; well I have to weigh both the benefits and the risk as I consult every buyer, seller, owner and client that comes my way. I evaluate risk every day in the real estate industry as other economic drivers that impact my industry. But I am that guy (regardless of what title you give it) that looks for the opportunity within any up or down cycle of the real estate market and seek to capitalize on such opportunity as well as coach and assist my clients into the same. Though there will always be risk in any investment arena be it Florida or elsewhere I do try to educate myself and my clients as completely as possible to make the wisest decision in investing. Any yes I do benefit as I do not like working for free and my services add value regardless of my relationship. Now; off to better things…
John-USA-CommercialRE
Email MeHey Freckle; where do suggest to invest? You make yourself out to be such an authority on everywhere in the world..I would love to see your personal track record to verify what you can do.
Since I live and work and assist thousands of people with commercial investments I qualify to be a far better speaker to this market than you my friend. I personally have closed $13 million in commercial sales alone the 1rst quarter of 2013. As an agent, broker, and soon to be real estate instructor I will take my chances with NOT listening to people like you. You must have tons of time on your hands; is this your real job?
John-USA-CommercialRE
Email Me-
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