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Multifamily Resilience

As the news headlines see an influx of Q1 2010 performance reports, we are greeted with a sense of improving numbers for the multifamily sector of commercial real estate. The OK CRE View article entitled “Q1 CRE Sales: Change in Attitude” shines light on a positive outlook for the rest of 2010 based on first quarter findings. Q1 2010 showed an increase in sales volume in all sectors of CRE, with multifamily seeing “the greatest spike in transaction volume.” The article interestingly points out, however, that these sales primarily consisted of core and not distressed properties. As potential buyers are incentivized to pursue quality assets and competition for these investment properties builds, cap rates are forced down, leading to higher prices and benefits to sellers. The drop in cap rate in apartment buildings was less dramatic, but this can be attributed to the fact that prices did not fluctuate as much despite the soft economy. This sector experienced the least drop in NOI, as occupancy level remained high thanks to an increased demand for cheaper rental housing. Locally in Los Angeles County, there have been few distress sales. Even in the case of REO investment opportunities, Chase Bank, which holds most of the faulty multifamily debt, engages in several broker price opinions (BPOs) prior to selecting a broker to list the property at or even above market value in some cases. Recently, a 14 unit property in Van Nuys established a new price standard for properties in the submarket. The “REO”......
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Private Money

Get Creative and don't hesitate to ask for Zero Down Owner Financing.  Always start the negotiations with the best return on your money and show seller a good investment. Many properties are owned clear and free so why not start with seeing if the owner will be your private money lender.  I offer 6.5% interest on the sales price.  If the insist on money down I'll counter offer with the % they want down and offer the same % of equity.

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Multifamily: Profiting Despite the Downturn

We specialize in multifamily investments, and at a time when it feels like everyone laughs at you for working in commercial real estate, it is a comfort to read in the news that multifamily housing is the one of the highest-performing sectors. NREI Online just released a research article entitled "2010 Borrower Trends: All Is Quiet on The Lending Front." It is no surprise to hear that lenders are apprehensive when it comes to commercial real estate, especially given the current economic turmoil, but the article also brings optimistic news for the multifamily sector.Our recovery is proceeding slowly but surely. At a time when real unemployment levels exceed those during the Great Depression and investors cannot afford to jump headlong into opportunities, the financing community has a positive outlook for apartment buildings. The article's survey yielded that "more than six out of 10 lenders (65%) say apartments offer the best investment opportunities." We cannot agree more. In Los Angeles especially, more and more people are looking to rent, filling the vacancies in multifamily housing. Additionally, landlords have come to realize the need to lower their asking rents to more closely reflect affordable effective rents, the primary appealing factor to the tenants in this economy. Investors in this sector also have financing support from Fannie and Freddie; in fact, according to CoStar.com, Freddie Mac just announced that it will be "partnering with experienced multifamily players to help bridge the capital gap for borrowers who need to finance or refinance overleveraged multifamily properties......
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Tempered Optimism for 2010

The headlines are filled with mixed messages of optimism tempered by the recognition that a difficult path lies ahead. Is the commercial real estate market bottoming out? Should Congress be concerned by commercial real estate? What about financing for commercial real estate investments? And the implications of Stuyvesant Town fiasco in New York?NREI Online recently posted an article by Dr. Victor Calanog entitled "Profiting from Record-Breaking Distress in Multifamily Properties." There are few apartment developers increasing the supply of rental housing in the market, so as demand for rental housing is expected to rise, landlords can benefit from charging higher rents and filling vacant units. Low pricing provides incentive for buyers to search for "good deals" as the market begins to recover and turn up. Calanog reinforces the idea that "with pricing at attractive levels and financing still somewhat available via government-sponsored enterprises, today might be the time to invest in multifamily properties."Calanog closes with the sentiment that "multifamily buildings have endured much distress in 2009, but Reis as well as other data providers generally expect apartments to be one of the first sectors to rebound in commercial real estate." Indeed, though the market appears bleak and slow to recover, there are still advantages to be found and a sense of tempered optimism for 2010.Source: Profiting from Record-Breaking Distress in Multifamily Properties  ---------Alice currently works with Apartment Building Trader, Inc. providing administrative and marketing support to the Founder and Senior Advisor Raymond Rodriguez, who serves as Director, National Multi Housing Group with......
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ASKING FOR IT. "Bring it." Nuggets are out there.

Litmus Test - Ric Campo, CEO of Camden, national REIT based in Houston, BELIEVES in litmus tests. Camden is awaiting waves and raves. Multifamily Executives are asking for it. They're sticking their toes into the water...they just want Reviews and Communication through Social Media done RIGHT. They are seeking new ways to bridge the Consumer & Community Gap. Check out these recent Tweets; A national Apartment Management Company sent out this St. Paddy's Tweet..."My Lucky Day! I just turned my first negative Resident Tweet into a Positive!" And this one during March 19th's weekly Friday afternoon Twitter #AptChat. "Rented on of our apts recently? If so, let other renters know how you like it by rating it at http:..." In an ironic twist and despite the ever-growing frustration with various apartment ratings sites, several Multifamily executives are not only willing to put their properties up for review, but they are actually asking for it. “Regarding apartment reviews, it’s not that somebody has to do it, it’s that somebody has to do it right,” said Mark Juleen, VP of marketing for the JC Hart Company based in Carmel, Indiana. “Ratings and reviews have been out there for a long time in the form of ApartmentRatings.com and now Yelp.com. The problem is, these companies aren’t fostering open communication between the renting community and the apartment community.”  Companies eager to engage in the two-way dialogue taking action today include Camden, Mission Residential, Mills Properties, Gables Residential, Urbane Apartments, and the JC Hart Company.“We believe in......
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Lori Snider
Bring it on - as long as it can be a fair dialogue! Good post!
Sunday, 21 March 2010 05:29
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So why are you reading this?

At least my assumptions is that someone is reading this.  I thought the real estate market was DEAD?  I thought only dudes on infomercials were getting anything out of this game?  While that may be true, I can tell you that Deb and I seem to be doing fairly well and we live smack dab in the middle of (wait for it) Michigan!  I guess there are worse fates, but possibly not when the topic of conversations is real estate, real estate investing and even worse still - MULTIFAMILY REAL ESTATE INVESTING!Well, don't sweat it.  We all have our cross to bear and since my parents moved to Michigan prior to my being born, I have to endure this.  My sin is I did the same thing to my children as well.  ALL my girls LOVE it here!  They are worse than me.  The point I am trying to make is why do anything if you can't have fun doing it, why run any business if you can't make money at it and why put yourself at a foundational disadvantage right out of the gate by doing this in Michigan!?!  WHY?Because someone needs to.  Today that someone is me and several thousands of other Michiganians.  I can't wait to be the guy that watches us live up to our own promise and the promise of our forefathers.  Work hard, keep quiet and great things will happen.  The fact that I am out here should show you that I am already failed......
Recent Comments
Brent Williams
Thank you for the inaugural post, Doug! Definitely looking forward to your blogs down the road.
Tuesday, 02 March 2010 01:06
Kimberly Madrigal
Welcome Doug. Thanks for the post. You are not alone in wondering if anyone is reading. It is a terminal illness of start-up blog... Read More
Tuesday, 02 March 2010 01:33
Tarla McCann
Thanks for your post Doug. I look forward to reading more of what you have on your mind!
Tuesday, 02 March 2010 02:26
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  Let's face it...you are tired of seeing them. Yes, I am talking about those ugly roof stains. Are the roofs in your complex covered with black streaks & stains? If so, then you may be surprised by what the staining you see actually is. It is a form of algae called "Gloeocapsa Magma" which feeds on crushed limestone used in common asphalt shingles. The good news is it can be removed using the right roof cleaners and cleaning technique. Many people don't realize what causes the stains on your roof. We have heard almost everything...from residue of jet fuel to the shingles rotting from the insideout.                                                                               The truth is shingle roofs are manufactured with different degrees of quality. Most roofs applied by builders and roofing contractors are in the low quality to at most mid quality range with few, if any, fungus fighting elements like zinc or copper.                                                                                                                   Contributing Factors: - Black fungus requires three things to grow: heat, moisture, and a nutrient. Nutrients can be found within the shingle themselves while other variables contribute to and hasten fungus growth. The algae develops an actual root system and lifts granules off the shingles. The north side of the roof is usually the first to exhibit staining because the moisture remains there longer. Add to that, the type, grade and manufacturer of the shingle, the age of the roof, the close proximity of trees, pools, or lakes, how hot and humid the weather is and if there are leaves accumulating on......
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James Martin
Jeff,This is great information. I can't tell you how many ugly stained roofs I see when I visit properties across the country. U... Read More
Monday, 18 January 2010 21:21
Jeff LeCours
Thanks James,I always wonder why people and or complexes will leave their roofs with the ugly stains, have a beautiful house or bu... Read More
Tuesday, 19 January 2010 07:18
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Fannie Mae Small Multifamily Loans – Demystified

During the economic crisis of the last two years many banks that traditionally made loans to owners of small apartment properties have either left the business or cut back on lending.  This has left many owners of small apartment properties with limited borrowing choices.  One lender that has stuck with the small multifamily market and even expanded their outreach is Fannie Mae.   A number of Fannie Mae DUS lenders have embraced this program and its being marketed by almost every loan broker/banker in the country.   This program is different than bank loans that traditionally have lent to small owners and many of the brokers/bankers who are selling the program don't really know how it works.    Hopefully this article will explain some of the issues with these loans and make it easier for you to evaluate these loans.First lets talk about who makes these loans.   These loans are made by one of a few select small loan lenders and then are either sold to Fannie Mae or are sold as Fannie Mae guaranteed mortgage backed securities to Wall Street.  Because Fannie either buys the loans or guarantees the bonds backing the loans they must follow Fannie Mae guidelines.   According to the Fannie Mae web site there are 12 Market Rate Small Loan Lenders.  However, not all of these lend in every market and many are really not active in lending today.  My experience shows that there are really 4-5 lenders who are actively pursuing this business.  These lenders predominantly work through mortgage......
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Operators Trade Rent Production for an Occupancy Bump in Denver

Most apartment markets across the country saw occupancy rise at least a little between June and September. To some degree, that simply reflected the seasonal leasing pattern, as 3rd quarter is the peak demand period throughout the year in many places. A few metros, however, registered quarterly occupancy increases well beyond what seasonal shifts in leasing activity would yield. Denver stands as Exhibit A on the list of locales demonstrating real occupancy momentum during the past few months.Denver's overall occupancy rate for apartments stood at 92.5 percent as of September. While that figure is more than 2 points under the level seen in the fall of 2008, occupancy climbed a solid 1.4 points specifically during 2009's 3rd quarter. Neighborhood-level occupancy increased on a quarterly basis everywhere except South Aurora, and the magnitude of upturn was particularly impressive across the Tech Center, North Aurora and Douglas County.Influencing the quarterly rise in occupancy for Denver apartments, operators set rents at particularly conservative levels. Measuring change on a same-store basis, effective rents in Denver were cut 2.1 percent between June and September, taking the metro's annual rent decline to 5.8 percent.Rent giveaways mushroomed in the market during recent months. The share of product featuring rent concessions in the pricing structures went from 31 percent in June to 47 percent in September, and the size of the typical discount among those properties offering concessions deepened from 10 percent to 12 percent.Looking ahead, Denver is one of the markets where MPF Research anticipates the most progress......
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Guest — Tom Denver
The continuous increase in the demand for apartment rentals in Denver has been a fruit of the economic success of the place. As m... Read More
Tuesday, 18 May 2010 14:53
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Demand Has Returned in Atlanta's Urban Core

After Atlanta's apartment market suffered nearly 15,000 net move-outs from the end of 2007 through 1st quarter 2009, absorption now has been back in positive territory for two consecutive quarters. Demand registered at 1,750 units during 3rd quarter, bringing absorption in the April-September prime leasing season to 3,830 units.While big price cuts certainly played a part in generating the demand seen over the past few months, the fact that anything could stir up some absorption in a metro that is losing jobs at a pace of roughly 150,000 positions annually is encouraging. What's happening, then, is that traditional apartments in Atlanta are recapturing some renters who previously moved out to the shadow market stock of individually-owned condos and single-family homes offered for rent.In particular, the market seems to be having some success in getting back the households who had opted for condo rentals, as recent demand has been concentrated in the urban core. About two-thirds of the metro's total absorption posted during the April-September time frame was captured in the neighborhoods that extend northward from downtown to the Perimeter, inclusive of Intown/Midtown, Northwest Atlanta, Buckhead and the Chamblee area. All but Northwest Atlanta have seen absorption well surpass completions, pushing occupancy upward of late.Occupancy in Buckhead now is at 91.4 percent, up 2.8 points since March and 3 full percentage points over the metro norm. Chamblee's occupancy figure has climbed 2.1 points over the past two quarters and, at 89.5 percent, is 1.1 points ahead of the metro average. For Intown/Midtown,......
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