Multi-Family Properties Might Be The Way To Multi-Millions

In the current commercial real estate market, investing in multi-family homes should be on the radar. Multi-family properties don’t always have to be 20 floor sky rise apartments in a big city. They can be smaller duplexes, town homes Read more

New Real Estate View: Why The Homeless Are Big Business In New York

It's a grim scenario: In New York, there are more than 50,000 homeless. Of that number, 21,000 are children, an increase of 21 percent from last year, according to a report by the Coalition for the Homeless, a New Read more

Red Is the New Green – Chinese Investors Eye US Assets

***This blog entry is a guest post from Elton Steinberg, Marketing Associate at United Realty*** American fund managers should be aware of current and future trends that may make the Chinese account for a more significant portion of overall foreign Read more

Gimme Shelter - Foreign Investors Seek Returns and Safe Haven in US Real Estate

***This blog entry is a guest post from Elton Steinberg, Marketing Associate at United Realty*** Foreign investment has been a significant driver of the US real estate market recovery. Investors from across the globe have been responding to negative stimuli Read more

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Multi-Family Properties Might Be The Way To Multi-Millions

In the current commercial real estate market, investing in multi-family homes should be on the radar. Multi-family properties don’t always have to be 20 floor sky rise apartments in a big city. They can be smaller duplexes, town homes or small condos. These smaller properties are recommended for startup investors.

Investing in multi-family homes is a great way to enter the real estate market. As opposed to investing in single family homes, the cash flow of multi-family homes is increasing due to lower property values, mortgage cost and rent increases. This can lead to many advantages for an investor. There is also less risk and less cost as opposed to owning five single family homes where you have to maintain five different properties. With all five families in the same building, there is only one roof to maintain and the tenants are in the same location.

With many unable to afford homes in the suburbs, the demand for multi-family homes is increasing. Also, the construction on new multi-family apartments is bouncing back. Many are having trouble finding stable jobs so they are leaning toward renting apartments as opposed to buying single family homes. The baby boomer generation is starting to live more frugally because they realize that they don’t have enough saved for retirement. As a result, they are spending less and recognizing that they can’t live their current lifestyles. They are working longer and see renting as a more cost efficient option. With the overall increase in demand, this inevitably leads to an increase in rent which makes investing in multi-family homes very attractive.

Now speaking of rent, if an investor is going to rely on rent to cover the property’s debt and operating costs, it is necessary for the investor to choose an area where the rent demand is high and the vacancy rates are down. Depending on the right location, a larger apartment can rent faster than a smaller one. Location is critical for a successful multi-family home to reap high rewards.

As new investors, starting off investing in multi-family properties is a good foundation for a strong and diverse portfolio. It is important to know all the “ins and outs” of the market. Evaluating past transactions and possible properties for transactions is essential. A small investment in a multi-family complex can be the outlet for a cash flow gaining investment. The right multi-family properties are income producing assets that provide great long term returns.

 

Posted on by Jacob Frydman in Commercial Real Estate, Guest Blog Post, Housing Market, multi-family, News, Residential Real Estate Comments Off

New Real Estate View: Why The Homeless Are Big Business In New York

New York Residential BuildingsIt’s a grim scenario: In New York, there are more than 50,000 homeless. Of that number, 21,000 are children, an increase of 21 percent from last year, according to a report by the Coalition for the Homeless, a New York advocacy group. Even worse, the numbers haven’t been this high since the Great Depression. But some landlords have managed to find a lucrative return from a commercial real estate angle.

Though the methods differ, and opposing views persist, the goal – more homeless individuals and families housed – is aligned, to a degree. Landlords can use their real estate to offer shelter to the percent of New Yorkers who need a place to stay. As reported by the New York Times, landlords can receive up to $3,000 (from the Department of Housing Services), and some are offering tenants up to $25,000 to move out of their current homes to make room. Somewhat problematic, these are often rooms without bathrooms or kitchens. The conditions, as reported by some, are worse, due to drug use, violence, and even prostitution.

Meanwhile, the Department of Housing Services (DHS) has been critical of Mayor Michael Bloomberg’s handling of New York’s homeless population, and recently claimed that the homeless shelter population under his administration increased by 61 percent. Additionally, the shadow of Hurricane Sandy looms rather large, albeit the numbers are not included in the report, it can be inferred that a number of displaced New Yorkers affected by Sandy are likely in the system. The DHS concludes that “for the first time since modern homelessness began, the City now provides no housing assistance to help homeless children and families move from shelters to permanent housing.”

According to the Wall Street Journal, the budget for adult shelters has gone up 43 percent to $317.2 million since 2008, while family shelters now cost $464 million a year, up 15 percent from 2008. And in the past two years, the city has added nine single-adult shelters, six adult family shelters and 11 shelters for families with children. Two hundred and thirty-nine shelters are in the system. So, a shortage of shelters, means opportunity for some land owners. Whether it takes advantage of the system (and displaced New Yorkers) is another matter best left for politicians and newspaper opinion pages.

The facts are this: in January, an average of 11,984 homeless families slept in shelters each night, which was a rise of 18 percent from the previous year. And advocates on both sides have valid arguments. Is it morally gray to offer less-than-favorable apartments to individuals and families in transitional housings? Possibly. But when the shelters are more crowded, and the options for moving from transitional housing has stalled, other solutions should at least be examined.

A policy in response to court settlements in 1979 and 2008, pushed for every homeless person in New York to have some type of housing that would be provided by the city. Landlords willing to house the homeless were given freedom to set their own rental prices and terms. In 2005, Bloomberg’s administration ended the  policy, which had up to that time allocated a share of federal public-housing apartments and federal housing vouchers to homeless families.

The action plan outlined by DHS points to ending “the so-called cluster-site/scatter-site shelter program (i.e., apartment buildings used as temporary shelter at enormous cost),” and phasing out the use of commercial hotels and motels as temporary shelter for families. New mayoral candidates have already started their stump speeches to include this issue. But, really, where does the discussion on this really begin? True, you will possibly have a number of landlords who will use the plight of the homeless as a way to make a profit. However, the idea, if properly implemented with at least a modicum of oversight, could allow for positive results to surface.

When transitional housing and commercial real estate converge – or collide – in New York, there’s bound to be a passionate response. At best, we should be able to find a middle ground. One where real estate thrives, and more people have access to a higher quality of life, moving outside the homeless system, and into independence. It’s good business for everyone.

Posted on by admin in Commercial Real Estate, Housing Market, Residential Real Estate Comments Off

Is Two Really Better Than One? Fannie and Freddie Work Together to Find Out

United Realty Discusses Fannie Mae and Freddie MacIt’s barely spring, but the housing market news is starting to warm up. The recent announcement by Edward DeMarco, acting director of the Federal Housing Finance Agency (FHFA), that Fannie Mae and Freddie Mac will consolidate functions by starting a securitization firm, has the industry buzzing. This new firm would presumably cast a red hot beam on home loans as they are processed today, easing some of the government involvement in the process. It’s reconstruction on a grander, reasonable scale, and it might just work. Speaking to the National Association for Business Economics, DeMarco outlined a scenario that would be built on cooperation, sure, but more importantly, an aggressive consolidation whereby the company would have its own chief executive and board, jointly owned by Fannie and Freddie.

As the natural step, a sort of quantum leap from the pessimism of 2008, when the Federal Government bailed out numerous companies including Fannie and Freddie, the ground seems almost poised to produce a future harvest, or at best, the beginnings of a more stable and robust market. What are the broader implications? Less government should result in less strain on the U.S. Treasury (both companies have drawn nearly $190 billion to stay in business), at least in theory. Additionally, the goal is to shrink Fannie Mae and Freddie Mac down by 10 percent in the loan market for multifamily homes. According to Reuters, Fannie Mae and Freddie Mac collectively finance about two thirds of the loans in the U.S. Reuters also reported that Fannie and Freddie will aim to complete $30 billion in single-family credit guarantee business in 2013, in effect, sharing some of the risk with the private market. Transactions could include mortgage insurance or other types of debt securities. The Chicago Tribune reports that by next year, both companies will be required to reduce the less liquid portion of their portfolio of mortgages by 5 percent.

The offspring of Fannie Mae and Freddie Mac may share some of the junk DNA inherent in today’s mortgage loan guidelines, but tougher regulations and a new outlook could be enough to make this firm a successful up-start (if you could call it that). The housing turnaround – a rebound, if you’re closing watching the numbers – is poised for yet another collection of positive headlines, as the general climate moves from pessimistic to cautiously optimistic. It won’t happen today, and it certainly won’t happen tomorrow, yet the cogs of the machinery are getting pushed into motion. Springing forward, just took on a whole new meaning, especially if you’re on the right side of commercial real estate.

Posted on by Jacob Frydman in Commercial Real Estate, Housing Market Leave a comment

There Are Still Clouds Amid Housing Sector’s Silver Lining

Real Estate ContractAmid mounting evidence that the extended real estate market recession is finally abating, investors are still advised to display considerable caution before jumping back into the market without the advice of competent investment counsel. Over the past few sessions, newly released industry and government data would seem to raise recovery hopes as the residential home market has shown some encouraging signs of reversal. Sales of new homes as well as resales have suddenly ratcheted upward and prices in key markets have been recovering from multi-year lows. This enthusiasm was further encouraged by Toll Brothers’ fiscal year 2012 second-quarter results which showed its revenues rose to $373.7 million with deliveries of 671 units, as compared with revenues of $319.7 million and 591 deliveries in the year ago period. But of greater market impact, according to analysts, was the fact that Toll said it ended the second quarter of its 2012 fiscal year with a backlog of $1.50 billion, for 2,403 housing units, an increase of 49% in dollars terms and 37% in units, compared to the year-ago second-quarter-end backlog of $1.01 billion and 1,760 units.

As the leading builder of luxury homes, analysts consider Toll’s encouraging results to be a possible bellwether for the housing sector in general. Nevertheless, some housing market economists have suggested that the price recovery may be more a reflection of dwindling supply, as new construction has been sharply curtailed over the past couple of years. It will take a couple of months of sustained growth in new starts numbers coupled with firming prices to confirm that a turnaround is taking hold. In the meantime foreclosure activity in outstanding mortgages from the boom years of the mid-2000s continues as a drag on the sector and the pace of loan modifications still appears to be lagging expectations. Sub-prime mortgage securitizations from the issuance boom in 2007-2008 remain well under water and even senior tranches are available at distressed sale levels. The situation is being acerbated by the reluctance or inability of banks or servicers to actually take responsibility for maintaining foreclosed properties. As a result they often are caught in unwanted litigation from tenant or tenant groups over property maintenance. Litigation serves to further delay any corrective activity leading to even greater property deterioration with the result that property values recede even further below outstanding mortgage balances.

Nevertheless, astute investors that avail themselves of well researched market intelligence should be able to identify deals that are discounted to such levels that astute management and patience should be well rewarded. For this reason it is important to seek out professional management that has experience in dealing with such mortgage instruments and that is also in touch with the market and aware of the current state of actual ground level conditions. Such an organization will be able to guide investors towards the best opportunities at any given time. But more important, they will be able to keep investors away from situations that may appear lucrative on the surface but that may actually be fraught with longer term dangers.

Posted on by Jacob Frydman in Housing Market, News Leave a comment