apartments Archives - J Darrin Gross Podcasts

CREPN #99 – Buy and Hold Investing with Jesse Fragale

Buy and Hold Investing is the standard for most Canadian real estate investors.

Jesse Fragale bought his first rental when he was at college. Recognizing a good thing, he grew his student housing portfolio with multiple single family and condo rentals.

You might think student housing equals keg parties and irresponsible tenants. While this may be true, it was a guaranteed way to push market rents in a rent controlled market.

Jesse is a Commercial Real Estate broker in Toronto, where the rent control policy caps rent growth to a maximum of 1.8%. The only time a landlord can increase rent by more is after a tenant moves out, which is frequent in student housing.

Rent Control

Interestingly, the policies meant to help tenants gain affordable housing, has prevented investors from entering the market to build more units. It is estimated that over ninety percent of all apartment housing in Canada was built prior to 1970.

Instead of building new apartments, investors have purchased condominium units and placed into rental. Until now, condos have evaded rent control. Ontario has proposed changes to rental housing policy to close the loophole and bring condos under rent control. Ontario’s 16 new housing measures

Jesse and a partner recently purchased an eleven unit property. Two vacancies allowed for market rate rent increases. Also, there is a possibility of creating an additional unit from a large laundry room. These measures will dramatically increase the value of the property.

Buy and Hold for the long run

The 1031 Exchange available in the USA, allows the investor an option to defer paying capital gains tax when a seller buys a larger property. No such option exists in Canada. Due to the lack of a 1031 exchange, most Canadian investors buy and hold focusing on the long .

Jesse would like to grow the portfolio substantially in the next five years. However, given the challenges in Canada, he is considering his options in the US.

For more, contact Jesse Fragale at:

jessefragale@gmail.com

CREPN #98 Multifamily Market Opportunities with Ryan Kimura

Where are the Multifamily Market Opportunities?

Find a market with jobs, low rental housing supply and rents that are affordable.

The Multifamily market has been cooking for several years as the demand for rental housing created by the crash and millennials who choose to live in cities.

As the cycle continues, investors begin to ask, “how long can this last?”

If you are a developer or investor, the ability to look at a specific market and identify the characteristics in play are critical to your success. Firms like firms like Axiometrics, acquired by RealPage, specialize in providing monthly multifamily market data.

Primary markets with the most demand and development, are showing signs of oversupply in the class A units. In these markets, free rent concessions have begun to show up and rent growth has slowed.

Say goodbye to rent growth of 12, 14 and 16% year over year is no more in most markets. The healthy markets for the near future suggest 2 – 3 % annual rent increases.

Are there still multifamily market opportunities?

While primary markets ability to absorb all of the new units has begun to cool, the secondary and tertiary markets still show signs of opportunity for investors and developers.

What’s the key? The fundamentals of opportunity remain the same. Where are the jobs? Where is supply tight, and rent is still affordable.

Tech jobs pay well and drive up the demand for high end housing.

Things to watch?

The cost of construction is rising based on the tight labor market. This has not slowed development, but it is driving the cost of developing new units and repositioning older units.

Millennials continue to want to live downtown, are not getting married and do not want to move to the suburbs. Until then, multifamily demand should remain strong.

For more go to:

www.realpage.com

ryan.kimura@realpage.com

CREPN #64 – Multifamily Asset Class A,B,C with John Wilhoit

Multifamily asset class for investors are graded by letters from A,B,C, and All Other.

John Wilhoit is an author, investor, asset manager, multifamily expert and a returning guest.

Check out John’s prior appearance CREPN #27 to learn about market size.

In this episode, John breaks down the difference between the asset class grades and the characteristics of each.

The designations are primarily reference points for institutional investors investing in properties with 150 – 250 units. There are exceptions. In markets with strong demand, smaller boutique properties with fewer units can be considered class A for the marketplace, but would be regularly excluded from institutional investor consideration.

The factors that define the property class designation include age of the property, amenities offered, rents charges, level of service, safety of the neighborhood, uniformity of the property and more.

Class A properties

Located in communities of 50,000 and more.
The newest property in the area.
Features will include the greatest level of amenities in the marketplace; concierge service, dry cleaning pickup, vehicle service, etc.
Construction finishes will be of the highest materials currently in use, “Best in Class”.
Rents will be the highest in the marketplace.
Properties are located in desirable neighborhoods.
Older properties that are located in a higher desirability location that command a higher rent are referred to as “legacy” properties.

Class B Properties

Age of properties are twenty years old and older.
Older properties that are redeveloped even with the highest level of finishes will be considered “B”, or “Legacy” property
Properties are well maintained and have little to no deferred maintenance.
Rents will vary depending on the market.
Located in a safe and desirable neighborhoods.
Tenants tend to be more salaried professionals and more stable income.
Turnover will be less than that of a “C” class property.
Features will vary based on the ownership.

Class C Properties

This is “Workforce” housing.
Tenants are normally hourly workers and live pay check to pay check.
Located in safe neighborhoods.
Tenants credit tends to be marginal.
Turnover tends to be higher
Properties will have deferred maintenance needs.
Lower rents, keep these properties in demand

Everything else

These properties do not fit in any of the A, B, C categories and have characteristics including:

High crime
4 story walkup
Non conforming floor plan or unit configuration
Lower rent
Lower caliber of tenant
For more go to:

John Wilhoit on Amazon.com

http://multifamilyinsight.net/

CREPN #23: Commercial Financing Tips with Darryl Dahlen

From a post in the Facebook Group, Commercial Real Estate Network regarding a refinance of a 400 unit apartment complex, I learned about Darryl Dahlen & his company Global Solutions. I invited him on CREPN Radio to share commercial financing tips with our audience.

FREE CRE Finance Worksheet http://bit.ly/CREPN-DarrylDahlenCREFinanceWS

We will dive into various topics with Darryl regarding:
Current Marketplace Opportunities for Investors:
Areas of the country where undervalued opportunities still exist
Rates of appreciation year over year
Types of financing
Purchase
Purchase & Rehab
Refinance / Cash Out
Length of ownership operating required for consideration

Global Solutions is an experienced commercial brokerage with years of experience that specializes in funding commercial real estate loans for domestic and international clients.

Our business model is based on leveraging our strong lender relationships that have been formed over many years to bring our clients the best terms possible.

Using a “square peg square hole” approach we use our 10 years of lending experience to match a loan with appropriate lender.

We have an array of loan products which allows us to be extremely flexible and competitive. We can arrange financing using SBA, USDA, HUD, Fannie/Freddie, bank loans, CMBS lenders, bridge loans, and hard money or private money.

While our focus in multifamily properties, we are well-versed in many asset classes and welcome any owner-occupied or non-owner occupied properties that are:

Assisted Living
Office/Medical
Office flex
Light Industrial
Manufacturing
Self-Storage
Strip malls/Shopping Centers
Stabilized Hotels

CREPN #51 – How to Find Deals in a HOT Market with Rick Bean

The Multifamily property marketplace is HOT. Rick Bean with Rose City Commercial Real Estate explains what it takes to compete in a compete and how to find deals in a HOT Market.

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Return on investment is the goal for every investor. When the stock market is not providing the desired rate of return, so where do investors go? When foreign markets are not providing a positive return, so where do foreign investors go?

They go to the US Multifamily Marketplace

Since the collapse of the mortgage and housing market in 2008, demand for apartments has risen sharply. This demand is expected to continue for the next couple of years, giving investors a place to invest.

The collapse of the mortgage market forced homeowners who lost their home to foreclosure into the renters market. Many potential buyers have decided they are no longer interested in being burdened by a mortgage, or do not qualify for a bank mortgage to buy a single family home.

Combined with baby boomers leaving the suburbs for an urban apartment or condo and the millennials who chose to rent, the housing market has shifted. The housing consumer wants to rent. This demand for urban multifamily living for units that have not yet been built will bode well for developers and investors.

More demand than supply pushes the price up. Rents in urban markets like Portland, have pressed upwards double digits year over year, and has caught the attention of investors looking for return.

Real Estate Investors looking to take advantage of the market conditions, are struggling to find properties to buy. The increased rents, net operating income and demand for properties are squeezing the cap rates to record lows. The rising rents and minimal vacancies have kept many owners from selling their multifamily properties. The available supply is well below the demand.

Most buyers start looking for a property is the internet. Sites like, google, loopnet and zillow, make it easy for investors to get educated on the market. Properties listed on these sites are being actively marketed.

When demand is greater than the supply it is a Sellers Market.

How to Find Deals in a HOT Market

Buyers wanting more options to chose from are turning to working with Commercial Real Estate Brokers that look for Off Market Properties.

Buyers work with Brokers to define what exactly they are looking for. The Broker then approaches Owners of properties fitting the Buyer parameters. Agreeable Owners enter into a contract with the Buyer without ever placing the property on the open market.

Additional tactics used by aggressive Buyers in order to gain an advantage with Sellers is to make the deposit go hard right away. Unlike a refundable deposit a hard deposit goes to the seller right away. This confirms each to each party the deal is going to happen.

For more information about the Portland, OR Multifamily Real Estate Marketplace, contact Rick Bean.

PH: 503.577.1034

EM: rick@rosecitycre.com

Web: www.rosecitycre.com