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Spencer Hayes' Blog

By Spencer Hayes | Agent in 36117
  • Are Mega-Investors Changing Rental Housing?

    Posted Under: Rental Basics, Rent vs Buy, Rentals  |  July 30, 2014 8:57 AM  |  13 views  |  No comments

    When large investors such as Blackstone and Colony American Homes began buying up single-family homes in 2011, most observers considered the acquisition a short-term play. Now, although acquisition has slowed, the successful securitization of SFH rental income by Invitation Homes (a Blackstone subsidiary), the transformation into REITs of large single-family owners such as American Homes 4 Rent, and the creation of the National Rental Home Council, a group that includes most of these new mega-investors, all indicate large investors are in it for a longer haul. How will their business models change the dynamics of the rental marketplace? 

    How large a presence do these mega single-family owners represent in rental markets?

    At the end of 2013, mega-investors controlled about 200,000 single-family properties. That’s not much in a national market of 13 million single-family home rentals. It’s certainly not a game changer. Still, within certain niche markets in cities such as Atlanta, Phoenix, and Tampa, mega-investors are more of a factor. Most of these buyers have concentrated on a dozen or so cities with good potential for price appreciation. The one exception is American Homes 4 Rent, which owns properties in many more markets. Even within these markets, mega--investors won’t buy just anything. They are buying mostly homes priced between 100 and 140 percent of median price in locations where the sales price-to-rent ratio is favorable enough to yield a 5 to 10 percent annual cash flow with a five- to eight-year hold period.

    Which segments of the multifamily market are most vulnerable to competition from these new single-family properties?

    The demand for rentals is increasing, especially in moderate and middle-income groups that a few years ago might have bought homes. Single-family rentals have always attracted families with children who want a larger space with a yard. Homes owned by mega-investors may also attract renters willing to pay a premium if they can deliver the more professional management these large owners propose to offer. And relocation companies may be attracted to the extensive portfolios held by mega-investors.

    Will the mega-investors benefit from technology and economies of scale?

    The jury is still out on that. Single-family management requires a lot of hands-on involvement. One management option is to partner with local third-party management companies that already handle large pools of single-family rentals for small investors. Other potential partners might be large local investors. Perhaps the most successful model will end up looking more like a franchise with local managers who have some financial interest.

  • Retail Rebound Thanks to Housing?

    Posted Under: Shopping & Local Amenities in Alabama, Market Conditions in Alabama, Rental Basics in Alabama  |  July 9, 2013 11:00 AM  |  720 views  |  1 comment

    The average vacancy rate of retail property fell to its lowest level in more than three years in the second quarter, now at 10.5 percent, according to Reis Inc., a real estate research firm. 

    The recovering economy is helping retail landlords fill empty spaces and charge more for rent, The Wall Street Journal reports. Some analysts are attributing that recovery to consumers spending more due to the recovering housing market. 

    "When you see home prices starting to grow again, when you see the job market slowly recovering, all those things have come into play to add more stability" in the retail sector, says Jim Schutter, a retail expert with the brokerage Newmark Grubb Knight Frank.

    The vacancy rate at malls was 8.3 percent at the end of the second quarter, posting its lowest rate in more than four years. Vacancy rates at strip-shopping centers was at 10.5 percent, a decrease from 10.8 percent a year ago. 

    Despite the improvement, vacancy rates are still elevated compared to prior to the recession. In the first quarter of 2008, the vacancy rate was 7.7 percent—compared to 10.5 percent today. 

    However, the retail market is expected to progress in the coming months because new development had grinded mostly to a halt during the recession. According to the CoStar Group, about 31.5 million square feet of new retail space is expected to pop up this year—that compares with about 200 million in 2007 and 2008.

    Source: “Retail Vacancies Lowest in 4 Years,” The Wall Street Journal (July 3, 2013)

  • Landlords Tell More Renters: No Smoking

    Posted Under: Rental Basics in Alabama, For Rent in Alabama, Rentals in Alabama  |  July 1, 2013 9:41 AM  |  571 views  |  No comments

    Many landlords maintain nonsmoking policies, but the bans are growing in numbers, according to the National Multi Housing Council, a trade group of landlords. 

    One of the nation’s largest landlords, Related Cos., announced June 19 that it would phase in a smoking ban in all of its apartments (that includes on terraces and private balconies). The company owns 40,000 units in 17 states. 

    Several municipalities are also taking up the smoking ban issue, with some municipalities moving to ban smoking in all multifamily housing in an area. For example, city officials in Walnut Creek, Calif., are expected to take such a step in July. 

    Some smoking-advocacy groups are speaking out against the bans, calling them “intrusive” in prohibiting a behavior that’s legal. 

    But with tight rental supplies and high demand, landlords may be feeling more confident to implement such bans, says Rick Haughey, vice president of operations and technology for the National Multi Housing Council. Landlords say that the smoking bans are being driven by concerns that secondhand smoke can drift in from unit to unit. Also, the extra costs involved by having smokers on the premises are driving change. 

    “There are higher cleaning costs when smokers move out of apartments,” Haughey says. “Any soft surface would absorb the smells. Carpets would have to be cleaned, maybe even removed. And drapes would more likely need to be cleaned — even the wall would need a deeper clean than you would otherwise have to do. I believe you would find reduced insurance costs as well. So there are financial incentives [to the ban], but I don't know if those costs have been quantified, industrywide.”

    Source: “Change in the air: Rental smoking bans,” The Chicago Tribune (June 28, 2013)

  • Amneal Pharmaceuticals Inks 70,200 SF Lease

    Posted Under: Rental Basics in East Hanover, Property Q&A in East Hanover, Investment Properties in East Hanover  |  July 6, 2012 3:36 PM  |  748 views  |  No comments

    EAST HANOVER, NJ–Cresa NJ-North/Central, part of the international tenant representation firm, negotiated a new 70,200-square-foot lease for Amneal Pharmaceuticals at 1 Murray Road in East Hanover, NJ. Amneal is making an expansion move to the high-tech industrial facility from its facility in Paterson.

    Ron Ganter and Tom Giannone, managing principals of Cresa NJ, along with Jiten Parikh, vice president of operations for Amneal, represented the tenant in the deal. The landlord, Ridge Murray Associates, was represented by its general partners, Bob Amaducciand John Haug. 

    “Amneal was looking for a new packaging space to accommodate its expansion, and the lease was procured quickly and smoothly thanks to the dedicated focus of all parties involved,” says Ganter. “The entire real estate process, which included significant improvements to the space, was completed within four months - an exceedingly rare occurrence.”

    Amneal Pharmaceuticals is producer of generic pharmaceuticals. Its product are developed from the early stages of research and pharmaceutical ingredient development all the way through to FDA approval. Last year, IMS Health listed Amneal as the seventh largest generics firm based on prescriptions dispensed.

  • Williamsburg Condo-Turned-Rental Sells to Steiners

    Posted Under: Rental Basics in New York, Investment Properties in New York  |  July 6, 2012 3:29 PM  |  448 views  |  No comments

    NEW YORK CITY-Having plunked down $30 million this past November for a development site that eventually will house a 52-story rental apartment tower in Downtown Brooklyn, theSteiner family has set its sights on another neighborhood in the borough. The Steiners have bought Jardin, a two-building rental complex at 142 N. 6th St. in Williamsburg, from Read Property Group in a $38-million deal.

    David Behin of MNS, the sole broker on the sale through MNS’ Investment Sales and Capital Advisory division, says in a release that Jardin was conceived as a condominium project. However, he notes that Williamsburg has been experiencing “an unprecedentedrental demand,” making the 142 N. 6th project a more profitable investment opportunity in this format.

    “We expect to see more deals of this nature in the surrounding area as inventory is tight and investors compete for acquisitions of multifamily buildings,” Behin says in the release. As a case in point, he notes that as of its sale to the Steiners, the 44-unit Jardin was fully leased at an average of $53 per square foot.

    “The property was leased up in weeks prior to being marketed for sale, so we see good upside in rental rates,” Douglas C. Steiner, chairman of Steiner Studios, says in the release.
    “The building is well-built and has great layouts and design, and the location is fantastic.” Williamsburg’s multifamily sector has already seen a number of sales and financings so far this year.

    In May, GlobeSt.com reported that Madison Realty Capital took title to a six-story condo project at385 Union Ave. for $21.5 million., resolving a troubled situation, while American Realty Advisorsacquired a formerly-stalled 62-unit apartment complex at 111 Kent Ave. from Stellar Managementfor $55.5 million. Two months earlier, Steelworks Lofts, a stalled 110,000-square-foot mixed-use condominium development at 76 N. 4th St., received a jump-start, securing a $28.4-million acquisition and construction loan on behalf of a partnership between Cayuga Capital Management and Jacob Toll, according to Meridian Capital Group LLC, which arranged the 36-month loan.

    Also in March, LCOR closed on $50 million in construction financing from Helaba for a new six-story, 234-unit rental property in Williamsburg. LCOR plans to open the property, to be located at 250 N. 10th St., in 2013.

  • Homeless Man Dupes Would-be Renters, Police Say

    Posted Under: Rental Basics in Alabama, Rentals in Alabama  |  July 5, 2012 11:34 AM  |  397 views  |  No comments

    A homeless man posted a foreclosed home available for rent that he had no ties to on Craigslist, and then pocketed the cash from potential renters so that he could afford a place to live for himself, according to police reports. 

    Eric Sisson, 27, posted a foreclosed home in Ormond Beach, Fla., on Craigslist, saying that he just recently purchased it and wanted to rent it out. Two people responded to his ad, agreeing to rent the home and giving Sisson a total of $1,375 for the “fake” rental agreements, police say.  

    One victim soon after asked for her deposit back, and Sisson sent her a check. But when she went to deposit it, the bank said the check was from a closed bank account. 

    Both women, realizing they had been duped, eventually contacted police.

    Police arrested Sisson when he showed up at the house to collect the rest of the deposit from one victim. He faces charges in connection with obtaining property by fraud, issuing a worthless check, unarmed burglary, and grand theft. 

    Sisson told police that he didn’t own the home. He told police that he was posting the fake rental ad so he could get money to afford his own place to live in, MyFoxOrlando.com reports. 

    In recent months, real estate professionals have been warning others about similar rental scams, in which scammers are using sites like Craigslist to post homes for rent that they don’t really own. 

    Source: “Homeless Man Rents Out Vacant House,” MyFoxOrlando.com (July 2, 2012)

  • 5 Top Hot Spots for Buying Rental Properties

    Posted Under: Rental Basics in Montgomery, Rent vs Buy in Montgomery, Rentals in Montgomery  |  June 28, 2012 1:25 PM  |  728 views  |  No comments

    Rents are on the rise nationwide and investors are looking to cash in. Local Market Monitor recently reviewed 316 housing markets to find which ones offered some of the highest returns on investment potential for single-family rental properties. 

    The following are the top five markets that emerged from its list as best places to purchase a rental property in the U.S.

    1. Las Vegas

    Median home price (2012): $122,000

    Estimated median home price by 2015: $121,087

    Projected annual rent in 2015: $12,829

    2. Detroit

    Median home price (2012): $78,000

    Estimated median home price by 2015: $93,982

    Projected annual rent in 2015: $9,016

    3. Daytona Beach, Fla.

    Median home price (2012): $114,000

    Estimated median home price by 2015: $123,282

    Projected annual rent in 2015: $11,048

    4. Orlando, Fla.

    Median home price (2012): $115,000

    Estimated median home price by 2015: $150,491

    Projected annual rent in 2015: $13,105

    5. Warren, Mich.

    Median home price (2012): $114,000

    Estimated median home price by 2015: $116,706

    Projected annual rent in 2015: $9,308

    View CNNMoney’s full list of the Top 10 best places to buy rental properties. 

    Source: “Best Cities to Buy Rental Properties,” CNNMoney (June 2012)

    Read More

    3 Ways to Take Advantage of a Rising Rental Market


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