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Multifamily Construction

Multifamily Construction
As 2020 winds down and I think about multifamily construction lending in 2021, I expect to see sidelined construction lenders re-enter the market amid more efficient capital markets.  Multifamily has been a desirable asset class, and as concerns of exposure to COVID -19 subside, projects in this sector will continue to attract favorable financing terms especially when they are in a growing or high demand market with an experienced development team.  We are optimistic that we will see diminishing numbers of COVID hospitalizations and deaths, encouraging vaccine news and better therapies in early 2021. Loan terms, rates and LTC for multifamily construction lending vary from project to project and amongst types of lenders. Two to three-year initial terms are typical along with extension options. Rates for a recourse construction loan is currently below 4% for the right sponsor and project.  Non-recourse is approximately 100 basis points higher. LTC on a non-recourse construction loans will stop at 60% LTC, however additional players can be added on to bring the total solution to north of 75% LTC.  Recourse financing will push leverage higher and pricing lower. Recourse lenders requirements typically include a full or partial repayment guarantee in addition to debt service, bad boy, environmental and completion guarantees.  Non-recourse lenders do not require repayment guarantees and typically do not require a debt service guarantee. I expect to see the most multifamily construction financing activity in the top 25 MSA’s and gateway cities. Some of the MSA’s with growing demand drivers are Austin, Denver, Sal......
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How State of Emergencies Can Be A Silver Lining for Florida Property Owners

How State of Emergencies Can Be A Silver Lining for Florida Property Owners
Emergency Orders Can Have A Silver Lining for Property Owners and Developers CapasGroup Realty Advisors, in collaboration with zoning and land use attorney Drew Melville of Melville Law, PA is pleased to share the following discussion explaining how property owners can easily extend their real estate entitlements and permits.  To our surprise, many property owners are not aware of their statutory right to these extensions.  If you are a developer or own property with permits or other entitlements, please read this article and keep it on file for future reference.  For more details, please contact CapasGroup, Melville Law or your zoning attorney. Under certain circumstances, the Governor of Florida will issue an Executive Order “EO” declaring a state of emergency “SOE” for specific counties or even for the entire state.  In Florida, SOE declarations most commonly occur in advance of tropical storms or hurricanes but can be in response to other threats as well. Recent examples include SOE’s issued related to Lake Okeechobee discharge and even the Zika virus. To enable property owners in affected areas to focus on the emergency at hand, Florida Statutes makes certain entitlement and permit extensions available whenever a state of emergency is declared.  Property owners in affected areas can typically extend their entitlements for at least eight months, sometimes longer.  The process is relatively simple, inexpensive does not require an approval process.  Essentially, all property owners must do is notify the appropriate regulatory agencies of their intent to exercise their rights under the Section. How It Works Under Section 252.363, ......
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10 Ways to Knock Out Lease-Up Growing Pains

10 Ways to Knock Out Lease-Up Growing Pains

As exciting and anticipated as new developments are, challenges exist. Construction delays, traffic struggles and selling prospective residents on a “work in progress” are just the tip of the iceberg. Some of these obstacles are unavoidable while others can be counterpunched with a strong right-hand of preparation. Here are ten tips specifically designed to help you through the lease-up process, minimizing the risk of the dreaded "terrible twos". 

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Mission Statement

Mission Statement
MISSION STATEMENT Around 15 years ago I had a “moment”. I was watching Jerry Maguire and the movie completely change my life when our main character was sitting with his lap top late one night scribing up his famous “Mission Statement”. In his statement it was about more attention to good clients and about being honorable for those that you represent and work for. I took it very seriously and began working on my own Mission Statement that focused on representing the best firms and best talent in real estate development, construction and architecture. Now this didn’t mean just talent or prestige. It meant everything from attitude, communication, intelligence, respect……the proverbial QUON. The other day we heard through the grapevine that a particular recruiter in our industry, the kind that gives recruiting a bad name, was taking credit for a high-level placement that our firm filled. We will leave the name out but, will say for our national clients that this particular person is located in Southern California so don’t worry.  I didn’t find it overly shocking but, it did make me sad for my industry that these people exist. Jerry McGuire was enduring a cesspool of dog-eat-dog breed of agents much as good recruiters have to endure these low-breed used car sales people that find their way into our business. For those of you that find yourself in close quarters with an individual that’s willing at any moment to take credit for the work of others my advice is to ignore them and ris......
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California Construction Talent DROUGHT!

California Construction Talent DROUGHT!

TIRED of the weather and all of the political talk on the East Coast?

Well, come to California!!

Right now the entire West Coast is experiencing the beginning of a major real estate development BOOM of historic proportions....

THE CALIFORNIA DROUGHT ON TALENT!!!

Right now the entire West Coast is experiencing the beginning of a major real estate development BOOM of historic proportions.  Pipelines are in the BILLIONS of dollars and opportunities range from San Jose, San Francisco, Los Angeles to Orange County.

The weather is great, the real estate job market in multifamily, mixed-use, hospitality and retail are in high gear and the bench strength for talent is COMPLETELY TAPPED OUT!!!

So if you’ve ever wanted to live on the West Coast and build some extraordinary product then now is your time to shine!!!

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Does Your Internet Service and Infrastructure Position Your Property for Success?

We’ve written before about the move to over-the-top OTT streaming applications and the need for increased bandwidth, especially among younger renters and condo buyers. Further research shows how faster Internet availability can add homeowner value. As recently as April of 2014, RVA Market Research and Consulting conducted a national study that found that fast internet/broadband was rated the single most important home amenity amongst condominium owners and the most important media amenity amongst both owners and apartment renters. The same study also found a distinct correlation between overall resident satisfaction and the availability of Fiber-to-the-Home (FTTH).  Buildings with FTTH service have lower churn rates and residents are more satisfied with reliability, consistency of speed, upload/download, and video streaming experience with their service. Let’s say you’re convinced that you’d like to offer faster service at your building. What are your next steps? Partner with a provider who will bring fiber to your property and provide all of the equipment necessary to deliver a best in class customer experience. Existing wiring can be used to deliver service to residents. At this time, cat5, cat5e or cat6 wiring is needed to enable a gigabit connection. If you’ve got cat3 the best we can do is 100 mbps and if you’ve got even older phone wire, we may not be able to provide high-speed service. The clear link between the availability of FTTH technology and resident satisfaction illustrates the importance of equipping every building with the proper wiring to support FTTH technology. Bob Bush of BnB Cable Contractors estimates that approximately 50% of buildings b......
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Are U.S. Construction Lenders Looking for New Opportunities Outside Multifamily?

Are U.S. Construction Lenders Looking for New Opportunities Outside Multifamily?
As the country continues to experience a resurgence in commercial construction, the increase in starts for everything from office buildings and industrial developments to multifamily residential projects has the nation’s biggest lenders exploring new ways to diversify their business. Lenders are discovering that, while they would like to continue to supply the needed capital for tomorrow’s new apartment projects, they are reaching their lending limits on the amount of construction loans they can carry and can only make new loans once an existing loan gets paid off. With builders continuing to break ground on new communities to keep up with the growing demand of the transitioning public and with the top banks working as hard as they can to meet the demand, it’s the local and regional banks that are now being given the chance to compete for these loans. (Even if they have to team up with several other banks to make a multimillion dollar loan, it’s the first time in recent years they’ve been able to compete for these types of deals.) Commercial Banks Hit Their Limits, What’s Next? With real estate recovering at a steady pace, and in spite of having reached their spending limits, competing banks find themselves ready to lend and are now having to actively seek out alternative types of properties to make loans on. In an industry that has seen new construction project starts go from $254.1 billion at the beginning of the year for a 1% increase over the last twelve months to a 6% jump t......
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Are Renters Flocking to Buy Homes? [VIDEO]

Small shifts in data tend to quickly make headlines and dominate conversations. Most recently, it’s the uptick in single-family home sales creating some news about apartment renters leaving to buy homes. But it’s not a big spike – and even if it was, that wouldn’t necessarily be a bad thing for the U.S. apartment industry. Greg Willett and Jay Parsons from MPF Research explain why in this video edition of Apartment Market Dynamics.

[video:http://www.youtube.com/watch?v=CD7QPR5O1KY&list=UUyoXp1Vnx1d1sw1ZzzT2AJw&index=2&feature=plcp 433x300]

 

Michael Cunningham is the Managing Editor for Property Management Insider.

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If It Is Broke, Don't Delegate

Landlord RepairBy Colin McCarthy, J.D., Robinson & Wood, San Jose, CA Even after our little spigot fiasco, my father and I are speaking again. In fact, it did not take long. We both bonded over the fact that later that night, my wife and I walked out of the George Clooney movie, the Descendants. My wife and I both were bored out of our minds and had little empathy for a guy who owned all of Hawaii. I mean, really? I'm supposed to feel sorry for this guy!? Dad, being generally anti-Hollywood applauded our decision to vacate the movie theater in favor of the bar next door. We got to talking, and we agreed that in the future, it would be best if I not ask him to do repairs on our house. It's not really something I should delegate to him. We decided on the McCarthy "non-delegable duty of repairs” rule - I must do my own repairs. By operation of law in California, a landlord also has a non-delegable duty regarding repairs. If the negligent – grossly negligent one might argue – repairs my father attempted were on a tenant's dwelling that I rented out, I still would be liable for any injuries it caused. So if the tenant got hurt from this negligent repair, they could still sue me. A landlord cannot escape liability for his repair duties by having someone else do the repairs. This duty to repair is "non-delegable." Thus when a landlord hires a plumber, or......
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If It Ain't Broke . . .

By Colin McCarthy, J.D., Robinson & Wood, San Jose, CA Well, hello there and happy 2012 to you all. It has been a little bit of time since we have had a chance to chat. I will beg your forgiveness for being pre-occupied with year end duties, and a jury trial in Visalia, California that preoccupied my time and has prevented me from indulging in the blogging world. Now that I am able to focus, I want to talk to you about every one's favorite topic – repairs – from everyone's favorite perspective – a lawyer. But before I do, I'll share with you how I spent my New Year's Eve. It's a story that pretty much exemplifies why it is important to have a good handyman at your disposal. And why it is important that you not rely on your father to do repairs at your home or your leased property. As is the case with a lot of you, my parents came to see their grandchildren for Christmas. They did not come to see me or my lovely wife. They wanted to see my kids while they are still cute, and say and do precious things. I recognize this and accept it. My little brother will soon benefit from this phenomenon. For the first time, my parents will actually go to see him in the cesspool (I mean lovely city) that is Los Angeles*. As payback for this parental neglect, I frequently use the visits as the opportunity to......
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