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Single Family to Multifamily (Apartment) Investing, Making a Successful Transition

fishmakingtransition  “If you are not getting bigger, you are getting smaller.” We’ve all heard the quote in business, but have you applied it to your real estate investing career? If you’ve been investing in real estate for awhile, this article is for you. It’s time you take the next step in your investing career. It’s time to use all the knowledge you’ve learned over the years in single family investing and apply it at the next level. It’s time to go from single family to multifamily real estate investments. It’s the logical next step. It will accelerate your wealth and grow your cash flow. There has never been a better time. Are you ready to take the next step in your real estate investing career? Are you ready to go from single family to multifamily investing? If so, there are a few things you need to know so that your jump has a smooth landing. Here are 5 key differences you must know to make a successful transition from single family to multifamily investing: How to determine value. One big difference between single family and multifamily investing is how value is determined. Single family home value is determined by looking at sales of comparable homes. Homes can also be priced per square foot. Apartments are not priced by looking at similar property sales. Multifamily property value is determined by the income it produces. How to read a financial statement. To be successful in multifamily investing you must know how to read and evaluate an investment property’s financial statements and understand the metrics ......
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Do Short-Term Rentals Make Sense for Property Managers?

Short-term rentalsA guest post by Ashley Halligan, Analyst, Property Management Software Guide Short-term rentals, of all natures, have become a hot commodity – and a controversial one at that. Short-term rentals can include vacation rentals and temporary housing, often sought by vacationers, business travelers, or people who have recently relocated while seeking long-term living arrangements. Either way, it’s become an ongoing topic of debate and an attractive investment opportunity for property owners and managers. In comparison to traditional rentals, short-term rentals can charge significantly higher rates given their nightly and weekly availabilities. Some property owners have earned as much as 25% of their mortgage in a single night. And during special events or peak rental periods in a given area, potential rental rates can be very attractive to property owners. Because of the income short-term rentals can procure, the opportunity for profit potential may be exponential – but there are several considerations that should be kept in mind. First and foremost, it’s essential to keep the added costs of maintaining a short-term rental in mind. These rentals can be subject to Hotel Occupancy Taxes in certain cities, while other cities require specific licensures and inspections not required of traditional, long-term rentals. Penalties for not abiding by short-term rental laws in your city may result in hefty fines. There can also be increased insurance costs. Additionally, the cost of regular upkeep and maintenance, including utilities, should be calculated. In order to continually attract tenants, your property must be kept in prime condition, both functionally and cosmetically. F......
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The Most Wonderful Time of the Year; The Apartment Developer's Dilemma

Let me begin by wishing you all a very Merry Christmas and Happy Hanukkah. For those of you who regularly read my scribbles, you are used to some pretty meaty topics. In light of the Holidays, this one will be a bit frothier. In each blog that I write there are certain themes which remain pretty consistent. One of my favorites is that real estate development is about the coolest industry on the planet. After all, our job is to make the world a better, more usable, more beautiful place.   Often my intended audience is the real estate developer (my hope is of course that there is some part of my subject matter which translates to my non-developer audience- or at least helps you better understand those temperamental developers who constantly tell you ‘We can’t afford that.’). Today, I would like to remind us all of something that is very easily glossed over as we perform our day-to-day tasks.   No matter what our role in the industry, we have a hand in something very precious. Through our daily work (whether it is building, developing, leasing, managing or maintaining) we have a definite and real effect on people’s lives. We provide the backdrop in which our residents and neighbors work, play, rest, are made safe, fall in and out of love, have babies, spend their final years, argue and make-up, worship and congregate and pursue their individual goals. And while we don’t necessarily know which combination of these that they are ex......
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Patricia Davis
I love this Ross! I've often told my co-workers that our residents are making memories everyday in our apartments and it's our job... Read More
Thursday, 22 December 2011 07:55
Guest — Joshua Turbevillw
This is an amazing article. You obviously share in the passion I have for what I do. I currently work as an assistant manager, b... Read More
Tuesday, 27 December 2011 00:12
Ross Blaising
Hey guys,Thank you for the kind words. For those of us that have chosen to work in real estate (in my case development), we are tr... Read More
Friday, 30 December 2011 07:10
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Focus on Profitability over Volume Lends to Successful Property Management

CalculatorBy Ben Holubecki, STML Realty Group, Glen Ellyn, IL One of the most important and difficult things to do as a professional property manager is to honestly assess your strengths and weaknesses and build your business around the part of the business that you do best. For those outside of the industry, a property manager is a property manager, and few people can or care to make any distinction between an HOA, multi-family, or single family manager. There are also few who make any distinction between competent professionals and slum lords. It is not surprising that the general public can’t grasp these differences. What is surprising is that many of us as property managers and landlords can’t even make this distinction within our own companies and portfolios. I’m not pointing fingers here, as my company was as guilty as any other only a couple of years ago. Our management portfolio consisted of hundreds of single family units, multi-family buildings ranging from the worst of areas to the best, multiple commercial properties, as well as some associations. We had spent years building up our volume of managed properties without any regard for the type, quality, or location of the properties that we were taking on. We were happy that our unit count was growing steadily, but no matter how many units we added, it seemed that we were not making any additional profits month over month. It was frustrating, to say the least, so we made an effort to find out what the is......
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Always Good Decisions To Be Made; The Apartment Developer's Dilemma

Not long ago, I toured an apartment complex with two friends; one was the architect who designed it and the other, the developer who built and owns it. The exterior was gorgeous and appropriate. The amenities were unique and clever. The units appeared to be attractive and reasonable for the market…that is until we entered the kitchen. This room was comprised of dark hardwood floors, rich wood cabinetry, stainless appliances and a builder-grade white laminate counter (that stuck out like a sore thumb). I winced. I looked to my architect friend- who gave me the ‘this isn’t the time’ slight head shake. We continued the tour.  Later, I took the architect aside and asked ‘What the f@*k was that?’ He explained that there were originally granite counters spec’ed, but that they were lost in the V.E. process. To me, this was yet another example of the bad results of not training our young developers to know the difference between a good and a bad decision. It’s the problem of not teaching them that development happens in the real world- not on a spreadsheet. Which brings me to our theme; ‘Whenever there is a decision, there is always a good decision to be made.’ Now I’m not saying that every decision has an option which is ideal, just that there are always better and worse choices. When, as developers, we accept the opportunity to reshape the world around us, we also take on the responsibility to understand the ramifications of the decisions......
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David Kotowski
I've seen situations like this a few times with new development and it just makes me shake my head. I was fortunate to work for a ... Read More
Saturday, 26 November 2011 05:45
Guest — BruceGallman, CCIM
Every one of our developments have been unique since we deal in adaptive reuse or "from the ground up" projects in historic neighb... Read More
Sunday, 27 November 2011 22:27
Guest — Debbie L. Mauro
I've recommended the developer live in an apartment for at least 6 months before he considers developing. Once he has developed, ... Read More
Monday, 28 November 2011 21:31
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The Apartment Building Investment Triple Opportunity Is Right Now

For value investors, Demand, Supply and the Cost of Acquisition are the three factors affecting the apartment building investment decision and all are saying the time to buy is now.  There is a tidal wave of new renters coming into the market and there has been little apartment construction to meet this growing demand. Outside of the gateway cities the prices of existing apartment buildings remain below the cost of building new.  Fixed rate financing is available for apartment buildings at rates lower than we will see again for years if not decades. “The multifamily sector is probably the only commercial real estate sector that has very positive fundamentals behind it,” said Jeffrey Baker, managing director at Savills LLC, a real estate investment bank that raises capital for multifamily owners and developers. “You’ve got a demographic that is producing more households that want to rent an apartment. You’ve got virtually no new supply that’s been added over the last several years.”1 Demand = DEMOGRAPHICS The population of the US has grown 10% since 2000 to 308.7 million. If population growth keeps its current pace and the average household size does not increase further, household growth must pick up to at least 1.1 million per year. Even the slightest decline in household size would allow housing demand to grow by 1.3 million annually. A combination of improving household growth and a steady or falling homeownership rate will produce the strongest growth in rental demand since the 1980s. CBRE Econometric Advisors2 There are......
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Real Estate Investment Options and Basic Human Needs

Why You Need to Consider Multifamily Real Estate Investment Properties. When comparing different real estate investment options, it is important to look at key factors in addition to just the income they produce and the purchase price.  When looking at different real estate investment options, our team likes to invest in properties that fill a profoundly necessary need that will always be in demand, and that need is shelter.  Commercial real estate properties containing businesses (retail and office) have been declining every year. Businesses continue to have a variety of options available to them for locating their businesses. Their businesses can be located in an office building or in the basement of a home, or they can even use technology to make their businesses virtual, requiring a minimum of space. Businesses can store files in a warehouse, in the cloud, or on a thumb drive. They can stockpile large inventories or stay lean and order as needed. It is all reflected in the cost to run the business and affects the amount of space they need. My wife's employer is based in Texas and over 50% of their employees work from home, and connecting online. The internet has created less demand for retail space as consumers no longer have to rely on companies down the road to purchase goods and services.  They now have virtual stores they can shop from and have their purchases delivered right to their doors diminishing the need for retail space.  Companies are always scrutinizing the use of......
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Mark Billig
There is a great article from NAA Apartment Industry newsletter, "The apartment rental industry is doing well with the depressed h... Read More
Tuesday, 22 November 2011 02:00
Spencer Cullor
I'm glad you are seeing the same things down in Texas. We own Retail, Office, and Industrial as well and our Multifamily investme... Read More
Tuesday, 22 November 2011 02:54
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Path to Partnership; The Apartment Developer's Dilemma

I have been fortunate to have the occasion to work with a group of promising young folks and get to hear their hopes and expectations. As I listen, I can’t help but think back to my own career path and chuckle at how little changes generationally. Their wants are no different than mine were at their age. Their frustrations that it all happens too slowly are the same. Their fundamental lack of understanding is heartwarming, as are their expectations.  Since early in our careers, those of us who are smart, hard-working and motivated have generally focused on the idea of ownership. We see the entrepreneurs who employ us and want to be similar. They embody a version of our concept of success. When we are young, being a partner means having a seat at the grown-ups table. It’s our opportunity to affect change or enable our visions. It’s the gateway to profit and security. There may even be a little pride in the title of ‘owner’ which we covet- if we’re confident enough to admit it. But because we are smart, hard-working and motivated; we also want things well before we’re ready for them, before we even understand what it is that we think we want. Of course we don’t recognize that we’re not ready; after all we have been told that we are bright and unique snowflakes since we were three years old. So I thought that I might offer some ‘tough love’ advice and words of wisdom to the......
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Brent Williams
Wait, are you saying I'm not a bright and unique snowflake? But really, fantastic blog, and it's funny because I was working on a... Read More
Sunday, 13 November 2011 23:34
Ross Blaising
Brent, I find you to be an exceptional snowflake!So please piggyback on my topic. What did I miss? Where am I wrong? What insights... Read More
Monday, 14 November 2011 03:42
Jolene Sopalski
I like the exceptional snowflake, I think I will start telling my 6 year old this everytime she ask me if she is smart. This was a... Read More
Monday, 14 November 2011 10:12
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Structural Integrity; The Apartment Developer's Dilemma

Many of the topics that we discuss in this blog are related to three basic themes;   1.       The Industry is broken and in need of a major overhaul. 2.       As our product becomes increasingly complex, the skill set of the developer has diminished. 3.       It is within our power to reclaim the glory of our profession.   For those of us dedicated to the betterment of the profession, one of the major challenges that we face is that our firm’s lack integrity. Now by that I don’t mean that they are liars. Nor do I mean that they are out polluting our rivers and streams, etc. I use ‘integrity’ in a broader and more exact sense. Integrity is achieved when each of our members is working in concert with the whole. In other words, when our highest ideas and values can be witnessed in even the simplest of our work and projects, there is integrity.   Let’s begin with the following principles; Each of us is made up of three primary components; the physical, the intellectual and the spiritual. We, as individuals, operate more happily and effectively when those three aspects act in unison. Put another way, when our actions operate in concert with our values, we achieve harmony. There are also three primary aspects of our lives; work effort, personal effort and sleep. If we live in accordance with our values in only two of the three, then our quality of life and greatness of achievement will be lessened.......
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The Mentorship Model; The Apartment Developer's Dilemma

Over the past few months we have discussed some of the underlying problems within the wonderful profession of real estate development. We have also bantered about individual solutions to prepare ourselves (as the next generation) which have ranged from education to understanding the key success traits for our own self-improvement. Hopefully these have been fairly logical. But, if so, then why hasn’t it just naturally happened? Sadly, ‘obvious’ and ‘easy’ don’t always go hand-in-hand. I would suggest that self-improvement is one of the most difficult things to achieve- especially on our own. Often we are just not equipped to step back and look at ourselves objectively. And, even if we are, we don’t necessarily have the tools to affect the changes that we need. And when it comes to creating a good developer- it really takes a village. It would be nice if we could learn everything that we need to know from our superiors or the more experienced folks within our firms, but unfortunately, my generation and the one before me has left our profession in shambles. The built world is an uglier, less urbanistically successful place for many of our incursions into it. The reason for this is that (statistically speaking) you likely work for a spreadsheet monkey who was never taught or didn’t embrace the romance of what we do. He can’t teach you because he doesn’t know himself. If you want to be great, you will need to actively seek out the folks who can develop in......
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Guest — Brad W.
Interesting and relevant topic given the current state of development. I think it is important to note that it is possible to hav... Read More
Wednesday, 28 September 2011 00:19
Guest — David tB
"The reason for this is that (statistically speaking) you likely work for a spreadsheet monkey who was never taught or didn’t embr... Read More
Thursday, 29 September 2011 04:24
Guest — Krista W.
I asked a former boss to be my mentor (thanks, Maria Lawson). She was very different from me, and I could see from watching her le... Read More
Wednesday, 05 October 2011 01:01
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