Monday, June 29, 2015

Report: U.S. Apartment Market Rents Averaging 6.3 Percent Year-Over-Year Increase - Portland at 15.1 Percent

Santa Barbara, Calif.—The June 2015 edition of Matrix Monthly, a report on U.S. apartment market trends from Yardi®, documents a robust 6.3 percent year-over-year increase in average rents across the country.  Rents rose by 1.3 percent month-over-month in June, the largest increase since the last recession, and are now at an all-time high of $1,150.
The report states that continued rent escalation in San Francisco, Denver, Jacksonville, Fla., and Portland, Ore., accounted for much of the average rent increase in June. 

Wednesday, June 24, 2015

Salem Apartment Portfolio | Five Properties Totaling 65 Units | $3.195M

HFO is pleased to announce the listing of 65 units in Salem, Oregon. This amazing portfolio offers investors an opportunity to add-value and create alternative exit strategies.

Rents are significantly below market and vacancy at these properties has been historically low. Rents could be brought to market and there are other income possibilities to consider.

All properties have on-site laundries, off-street parking, and are all located within a 3-mile radius. Click here to learn more and download a PDF of the Salem portfolio offering memorandum.

Investment Property Won't Sell? ... Perhaps It's Not The Price.

 By Trevor T. Calton, MBA

When investment real estate is hot, or even when it’s slow, sometimes you miss the market and have a property sit too long, losing momentum and buyer interest while everything else seems to be moving. Many sellers think price is the only variable. But in investment real estate, price is just one piece of the puzzle. If a property hasn’t sold, it could be something else or a combination of issues. The good news is that there are only four reasons an investment property doesn’t sell, and all of them are under your control.

Price – Yes, the most obvious factor is price. How did you establish your asking price? Did you grab it out of thin air when you “heard the property down the street sold for ___?” Or did you take an analytical approach? Sure, you want to get top-dollar for your property, but if you price it too high, you’ll get nothing.

When determining the selling price for your property, look at it from a buyer’s perspective. Would you buy it at that price? Be realistic. Also, be sure to find out how much debt financing a buyer can get on your property. A good mortgage broker can give you multiple potential loan quotes fairly easily if your books and records are organized. Cash buyers are rare, so knowing what size of a loan your property will support will help you determine its market value. If the cash-on-cash return is too low, buyers will take their money elsewhere.

Income – Take off your “owner’s hat” for a moment and start thinking like an investor again. Have you been managing for occupancy rather than value? Have you been more concerned with vacancy than with maximizing rents? Remember, investors are ultimately just buying your net operating income (NOI.) If you want buyers to pay your asking price, make sure the income is there. Remember, a property’s value is equal to its NOI divided by the market cap rate.

Look at both your revenue and your expenses for areas to improve income. Ask your broker for his opinion on your operating statements and find out how your property performs compared to other similar properties. Then start thinking outside the box. What else can you be doing? If you need some ideas, check out my article 27 Ways to Increase Your Apartment Income.

Physical Condition – Did you personally conduct a thorough inspection of your property? If it hasn’t sold, it’s time to see it with your own eyes. Take a look at the interiors, exterior, landscaping, roof and structure, and identify any items that may need to be addressed in the next five years. You know a buyer will do the same thing, and having this information beforehand can work to your advantage. Important items to look for are structural deficiencies, mold, pests, leaking windows, safety hazards, old appliances, paint, carpet and floors.

If you spot a glaring problem, consider taking care of it now instead of leaving it for the buyer. If you would rather not deal with it, then you won’t be as surprised by low offers or if a buyer requests a credit at closing for the deferred maintenance. Either way, if you know about it in advance, you can choose how to handle it, and maintain the upper hand in any negotiations down the road.

Marketing – Finally, a successful sales strategy is all about exposure to qualified buyers. When it’s time to sell, don’t underestimate the value of a good marketing platform, and be willing to pay for it. 80% of investment properties are sold through by the top 20% of real estate agents for a reason: Marketing to the right buyers.

Investment properties are purchased by a very small subset of the population, primarily for their ability to generate a solid return and create wealth. Successfully selling your property requires getting the complete and accurate information in front of motivated buyers at the right time.

Look for experienced agents who have a robust network of clients, have a strong track record of sales of similar properties, and utilize “push” marketing tactics such as email, direct mail, and good old-fashioned phone calls. Ask your real estate agent to provide formal marketing reports and add you to their mailing list so that you are included in their campaign to sell your property. This will enable you to observe their efforts from the market’s perspective.

Once you’ve taken a look at these four factors – price, income, physical condition, and marketing – you’ll certainly find the reason your property hasn’t sold. Even in the most tumultuous market, buyers will always be out there looking for good, fair, reasonable deals. If your property hasn’t sold and you make the appropriate adjustments, you should start seeing offers immediately.

Trevor T. Calton, MBA, is a former Director of Asset Management for a portfolio of over 6000 multifamily units and he has underwritten over $3 billion in commercial real estate assets. He is a Professor of Real Estate Finance at Portland State University. 

Tuesday, June 23, 2015

Congratulations to HFO's National Volunteer Award Nominee

HFO Senior Director of Marketing and Chief Customer Officer, Aaron Kirk Douglas, has been selected as a finalist in MENTOR: The National Mentoring Partnership and Cabot Creamery Cooperative’s cruise contest!  

You are invited to vote by July 5 and help Aaron win a once in a lifetime experience of an all-expense paid Caribbean cruise for two. The cruise will feature workshops and seminars on how to inspire community volunteerism for the more than 50 volunteer honorees

VOTE NOW! #MentoringCruise

Thursday, June 18, 2015

GlobeSt: No One Gains if 1031s Are Repealed

G. Joseph Consenza, vice chairman of The Inland Real Estate Group was interviewed at RECon 2015 recently in Las Vegas. 

Consenza will explain:
  • 1031's historical importance to the industry and economy.
  • The importance of investment; and
  • The impact of repeal well beyond the commercial estate industry.

More information on this topic:

Like 1031 Exchanges? Let Congress Know.

Greg Frick: Eliminating 1031 Like Kind Exchanges Could Chill Real Estate Market.

HFO-TV: Are 1031 Exchanges Going Away?

Wednesday, June 17, 2015

No Surprises Here: PSU Center for Real Estate's Spring 2015 Report

The PSU Center for Real Estate released its Spring, 2015 Multifamily Report this week. It's a nice summary of data reported here over the first few months of this year.

Particularly interesting statistics on multifamily transactions were the following based on sales through March 2015:

  • Average price per foot: $126 
  • Median cap rate: 6.37%
  • Median gross rent multiplier: 8.46
  • Median price per unit: $94,243

Tuesday, June 16, 2015

Is Paying $40 Million for an Empty Apartment Building in Seattle Crazy?

Not according to CWS Capital Partners, a real estate investment management company out of Southern California. The Puget Sound Business Journal reported CWS Capital Partners purchased the Lenora Apartments, a 15-year-old property in the Belltown neighborhood for approximately $40.4 million. This is 67% more than what the sellers paid for the 107-unit property five years ago.

The Art Institute of Seattle had a master lease on the property for student housing. However, now the building sits empty due to the expired lease. More information on this can be found in the Puget Sound Business Journal article.

Friday, June 12, 2015

Grow Up, Portland. Why the Apartments You Hate Are Good For the City.

"None of us, not a single damn one of us, is entitled to live where we want to live for as long as we want to live at a price we can reasonably afford." -Tyler Hurst, freelance writer and Portland apartment renter.

Recently, press coverage has increased on the potential and negative impacts from the development of new multifamily properties throughout Portland. Some of these concerns, like parking are legitimate.

This week the Willamette Week published a refreshing set of articles covering topics about myths, misconceptions and misinformation that has spread about new apartment buildings in Portland. Enjoy.

Willamette Week - June 10, 2015:

Why the Apartment Buildings You Hate Are Good For the City

Why My Apartment Is Good for Portland

The 5 Myths About Portland Apartments

Wednesday, June 10, 2015

MPF: Portland's May Rent Growth Third Highest in US at 12.6%

MPF reports that in Portland rents for new residents are up 17.6 percent and renewals are up 7.4 percent, the third highest in the country, putting total rent growth at 12.6 percent. 

Nationally, U.S. apartment rental rates jumped 6.5% in May 2015 – breaking the previous high for this cycle set just one month earlier.

Read more. 

Tuesday, June 9, 2015

HFO's New Look, New Tagline

HFO leadership spent months working with local agency eROI to find the best way to communicate to our clients why we are always excited to come to work each day.

The success of our clients' is driven by a deep passion for the multifamily investment industry and embracing HFO's unique culture of specialization and collaboration. 

Read more.

Monday, June 8, 2015

Portland Ranks in Nation's Top 5 Markets for Rental Housing Investment Returns, Says Latest Report

Portland rental property ranked #5 among 75 largest metros for investment. According to the a report by All Property Management of Seattle. Portland is currently the fifth-best market for rental real estate investment in the western U.S. and in the country as a whole.

Read more. 

HFO has Moved to a New Location on the Central Eastside

After 10 years at the Water Avenue Commerce Center, we've relocated to larger offices at 2424 SE 11th, near the corner of SE and Division. We have ample on-site client parking and look forward to welcoming investors and friends to our new digs at open houses this fall.

Read the full story in the Business Journal.