Where Are The Best Investments For 2011 For Multifamily Assets?
In our present economy, where are the best investments for 2011 in the multifamily asset class?
Multifamily assets seem to be the most popular commercial class of real estate in which to invest. For sure, it is the asset class that most commercial real estate gurus sell to the general public since it is the easiest to get financing for as well as the easiest to understand since apartment rental units are almost just like single-family houses in that everybody needs a place to call “home”.
I opened up the most recent issue of one of magazines to which I subscribe, Multifamily Executive, and saw that they just released the “20 Hottest Multifamily Markets for 2011” based on multifamily permit activity in 2010. I think this should be taken with an ever-so-small grain of salt since these numbers could be easily influenced by a number of things such as government subsidies, or other incentives, and not just by shifting demographics as indicated in this article. As an example, I own a rental property in a low-grade rental neighborhood here in Aiken, South Carolina, where houses can normally be bought in the mid-$20,000′s to the low-$30,000′s. But if you look at some recently recorded deeds, you might think that houses in this neighborhood are selling in the $90,000′s to just over $100,000. What the recorded deeds won’t tell you is that the City of Aiken is using grant money to not only buy houses in this neighborhood but also to provide homeowner loans at extremely low interest rates with little to no money required for down payments. It is actually much less expensive to “buy” a house there than it is to rent one. Now imagine if you moved to Aiken from California and see what you think are “cheap” rental houses and ended up paying $90,000 for one in that area. Given the rental market there and without being able to obtain the same kind of low-cost financing as what the City provides to owner-occupants, you’d get stuck with an overpriced rental house in a low-grade neighborhood. Likewise, be wary of anyone who tells you that they know where the best investments for 2011 (or for any year) are for real estate. Keep in mind that value all comes down to supply and demand, both of which can be drastically influenced by overall macroeconomics and not just by buyers communicating with sellers. It is one thing to WANT to buy a property, but it is another to actually be able to BUY it.
The above caveat being given, the writer of the aforementioned article is quite knowledgeable and credible. He writes for one of the premier trade journals in the multifamily industry so his words are not to be taken lightly. But don’t just go stampeding to invest in the markets he cites just because he says these may be the places for the best investments for 2011. There are probably many equally great deals, as well as potential partners, in your own backyard, i.e., right where you live even if you don’t happen to live in one of these 20 markets.
Along the lines of finding partners “in your own backyard”, and on to another rant, there is an overly-confident real estate investor who lives in my hometown of Aiken. Let’s call him Hal. Hal and I tried to work together about a year, or so, ago to purchase multifamily investments. We both learned from one of the top apartment investing educators, David Lindahl, who owns over 7000 apartment rental units, himself, so David definitely has the credentials to properly teach multifamily investing. The problem with working with Hal was that Hal wasn’t a careful guy and he didn’t know how to properly apply the Lindahl teachings but stubbornly thought that he knew (for someone to think they know something but they really don’t is not only hazardous to their wallets but also to yours if you try to work with these idiots). Hal was more than willing to take risks…with MY money. I recall an apartment complex in Dillon, South Carolina that Hal put under contract, since he was confident that it was a great deal, and for which I trusted him and put up the entire earnest money deposit. After taking two days to walk the property together and get a better idea of the Dillon market, I contacted the owner to tell him that we were canceling the contract since the financials for it were hopelessly intertwined with those of another property in a different state. The owner, to save money, had both properties’ financials tied into only one set of accounting books so we couldn’t verify the performance of the Dillon property alone. Hal and I spoke with the attorney who held my money in escrow and she told us that the money couldn’t be released back to me since the contract, which Hal got from an Internet download and insisted was legal here, didn’t have the proper provisions to do so under South Carolina law. The ONLY thing that saved me from losing this money was that Hal was the one who actually signed the contract, not me. I only put up the earnest money so I was able to get the money released. I was royally pissed at Hal, who never once apologized for his mistake that could have cost me my earnest money deposit, but I thought that he just made an error in judgment and learned from it so I decided to keep working with him, albeit with a lot more caution.
Two weeks later, Hal called me to say that he had put the Dillon property back under contract. When I asked him for the price and terms, he told me that he put it back under contract FOR THE SAME PRICE AND TERMS. Folks, when I was a kid, we did a science experiment in junior high school showing that earthworms can learn to avoid unpleasant stimuli like ultraviolet light and electric shocks. This taught me that even earthworms can learn. When Hal put the Dillon apartments back under contract for the SAME price and terms, this taught me that Hal CAN’T learn. A good Rule of Thumb is to NEVER work with anyone who is dumber than an earthworm. From that day on, I stopped returning Hal’s phone calls and will never again try to work with him. Trying to work with people like Hal is just a waste of your time. Prescreen your partners carefully and make sure that you’re both at least equally intelligent, so much the better if you can partner up with people who are MORE intelligent than you. This advice applies whether you are looking for good multifamily deals and partners locally, or if you decide to look in the much ballyhooed places for the best investments for 2011 as proclaimed in Multifamily Executive magazine.
As long as this post is on locating the markets with the best investments for 2011 for multifamily complexes, I’d like to list possible prospects in each market that are in my database for those who have the knowledge and resources to hunt them down.
Much in the same spirit as David Letterman’s Top 10 Lists, some possibly good multifamily deals in the locations where you’re supposedly able to find the best investments for 2011 are:
| Rank | Property Name | City, State | Address | $ Size | Est. 1st Mortgage | Notes |
| 20 | Hillside Garden Apts | El Paso, TX | 108, 124, & 125 Vaquero Lane | $4.2 million | $2.9 million | Maturing Loan (April 2012) |
| 19 | Valley St | Oakland, CA | 2341 Valley St | $1.7 million | N/A | Lender REO |
| 18 | Colonial Parc | Little Rock, AR | 5813 Baseline Rd | $4 million | N/A | Lender REO |
| 17 | Lincoln Green | San Antonio, TX | 11800 Braesview Dr | $30.1 million | $23.2 million | Foreclosure Initiated; Auction/Trustees Sale Scheduled; Receivership, Admin, Special Servicer |
| 16 | 1459-1461 VFW Pkwy | Boston, MA | 1459-1461 VFW Pkwy | $9.9 million | $8.2 million | Delinquent/Default; Receivership, Admin, Special Servicer |
| 15 | ACRE Rutgers University Student Housing Portfolio | New Brunswick, NJ (in lieu of Edison, NJ) | 51 Ray St | $4.7 million | $3.4 million | Receivership, Admin, Special Servicer |
| 14 | Brookhaven | Minneapolis, MN | 3907-3911 65th Ave N | $2.9 million | N/A | Lender REO |
| 13 | Lakehurst | Spring Lake, NC (in lieu of Fayetteville, NC) | 1000 Riverbank Dr | $5 million | $4.3 million | Receivership, Admin, Special Servicer |
| 12 | 211 Warren Ave | Baltimore, MD | 211 Warren Ave | $7.1 million | N/A | Lender REO |
| 11 | Ralston Place | Tampa, FL | 2803 W Sligh Ave | $7.7 million | $6.1 million | Owner Financially Challenged; Maturity Default/Past Due; Transferred to Special Servicer |
| 10 | Inverness | Indianapolis ,IN | 5810 Sebring Dr | $6 million | $4.7 million | Foreclosure Initiated; Maturity Default/Past Due |
| 9 | Twin Lakes | Miami, FL | 777 NW 155th Ln | $17.5 million | N/A | Lender REO |
| 8 | 5718 N Winthrop Ave | Chicago, IL | 5718 N Winthrop Ave | $3.1 million | $2.8 million | Delinquent/Default |
| 7 | Parklee Apts | Washington, DC | 1630 Park Road, NW | $2.4 million | $1.9 million | Auction/Trustees Sale Scheduled; Foreclosure Initiated; Transferred to Special Servicer |
| 6 | 462 West 51st Street | San Jose, CA | 3150 Almaden Expressway | ? | $1.5 million | Maturing Loan |
| 5 | The Park Seneca | Seattle, WA | 802 Seneca St | $4 million | N/A | Lender REO |
| 4 | St Augustine Apts | Dallas, TX | 1198 North St Augustine Rd | $5.3 million | $3.8 million | Maturing Loan; Delinquent/Default; Transferred to Special Servicer |
| 3 | Plaza Vermont | Los Angeles, CA | 960 W 62nd Pl | $6.4 million | N/A | Lender REO |
| 2 | Houston Woods Greenbriar | Houston, TX | 906 Greens Rd | $4.2 million | $2.6 million | Maturing Loan; Transferred to Special Servicer |
| 1 | 261 Wadsworth Ave | New York, NY | 261 Wadsworth Ave | $8.2 million | N/A | Lender REO |
Keep in mind that highlighting the well-publicized markets above is based solely on permit activity, but your best investments for 2011 could be where you least expect to find them.
Here are a few related sites that may give you more information relevant to your needs. Thanks for visiting Aesir Group commercial finance.
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Commercial Real Estate News
property manageme... (1)
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Over the passage of time you'd be able to say bye bye to Mr.
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It’s great to have folk who know the industry like the back of their hand, on your side.
These snatched properties are called repo'd house for sale and after the bidding of it that property is called as the foreclosed property.
Don’t hear your colleague that heard from a mate that a certain stock was going higher.
Look at other properties that have sold in the area and take a look at how much properties in the area have appreciated over a period of time. Purchasing an investment property should be good fun, not a difficult task. Being informed is the easiest way to love making this call.
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Firms whose stocks pay regular dividends. The best investment here will rely upon your risk preference : conservative, moderate, or assertive. First, your aim and risk toleration.
No-load INDEX FUNDS : your best investment in retirement funds.
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You appear to know a lot about this chosen topic but opinions are divided.
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The best investment newsletters are backed with this guarantee and the publishers even inspire you to try them in this fashion which I have done with lots of them.
Don’t hear your colleague that heard from a friend that a certain stock was going higher.
Going forward, exchange traded funds are the most straightforward and easiest way to broaden your diversification.
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This would imply transactions are legal, safe and fast.
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If you're a risk taker and want to do your own business in your bought commercial repos it might do you good.
The best hedge funds keep the price of investing low. No-load funds have no sales charges and a few of them have lower than average annual costs.
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Lists might be available thru agents or agencies handling repo'ed properties.
These funds don't have sales charges, but financiers do pay for annual costs.
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During the past, as an example, rising inflation has worked to extend property values and the cost of gold when stocks faired poorly. Inflation has been low for a while but will ultimately rear its head again.
Target balance and rebalance.
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Being informed is the most effective way to love making this call.
No-load funds have no sales charges and many of them have lower than average annual costs. Lower your price of investing as a part of your general investing system.
You are able to save up on rent and opportunities are unlimited. Over the long run, growing your enterprise would be less complicated with all of the money you are able to save by employing your own commercial space.
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* plan ahead about however much you can afford balanced with the rent you'll be in a position to charge on the property- be cautious not to overstretch yourself too much.
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Here’s the important thing with numismatic coins…they are only worth what somebody else is content to pay for them due to their apparent rareness and quality of condition. Stay tuned.
) To determine the list price of a numismatic coin, coins are graded by grading services. ( At current costs, you would have paid in the region of the same total amount for the silver in each pocket….about $1,000 each. ) Here’s the question.
This is a significant choice, so you really ought to know everything there is to understand about what you are purchasing before going on with the acquisition. While it's good to do a lot of your own research and learn as much as humanly possible, getting guidance from execs who live and breathe property investment can make a very great difference.
Stick to what you know. There are many types of investments, but you've got to be certain that the exact investment suits you well.
How much or what p.c of the cash you invest should go to each fund or asset type. The point of this document was to get you headed in the correct direction towards the best investments and best investing technique.
Cramer supplied with the data you want. Don’t take investment information from just anywhere.
Take care.
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Many of them offer no-load funds with no sales charges and low annual financier costs. Your last consideration is asset allocation…
During the past, for instance, rising inflation has worked to extend real-estate values and the cost of gold when stocks faired poorly. Many of them offer no-load funds with no sales charges and low annual financier costs.
Search ‘no-load funds’ online to find them.
[...] would be “push button” and “hassle free” for me. In a previous blog post, I mentioned some ways to avoid inadvertently falling into deals with such idiots who would put you a…. He almost burned me and I have a sneaking suspicion that he’s burned other people by [...]
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[...] to stay in the deal and properly manage it. There is a local investor in my area named Carl (I referred to him as “Hal the earthworm” in a previous blog post but will use his real name here) who doesn’t know what he’s doing but is reasonably [...]