Experts agree, the multifamily market will continue to remain suitably tight to allow landlords to continue to raise rents. Currently, for regions on the western half of Los Angeles County, vacancy is in the low-3% range, allowing operators sufficient leverage to lift rents more significantly than the pace of inflation.
Current Los Angeles market trends data indicates an increase of +16.2% to $169,156 per unit compared to last year’s prices in the City’s more desirable areas – for the properties that are available. The number of multifamily properties for sale in Silicon Beach neighborhoods like Culver City, Mar Vista, Marina Del Rey, Venice, Santa Monica and Westwood is way down, forcing prices up, yet again.
Of the 12,500 units currently beyond the groundbreaking stage, nearly 12,000 are in the western part of the county, observes Marcus and Millichap’s most recent Apartment Market Research Report.
At the current pace of demand growth, pundits believe vacancy will rise to close to 4% next year as new supply competes with existing units.
National housing vacancy rates in the fourth quarter 2013 were 8.2% for rental housing and 2.1% for homeowner housing, according to the Department of Commerce’s Census Bureau. The rental vacancy rate of 8.2% was 0.5 percentage points lower than the rate in the fourth quarter 2012.
For more information please contact Jodi Summers and the SoCal Investment Real Estate Group @ Sotheby’s International Realty – email@example.com or 310.392.1211, and let us move forward together.
by Jodi Summers
Environmentally conscious real estate leases faster and at better terms than traditional buildings, yet it is extremely difficult for property owners to finance green upgrades. A recent McGraw-Hill survey concluded that building owners looking for finances to pay for energy retrofits for their properties are often are forced to rely on their personal resources rather than outside funding.
Granted, there are some options green loans, but the routes are not traditional. The government and utility companies are doing their share to facilitate green loans. Out of the box choices may include ESCO (energy service company) financing, energy service agreements, government loan programs, PACE (property assessed clean energy) programs, and on-bill utility financing.
Richard L. Kauffman, senior advisor to the secretary, Department of Energy suggests that owners should be look to capital market investors, state bonds, local banks and government incentives to generate the necessary capital for individual green improvements to their existing commercial buildings.
If you want to try the traditional route, instead of asking the bank for a green loan, try rolling the cost of energy efficient improvements into a building retrofit or renovation. This is an easy way to sidestep lenders’ reluctance to loan on green improvements as a stand-alone investment.
The issue at hand many banks is that green lending is a new thing. They have yet to assimilate green loans in into their underwriting programs…which may require years of data for evaluating risk and assessing the long-term financial impact from green investments.
Research and statistics show that Energy Star and LEED-certified buildings can attract higher rents and generate increased demand from tenants < and that a green property can garner a better lease rates and higher sales price. Lenders aren’t persuaded by research. They want empirical data on risks, and actual cost vs. performance data, not just assurances of what a new technology is expected to deliver.
Run the numbers, buying can be cheaper than renting until the 30-year fixed rate reaches 10.5%. Trulia has published a really fine Rent vs. Buy Calculator @ http://www.trulia.com/rent_vs_buy/
Which helps you calculate if buying a home makes sense for you by asking appropriate questions such as:
- What is your target monthly rent?
- What is your target home price?
- How long would you live there?
- What is your income tax rate?
- What is your mortgage rate?
It’s a good site. Learn more @ http://www.trulia.com/rent_vs_buy/.
by Naomi Shaw
A real estate partnership can be a lucrative venture for many individuals with a limited amount of money to invest. Forming a partnership will increase your working capital, and you’ll be able to buy properties you couldn’t afford on your own.
However, there are some significant risks that can come with forming a partnership. If you choose the wrong person or company to do business with, you could find that your investment quickly becomes a loss.
Before entering into any sort of real estate business partnership, make sure you do your homework on who you’ll be working with.
Knowing Your Partner
Entering into a real estate partnership with another person or company is something you should do only after you understand who you’re working with. While helpful to work with people you know and trust, there are some questions you should ask any person or company before considering a partnership.
● How much money do you have to invest? How is your credit score?
● How many properties do you currently own?
● When do you expect to make a profit from your properties? Do you plan on holding properties for years or do you want a quick turnaround to leverage into other ventures?
● Have you had other real estate partnerships in the past? Do you currently have other real estate partners? Do you have references to any past or current partners?
Understanding Your Partnership Agreement
Before you commit to any type of partnership, it’s essential that you come up with an agreement as to how the partnership is going to work. The most important things you need to discuss when setting up a real estate partnership include:
● What your responsibilities in the partnership are. Usually, one partner will manage properties while another is responsible for finding new properties. Of course, all partnerships differ. Defined roles are important.
● Is the partnership going to be reviewed at certain times? Many partnerships review profits about once per year. After all, not all partnerships are worth maintaining if there’s no growth or profit.
Hire an Attorney
If you form a good partnership, chances are you won’t ever need to consult your attorney. However, you do need to hire a qualified attorney who will help you setup your partnership.
Trying to do it yourself will most likely leave big gaps in your contract, and unless you’re incredibly well versed in business partnerships, those gaps could create potential problems down the road when it becomes time to sell properties, split profits, or dissolve the partnership and its assets.
Hiring an attorney seems costly, but it’s going to cost you a lot less than a business partnership gone wrong.
A real estate partnership is often an excellent way to make more money than you ever could on your own while balancing the work that real estate investing takes. However, partner with the wrong person, and you could end up losing all of the money that you had to invest.
Do your homework and ask questions, and always set up a binding legal agreement that helps both partners understand how they’ll be working together and how they’ll be able to exit the partnership if needed.
Naomi Shaw is a freelance writer in Southern California. She loves real estate and home design, and enjoys covering both topics in her writing. She contributes to HarrisHousePainting.com often.
edited by Jodi Summers
QM is a newly created set of restrictions on lending guidelines and the products that are available in the secondary market. For example, there will be no more:
- Prepayment penalties
- Loan terms longer than 30 yrs
- Generally no debt ratios over 43%
“The effect of QM will be that many qualified borrowers will have more difficulty in obtaining financing,” reveals Caroline McPherson, Senior Mortgage Consultant @ RPM Mortgage.
Fitch Ratings believes that after the Qualified Mortgage rule goes into effect, it will help to protect investors and provide incentives to originators and issuers to maintain high-quality originations while upholding guideline compliance.
The forthcoming ability-to-repay and qualified mortgage rule will have direct consequences for the primary and secondary mortgage markets. Experts say processes will need to be developed to satisfy secondary market participants, including loan aggregators and residential mortgage-backed securities investors.
For borrowers with a debt ratio is over 43%, solutions include paying down debt so that they can qualify under the new debt ratio guidelines. Another option is FHA Loans. Mortgages insured by the federal government will have somewhat looser restrictions.