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Archive for the ‘Multi-Family Real Estate’ Category

Six Ways Investing in Real Estate Can Save You Money

In Buyers, Commercial Real Estate, florida, Investing, Investor, IRS, miami, miami beach, Miami-Dade County, Multi-Family Real Estate, real estate, Roth-IRA, Self-Directed IRA, Sellers, tax deductions, Tax Matters on May 10, 2013 at 1:28 pm

There are many investment vehicles. Stocks, bonds, art, coins, postage stamps, toys, commodities and real estate, among others.

Some economists even suggest that as long as you are disciplined and can comfortably pay for it, you should buy any investment you can. If you can finance the purchase, even better.

However, real estate is probably the only one against which you can borrow and have the asset pay itself off through rental income, EVEN as it pays YOU.

In fact, I have spoken to property owners who have managed to leverage a property two, even three times in their lifetime, by borrowing against the property they now own free and clear, to buy another.

What’s more, the income from the new property (let’s call it property B), paid with borrowed funds from say, property A, plus the income they still generate from that newly leveraged property A, can over time, pay back the loan on A from rent collections on A and B, while proving the owner with a boost in passive income. In other words, party money.

Even if you can purchase property in cash, many recommend you consider financing after the fact. Leveraging allows you to possibly, acquire two or more properties, update or fix them up and let themselves carry the burden of paying down the loans with rental income.

Over time, you would have the ability to acquire even more properties and eventually, when you are at the right stage in your life, own them all free and clear while enjoying all that income in retirement. The ultimate 401K or IRA.

Of course, you must buy right and be disciplined throughout. With every payment received in rents, you must set aside a portion every month to pay for licenses, taxes, insurance maintenance and miscellaneous repairs, improvements, etc. In short, you must budget as you would with any business.

Below, we examine some of the advantages for owning investment property and in particular, multi-family property.

1. Economies of Scale

When you buy a single family house or condo unit, small investors often feel they’re easy to manage. That may be true to some extend. On the other hand, consider that with a multi-family building, you only deal with one roof and/or one yard to mow, you are the board that approves tenants or how many times a year you rent your property and in one single trip, you can fumigate, inspect and have a punch list ready for your handyman, plumber and/or electrician to take care of, minimizing headaches.

2. Lower Taxes

There are several tax incentives for real estate investors. If you are employed, deductions from real estate investments may be used to offset wage income. In addition, there are a number of tax breaks for real estate investment which often allow property owners to turn a loss into a profit. Deductions can include any actual costs involved in financing, managing and operating the property, to include maintenance, repairs, property management fees, travel, advertising, and utilities. In addition, the IRS allows a depreciation deduction that accounts for a portion of the building (not the land portion of the property) over time, usually some 27 years.

3. Cash Flow

A property can generate negative or positive cash flow. Cash flow simply refers to the amount of money that flows in and out in pursuit of maintaining a property. Rents are an example of cash flowing in while taxes and insurance must be paid out, typically from a portion of the rents received. When the amount of income received exceeds the payments, it is said you have a positive cash flow. There are times when the amount of payments exceed your income and in these cases, you are said to have a negative cash flow. Regardless, when it comes to real estate investment, there are two more important concepts involved: pre-tax and after-tax. A pre-tax positive cash flow for instance, may also be said to occur when income received is greater than expenses before taxes are paid. However, even if your are experiencing a negative cash flow, you may end up with an after-tax positive income when your expenses are more than your collected income, but the tax breaks bring you back in the black. Depreciation can often help turn a negative into a positive.

4. Use Leverage

An old rule of thumb in real estate is to never spend a dime on your real estate investment unless you have to and/or unless it will save you money. Leverage is an important aspect of saving money through real estate investment because a real estate investor uses leverage to increase their assets without spending their own money. By taking advantage of your equity, you also improve your return on equity and it provides you with tax-free funds to help fund your next deal or improve the value of your existing property by making updates, upgrades or repairs that entice tenants (to come in or stay) and should allow you to raise rents and improve your bottom line.

5. Equity Growth

The best way to save money and earn money, is to build up equity from real estate investments. That way, with high equity you are able to save on your mortgage while earning a nice chunk of profit. However, idle equity is like idle funds in the bank. Ideally, you are always utilizing your equity to improve the value of the property and/or pursuing and acquiring new opportunities. Often, selling is a great way to take advantage of existing equity, which would allow you to reposition yourself in a potentially better property with better opportunities. For instance, you may own a building sitting on prime land which may allow you to build a much larger structure for more potential. However, you are not a builder and you’re not in the mood to start. Even if that property is making money, selling it may bring enough to allow you to purchase a more suitable property or properties.

6. The Benefits of Inflation

Generally speaking, inflation can help you save money on your real estate investment because as rent increases, your mortgage costs will remain static (assuming it is a fix-rate loan), which means you will improve your position with the increased cash flow from the rent and equity growth. Although inflation is quite low these days, there is a typical amount of appreciation properties experience as a result of even low inflation, which adds to your equity without a single penny out of pocket.

Of course, it is not all rosey with real estate investing. There are a LOT of factors that deter people from getting involved. It is scary, you could lose a lot if you engage from an emotional standpoint and there are headaches and horror stories borne from bad tenant situations to fill a few books.

Regardless, I reiterate that if you buy properly, budget properly and stay involved, you may never have to worry about money when it counts – throughout the live of the property and during your retirement. What could be more beautiful than that?

Most real estate professionals can help a buyer or seller make the right buy or sell decisions. Obviously, as you would listen to a quality attorney, doctor or accountant, listening to a quality real estate professional’s valuable information will go a long way in helping you achieve your buying or selling goal. Budgeting however, is a function of habit and here again, you must proactively seek qualified, quality, professional advise.

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15 Ways to Prep Your Multi-Family Building Exterior for the Spring Market

In international buyers, Investing, Investor, miami, Miami-Dade County, Multi-Family Real Estate, real estate, Sellers on April 6, 2013 at 8:46 am

Spring is the season for rain, sun, flowers and humidity buildup. It is also the season buyers and sellers traditionally come out of hibernation. It is a time when folks turn to spring cleaning, regardless of whether they are selling their property or not.

However, if you are in fact, looking to sell, you will definitely want to pay close attention and properly prepare. This article will hopefully, help you get started and get you to a fast closing that nets you the most money in your pocket, ready to enjoy, retire other debt or reinvest.

As I flip channels and sometimes watch a particular product they may be selling, particularly jewelry, I notice that ‘shine’ is critical. I also notice the effect I feel when I walk up to a car dealership that keeps its cars sparkling clean versus when I walk up to a car that seems poorly maintained.

Similarly, I notice what I feel when I approach a property. As I walk through it, I notice the big and little things that say WOW. The question is, what follows that “wow”? Is it, wow this is great or is it, wow this needs a lot of work!

As rents climb or stabilize, buyers are watching for opportunities. Your job as a seller is now to convey the message to the buyer that your property has been well taken care of and that it will provide a handsome return and that it is therefore, worth their investment.

The tips below will cost little money and could go a long way to convey the right perception that attracts buyers to make an offer. Even if you are a distressed seller, the more appealing your property looks, the higher the perceived value and the more money you could net.

With this in mind, here’s how to get the exterior of your building shipshape so it tell buyers, “yes, this is a good investment”:

1. Clean the glass covers of all light fixtures and make sure to remove all bugs. Also, replace any broken or missing glass covers. Make sure they all match. If not, replace them all to match and improve the look of the fixtures.

2. Replace missing or burnt bulbs. Consider replacing every bulb with bright white energy efficient bulbs. They brighten up the common areas making it more appealing and saves energy while helping deter crime.

3. Clean or replace mailboxes. Busted mailboxes often convey a sense of neglect.

4. Clean or paint all doors and frames and replace or polish their hardware so they all match throughout.

5. Make sure the building address number and each unit number are clearly visible and neat.  You may also want to consider replacing them for a clean look.

6. Make sure all stairs, hallways and stair guardrails are clean and/or painted as needed.

7. Wash all windows and seal them right to avoid water leaks while improving energy efficiency. See that tenants cooperate by keeping old tape used during a prior hurricane watch or warning and even odd window coverings, off windows.

8. Make sure to pressure clean parking areas and that they are swept clean. If necessary, cover driveway and parking areas with a fresh coat of tar. Check that all parking stoppers are painted and if appropriate, labeled.

9. Rake the lawn and ensure all green areas are trimmed.  Use fresh mulch or stones accordingly to cover patches, driveways and other areas. Plant fresh flowers or plants if possible. These are often inexpensive and greatly ‘green-up’ common areas.

10. Clean all debris from gutters and drain spouts and repair or replace them as needed.

11. If there is a community barbeque, be sure to clean it thoroughly and wash down the lid if there is one.  Replace a worn cover if needed.

12. If there is a community swimming pool, make sure it sparkles. Treat or repair any surrounding pool ground area that isn’t perfect.

13. If there is patio or pool-area furniture, make sure it is clean. Remove or replace any broken pieces.

14. Check your roof and make sure to repair or replace any missing or damaged shingles or tiles. Make sure to apply a sealant to flat roofs. Even if it does not seem necessary, this is a small expense compared to what a poor roof inspection result may represent.

15. Paint. Although this could be the costlier of the cosmetic preparations, I can’t say enough about this, especially if the building has not been painted for 3+ years. When it comes to selling, remember, ‘sparkle’ is key and nothing sparkles more than a fresh coat of neutral color paint. Make sure it is properly done and that cosmetic cracks are patched prior to application.

Now, go ahead and comment on any of the above or add your own to the list.

As a buyer, what items do you look for when you walk through the exterior of a building you are considering?

Also, as a buyer, HOW is your offer price affected by either a positive or negative impression you experience while walking the exterior of a property? How much more or less would you offer be as a result of your experience?

Frequently Asked Questions About Foreclosure

In forclosure, foreclosure, foreclosure moratorium, foreclosure prevention scam, government, HAFA, HAMP, homeowner, Industry trends, miami, miami beach, Miami-Dade County, modification, mortgage, Multi-Family Real Estate, real estate, scams, Sellers, Short Sales, South Beach on November 9, 2010 at 2:34 pm

It is understandable to have questions when coping with a new and challenging situation, especially when a home is at stake. The reality is that millions of homeowners across the country are finding out that they have more questions than answers.

We hope that the following information will help you better understand the circumstances. If you have further questions not addressed below, or would like additional information resources, feel free to Contact Us.

Do I qualify for a short sale?

The qualifications for a short sale include any or all of the following:

  1. Financial Hardship – There is a situation causing you to have trouble affording your mortgage.
  2. Monthly Income Shortfall – In other words: “You have more month than money.” A lender will want to see that you cannot afford, or soon will not be able to afford your mortgage.
  3. Insolvency – The lender will want to see that you do not have significant liquid assets that would allow you to pay down your mortgage.

What is a mortgage modification?

A mortgage modification is a process through which your mortgage lender changes any or all of the following:

  • Your interest rate
  • Your principal balance (through a reduction)
  • Your loan terms (example: from an adjustable to a fixed rate)

This process can allow borrowers to stay in their property when they can no longer afford their current mortgage payments.

Why would a lender modify my mortgage?

Lenders have realized that in some cases it is better for them to work with current borrowers to lower payments or possibly improve terms in order to keep homeowners in their properties. The average foreclosure can cost a lender from 35-50% of the value of a property, so keeping borrowers in their homes is a good option for everyone.

What do I need to qualify for a mortgage modification?

According to the Making Home Affordable Web site (www.MakingHomeAffordable.gov), you will need the following information for your lender to consider a modification:

  • Information about your first mortgage, such as your monthly mortgage statement
  • Information about any second mortgage or home equity line of credit on the house
  • Account balances and minimum monthly payments due on all of your credit cards
  • Account balances and monthly payments on all your other debts such as student loans and car loans
  • Your most recent income tax return
  • Information about your savings and other assets
  • Information about the monthly gross (before tax) income of your household, including recent pay stubs if you receive them or documentation of income you receive from other sources

If applicable, it may also be helpful to have a letter describing any circumstances that caused your income to reduce or expenses to increase (job loss, divorce, illness, etc.)

How do I qualify for a mortgage modification?

The first call you make should be to your lender, have the information above ready to discuss with them and call your customer service line to ask them what options you have available. If the person you speak with does not understand what you are asking, you can ask to be referred to one of the following departments (different lenders have different names for these departments):

Prior to contacting your mortgage lender you can quickly complete an eligibility test at www.MakingHomeAffordable.gov. This test will let you know if you are eligible for a modification through the government-sponsored Home Affordability and Stability Program (HASP). For a list of mortgage lenders and servicers, visit www.HopeNow.com.

What if I don’t qualify for a mortgage modification, can’t afford my home, and owe more than it’s worth?

You are not alone and foreclosure is not the only option. If your mortgage lender or servicer will not work with you to reduce your payment, you may want to consider a short sale. Agents like me, with the Certified Distressed Property Expert® Designation, have undergone extensive training in how to process and negotiate short sales. A short sale allows you to sell your home for less than what you owe and avoid foreclosure. Speak to your market expert to see if you may qualify.

What is a Home Affordable Refinance?

If Fannie Mae or Freddie Mac owns your mortgage, you may be eligible for a Home Affordable Refinance. This will allow you to refinance your home and often lower your payments.

What are the qualifications for a Home Affordable Refinance?

According to the resources released by the government, following are a list of qualifications:

  • You are the owner occupant of a one- to four-unit home
  • The loan on your property is owned or securitized by Fannie Mae or Freddie Mac (see Useful Links)
  • At the time you apply, you are current on your mortgage payments (you haven’t been more than 30 days late on your mortgage payment in the last 12 months, or if you have had the loan for less than 12 months, you have never missed a payment)
  • You believe that the amount you owe on your first mortgage is about the same or slightly less than the current value of your house
  • You have income sufficient to support the new mortgage payments, and the refinance improves the long-term affordability or stability of your loan

This represents only a summary of some of the solutions available to homeowners facing foreclosure. Locate a CDPE in your area for an evaluation of your individual situation, property value, and possible options.

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If you or someone you know and love is facing this difficult challenge, make sure to Contact Us. 7 our of 10 foreclosures happen because the borrower (home owner), did not seek proper professional advise from experts dedicated full-time to helping folk find ways to overcome this challenge. Get the answers that suit YOUR needs, today. Get more answers at http://www.cdpe.com/faqs

Q2-2010, Existing Florida Home & Condo Sales – UP

In Buyers, Distressed Sales, FAR, florida, foreclosure, HAFA, HAMP, Home Buyer, home sellers, HomePath, HUD, Industry trends, Market Report, miami, miami beach, Multi-Family Real Estate, real estate, REO, Roth-IRA, Self-Directed IRA, Sellers, Short Sales, Trends on August 11, 2010 at 3:10 pm

Florida’s existing home, condo sales up in 2Q 2010

ORLANDO, Fla. – Aug. 11, 2010 – Sales of existing single-family homes in Florida rose 21 percent in second quarter 2010 compared to the same period a year earlier, according to the latest housing statistics from Florida Realtors®. A total of 51,564 existing homes sold statewide in 2Q 2010; during the same period the year before, a total of 42,604 existing homes sold. It marks the eighth consecutive quarter that Florida has seen higher existing year-to-year home sales, according to the state association.

Statewide sales of existing condominiums in the second quarter rose 45 percent compared to the same time the previous year. This marks the seventh consecutive quarter for increased statewide sales in both the existing home and condo markets compared to year-ago levels.

Statewide sales activity in 2Q 2010 also increased over 1Q 2010’s sales figure in both the existing home and existing condo markets, Florida Realtors’ records show. For 2Q 2010, statewide sales of existing homes rose 32.7 percent over the 1Q 2010 figure; statewide existing condo sales in 2Q 2010 increased 24.2 percent over the 1Q 2010 level.

Looking forward, the University of Florida’s Bergstrom Center for Real Estate Studies’ latest quarterly survey of real estate trends reported that job growth and the BP oil spill were cited as top concerns for the future outlook of the state’s real estate industry. The survey polls market research economists, industry executives, real estate scholars and other experts.

The center’s director, Timothy Becker, noted in the report that the oil spill has created “a cloud of uncertainty that is affecting all markets across the state. Our respondents indicate that the effect of the oil spill is being felt across Florida despite the fact that oil is only showing up on some beaches in the Panhandle.”

The survey reported the outlook for investment in industrial properties continues to brighten and is becoming increasingly positive.

Seventeen of Florida’s metropolitan statistical areas (MSAs) reported increased sales of existing homes in 2Q 2010 compared to the same three-month period a year earlier; 18 of the MSAs showed gains in condo sales.

The statewide existing-home median sales price was $141,300 in 2Q 2010; a year earlier, it was $143,000 for a decrease of 1 percent. The 2Q 2010 statewide existing-home median sales price was 5.6 percent higher than the statewide existing-home median sales price of $133,800 in 1Q 2010. According to industry analysts with the National Association of Realtors® (NAR), sales of foreclosures and other distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes. The median is a typical market price where half the homes sold for more, half for less.

In the year-to-year quarterly comparison for condo sales, 20,986 units sold statewide for the quarter compared to 14,430 in 2Q 2009 for a 45 percent increase. The statewide existing-condo median sales price was $98,900 for the three-month period; in 2Q 2009, it was $110,300 for a decrease of 10 percent. The 2Q 2010 statewide existing-condo median sales price was 3.2 percent higher than the 1Q 2010 statewide existing-condo median sales price of $95,800.

Low mortgage rates remain another favorable influence on the housing sector. According to Freddie Mac, the national commitment rate for a 30-year conventional fixed-rate mortgage averaged 4.91 percent in 2Q 2010; one year earlier, it averaged 5.03 percent.

Reprinted by Permission: © 2010 Florida Realtors®

Miami-Dade County – Mid Year Real Estate Report

In bank-owned properties, Buyers, closing, Commercial Real Estate, credit, Distressed Sales, First-Time Buyer, florida, forclosure, foreclosure, government, HAFA, Home Buyer, home sellers, Industry trends, lenders, Market Report, miami, miami beach, mortgage, Multi-Family Real Estate, new rules, real estate, REO, Sellers, Short Sales, tax credit, Trends on July 11, 2010 at 10:45 pm

Wow…the last 18 months have been a roller coaster ride in Miami-Dade county. Click Facts & Trends Report – June2010 to view full report and follow along.

With a drop in inventory of almost 34% since January, 2009 to an increase of 62% in Closed Sales in the same period with Pending Sales accounting for almost 80% more properties under contract, pointing to a great recovery. All this with slightly more than a 1% increase in new listings, one could ALMOST say we’re out of hot water. Until we look at more recent figures, that is.

True, year over year numbers still reflect quite a positive story considering what happened after the market collapsed. However, inventory for sale dropped only by 18% or almost by half as compared to the 18-month period. In addition, there are over 24% new listings in the system these days from June 2009 (compared to the easily ignored 1% in the 18 month period), and a drop in closed sales of almost 2% year-over-year, coupled by a much less than robust 20.3% of new pending sales from prior June’s numbers (as compared to the 79.5% increase in the 18 months since January, 2009.

Between May and June 2010, inventories increased for the first time in the entire 18 months (actually…for the first time since September 2008), by 2.1% to 24,150 units, while new listings jumped by 9.4% to 5,634 units. Closed sales however, increased by a measly 0.2% while pending sales went up by only 6.7% between May and June, 2010.

Based on Closed Sales, Months of Inventory dropped by 59.1% in 18 months (a drop from 30.4 months down to 12.4), and dropped by 16.3% year over year, only to jump by 1.8% (up from 12.2 months), from May to June, 2010. This type of activity has cased a substantial and noticeable change in the absorption rate, which deteriorated from a 144.2% increase in the 18 month period (from 3.3 units to 8), to a disappointing 19.4% between June 2009 and June 2010, and a drop of 1.8% from 8.2 in May.

At this pace, with stimulus no longer incentivising sales, interest rates not getting folks off the fence (not even to refinance at today’s 4.5% rates (not seen in about 60 years!), employment (or lack of), weighing on peoples minds, a mounting national debt, increase mandates for health care and the addition of thousands of IRS agents to ‘chase’ folks…it’s no wonder people may be scared and unmotivated by real estate.

This is quite sad because, prices in Miami right now are low enough that would make it cheaper to buy than to rent for the first time in years. The average list price of properties in Miami has dropped in recent months and was quite neutral over the 18 month period from January 2009 ($519,000) to June 2010 ($522,000), for a meager 0.6% increase. Compared to the year over year figures between June 2009 and June 2010, when the average price of a property for sale dropped by 4.6% (from $547k down to $522k) and by 2.8% between May and June, 2010 from $537k to $522k.

While the price of properties for sale was dropping, the price of properties sold was increasing as follows:

Chart

Closed Price trend


This trend of increased closed prices has been a reflection of the highly competitive market we are faced with. REO sellers are finding multiple cash offers, forcing the bottom to rise once more. With average Sold Price increasing by 17% in 18 months, sellers were beginning to see a light at the end of the tunnel (not a train coming for a change), buyers were beginning to feel the frustration of under bidding.

Serious buyers have been snatching bargains in Dade county because they have been aggressively competing for the low hanging fruit. Those REO / foreclosed properties banks were under-pricing in order to attract buyers and quickly sell their inventory. This tactic easily explains in part the drop in prices for properties for sale and the increase in sold inventory. Regular sellers and Short sellers also have had to adjust.

But with banks opting for foreclosure avoidance and more short sale negotiations using one of the HAFA programs now available, they’re also saving time, money and court costs, jams and errors by simply negotiating to avoid a foreclosure. In addition, there are laws lenders must now adhere to when they take a property back in foreclosure, which forces them into additional county and/or city compliance issues (like Miami-Dade’s Certificate of Use).

Nonetheless, the Median Price for sold property in Miami-Dade has dropped by 8.2% in 18 months (from $164k to $150k), by 6.2% from $160 in June 2009. It then dropped by as much as to $140k in February, 2010 before going up again to $160k in May and now, back down to $150k (another 6.2% drop but this time, not in a year’s time but in one month!). This places today’s Median Sold Price at $150k back down to levels not seen since about April, 2002! That was more than 8 years ago, in case you were wondering….

Overall…charts for the last 6 months can be seen Facts & Trends Report – 6Months ended June2010

So what does it all mean to YOU? Who knows! What does your Chrystal ball say? Will interest rates remain low, will hours work improve so that fold start to work regular hours again? Will wages increase and unemployment drop? Will the national deficit, debt and trade improve in the weeks and months ahead? Will the impact on new taxes, natural disasters, man-made disasters, continue to erode your way of life?

Will the government continue to dress up the CPI or measure of inflation (which compares prices of a basket of goods from period to period), begin to notice that items not listed in the CPI’s basket of goods are in fact increasing as told by your grocery bill any time you buy items not in that basket (I mean…aren’t meals at fast food restaurants costing more than a year or two ago? I think so), will real estate bring us out of this recession or are we headed into a double dip recession due to wars, taxes, health care, impact fees on pollution and other cost passed on to consumers? What about politics? Will November’s elections effect any positive change or will create no change at all or even make matters worse?

In my humble opinion…we have been doing great in Miami-Dade. There is just too much noise and confusion to properly read the future past today or even tomorrow. Changes in laws, politics and everything in between and not even related to them are coming as fast as lightning, giving business and folk few ways to find niche opportunities and have the time to recognize the brakes, devise a plan and execute it to any lasting degree. If you are not nimble enough to recognize change and implement a plan of action PRONTO…you are likely to miss the boat.

Rentals have continued to be difficult to gauge, for example. It used to be you could pretty well predict what rent values would be worth in a few year’s time, helping investors find buying opportunities and figure out cap rates and ways to improve property values with some changes. Now, this seems to be no longer possible without a long-term plan. Unless you are willing to invest today knowing that the likelihood of the property’s value improving over time is historically high, you may be quite reluctant to enter the market today.

If you are a renter considering whether to buy real estate or wait…I could quote an old real estate adage: Don’t wait to buy real estate…buy real estate…and wait. Specially with prices as low as they were more than 8 years ago and interest rates as low as they were some 60 years ago! Really! Why wait?!

The same goes for those in distress. Yes, property values may go up in the months and years ahead. This does you NO good if you cannot wait. Get out from under that cloud and in as few as 2 to 3 years, you may even qualify again as a first-time buyer, able to buy using an FHA loan program, hopefully at still attractive rates.

Investors on the other hands are finding it better to pool funds and either buy notes or buy in bulk. Flippers are finding the bottom market become a difficult, murky water to be in. However, opportunities abound and will continue to be seen in the luxury market (at least over $500k). Some of these properties can be acquired at substantial discounts from their high. With the right formula, and access to money, deals can still be made, all with more zeroes.

If you are curious about the state of a particular area in the county, let me know and I can create charts for that area for you (even for some buildings).

Expected improvement in rental market giving positive outlook to multifamily market

In Buyers, Commercial Real Estate, Distressed Sales, florida, Leasing, miami, miami beach, Military, Multi-Family Real Estate, real estate, Roth-IRA, Self-Directed IRA, Sellers on June 11, 2010 at 4:31 pm

Multifamily builders less pessimistic

WASHINGTON – June 11, 2010 – The multifamily market showed signs of moving toward stability in the first quarter of 2010, according to NAHB’s Multifamily Market Index (MMI). The current production index for market-rent apartments jumped to 30.6 – 14 points higher than a year earlier – while future demand expectations for Class A apartments rose to 49.6 from 34 and for Class B to 53.1 from 43.9. For lower-rent units and for-sale condominiums, the current production indexes rose to 38.2 and 25.0, respectively – more than 10 points higher than in the first quarter of 2009.

The MMI measures multifamily builder sentiment based on production and occupancy at the current time as well as builders’ expectations for conditions over the next six months. An index number greater than 50 indicates that the number of builders who view conditions as getting stronger outnumber the number who view conditions as becoming weaker. The values are not seasonally adjusted.

The current demand index for Class A apartments – among the hardest hit by the recession ¬– also showed improvement, rising to 41.7, or 19 points higher than a year earlier. The index measuring demand for Class B apartments rose to 43.4, up seven points. Demand for Class C apartments – the least expensive, and the most likely to stay occupied during hard times – actually showed a slight decline, falling about two points to 43.1.

Builders’ expectations for future production, though improved from a year ago, are still constrained by the difficulty in obtaining loans to fund development. Condo starts showed the lowest expectation for increased starts at 32.7. The future production index for lower-rent communities is 45.1 and for market-rate rent communities 43.5.

“The most encouraging part of the MMI is the number of multifamily builders expecting gains in rental occupancy over the next six months,” says NAHB Chief Economist David Crowe. “Builders’ optimism is directly related to recent positive employment news and expectations for the trend to continue. Current conditions are still depressed by multifamily builders’ difficulty obtaining financing for acquisition, development and construction.”

Reprinted by Permission: © 2010 Florida Realtors®

UF Study: Florida Real Estate Market Has Hit Bottom

In Distressed Sales, fannie mae, FHA, First-Time Buyer, florida, foreclosure, HAFA, HAMP, Home Buyer, home sellers, HomePath, HUD, miami, miami beach, Military, Multi-Family Real Estate, real estate, Sellers, Short Sales on April 29, 2010 at 4:14 pm

GAINESVILLE, Fla. – April 29, 2010 – Florida real estate markets show the first tentative signs of recovering from the most painful recession in the state’s history, according to the latest University of Florida (UF) report.

“Results of our first quarter survey indicate that the real estate market in Florida has hit bottom and is in the process of stabilizing across most property types,” says Timothy Becker, director of UF’s Bergstrom Center for Real Estate Studies.

But while most of the survey respondents report the market probably won’t get any worse, few say it has actually begun to improve yet, Becker says. “One of our respondents summed it up by stating that ‘if anything, we will get less bad.'”

On the positive side, private capital – both foreign and domestic – is continuing to enter the state in search of quality investment deals. As banks start to deal with their problem assets, more deals will come to market.

Another good sign: Life insurance companies have started to re-invest in commercial properties after backing off for the last year and a half, Becker says. Because these companies use premiums from life insurance policies to make investments, they are not deterred by the lack of available bank financing.

“(Life insurance companies) see the fundamentals of the economy stabilizing and they see the opportunity to get quality assets at a good price,” Becker says. “So if they think things aren’t going to get worse and they may actually get better, it follows that they’re going to want to start investing again.”

On the negative side, unemployment continues to be one of the state’s biggest problems, edging up to 12.3 percent in March, its highest level since the state began keeping count in the 1970s. Florida has lost more than 880,000 jobs since 2007.

Although there is a potential for job growth later in the year, even under the most optimistic assumptions it will take three to four years to return to 2006 levels, Becker says.

Also of concern is the continued reluctance of commercial banks to lend money because of pressure from regulators to manage risks along with depressed values that make it difficult to refinance mortgages.

The retail and office markets are the worst off, Becker says. “Until there is an increase in job growth, there is no need for more office space, and people aren’t spending as much money as they used to.”

Apartments continue to be the best market in the state due to high demand from people moving out of foreclosed homes. “More people are going to be living in temporary spaces than trying to buy homes just because it’s gotten a lot more difficult to buy homes from a financing perspective,” Becker says.

Statewide, Florida’s new housing market will continue to be slow, a result of more foreclosed homes becoming available. “That competition makes it very difficult for new homes to get built and purchased because buyers can often get an equal or nicer home for a much cheaper price on the foreclosure market,” Becker says.

One of the strongest areas of the state is South Florida, especially Miami-Dade and Broward counties, with their diverse economies, steady migration and influx of foreign capital. “The glut of condos in South Florida is actually starting to change hands – they’re beginning to rent them – and I think there is more life in downtown Miami than there has been in a long time,” Becker says.

Orlando, Tampa and Jacksonville also are picking up. “Florida’s big cities – those four areas – are less bad off than the rest of the state, and they’re going to recover quicker than other places,” Becker says.

Jacksonville, in particular, is in a good position because its housing market never got as hot as other markets; and, as a result, it doesn’t have as many foreclosures. “I think Jacksonville is primed to really take off, and with the expansion of the port is going to have a lot of jobs coming into the marketplace,” Becker says.

A positive note overall is that survey respondents’ confidence in their own business has risen for the fifth consecutive quarter. In previous breakdowns by profession, developers and lenders had extremely low expectations for their own businesses, and that has grown substantially in the last few surveys.

“It’s always a good sign for us that the lenders think their business is going to get better,” Becker says. “Maybe it means there is some light at the end of the tunnel, even though we’re still not at a great spot.”

Reprinted by permission: © 2010 Florida Realtors®

Florida real estate news – is a true trend in motion?

In bank-owned properties, Commercial Real Estate, Distressed Sales, fannie mae, FHA, First-Time Buyer, florida, forclosure, foreclosure, government, HAFA, HAMP, Home Buyer, home sellers, HomePath, HUD, Industrial Real Estate, miami, miami beach, Multi-Family Real Estate, NAR, real estate, REO, Sellers, Short Sales on March 14, 2010 at 6:31 pm

ORLANDO, Fla. – Feb. 26, 2010 – Florida’s existing home sales rose in January, marking 17 months that sales activity has increased in the year-to-year comparison, according to the latest housing data released by Florida Realtors®.

Existing home sales increased 24 percent last month with a total of 10,465 homes sold statewide compared to 8,444 homes sold in January 2009, according to Florida Realtors.

January’s statewide sales of existing condos rose 81 percent compared to the previous year’s sales figure.

Sixteen of Florida’s metropolitan statistical areas (MSAs) reported increased existing home sales in January; all MSAs had higher condo sales. A majority of the state’s MSAs have reported increased sales for 19 consecutive months. “Now is the time for anyone thinking of buying a home in Florida to make that decision,” said 2010 Florida Realtors President Wendell Davis, a broker and regional vice president with Watson Realty Corp. in Jacksonville.

“Markets across the state are seeing increased sales, yet conditions remain very favorable with still-low mortgage rates, a range of housing inventory and attractive prices. As an added incentive, buyers need to accelerate their plans because a purchase contract must be in place by the end of April to take advantage of the extended and expanded federal tax credit.

To find out more, consult a Realtor about options, qualification criteria and opportunities in your local housing market.” Florida’s median sales price for existing homes last month was $130,900; a year ago, it was $139,400 for a 6 percent decrease.

Analysts with the National Association of Realtors (NAR) note that sales of foreclosures and other distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes. The median is the midpoint; half the homes sold for more, half for less.

The national median sales price for existing single-family homes in December 2009 was $177,500, up 1.4 percent from a year earlier, according to NAR. In California, the statewide median resales price was $306,820 in December; in Massachusetts, it was $305,000; in Maryland, it was $244,820; and in New York, it was $222,000.

According to NAR’s latest outlook, homebuyers are taking advantage of the federal tax credit. “With inventory levels trending down over the past 18 months, we expect broadly balanced housing market conditions in much of the country by late spring with more areas showing higher prices,” said NAR Chief Economist Lawrence Yun.

In Florida’s year-to-year comparison for condos, 4,631 units sold statewide last month compared to 2,554 units in January 2009 for an increase of 81 percent.

The statewide existing condo median sales price last month was $97,300; in January 2009 it was $113,300 for a 14 percent decrease. The national median existing condo price was $183,700 in December 2009, according to NAR.

Interest rates for a 30-year fixed-rate mortgage averaged 5.03 percent last month, slightly lower than the average rate of 5.05 percent in January 2009, according to Freddie Mac.

Florida Realtors’ sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written. Among the state’s smaller markets, the Fort Walton Beach MSA reported a total of 143 homes sold in January compared to 118 homes a year earlier for a 21 percent increase.

The market’s existing home median sales price last month was $201,400; a year ago it was $188,300 for an increase of 7 percent. A total of 70 condos sold in the MSA in January compared to 25 units sold the same month a year earlier for an increase of 180 percent. The existing condo median price last month was $270,800; a year earlier, it was $268,800 for a gain of 1 percent.

Reprinted by permission: © 2010 Florida Realtors

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Commercial Real Estate owners need to hang on….

In bank-owned properties, Commercial Real Estate, Distressed Sales, florida, forclosure, foreclosure, Industrial Real Estate, lenders, miami, miami beach, mortgage, Multi-Family Real Estate, NAR, Office Space, real estate, Retail Space, Short Sales, SIOR on February 24, 2010 at 4:06 pm

No meaningful recovery in commercial real estate before 2011

WASHINGTON – Feb. 24, 2010 – Although the economy has been growing lately, fallout from the recent recession continued to negatively impact commercial real estate sectors in the fourth quarter, but there is hope for some improvement next year, according to the National Association of Realtors®.

Lawrence Yun, NAR chief economist, said commercial real estate almost always lags the economy. “Because of the lingering impact from the deep recession over the past two years, vacancy rates will trend higher and many commercial property owners will need to make rent concessions,” he said.

“With the job market expected to turn for the better later this year, we’ll see rising demand for office and warehouse space, but that isn’t likely before 2011,” Yun said. “At the same time, improved consumer confidence would help sustain the retail sector and encourage more people to enter the rental market.”

Yun notes that commercial vacancy rates remain high in most market areas and are depressing rents.

The Society of Industrial and Office Realtors®, in its SIOR Commercial Real Estate Index, an attitudinal survey of more than 700 local market experts, suggests a flattening level of business activity in upcoming quarters with 55 percent of members expecting the market to improve in the second quarter.

The SIOR index rose a 0.2 percentage point to 35.5 in the fourth quarter, compared with a level of 100 that represents a balanced marketplace. This is the first gain following 11 consecutive quarterly declines. Although some indicators show that a decline in commercial property values is beginning to flatten, 86 percent of respondents report prices are below replacement costs.

Nearly nine in 10 survey participants said new commercial development is virtually nonexistent in their market areas, and rent concessions are reported almost everywhere.

An independent survey earlier this month showed a couple dozen banks are willing to expand commercial credit this year, which is critical. The lending expansion is aided by the Federal Reserve’s Term Asset-Backed Loan Facility, which is encouraging issuance of commercial mortgage-backed bonds. In addition, regulators are prodding lenders to extend terms for many existing commercial loans.

“We have a long way to go for satisfactory levels of commercial credit, but these are important first steps,” Yun said. “Given that about $1.4 trillion in commercial debt will come due over the next three years, more extensive action is needed and the Fed needs to more actively help resuscitate commercial mortgage-backed securities. The credit improvement will mean more commercial property sales in 2010, even some at deeply discounted prices.”

Looking at the overall market, commercial vacancy rates generally will stay at elevated levels, according to NAR’s latest Commercial Real Estate Outlook. The NAR forecast for four major commercial sectors analyzes quarterly data in the office, industrial, retail and multifamily markets. CBRE Econometric Advisors provided historic data.

Office market

With a lot of sublease space currently on the market, vacancy rates in the office sector are forecast to rise from 16.3 percent in the fourth quarter of 2009 to 17.6 percent in the fourth quarter of this year; the longer term outlook is for vacancies to average 17.4 percent in 2011.

Annual office rent is projected to decline 7.2 percent in 2010, following a drop of 12.7 percent last year. In 57 markets tracked, net absorption of office space, which includes the leasing of new space coming on the market as well as space in existing properties, should be a negative 27.3 million square feet in 2010.

Industrial market

There is proportionately less industrial sublease space on the market than in the office sector, but obsolescence remains a factor. Industrial vacancy rates will probably rise from 13.9 percent in the fourth quarter of last year to 14.9 percent in the closing quarter of 2010; they could average 14.5 percent next year.

Annual industrial rent is likely to fall 9.6 percent this year, after declining 10.9 percent in 2009. Net absorption of industrial space in 58 markets tracked is seen at a negative 93.5 million square feet in 2010.

Retail market

Retail vacancy rates are expected to edge up from 12.4 percent in the fourth quarter of 2009 to 12.7 percent in the same period of this year, and may hold at that level in 2011.

Average retail rent is forecast to decline 2.4 percent in 2010, following a drop of 4.0 percent in 2009. Net absorption of retail space in 53 tracked markets should be a negative 3.4 million square feet this year.

Multifamily market

The apartment rental market – multifamily housing – is poised to gain from a rise in household formation. Multifamily vacancy rates are likely to decline from 7.4 percent in the fourth quarter of last year to 6.6 percent in the fourth quarter of 2010, and possibly edge down to 6.1 percent next year.

Average rent is projected to decline 3.4 percent this year, following a decline of 3.6 percent in 2009. Multifamily net absorption is expected to be 115,000 units in 59 tracked metro areas this year.

Reprinted by permission: © 2010 Florida Realtors

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