Edited by Jodi Summers
Bravo to the City of Los Angeles. Through innovative public policy and creative private development, L.A.is demonstrating how older buildings can be repurposed and repositioned for the new economy while reducing carbon emissions.
Believe it or not, Downtown Los Angeles contains one of the nation’s finest collections of early 20th century architecture. Most of these buildings sat vacant for decades, until a carefully targeted Adaptive Use Ordinance (ARO) removed regulatory barriers, provided incentives, and helped make it possible to repurpose more than 60 historic buildings over the past 14 years as new apartments, lofts, and hotels.
A recent report from the Urban Land Institute and the National Trust for Historic Preservation’s Green Lab concludes that more than 10 million square feet of space in the city’s urban core is currently vacant. The report, Learning from Los Angeles, was presented to Mayor Eric Garcetti this morning, at an event organized by the ULI Los Angeles District Council. It describes strategies that build on the success of the ARO to unlock the economic and community development potential of underused older buildings. The report documents demolition, building, and vacancy trends throughout the city and recommends strategies for removing regulatory barriers, streamlining approvals, and providing incentives to make building reuse easier to accomplish.
Conversations organized by the Preservation Green and ULI Los Angeles identified key barriers to building reuse and recommend solutions to overcome these obstacles. The Los Angeles Conservancy, a key partner in this effort, served on the project Advisory Committee along with practitioners in real estate development, planning, design, construction, community revitalization, and local government.
Learning from Los Angeles is the first in a new series of research and policy reports being developed by the Preservation Green Lab through the Partnership for Building Reuse, a joint effort of the National Trust and ULI. Launched in Los Angeles in 2012, the Partnership for Building Reuse is designed to foster market-driven building reuse in major U.S. cities through dialogues with community stakeholders about building reuse challenges and opportunities.
by Jodi Summers
By taking a population-weighted computation of local sales tax rates and combining it with the prevailing state rate, the Tax Foundation has computed the combined sales tax rate for each U.S. state.
Oregon, Delaware and New Hampshire are the only three states without either state or local sales taxes. The five states with the lowest average combined rates are Alaska (1.69%), Hawaii (4.35%), Wisconsin (5.43%), Wyoming (5.49%), and Maine (5.50%).
Curiously, Tennessee takes the biggest toll, with the highest average combined rate of 9.45%, followed by Arkansas (9.19%) and Louisiana (8.89%). Other states in the top five for the greatest sales tax burden for consumers include Washington (8.88%) and Oklahoma (8.72%).
Keep in mind states with low or no sales taxes often have high income taxes. Oregon is an example. On the other hand, the Tax Foundation notes that Washington State has high sales taxes but no income tax.
edited by Jodi Summers
Here’s the premise…a recent study notes the impact structural economic shifts and how it’s impacted new workers in the work force. The results show that young adults are delaying their career launch, as well as leaving home and beginning a life of their own.
In the meantime, older adults are working longer because they’re getting paid better.
The report, “Failure to Launch: Structural Shift and the New Lost Generation” analyzes the divergent labor market trends for young and older adults since 1980. Major findings include:
- In 1980, young adults reached the middle of the wage distribution at age 26; today, they do not reach the same point until age 30. For young African Americans, it has increased from age 25 to 33.
- The 2000s were a lost decade for young adults. Between 2000 and 2012, the employment rate for young fell from 84% to 72%.
- Young adults’ labor force participation rate has returned to its 1972 level, a decline that started in the late 1980s and has accelerated since 2000.
- Opportunities have especially dwindled for young men, high school graduates, and young African Americans.
- Older workers aren’t crowding young adults out of the labor market: there are more job openings created from retirements per young person today than there were in the 1990s.
The report, “Failure to Launch: Structural Shift and the New Lost Generation” analyzes the divergent labor market trends for young and older adults since 1980. The report is a joint effort by the Georgetown University Center on Education and the Workforce and The Generations Initiative.
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 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.