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Top 5 Value Add ROI Projects in Multifamily Real Estate


We dive deep into the Top 5 exterior value add projects in multifamily real estate that have the greatest return on investment. You don’t have to do interior renovations, except make the units really clean, if you’ve done great exterior upgrades. You’ll never have a shot at leasing to that tenant if they don’t love the outside while driving by. We brought in the creative value add master himself, Jason Schaller, to give us his Top 5 value add ROI projects in multifamily real estate. If you’re an investor in the central and north Florida markets and you don’t know Jason, you sure as heck should. Jason Schaller is the Founder and Principal of The Schaller Group, a design, construction, and creative agency. He is also a partner with Peacock Capital, a multifamily investment company that has purchased and operates 33 apartment communities totaling 1,300 apartments in just the last 5 years with 500+ additional apartments under contract and 5 development sites in the early stages of development. I’ve had the pleasure of brokering a number of those deals with Jason and his partners. Prior to forming The Schaller Group, Jason was Vice President and Managing Director at McKinley, Inc., a $4.6 Billion Dollar real estate company based in Ann Arbor, Michigan where he worked for over 18 years. He was responsible for leading property management operations, sales, marketing, branding, due diligence, acquisitions, design, construction, and redevelopment throughout McKinley's National Real Estate Platform. He was directly responsible for the operations of a 12,000+ Uni......
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Will Multifamily Real Estate Housing Crash in 2022?


I have some very strong predictions about whether there will be a multifamily real estate housing crash in 2022.

Will there be a multifamily real estate housing crash in 2022? Hell no! Here are the reasons:

  • We need to build 325,000 new apartment homes each year on average, which we haven't done since 1989. We only did 289k in 2020, which was an extremely active year by any standards.
  • We need to build over 4 million apartment homes by 2030. And another 10-12 million apartments need renovation during that time. We aren't even close to being on track.
  • Immigration is predicted to account for half of all new U.S. population growth through 2030 and immigrants mostly rent.
  • For millennials 22-37 most common form of living is renting.
  • Seniors are choosing the convenience of apartment living over ownership.
  • Renters in the U.S. are near 39 million people, which is about 1 in 8!
  • Even if home prices flatten or go down in 2022, which is highly doubtful, they still won’t go down anywhere near enough to then shift renters to buyers.

Hear more in the video: 

 

 

 

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The Biden’s Administration’s Plans to Combat Workforce and Low-Income Housing

The Biden’s Administration’s Plans to Combat Workforce and Low-Income Housing
The Biden-Harris administration released a statement of September 1st, 2021, announcing immediate steps that would increase the affordable housing supply. The administration has recognized that major investors have stepped up to purchase real estate, such as urban and suburban single-family homes, and convert them into rental properties. However, the government has also recognized that this may have led to a shortage of affordable housing. In a White House statement, it was revealed that “One out of every six homes purchased in the second quarter of 2021 was acquired by investors.” This has created a limited supply, which drives up pricing.    However, the administration recognizes there is more to the dilemma than investors buying up most of the supply. The increase in material costs, labor shortage, the global pandemic, and prohibitive zoning laws all add to the problem. Therefore, more can be done to increase the affordable housing supply.  They announced steps that “create, preserve, and sell to homeowners and non-profits nearly 100,000 additional affordable homes for homeowners and renters over the next three years, with an emphasis on the lower and middle segments of the market.”   These steps include giving federal agencies the resources and authority to:  Relaunch partnership between the Department of Treasury’s (Treasury) Federal Financing Bank and the Department of Housing and Urban Development (HUD) Risk Sharing Program Expand financing through Freddie Mac, Fannie Mae’s and the Federal Housing Administration’s (FHA) Leverage existing federal funds Explore federal levers to reduce exclusionary zoning Launch learning and listening sessions with local le......
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Selecting Rental Comps & Rent In Multifamily Real Estate


Determining rental comps to use when valuating multifamily real estate is highly important. Especially when you're looking to add value to the asset after a renovation. Part of the process involves some sort of online membership-based software that can query all the assets in a market. Some of it is a gut feeling about whether a comp matches and some of it is an investor's knowledge of the market. This is how I select rental comps and post renovation rents when underwriting multifamily real estate assets. As a broker listing multifamily real estate assets for sale, it is imperative to select the right rent comps to prove achievable rents to the buyers. Buyers aren't stupid. They are going to recognize if a broker is choosing assets way better than the subject in order to sell the idea of higher rents. I use Costar to narrow down the initial field of assets based on the unit count, age, unit mix, and location in the market. Any similar program to Costar can do the same trick. After looking at the initial list of assets from the above search on Costar, I then use my market knowledge and gut feel to eliminate any remaining assets I know are not a close match. For the remaining comps, I typically put them in an excel spreadsheet and rank each one as 1, 2, and 3 with 1 being the closest matched asset to the subject. I place more weight on the 1s and the least weight on......
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The Law Of The Big Mo (Momentum) In Multifamily Real Estate


In multifamily real estate when an investor has built momentum, they are extremely hard to compete against. Every broker and seller wants to do business with them. In this video we discuss The Law of The Big Mo as author John C Maxwell calls it in his book The 21 Irrefutable Laws of Leadership.    Below are THE 7 KEY FACTS ABOUT MOMENTUM from John Maxwell's book: 1. MOMENTUM IS THE GREAT EXAGGERATOR When deals are being brought to you, and you’re closing, and more investors continue to give you money, and management is managing well, momentum makes it look even better. In contrast when you can’t find deals, and nobody is bringing you any, and you’re in a dry spell for closing, and you can’t find equity, momentum makes you look even worse. 2. MOMENTUM MAKES LEADERS LOOK BETTER THAN THEY ARE The more deals you’re closing on, the more brokers and sellers are wanting to bring you deals. The world forgets about how long it took you to get there, all the bids you lost, a moment or two you had to retrade, etc. 3. MOMENTUM HELPS FOLLOWERS PERFORM BETTER THAN THEY ARE When you’re acquiring more deals, and they are being managed well, and rents are increasing, and your value add program is working, your staff becomes inspired to perform at their highest levels. It becomes contagious. 4. MOMENTUM IS EASIER TO STEER THAN TO START Momentum is hard to get started but all elite investors found out that once a......
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We As Americans Love A Good Come Back Story. This Is Ours.

During my years in the business, I have seen and weathered multiple downturns in our economy; though nothing has been quite like what we’ve all seen the last few weeks. The past downturns that I went through were financial related for the most part and took time to come together, this however, is a health crisis that is creating financial hardships, many of which are yet to be seen that may in turn be difficult to recover from.  If this is your first experience with an economic downturn, I believe you are about to witness an incredible comeback. Don’t get me wrong, I am not saying this will happen overnight or even the next few months, this will take time and a maximum of effort. I have seen people sacrifice a lot over the last few weeks, strangers helping strangers do things they probably would have been less likely to have done before.  Times of crisis really show you who people are, and, in this crisis, I have seen a lot of support, creativity, generosity and kindness. If we maintain this mentality, we can all continue to work together and get most everyone back on track, building our businesses and our economy once again. I do believe that we as a country are realizing how important we are to one another. The people that we see daily on TV, social apps or movies are not the ones saving our country from devastation, it’s the people that normally run behind the scenes and j......
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Managing People Remotely-Responding to the Coronavirus Emergency

Managing People Remotely-Responding to the Coronavirus Emergency
As you know the coronavirus (COVID 19) emergency has led to many companies and organizations mandating that their people work remotely, instead of coming into the office. In this post I'll detail several things that leaders can do to make sure that their remote teams: Are Competent (to do the jobs they need to) Are Consistent (in what they do) Are Connected (so they feel like they're part of the team) First Things First-Take Inventory The first thing to do if you have people working remotely is to take an inventory of your team. What I mean by this is you need to think about your individual's strengths and weaknesses relative to working remotely-then armed with this inventory you'll want to create an "action plan" for how you interact with each team member.  For example:  Some of your people are really social, and derive their energy from being around people. So, you may need to connect more with these folks (text, email, phone etc.) Some of your people work better when left alone. If you keep "connecting" with these folks, you may interrupt their work flow, and cause them to be be less efficient....and quite frankly bug the heck out of them. (=  Some people need lots of data, information, and details. You may have to, what I like to say, "Break things down to the ridiculous" up front for them, so you don't get endless text messages, phone calls, and emails with question after question after question.  Get the picture?......
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Legislators recognizing the role deposit alternatives can play in driving housing affordability

Housing affordability is a serious problem across the U.S. Nearly half of renter households are considered cost-burdened (meaning they spend more than 30% of their income on rent), and of those renters, more than half spend over 50% of their incomes on housing.  This means there’s a real need for strategies that reduce the cost burden on renters.  While some municipalities have focused primarily on rent control bills, others are focusing on solutions that are beneficial for both renters and properties. And as new legislation shows, an increasing number of lawmakers are recognizing the role that deposit alternatives can play in offering these win-win solutions.  Legislators focusing on up-front rental costs Several states introduced (and passed) rent control bills in 2019. This legislation focused on monthly rent costs and was designed to make renting more affordable, but was largely opposed by property owners and operators.  Now, legislators are beginning to shift their focus from monthly rent costs to up-front move-in costs, as these can be cost-prohibitive to many renters.  In fact, in our 2019 Renter Sentiment Report, 30% of renters ranked affording up-front costs as more stressful than making monthly payments, and almost 60% of renters said they’d been prevented from moving into a rental home because the up-front costs were too high.  As a result, legislators like Cincinnati’s have chosen to focus on giving renters more affordable alternatives to standard cash security deposits. With their new bill, passed in January, properties have the option to either cut deposits in half, give ......
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How Will a Rise in Interest Rates Affect the Commercial Real Estate Market?

In the past couple years, overall interest rates have risen several times in the United States. According to many experts, they are likely to finally stabilize in 2020. However, they have already risen sufficiently enough in 2018 and 2019, and we cannot be sure that the same won’t happen by the end of 2020, or especially the year after. With that in mind, the commercial real estate market needs to start preparing for a possible rise that can have significant effects.  But what are those effects? How does a rising interest rate affect the commercial real estate market? If you want to know the answers, you've come to the right place, as this article aims to give you all the information you need. Let's take a look. How Interest Rates Affect Real Estate Values For those who are unaware, interest rates, like the ones on Treasury bills and interbank exchanges, have a massive effect on the value of commercial real estate and all property, for that matter.  That’s because they influence the ability of people to buy property by increasing or decreasing mortgage capital costs. However, that’s only one part. Interest rates also affect capital flows, supply and demand, and much more. When all of that is considered, we can conclude that interest rates have a profound effect on the commercial real estate market in a wide variety of ways.  However, we are only interested in the higher interest rates and how they affect the commercial real estate market. And that is a ......
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Your Insider's Look: The Laundry RFP

Greetings Gentle Readers! Typically when a property owner or manager needs a laundry proposal for their multifamily asset they contact a laundry company and ask for a “proposal” without giving the operator specific, if any,  guidelines in which they are interested.   And, usually when asked by the laundry vendor what the property wants to see in a proposal, the response is all too often a vague and less than strategic response: “Just give me your best deal”.    That response, unfortunately, is a nonstarter for a laundry vendor and leaves way too many options for the laundry vendor who sadly doesn’t have any idea what the property’s “best deal” looks like.   Too often neither does the property and it can result in multiple proposals, revisions, lost time and energy and missed opportunities for both counter parties. Let me give you an analogy that might help make the point.   1.      If I were to go looking for a roofing contractor, I would know at least 3 things, conceivably more, that are critical to my decision process.  In no particular order those might be: reputation, timeline for job and price.  I might also know that I prefer composite to tile and that I want 8 nails not just 6...all those are preferences that begin to outline my request. And it provides the contractors bidding the job a solid understanding of what I want.   2.      What I’m saying is the property owner/manager who knows at least three things, hopefully more, is in a better position......
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