Socal Multiunit Real Estate

SOCAL MULTIUNIT REAL ESTATE SNAPSHOT – JUNE 2010

by Jodi Summers

According to the California Department of Finance, on January 1, 2008 Los Angeles had a population of 10,363,800 residents. Statistics indicate that this is an increase of 844,500 persons since 2000. The County’s population would make it the eighth largest state in the nation, just behind Ohio and ahead of Michigan. Everyone needs a place to live – so if you think about it, multiunits are always a good investment in Los Angeles County.

Compare May-08 vs. May-10 in Los Angeles County, the median price of for sale properties is down 10% and the median price of sold properties is down 63%.

Smart investors know this the is bottom of the apartment market in the more desirable parts of
town. This theory is bolstered monthly by a variety of reports. The Case-Shiller Home Price
 Index notes a  very uneven housing market, with significant recovery in some places and
continued decline in others. Housing prices have held up better in wealthier and more
productive regions, with higher concentrations of knowledge, professional and creative work,
and high-tech industry as well as higher levels of amenity (measured as working artists and
cultural creatives) and openness (measured as greater percentages of immigrants). Sounds
a lot like Los Angeles, which is why the  Number of Under Contract Properties by Month is up
115% compared with two years ago.

Did you know that Los Angeles County has 112 public and private colleges and universities? Our higher learning institutions include UCLA, USC, California Institute of Technology, and the Claremont Colleges to top-rated specialized institutions, like the California Institute for the Arts, the Art Center College of Design, the Fashion Institute of Design and Merchandising, and the Otis College of Art. Medical education is also a strong point; Los Angeles has two each of medical schools, dental schools, and eye institutes, plus specialized research and treatment facilities like the City of Hope. The County’s community colleges offer many innovative programs, including culinary arts, fashion design, multimedia, and computer assisted design and manufacturing.

We sound like a smart group, and the strengthening of our real estate market confirms that Los Angeles would fall into the wealthier and more productive regions of our company. Actually, three California cities are in top six growing real estate markets, according to the Case-Shiller Home Price Index. San Francisco posted the largest gain — 16.2% over the past year. San Diego (10.8%), Cleveland (6.7%), Minneapolis (6.5%), L.A. (6%), and D.C. (5.6%) also posted significant gains.

The report notes that “Housing prices have fallen further in locations with lower incomes and wages to begin with, with blue-collar manufacturing economies, lower levels of skill, and lower levels of amenity and openness. Expect that pattern to continue.”

Savvy investors purchasing apartment properties over the past years have used a variety of
financing  methods to make up for the weakness in the commercial loan market. As the stock
market tanked,  many investors pulled money out and paid cash for multiunits, or worked out seller
carrybacks. Now  the Mortgage Bankers Association is saying commercial lending for multiunits
is coming back. The MBA’s Quarterly Survey of Commercial/Multifamily mortgage originations
states that 1Q 2010 commercial and multifamily mortgage loan originations were 12% higher than
during the same  period of 2009.  Sales are way up. Comparing May-08 vs. May-10 in Los
Angeles, the number of sold properties is up 72%

The National Association of Realtors confirms that the apartment market is strengthening. Chief economist Lawrence Yun noted that the only bright spot in commercial real estate is apartments. “Demand for units should increase in the second half of the year as new jobs are created in the improving economy and new households are formed,” he concluded.

**

http://www.laedc.org/reports/LA%20County%20Profile.pdf

http://latimesblogs.latimes.com/money_co/2010/05/vacancy-rates-will-continue-to-rise-in-most-types-of-commercial-real-estate-such-as-office-and-industrial-buildings-until-the.html

http://www.theatlantic.com/national/archive/2010/05/housing-prices-and-the-great-reset/57287/

http://www.creativeclass.com/creative_class/_wordpress/wp-content/uploads/2010/05/YearOverYear.jpg

http://www.costar.com/News/Article.aspx?id=359D8A406145159176A40807B924DC84

https://www.terradatum.com/agentmetricsonline/report_chart_view.td

SOCAL MULTIUNIT REAL ESTATE SNAPSHOT – MAY 2010

By Jodi Summers

It’s been all over the news. Now is the time to buy multiunit properties. Today’s research, offered by Bank of America-Merrill Lynch, concludes that if the apartment market didn’t bottom out in the fourth quarter of 2009, then it did during the first three months of 2010. The L.A. County multiunit market is the most desirable it’s been all millinneum.

In Los Angeles County comparing April 2008 to April 2010, the median price of for sale properties is down 18% and the median price of sold properties is down 47%

The lack of commercial financing and higher vacancy rates have contributed to the huge drop in sales prices, Marcus & Millichap data shows that apartment-house prices have slipped to an estimated median of $128,500 a unit last year, down 4% from 2008.

And that’s why in L.A. County, the number of for sale properties is down 40% and the number of sold properties is up 82%. Those that don’t have to sell are not, and those that can buy are.

More encouraging reasons to buy a multiunit property? Axiometrics’ survey of some apartment managers in the top 20 national markets reported better rental revenues in the first quarter, as compared with the four preceding quarters. Overall occupancy ended the first quarter at 92.6% and effective rents were $1,106.33.

And that is why locally, the number of under contract properties is up 156%.

**

http://netleaseinsider.blogspot.com/2010/04/us-apartment-uptick-net-lease-impact.html

http://www.globest.com/news/1644_1644/insider/184557-1.html

https://www.terradatum.com/agentmetricsonline/agentmetrics_online.td?__m_sid=121

LOS ANGELES MULTIUNIT REAL ESTATE SNAPSHOT – APRIL 2010

By Jodi Summers

Experts say the multiunit market is leading the commercial real estate recovery. After a dismal year of increased vacancies in the high end areas (There were 141 properties available for lease in Santa Monica on April 1^st, and 133 in Beverly Hills, according to the MLS.), which forced landlords to cut rents and make leasing concessions, investors have a renewed sense of optimism. Essentially, there’s no place to go but up. Nationally, average vacancy rate sits at a historic high, hitting 8% at year-end 2009. This positive outlook is confirmed by a PricewaterhouseCoopers Korpacz Real Estate Investor Survey for the first quarter of 2010, titled, “Investor Sentiment Improves, But Challenges Persist in 2010″ notes the multifamily market, will “bump along the bottom” this year, but continued price drops are not in the forecast.

Similar to other property sectors, sales activity has diminished for apartments; conversely demand is high for well-located, high-quality assets. Los Angeles is reaping those benefits. In Los Angeles County, comparing March 2008 to March 2010 the number of properties under contract is up 188%…

While the average number of sold properties is up 88%.

Another positive sign, the average days on market is down 16%. Nationally, the average asset sold within 8.06 months this quarter, a 9.03% drop from the prior quarter.

The market surge may be attributed to the fact that nationally, cap rates for apartments fell over the final three months of last year, ranging from 5% to 11%, with an average of 7.85%, down from 8.03% in the third quarter of 2009. For the first quarter of 2010, cap rates have risen back up to 8.01%. Cap rates for properties that are selling tend to be in the 5%-7.5% range in L.A. County, again depending upon the neighborhood.

Investors are always happy to pick up what they perceive as a value in California. But, on a regional level, in less sexy areas, the performance of the apartment market has hinged on the performance of the individual markets’ employment scene. Take the very solid Washington, DC, market, for example. Jobs are on the rise, and vacancy rates have remained stable over the past six months. This success can be applied throughout the Mid-Atlantic region as well. Face it, real estate tends to be stronger on the coasts.

Another happy point, investors feel that multifamily market rents should grow by a national average of 2.41% over the next eight years…or the standard 4% a year in Los Angeles.

**

http://www.globest.com/news/1624_1624/insider/184102-1.html

https://www.terradatum.com/agentmetricsonline/agentmetrics_online.td?__m_sid=121

http://pro.themls.com

http://www.loopnet.com/xNet/MainSite/Listing/Profile/Profile.aspx?LID=16322406&SRID=826306030&StepID=101

http://c.imagehost.org/0479/cp5_Kennedy-Warren_Apartment_Building1.jpg

GLOBAL EDGE TOP 10 BUSINESS DESTINATIONS

GLOBAL EDGE TOP 10 BUSINESS DESTINATIONS

edited by Jodi Summers

Global Property Guide has put together a list of the most attractive

property investment destinations across the world. Their research team

has ranked 77 of the world’s largest cities according to the average

gross rental yields.

The top 10 destinations are dominated by Asian cities, with Jakarta,

Kuala Lumpur and Manila all making the list.

http://www.globaledge.co.uk/news/top-10-best-investment-destinations-35909

LOS ANGELES MULTIUNIT PROPERTY SNAPSHOT – MARCH 2010

By Jodi Summers

And the good news is – research is indicating that the Los Angeles employment market is expected to stabilize in the second half of 2010. Following a loss of 115,000 jobs in 2009, payrolls are forecast to expand by 0.3 percent this year, with the addition of 13,000 positions, observes the 2010 National Apartment Index Report by Marcus & Millichap. The lack of job growth is hurting demand in the multifamily market, confirms Reis Research. “It is only when labor markets stabilize and recover that we will see a ramp-up in household formation that represents the greatest driver for rental apartments,” observes Victor Calanog, Reis research director.

Investors obviously feel that the Los Angeles market is stabilizing. Comparing February 2008 to February 2010, the number of under contract multiunit properties in Los Angeles is up 148%, according to Clarus Market metrics.

In 2009, the national vacancy rate for apartment properties rose 1.3 percentage points to 8%, the highest level since t in 1980. Average asking rents in the sector dropped 2.9% to $1,026/unit last year. Rents fell or held flat in 69 of the 79 markets tracked by Reis.

For years, Los Angeles has had low, low, low vacancy rates, hovering between 2-3 percent – making it a very attractive market. Even with the recession making higher priced units on the West Side less desirable, vacancy rates are still hovering between 5-6%. The National Apartment Index Report notes that the lingering high unemployment will continue to pressure owners to lower rents. Asking rents are expected to fall to $1,335 per month in 2010, while effective rents will slip to $1,263 per month, respective declines of 2.8 percent and 3.6 percent annually.

Now that the economy is coming back, Los Angeles multiunts are still attractive. Between Feb-08 vs. Feb-10, the number of for sale properties is down 44% and the number of sold properties is up 53%.

According to Realpoint, 6.53% of securitized loans backed by multifamily properties are delinquent, which is the CMBS market’s second-highest delinquency rate behind the hotel sector’s 8.09% rate.

Investors realize the current value of the Los Angeles, and there is a trend of cash-rich buyers shifting money out of the stock market and buying multiunit property with the intent of holding it for future generations. This is why the average months supply of inventory is down -79.8%

**

We would like your real estate business. If we can provide you with more detailed information, please contact the SoCal Investment Group through Jodi Summers, Jodi@jodisummers.com. We look forward to working with you in your next real estate transaction.

**

http://www.loopnet.com/xnet/mainsite/news/news.aspx?DocID=12898

http://www.reuters.com/article/idUSTRE5950PA20091006

http://www.socalmultiunitrealestateblog.com/?p=689

http://www.tierraproperties.com/current_market_data/metro_la_apt_vacancy_table.htm

http://realpropertyalpha.com/2009/08/17/metric-to-watch-apartment-vacancy-rate/

http://www.marcusmillichap.com/aboutus/News/Current/020510_los_mm.asp

https://www.terradatum.com/

6 units - $998,000 - PRICES HAVE COME DOWN IN SANTA MONICA

Jodi Summers

Sotheby’s International Realty

310. 392.1211

jodi@jodisummers.com

6 units - $998,000 - PRICES HAVE COME DOWN IN SANTA MONICA

Actual Net Operating Income - $51,496.80

1835 20th St, Santa Monica, CA 90404

1835 20th St, Santa Monica, CA 90404

* Price: $998,000

* Property Type: Multifamily

* Price/Unit: $166,333.33

* No. Units: 6

* Building Size: 3,038 SF

* Year Built: 1960

* No. Stories: 2

* Lot Size: 5,676 SF

* Parking Ratio: 1 / 1,000 SF

* Cap Rate: 5.16%

* Gross Rent Multiplier: 12.83

* Actual Net Operating Income $51,496.80

Highlights

* Rare Santa Monica Investment Opportunity

* 2 Blocks from Santa Monica College

* 6 Parking Spaces

* Easy Management in a Traditionally Strong Rental Demand Area

* Over 20% Upside in Rents

* Perfect for Owner/User or Investor

Description

If you’re looking for location and future cash flow, take a look at PRICED TO SELL! ALL CASH OFFERS PREFERRED! four (4) two bedroom + one bathroom unit & two (2) single units conveniently located near Santa Monica College.

Unit Mix

Description No. Units Avg. Mo. Rent

2 bed + 1 bath 4 $1,195

Studio 2 $ 850

Location

Close to Santa Monica College @ 20th + Delaware

Is this the kind of property you’re looking for?

Do let us know how we can move forward together in meeting your real estate goals 310.392.1211 or jodi@jodisummers.com.

It’s my hope, that over the course of the year, you would be comfortable referring one person to me. I’m building a referral-based business and your recommendation will make the world a better place.

Best….

Jodi Summers

The SoCal Investment Real Estate Group

Sotheby’s International Realty

310. 392.1211

jodi@jodisummers.com

www.SantaMonicaPropertyBlog.com

www.SoCalMultiUnitRealEstateBlog.com

LICENSE # - 01343854

**

It isn’t what you have, or who you are, or where you are, or what you are doing that makes you happy or unhappy. It is what you think about. - Dale Carnegie

p.s. This is not intended as a solicitation if your property is already listed with another agent.

Sustainable Industries’ Top 10 Green Building Products of 2009

Sustainable Industries’ Top 10 Green Building Products of 2009

Edited by Jodi Summers

Not to be outdone by other trends, Sustainable Industries magazine has made their choices
for the 2009 Top 10 Green Building Products. These industry-leading green building products
winners were selected by a panel of expert judges and the Sustainable Industries editorial team 
based on their environmental performance, scalability/market impact, innovation,design
aesthetic, value and compatibility with the U.S. Green Building Council’s Leadership in Energy
and Environmental Design (LEED) rating system. 

The 2009 Top 10 Green Building Product winners are:

Acadia Combined Heating and Cooling System

Made by Hallowell International

(www.gotohallowell.com)

The Acadia is not just another heating and cooling system. It maintains 200 percent efficiency even when outdoor temperatures drop well below zero..should global climate change ever affect us that severely. Acadia users can save up to 70 percent of their home heating energy costs.

ec-H20

Made by Tennant Co.

(www.tennantco.com)

Requiring no chemicals, ec-H2O uses tap water to clean most any surface of most any substance. Each machine reduces water usage by 70 to 80 percent, and the potential of 245 million gallons of water each year if it were installed in all new floor-cleaning machines.

InSpire Wall

Made by ATAS International

(www.atas.com)

This simple technology uses the power of the sun to heat outdoor air before sending it indoors, thereby slashing energy use while boosting indoor air quality. Depending on what kind of heating fuel is being replaced, this product can reduce heating costs by up to $5 for each square foot of InSpire Wall installed.

kama EEBS Structural Systems

Made by kama Energy Efficient Building Systems Inc.

(www.kama-eebs.com)

kama EEBS Structural Systems integrate light gauge metal stud framing system with expanded polystyrene insulation in a proprietary design that eliminates thermal bridging and helps to create a tight, energy-efficient building envelope.

PlybooPure Bamboo Plywood

Made by Smith & Fong Co.

(www.plyboo.com)

Because it’s technically a grass, bamboo had not previously been eligible for FSC certification. But in January 2008, after two years of lobbying, Smith & Fong achieved this first that propelled it to recognition on this year’s Top 10 list.

RainTube

Made by GLI Systems Inc.

(www.raintube.com)

This product received more Top 10 nominations than any other product this year. RainTube is a rain gutter filter made of 100 percent post-consumer high-density polyethylene – old milk jugs, in other words. This product is also Cradle to Cradle-certified, meaning that GLI Systems Inc had to develop a Post-Use Recovery Plan that goes out with every product.

Separett Villa

Made by Separett

(www.ecovita.net/villa)

This urine-diverting composting toilet – which is 100 percent PVC fee –uses no water and keeps solids separate from liquids, reducing odor and making it possible to reuse waste and urine for composting and fertilizing. The Separett Villa can be deployed where no plumbing exists, allowing for a greater reach of the technology.

Serious Windows

Made by Serious Materials

(www.seriouswindows.com)

Serious Windows are so efficient they have the potential to allow for the elimination of a building’s heating system, allowing waste heat from building appliances to serve as the main heat source in some applications. The windows have a full-frame R value of at least five and up to 11, which can cut a building’s energy bills by up to 50 percent per month.

Solatube Daylighting Systems

Made by Solatube International

(www.solatube.com)

This patented technology catches direct sunlight and redirects it down an adjustable-length tube, bringing daylight to parts of buildings that would not otherwise have access to natural light. The Vista, Calif.-based company recently launched a product specifically designed for commercial applications, making it ideal for large-roofed warehouses and manufacturing facilities, as well as retail stores and schools – allplaces that have been shown to benefit from increased daylight, as daylight is linked to higher worker productivity, decreased absenteeism and better retail sales.

Your Old Light Fixture

Made by Eleek

(www.eleekinc.com)

Eleek is the only business to make the Top 10 Green Building Products list all four years. Though not a product, Eleek’s lighting restoration service speaks to the important concept of the re-use of existing goods. When Eleek restores a light fixture, every piece of a fixture is taken apart, repaired and restored to its original splendor. Its wiring is updated to comply with modern codes and standards and a new lamp base is installed so it works with energy-efficient lamps such as CFLs and LEDs.

Original article @ http://www.sustainableindustries.com/greenbuilding/49012336.html

LOS ANGELES MULTIUNIT PROPERTY SNAPSHOT – NOVEMBER 2009

LOS ANGELES MULTIUNIT PROPERTY SNAPSHOT – NOVEMBER 2009

By Jodi Summers

“By mid-2010, I’d want to be in the apartments as the supply/demand imbalance… is favorable to the landlords,” observes Alexander Goldfarb of investment advisors Sandler O’Neill.

Someplace like Santa Monica totally reflects the downturn in the market. According to Clarus Market Metrics, since October 2007, the number of apartment buildings for sale is down by 15%, the number of properties sold is down by 20% - and the median sale price is down by 36%. Obviously, if you’re thinking of buying there are no values like the present. In its third quarter property analysis the UCLA Anderson Forecast, came to the conclusion that, “The worst recession in seven decades likely ended in the current quarter.”

The goal of any multiunit real estate investment is to have 100% occupancy. Try for a low-crime area that is conveniently located near bus stops and other urban conveniences. Tenants with children will be looking for properties that are near schools with good reputations.

The nation’s default rate on apartment buildings is still relatively low, but is on the rise. Fannie Mae, for example, said its delinquency rate was 0.30 percent at the end of last year, double what it was at the end of September, and almost four times the rate at the end of 2007.

Buy happy.

Looking for some specific details? Would you like to be our client – we’ll take good care of you. Contact the SoCal Investment Group through Jodi Summers, Jodi@jodisummers.com.

**

http://www.clarusresource.com/

http://www.uclaforecast.com/contents/archive/2009/media_91609_1.asp

http://www.dqnews.com/Articles/2009/News/California/Southern-CA/RRSCA091013.aspx

http://www.costar.com/news/Article.aspx?id=A473652CBA5022AE544D5933473223FC

http://www.forbes.com/2009/10/30/property-recession-apartments-personal-finance-real-estate-advisor-stock-talk.html?partner=alerts

http://www.sandleroneill.com/

http://latimesblogs.latimes.com/laland/2009/03/la-apartment-bu.html

IT’S A BIG-TIME BUYER’S MARKET FOR SANTA MONICA MULTIUNIT REAL ESTATE

IT’S A BIG-TIME BUYER’S MARKET FOR SANTA MONICA MULTIUNIT REAL ESTATE

by Jodi Summers

If you’ve been thinking about buying multiunits in Santa Monica, now is the time. It is a buyer’s market and there are great deals to be had.

Check out this two-year market snapshot showing the trends of Supply vs. Demand chart for residential income properties in Santa Monica. Notice that the number of multiunit properties for sale has dropped by 6% - there are now 58 multiunit properties on the market, while sales remain flat – three multiunit buildings sold in Santa Monica in September.

The government, in the form of Fannie Mae and Freddie Mac, now hold $194.62 billion of mortgages, all of which are backed by multifamily or healthcare properties, and mortgage pools guaranteed by the two hold another $157.25 billion of loans, for a total of $351.87 billion of mortgages.

When you add the mortgages held by federal, state and local governments to the agencies’ total, the volume of loans held by governments and their agencies balloons to $517.3 billion, a full 15% of the entire commercial mortgage universe. Scary thoughts for Halloween month.

Has your real estate market stabilized? Email jodi@jodisummers.com to receive a free market report for your LA county neighborhood.

**

http://www.clarusresource.com/

ONLY MULTIUNIT CAP RATES HOLDING STEADY

MULTIUNIT CAP RATES HOLDING STEADY

Edited by Jodi Summers

Bravo to the apartment building market for keeping investors satisfied through the recession. Although deal volume has been dropping in the first quarter, the cap rate for closed transactions has been holding steady at 6.8%.  –> The multiunit sector is the only major property category to hold the line on cap rate expansion.

Get it all @ http://www.costar.com/News/Article.aspx?id=805689186917C1830E65776FC4A47B2B&ref=100&iid=123&cid=383F14EEE265B182474DA2442BACBBBF