Socal Multiunit Real Estate

SAM ZELL’S INVESTMENT STRATEGIES

July 15, 2010 on 12:16 am | In Curious, Fascinating Information, Market Trends, Trends, Uncategorized, all, recession | 4 Comments

SAM ZELL’S INVESTMENT STRATEGIES

By Jodi Summers

Expectations of a crash in commercial real estate market are “greatly exaggerated,” noted media and real estate magnet Sam Zell recently in Chicago. “Everyone is waiting for the grave dancer to come and exercise his magic potion, but you need two to tango.”

Speaking at the at the first “Invest for Kids” conference in downtown Chicago, Zell noted that owners of office and apartment buildings today have no incentive to sell. By 2011 or 2012 they will likely be able to fill their vacancies, albeit at rates 30% below their peaks, because demand will catch up to supply, he observed.

Optimistically he shared the fact that the U.S. population is growing and with fewer building starts in the past decade, demand for housing will rise.

Then again, Mr. Zell has made some interesting predictions. Financial mogul Sam Zell, owner of the Tribune Co., recently told an Israeli business conference that the U.S. real estate market will be in recovery by spring 2009.

Chicagoan Sam Zell is best known for owning and defaulting such famous media properties as the Los Angeles Times, Chicago Tribune and New York’s Newsday. Media aside, Zell’s fame and $6 billion net worth originate from his mastery of real estate investing principles. This mastery, demonstrated repeatedly over a 40-year career, results from Zell’s acute understanding of real estate market mega-trends and his dedication to turning around troubled properties.

Zell got into real estate investing in the 1960s, during the time he received his bachelor’s (1963) and law degrees (1966) from the University of Michigan. It started when he finagled his way into a property management role with a local landlord. Next, Zell began buying distressed properties, fixing them up and rent them to students. Zell was a hands-on landlord who put a lot of energy into scouting and fixing up locations.

According to About.com, “In 1969, Zell and his partner Robert Lurie formed Equity Properties Management Corp. to centralize Zell’s rapidly diversifying investments in real estate. In the 1970s, Zell expanded beyond his initial interest in residential real estate and began to acquire office space under the aegis of Equity Office Properties Trust, or EOP. Zell structured his business as a series of real estate investment trusts, or REITs, under the Equity umbrella. EOP was one REIT; Equity Residential Properties Trust was another. The REIT structure allowed Zell to radically reduce his corporate income taxes. In addition to exploiting the REIT tax structure, Zell polished his skills as a salesman and convinced an increasing number of investors to entrust their money to him.”

Zell, with Robert H. Lurie went on to found the Equity Group Investments, LLC, which spawned three real estate public companies, including: Equity Residential, the largest apartment owner in the United States; Equity Office Properties, the largest office owner in the country; and Manufactured Home Communities, a mobile home company. In addition, Zell has created a number of public and private companies.

He proceeded to grow his office properties - Equity Properties Management REITs into strong national brand names. This project met with marginal success, as enterprises tended to buy office space based on local differentiators such as price and management, not on national differentiators such as brand name. Zell had to sell some office space for less than what he paid for it, but this did not cost him his whole empire, and he sold this part of his portfolio to Blackstone for $36 billion in 2006, and in 2007, Zell acquired a portfolio of newspapers owned by the Tribune Co., including the Chicago Tribune, Los Angeles Times, Newsday and Baltimore Sun. …an odd time to buy newspaper franchises.

Currently, Zell recently raised $625 million to invest in “credit opportunities.”

“In every market and in every situation there is opportunity,” Zell concluded.

“In my 40 years in real estate, I’ve found there is only one metric that matters — replacement cost.” He noted that the spread between a building’s replacement cost and its economic value is as wide today as it was in 1993 — mainly because the cost of construction has increased.

**

http://www.businessweek.com/the_thread/hotproperty/archives/2005/11/zells_favorite.html

http://www.chicagorealestatedaily.com/cgi-bin/news.pl?id=36105&print=1

http://www.socalmultiunitrealestateblog.com/?p=201

http://homebuying.about.com/lw/Business-Finance/Real-estate/Sam-Zell-Real-Estate-Magician.htm

http://en.wikipedia.org/wiki/Sam_Zell

http://www.businessweek.com/the_thread/hotproperty/zell2.jpg

http://reason.com/assets/mc/mwelch/2009_10/SamZell.jpg

http://www.richsamuels.com/nbcmm/zell/images/zellhs.jpg

http://images.businessweek.com/ss/08/07/0731_zell/image/zell.jpg

LOS ANGELES MULTIUNIT PROPERTY SNAPSHOT – JANUARY 2010

January 3, 2010 on 8:48 am | In Experts Say, Fascinating Information, Investment Opportunities, Statistics, Trends, all, fUNNY...mONEY, recession | 6 Comments

LOS ANGELES MULTIUNIT PROPERTY SNAPSHOT – JANUARY 2010

By Jodi Summers

The residential real estate market bottomed out in 2009, and the pundits at the Urban Land Institute feel that 2010 is the year “commercial real estate is going to hit to bottom as well,” notes ULI researcher Charles DiRocco.

It has been reported that commercial real estate value declines will average more than 40 percent below previous highs of mid-2007. Savvy investors are realizing that the apartment building market has hit bottom. Locally, in Los Angeles county, from December 2007 – December 2009 the median price of for multiunit properties for sale properties is down 13% and the median price of sold properties is down 70%. On the upside, the number of sold properties is up 78%, which should keep multiunits away from the wave of property falling back into their possession.

**

http://saratogavoice.com/wordpress/2009/10/20/california-real-estate-forecast-for-2010/

http://nyrej.com/37067

http://www.realtor.org/research/economists_outlook/commentaries/forecast1209

http://pittsburgh.bizjournals.com/pittsburgh/stories/2009/12/07/daily30.html

WHAT HAPPENS WHEN A TENANT ABANDONS A UNIT?

November 14, 2009 on 12:42 am | In Curious, Problem, Problem Solving, Rents, Uncategorized, all, recession | 3 Comments

WHAT HAPPENS WHEN A TENANT ABANDONS A UNIT?

Edited by Jodi Summers

Hey landlords, have you ever had this happen to you –

You decide to visit a tenant whose rent is past due, and while passing by the front window of the unit, you notice that the apartment appears to be vacant.

Do you know what to do? Can you, as the owner, just assume that the tenant abandoned the property, change the locks, and lease out the apartment to the next person?

Yeah right, if only it should be so simple. Being a landlord is just not that easy.

According to the California Association of Realtors legal department:

California law provides a procedure that the owner or the property manager of the rental real property must follow before assuming that the rented property has been vacated. The focus of this legal article is on this procedure for regaining possession of abandoned real property. A copy of the notice that the owner must send to the tenant is included. However, this article does not address the issue of recovery of damages by the owner.

FAQ

Q 1: If a landlord believes the rental property has been abandoned, what is the notice that the landlord must provide to the tenant?

A: The Notice of Belief of Abandonment (“Notice”) goes as follows:

Notice of Belief of Abandonment

To:

______________________________________________________________________

(Name of lessee/tenant)

______________________________________________________________________

(Address of lessee/tenant)

This notice is given pursuant to Section 1951.3 of the Civil Code concerning the real property leased by you at ____________________ (state location of the property by address or other sufficient description). The rent on this property has been due and unpaid for 14 consecutive days and the lessor/landlord believes that you have abandoned the property.

The real property will be deemed abandoned within the meaning of Section 1951.2 of the Civil Code and your lease will terminate on ____________________ (here insert a date not less than 15 days after this notice is served personally or, if mailed, not less than 18 days after this notice is deposited in the mail) unless before such date the undersigned receives at the address indicated below a written notice from you stating

Both of the following:

(1) Your intent not to abandon the real property.

(2) An address at which you may be served by certified mail in any action for unlawful detainer of the real property.

You are required to pay the rent due and unpaid on this real property as required by the lease, and your failure to do so can lead to a court proceeding against you.

Dated: __________________________________________________________

(Signature of lessor/landlord)

___________________________________________________

(Type or print name of lessor/landlord)

___________________________________________________

(Address to which lessee/tenant is to send notice)

(Cal. Civ. Code § 1951.3(d).)

Q 2: Under what circumstances may a landlord give the tenant the Notice in Question 1?

A: The landlord may give the Notice only if two conditions have been met: (1) the rent on the property has been due and unpaid for at least 14 consecutive days and (2) the landlord reasonably believes that the tenant has abandoned the property (Cal. Civ. Code § 1951.3(b)).

Q 3: What if the landlord doesn’t want to wait the 14-day requirement mentioned in Question 2?

A: If a landlord wishes faster action, the landlord may use the unlawful detainer remedy. See California Code of Civil Procedure Sections 1161-1179a. See also, the C.A.R. legal article, Unlawful Detainer: The Eviction Process in California < http://www.car.org/index.php?id=MTg4Ng >

Q 4: What if the landlord believes the property to have been abandoned and there’s been a breach of another covenant under the lease but the rent has been paid?

A: The landlord must use the unlawful detainer remedy if the landlord wants to get the tenant out of the property. See California Code of Civil Procedure Sections 1161- 1179a.  See also, the C.A.R. legal article, Unlawful Detainer: The Eviction Process in California.

Q 5: What is a “reasonable” belief of abandonment?

A: Many residential as well as commercial tenants vacate the premises when behind in the rent without ever notifying the landlord. What some courts look for is whether or not the keys have been turned over to the owner.  If turning over the keys establishes for the landlord a clear showing of abandonment, then the landlord may be able to take possession of the premises without providing the Notice as required by section 1951.3.  Following the procedure of section 1951.3 provides greater certainty to the owner and provides protection against a tenant who later sues the landlord for legal possession of the rental property.

However, if the tenant has not made it clear—has not given over the keys—then the landlord is left guessing about the tenant’s abandonment. One way to get some idea of the tenant’s intention is to view the premises by looking through a window to see if there is anything left behind. For example, if the utilities have been discontinued, there is no refrigerator and no furnishings, abandonment seem clear.

What if some personal possessions have been left behind?

“Since many lessees who abandon real property leave personal property on the premises, the mere fact that the lessor knows that the lessee has done so should not, by itself, be held to establish that the lessor’s belief as to abandonment was unreasonable. Where the personal property left by the lessee appears to be of little value, it would be reasonable for the lessor to conclude in the absence of other evidence that the personal property, as well as the real property, had been abandoned. On the other hand, where the personal property is of substantial value and it appears that the lessee is the owner, these facts would be significant evidence that the lessee had not abandoned the real property.” (11 Cal.L.Rev.Comm. Reports 951 (1973); 12 Cal.L.Rev.Comm. Reports 571 (1974); (Cal. Civ. Code § 1951.3(e)(2).)

Note:  if personal property has been abandoned too, there is another procedure to be followed.  See the C.A.R. legal article, Abandoned Personal Property: Disposition of Items Left Behind After Termination of a Tenancy.

Q 6: What If the property is under a lease that doesn’t terminate for several months, what should be written on the Notice regarding the date of lease termination?

A: Assuming the landlord wishes to terminate the lease and rent it to another tenant, the date of termination of the lease specified in the Notice should be at least 15 days after the Notice is served personally or, if mailed, at least 18 days after the Notice is deposited in the mail (Cal. Civ. Code § 1951.3(b)).

Q 7: How should a landlord or property manager give this Notice to a tenant if the tenant has disappeared?

A: The landlord’s Notice can be personally delivered to the tenant (if possible) or, in the alternative, it can be sent by first-class mail, postage prepaid, to the tenant at his or her last known address (which may be the rental property address).   If there is a reason to believe that the Notice sent to that address will not be received by the tenant (or will not be forwarded to a subsequent address), the landlord may also send he Notice to another address, if any, known to the landlord where the tenant may reasonably be expected to receive the Notice (e.g., a place of employment). (Cal. Civ. Code § 1951.3(c).)

Q 8: Can a landlord still assume that the tenant has abandoned the property if the landlord accepts all or partial payment of the rent due before or after giving the Notice?

A: No. If during the period of time beginning 14 days before the time the Notice was given and ending on the date the lease would have terminated in the Notice, the tenant pays all or a portion of the rent due on the real property, then the landlord cannot assume the property has been abandoned.  (Cal. Civ. Code § 1951.3(e)(4).)

Q 9: What must a tenant do to prove that he or she has not abandoned the property?

A: Assuming the tenant doesn’t receive the Notice and wants to regain possession of the property, the tenant must establish that he or she hasn’t abandoned the property by proving (1) that rent was not due and unpaid for 14 consecutive days when Notice was given, (2) that it was not reasonable for the landlord to believe that he or she had abandoned the property, (3) that, within the permitted time, he or she gave written notice of his or her intent not to abandon the property, or (4) that, during the period specified in section 1951.3 (e) (4), the tenant paid all or any portion of the rent that was due.  (Cal. Civ. Code § 1951.3.)

The burden of proof on these matters is placed on the tenant so that the landlord will be able to proceed to relet the property with reasonable assurance that the abandonment and termination will not later be set aside by a court. (11 Cal.L.Rev.Comm. Reports 951 (1973); 12 Cal.L.Rev.Comm. Reports 571 (1974).)

If the tenant receives the Notice, the tenant must respond in writing prior to the termination date in the Notice that the tenant has not abandoned the property and must provide a current address for the landlord.  In addition, the tenant must pay current all rent that is owed.  (Cal. Civ. Code § 1951.3(d).)

Q 10: Does the law discussed in this legal article pertain to all real property, commercial and residential?

A: Yes.  The law applies to all real property (Cal. Civ. Code § 1951.3(a)).

Q 11: Does the law discussed in this legal article apply to mobilehomes?

A: No.  For abandonment of mobilehomes, see the Mobilehome Residency Law; in particular, see California Civil Code Section 798.61.

Q  12: Where can I obtain additional information?

A: This legal article is just one of the many legal publications and services offered by C.A.R. to its members. For a complete listing of C.A.R.’s legal products and services, please visit C.A.R. at www.car.org Online.

**

Reprinted with permission of the California Association of Realtors. Credit for this piece is to be given to the C.A.R. Legal Department.

http://www.car.org/legal/2007articles/abandoned-rental-real-property

http://uas.osu.edu/slideshow/xml/189?1256748258

http://img66.imageshack.us/img66/2012/sballck7.jpg

http://www.mirrorrange.com/index.php?showimage=8

http://www.laobserved.com/images/XiomaraLara.jpg

U2 CAN BUY COMMERCIAL PROPERTIES @ AUCTION

October 25, 2009 on 12:07 am | In Curious, Economy, Investment Opportunities, Lights Camera Transaction, Market Trends, Money Saving Opportunities, Statistics, Trends, Uncategorized, all, fUNNY...mONEY, recession | 7 Comments

U2 CAN BUY COMMERCIAL PROPERTIES @ AUCTION

By Jodi Summers

Going, going, gone…with the commercial loan market in such a pathetic state, auctions are the fastest way for banks to unload undesired commercial property assets.

“Sellers are coming to the realization that the price point they had in mind is not a reality. That’s where auctions are so useful in determining value — bringing people together through competitive bidding,“ observed National Auctioneer Association spokesman Chris Longly. “Our membership is seeing more energy and movement this year on the commercial real estate side.“

The National Association of Auctioneers estimates that $58.6 billion in real estate was sold in private live-auction bidding in the U.S. in 2008, up 38.5% from five years ago. Auctions in residential real estate have risen 47.7%, raw land (including agriculture) 36.8%. Commercial real estate is up 31.3%, to $15.5 billion in gross auction sales for 2008. Last year, banks were dealing with residential real estate issues, now, banks are confronting commercial property asset issues.

While the foreclosure moratorium was on in residential, banks were able to reassess their commercial assets. You’ll note that auction activity growing in the 2^nd half of 2009, with major online commercial auction events. In the second half of July, NAI Global offered 75 investment properties in 21 states valued at more than $250 million. The timed online auction will include 58 properties — including the historic State Theatre in South Bend, IN, which still bears bullet holes from the nearby shootout following John Dillinger’s final bank robbery on June 30, 1934 — and 14 other properties. In late July, Sperry Van Ness/Guardian held an auction at the Hyatt Regency in Los Angeles includes more than $100 million in real-estate owned (REO), bank-ordered and developer close-out assets in six Western states.

Among the high profile properties going up for sale is the historic Watergate Hotel made infamous during President Nixon’s wiretapping antics. (http://www.socalofficerealestateblog.com/?p=669). Other noteworthy pieces of real estate hitting the auction market include development sites in the metro Washington, DC area, retail sites in Highland Park, IL, and Spokane, WA, the historic theater redevelopment in South Bend, IN, and an infill site in Flint, MI; an upscale hotel/golf resort in Beecher, WI, and a fully entitled multifamily development tract in Navarre Beach, FL, plus lots of excess and partially developed inventory.

Even the government is getting into it. As you know, the state has been selling off their legacy assets - http://www.santamonicapropertyblog.com/?p=1188, and take a cursory glance @ what the U.S. government might be auctioning off in California, and we find industrial properties in Laguna Nigel, Morro Bay and Red Bluff.

“We’re probably seeing a 30 to 40% increase this year” in office, retail, industrial, multifamily and land auction inquiries, remarked Paul Rogers, senior vice president @ Inland Real Estate Auctions, Inc. “With bank activity in particular, we’re going to be busy for the rest of this year — and probably well into next year.”

This trend echoes the real estate slump of the 1990s and early 2000s, with commercial properties following residential foreclosure auctions after they have been mainstays in the downturn. Companies auctioning properties note that it is an opportunity to sell assets quickly, reduce holding costs, and secure true market value under unpredictable market conditions.

**

Sources:

http://www.costar.com/News/Article.aspx?id=F9243DEB83153259F95525F184C9EEE8&ref=100&iid=140&cid=383F14EEE265B182474DA2442BACBBBF

http://fasrp.sc.egov.usda.gov/fasrp/mainAction.do;jsessionid=804CCE54F02BBCC115D4B0BA22A910FF?pageAction=GetCounties&state=CA&stateName=California

http://www.philly.com/inquirer/world_us/20090720_Watergate_auction_drawing_interest.html

http://www.socalofficerealestateblog.com/?p=669

http://media.commercialappeal.com/mca/content/img/photos/2009/04/16/b17auction.jpeg

http://ethicalforeclosurefortunes.com/wp-content/themes/thesis/rotator/govt_auctions_sm.jpg

http://i.ehow.com/images/GlobalPhoto/Articles/5117276/237446-main_Full.jpg

http://www.unitedcountry.com/picturesx/10086-10099-1576957.jpg

http://www.ritholtz.com/blog/wp-content/uploads/2009/06/foreclosures-may-o9.png

http://www.mccallauctions.com/auctions/photos/1074/p12368596779029.jpg

THE GEOGRAPHY OF JOBS

July 4, 2009 on 12:02 am | In Curious, Economy, Fascinating Information, Market Trends, Of Local Importance, Problem, Statistics, Trends, Uncategorized, WOW, all, recession, websites | 4 Comments

By Jodi Summers

According to this exploding Geography of Jobs map - http://tipstrategies.com/archive/geography-of-jobs/-

Southern California reached its peak in 2^nd quarter 2005, hit parity 3^rd quarter 2007 and then began our great economic slide…

Check it out:

October 2007

~~

April 2005

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March 2009

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Let’s hope we go green in more ways than one.

BE HAPPY! LOS ANGELES IS NOT ON THE LIST OF PLACES WHERE HOMEOWNERS HAVE THE MOST DEBT

May 30, 2009 on 12:30 am | In Lending, Market Trends, Problem, Uncategorized, all, recession | 4 Comments

By Jodi Summers

Sure, we’re all complaining about our decline in wealth, and the drop in real estate values. The bright side is if you’ve owned for any length of time, you’re still satisfied. In many parts of the Los Angeles area, real estate saw a 400% rise in a 10-year period – to have prices drop by a third is still 266% better than 12 years ago.

Other cities in California have a lot more to complain about, according to Forbes list of Where U.S. Homeowners are Most in Debt. Seven metro areas of the Forbes Top 10 made the list, including Modesto, Riverside, Yuba City, Merced, San Diego, Stockton and Vallejo.

In these cities, underwater mortgages–one on which more is owed than the home is worth–comprise an average 44% of outstanding mortgages, compared to the 29% nationwide average.

Modesto ranks as the worst city for homeowner debt. Household wealth has been reset to 2001 levels while housing prices have declined 57% since the peak in 2005, and 30% in the last year alone. This has dunked 81% of the last five years’ mortgages underwater.

 

Want to know more?

Check out the whole story @ http://www.forbes.com/2009/05/11/homes-equity-debt-lifestyle-real-estate-mortgage-underwater_slide_2.html?thisspeed=25000

**

www.performermag.com/wcp.tourstop.0711.php

http://livedesignonline.com/theatre/State_Modesto.jpg

ECONOMIC STIMULUS FOR SMALL BUSINESS

April 10, 2009 on 12:23 am | In Economy, Fascinating Information, Federal Government, Problem Solving, Uncategorized, recession | 9 Comments

ECONOMIC STIMULUS FOR SMALL BUSINESS

 by Jodi Summers

Everyone is bitching about how the Economic Stimulus Bill does nothing to benefit small businesses. Okay, so maybe it isn’t everything the Republicans had hoped for, but as BusinessWeek.com astutely points out, President Obama’s bill contains several tax provisions designed to assist small businesses struggling through a tough economic times.

Net operating loss carryback. If your business operated in the red in 2008, but paid taxes on profits in the past five years, you can apply last year’s loss to prior-year taxes—and possibly get a refund on taxes you’ve paid in the past. It’s a bit like reassessing your property value.

 Deduct and depreciate equipment. Companies that bought new equipment in 2008 can treat it as an operating expense and immediately deduct the whole amount up to $250,000, a $117,000 increase over its previously scheduled limit.

 Shorter holding period for S-Corps. “This shortens the period that S-corp assets can be sold without paying taxes on built-in gains,” explains BusinessWeek.com. “A built-in gain is the difference between the fair market value of the assets and their tax basis at the time the company put an S-corp in place. The impact of this is that many business owners will be able to retire earlier without facing two layers of taxation.”

http://www.realtor.org/RMODaily.nsf/pages/News2009022401?OpenDocument

http://highbridnation.com/wordpress/wp-content/uploads/2008/05/stimulus.jpg

http://rlv.zcache.com/economic_stimulus_package_t_shirt-p235378275582632747s564_400.jpg

http://images.thestreet.com/tsc/rss/images/itunes_small-business_300×300.jpg