Ep. 126 Mark Holmes: What Multifamily Investors Need to Know About the Rental Boom

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multifamily investorsThe national housing market is undergoing a major shift and multifamily investors are taking notice. Through economic and generational factors, the housing market is seeing a lessening demand for single family home purchases. Instead of buying a home, young professionals are opting to rent.

Mark Holmes may know this growing trend better than anyone. As a certified property appraiser with Value Tech Realty, Mark travels the United States appraising multifamily properties. As an appraiser, he understands this rental boom from a valuation perspective. As an active single family investor and passive multifamily investor, he understands what it means from an investor’s standpoint.

This episode, Mark gives us a recap of the the national multifamily market as well as the Florida multifamily market. We discuss the recent rental boom and what it means for multifamily investors.

National Multifamily Overview

  • 63% home ownership, down from 69% (2004)
  • 37% renters: 15 million shift
  • Financial recession brought on behavioral shift
  • Job growth jump-started multifamily development

Florida Multifamily Overview

  • Landlord friendly
  • 3% job growth
  • Statewide rent growth: 4%
  • I-4 Corridor rent growth: 6%

Florida Multifamily Markets

  • Tampa
    • 4000 MF units online, last 12 mo.
    • 65% absorption rate
    • 3.7% rent growth
    • Class A: 4.5% cap rates; Class B: 6%
  • Orlando
    • 5,500 MF units online, last 12 mo.
    • 57% absorption
    • 4.8% rent growth
  • Melbourne
    • 8% rent growth in last 12 mo.
  • Miami/SFL
    • 3,500 units online last 12 mo., 3,300 coming
    • Nearly 100% absorption
    • 3.3% rent growth
    • 4.45% cap rates
    • 49% of income goes to rent

What It Means for Multifamily Investors

  • Capital looking to invest in multifamily is out there
  • Class A property growth concessions trickling down to B + Cs
  • Most buyer interest is in multifamily
  • Interest rate increases mean cap rate increases
  • Major market cap rates seeing downward trend

Contact Mark

Looking for property appraisals? Contact Value Tech Realty through their website. For single family and multifamily investors looking to work with Mark on a deal, contact him through email at mark1holmes1@gmail.com.

Ep. 125 Gregory Radford – 5 Tips for Earning Hassle-Free Cashflow Out of Your Single Family Rental

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single family rental investingSingle family investors know that keeping up with rental properties and tenants can be a hassle. In addition to dealing with property management, investors must also manage tenants. While a single family rental is a great way for many to earn cashflow, it can be tough to stay organized.

Our guest this week, Gregory Radford knows a thing or two about organization. A decorated military veteran, Greg became a de facto single family rental investor while still serving in the Army. After renting out his home he had purchased using his V.A. loan, he had his Eureka moment. He saw the investment potential of the V.A. loan and leveraged that into becoming a successful single family investor.

Combining the organizational skills and discipline he learned in the Army with his loquacious attitude, Greg created a strategy for earning hassle-free cashflow through single family rental investments. Starting Radford Homes with his wife, Greg is an active single family rental investor in Polk County.

V.A. Loans

  • Federal loan program for military vets to put money down on a home
  • V.A. loans can be reused as many times as the loan limit allows
    • Homes must be inhabited for 12 months
    • Loan limits vary by state/county
    • Polk County: $424k

5 Tips for Hassle-Free Cashflow

  • Niche Marketing
    • Strategic, intentional marketing
  • Custom Rental Applications
    • Send pre-scripted correspondence to potential tenants with explicit application instructions.
    • Tenants who fail to follow instructions are disregarded
  • Tenant Screening
    • Active listening
    • Asking ope-ended questions during tenant interviews
    • Find out about prior residences
    • Check social media
  • Open House for Rentals
    • Controlled open houses
    • Open houses 2x/mo. cuts down on scheduling showings and creates urgency among potential tenants
  • Cash-Free Payments
    • Requiring proof of bank account assures tenant’s financial credibility
    • All payments sent through electronic funds transfer or cashier’s check

Investor Resources

  • Gary Keller – “Hold”
    • single family rental investing
  • Gary Raulston – “Real Estate Principals: A Value Approach”
  • Bureau of Labor Statistics – monthly reports

Contact Greg

  • On social media @Radford Homes
  • By phone: (863)410-0877
  • Greg is currently looking to expand into multifamily investing in Polk County

Ep. 124 Todd Hutcheson: Landlord Tales – Keep Control of Your Closing When Assigning Contracts

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getting into real estate with limited cash; assigning contractsReal estate investing is a big draw for many due to its strong ROI potential as well as its flexibility in investment strategy. There are a lot of ways to make money in real estate without keeping your finger on the main pulse of the deal. This is most evident when it comes to wholesaling and assigning contracts. Buying and reselling interest in a property allows for increased earning potential. It also allows for expedited turnarounds on deals.

Assigning contracts allows investors to sell interest in the property title without being responsible for following the deal all the way through. Essentially, investors can buy and sell properties without ever having to lay hands on the property itself. While this definitely has it’s perks, it is not without risks.

President-elect of the Central Florida Real Estate Investors Association, Todd Hutcheson, joins us today to discuss his experience starting out in wholesaling and assigning contracts. Listeners will remember Todd from episode 111, in which he discussed how investors can get into real estate with limited cash. Todd is an investing mentor. He is the founder of IBuyHomes and an active wholesaler in Central Florida. As he shares in this episode of Landlord Tales, assigning contacts can quickly become a snowball effect and your control over a closing can disappear before you know it.

What to Know About Assigning Contracts

  • Understand contract assignment process before selling interest
  • Write your control over closing into the contract
  • Contract assignments do not show up under public records
    • A final sale price listed in public records will not record contract assignments
  • Make sure to notify title companies of contract assignments when recording a title claim, otherwise it will not be insured

Contact Todd

Ep. 123 Chris Nebenzahl & Doug Ressler: Tracking Investment Market Data Made Easy!

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Tracking Investment Market Data

tracking investment market dataFinding a real estate market that fits your investment goals seems to be getting tougher and tougher. With markets tightening up across the state, investors are starting to feel it. Now, more than ever, investors need to be tracking investment market data – looking for trends and analyzing data to find viable markets.

Investors may be familiar with Yardi for property management services, but did you investment market dataknow they also offer comprehensive market research and data software? This system allows real estate investors to track investment market data on a national level, or zero-in on specific markets and sub-markets.

This episode, we welcome from Yardi Matrix: Senior analyst and editorial contributor, Chris Nebenzahl, and research and data analyst, Doug Ressler. They discuss what investors need to know about tracking investment market data. They also offer up an update on Florida’s commercial and multifamily markets.

Florida Multifamily Overview

  • Rent growth and development strong overall
  • Focus on A + Super A properties
    • Urban living
    • Amenity-rich
    • Attracts millennials
  • Increasing demand for B + C properties, but limited supply
    • B + C properties seeing value-add opportunity
    • Sub-market level

Florida Multifamily Market Highlights

  • Miami and Orlando: 9000 expected multifamily developments for completion, 2017
  • Tampa: 7200 expected multifamily developments for completion, 2017
  • Development expected to crest after 2017
  • Rapid rent growth may pose affordability issues in Miami/SFL

Florida Commercial (Industrial/Self-Storage) Market Overview

  • Strong self-storage appetite
    • New focus on urban core
    • Close proximity to multifamily developments
  • Small cap rate compression
  • Renewed interest in mixed-use developments
  • Hotel occupancy slowing, but Orlando and Miami still strong

Tracking Investment Market Data with Yardi Matrix

Investor Resources and Contact

  • For more information on Yardi Matrix services and subscriptions, visit their website or contact Doug directly by phone at (480) 663-1149 ext. 2419 or email at doug.ressler@yardi.com

 

 

 

Ep. 122 Livingston Hessam: What You Need to Know About the State of Mortgage Banking and Real Estate Lending

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mortgage banking and real estate lendingIt’s a new year and change is in the air. With financial regulation changes sure to come and the recently announced Federal interest rate increases, it’s no wonder mortgage banking and real estate lending is hot on investors’ minds.

This episode, we have Livingston Hessam, who just returned from this year’s Mortgage Bankers Association Commercial Real Estate Finance and Multifamily Housing Convention & Expo.

Listeners will remember Livingston from episode 70, in which he gave us a recap on multifamily mortgage banking and real estate lending from the 2016 conference. Livingston is Vice President of Walker & Dunlop‘s Tampa office. Livingston brings over 12 years of experience in real estate lending and finance solutions to Walker & Dunlop, which just celebrated it’s 80th anniversary.

Livingston offers up a recap of the 2017 CREF/Multifamily MBA Conference and discusses key themes from the past year and the current state of mortgage banking and real estate lending.

What’s In Store for Mortgage Banking and Lending

Agency Annual Caps

  • Fannie Mae & Freddie Mac each allocated $36.5 billion for 2017 (same as 2016)
  • Certain loans and portions of loans are excluded from the cap (i.e. affordable and green/energy efficient)
  • Fannie Mae & Freddie Mac multifamily production totaled over $110 billion in 2016.
  • Fannie up 30%, Freddie up 20% from 2015
  • Expected to capture 40% of total multifamily volume for 2017 ($50-55 billion each)

Commercial Mortgage-Backed Securities (CMBS Loans)

  • Risk-retention regulations put in place in 2016, narrowing amount of CMBS lenders
  • Post-election stability, but more selective lending market
  • CMBS lenders ramping up bridge-lending

10-year Spreads

  • Life-insurance (50% leverage and under): 125-135 range
  • CMBS (75% leverage): 250-280 range
  • Agency (80% leverage): Low 200s range
  • Federal interest rate sees .25% increase
  • Expected to increase to 2.75-3% by end of year

Hot Topics

  • Trump Administration
    • Tax reforms
    • Dodd-Frank roll-backs
  • Retail lending
    • Publix most active retail buyer in FL
    • Grocery chains are buying out plazas after lease terms or taking right of first refusal on new lease terms
    • Reduced supply of grocery-anchored retail
    • Strong retail appetite for real estate lenders

Investor Resources

  • In addition to his V.P. role at Walker & Dunlop, Livingston is President of the Society of Real Estate Professionals (SOREP). Formerly the Tampa chapter of University of Florida’s Bergstrom Council, SOREP hosts networking events and seminars to professionals and gives back to Florida universities. SOREP focuses on all aspects of the real estate industry and is open to all. Click here for more info.
  • Walker & Dunlop offers comprehensive real estate financial solutions for all income-producing properties. For more info, visit Walker & Dunlop website.
  • To contact Livingston directly, click here.

 

 

Ep. 118 Rod Khleif: Leveraging Investment Goals into Real Estate Cashflow

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earn real estate cashflow with investment goalsMotivation: it’s something every one needs. Whether it’s a financial drive or a spiritual one, everyone needs something that keeps them focused and real estate investors are no different.

Setting investment goals is something that every investor does. But sometimes as investors, we find ourselves setting unrealistic investment goals or goals that may reap immediate rewards but lack long-term gain. Sometimes it can seem overwhelming trying to set manageable, realistic investment goals that can actually be leveraged into cashflow.

Investor, author and real estate investing mentor, Rod Khleif, believes in the power of actionable investment goals. By setting goals for himself that not only inspired him to become a successful real estate investor, they also empowered him to forge his path.

Rod was introduced to real estate investing early on. He managed to find success fairly quickly and, by 2006, had acquired thousands of properties across the U.S., including 800 in Florida.

Following the market crash however, Rod lost everything. Instead of accepting defeat, Rod took that as a learning opportunity. He realized that, while his investment goals had been earning him income, they did not lay the foundation for a successful, long-term cashflow strategy. Rod re-tooled his approach and, by aligning his investment strategy with philanthropic efforts, was able to form actionable, empowering investment goals.

The Key to Setting Investment Goals

  • Daily routine/morning ritual
  • Find personal drive in life, incorporate purpose into daily routine
  • Keep family, personal and business life evenly balanced
  • Write down goals
  • Spiritual, not just financial fulfillment

Resources

  • Tony Robbins – motivational speaker; psychology of success and self-empowerment
  • Lifetime Cashflow through Real Estate Investing podcast
  • How to Create Cash Flow Through Multi Family Properties
    • Text “Rod” to 41411 (free copy of book)
    • Website

For any other questions about setting investment goals to earn real estate cash flow, or to find out more about Rod’s mentor programs and investor education, check out his website!

 

Ep. 117 Augie Byllott: A Focused Acquisition Strategy Can Earn Higher Investment Returns

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focused acquisition strategy can earn higher returnsBeginning real estate investors often get caught up in the appeal of high returns. However, the focus on high investment returns can come at the expense of a sustainable exit strategy.

A focused acquisition strategy can mean the difference between a profitable investment and a failed one. It is important to consider a seller’s circumstances when making a potential investment deal. By tailoring a deal to fit individual circumstances you have a higher tendency to close. By structuring multiple deals, you can easily see what acquisition strategy works best for your investment goals.

Augie Byllott is someone who knows the importance of acquisition strategy. The founder of Creating Wealth U.S.A. is a seasoned single family investor. With over 500 deals under his belt without the use of bank loans, Augie has become an expert on tailoring his acquisition strategy to fit specific deals. He now share his advice and experience through books and mentor programs.

Earning Exit Returns Through Acquisition Strategy

  • SCOPE strategy: 5-part investment methodology using creative financing
    • Seller-financing – Careful of toxic deals from sellers. Don’t get stuck with short balloon terms.
    • Cash – Be careful of accounting for cash flow expenses when putting cash down.
    • Options – Control property with option to buy, or sell option. Pricing depends on specific deal. Couple options with lease to earn more cash flow
    • Private money – $7 trillion in private capital from retirement funds
    • Existing financing – Take over payments on existing mortgages (assigned mortgages). Though these are less frequent, properties can be put in land trusts and then sell beneficial interest on trust.

Investor Advice and Resources

Contact

Visit www.creatingwealthusa.com for more info onthe SCOPE acquisition strategy and other services. You can also email Augie directly at augie@creatingwealthusa.com.

Ep. 116 Larry Goins: Cashflow without Tenants or Rehabs

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making money in a rising market. earning cashlfow without tenants or rehabsAll investors have heard horror stories from single and multi-family investing: bad tenants, rehabs gone wrong. Often these stories result in investors paying much more in out-of-pocket capital than was accounted for. This remains a major contributing factor preventing would-be investors from making the leap. Though there are successful strategies one can adopt to deal with bad tenants or to facilitate successful rehabs, many investors are still wary of residential asset classes.

However, there are ways to earn cashflow without having traditional tenants or making unneeded rehabs to the property.

Larry Goins is one investor that does not rely on having traditional tenants or doing property rehabs.

Listeners may remember Larry from Episode 106 where he discussed finding creative ways to make money in rising markets. Larry is a 30 year investor and investment mentor. He is an author, speaker and educator sharing his wealth of investment experience with beginner investors. This episode, Larry discusses his strategy of offering lease options instead of traditional tenant leasing.

Earning Cashflow through Lease Options

  • Homeowners in Training
    • Prospective tenants are given lease with option to own
    • Tenants have stated intent to purchase property
    • Tenants put up non-refundable down-payment stating consideration to purcahse
  • Lease Agreements
    • For Dodd-Frank compliance, tenant’s down-payment only goes to closing costs; no rent credits can be given during lease agreement
    • Make sure tenant is responsible for minor repairs and maintenance for “x” amount per occurance
  • Resources

For more information about lease options and earning cashflow without tenants or rehabs, contact Larry directly through his website.

For webinars, trainings, reports and other information, visit www.larrygoins.com

Visit the Invest Florida Show website for even more episodes and to check out our archives!

 

Ep. 114 Kurt Westfield: Apartment Investor Tough Lessons Lead to New Strategy

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multifamily investing and finding a strategy as an apartment investorAs real estate investors, sometimes what we think is a good investment strategy does not turn out quite as expected. While a single family investor may be able to stick to a strategy and adopt minimal changes, this is not usually the case for the apartment investor.

Your investment strategy should suit the deal you are making. It may become necessary to change your strategy in order to make a deal work.

While this may mean an extra headache in the short-term, a change in strategy could mean the difference between a successful investment and a failure.

Just ask Apartment Investor Kurt Westfiled

Kurt Westfield is the founder of WC Companies, an umbrella brand for his multi-service real estate investment firms.Listeners will remember Kurt’s last episode with us when he discussed his transition from single family investor to apartment investor.

This episode, we catch up with Kurt following his transition to apartment investor. He discusses how he found out early on in his career the importance of finding a winning strategy.

Apartment Investor: Finding a New Strategy

The Deal

  • 14 unit apartment building
  • In foreclosure
  • Expedited due diligence (7 days)
  • Intended to be 12 month, light fix-and-flip with capital expenses at $80-100k

The Issues

  • Tenants trashed complex
  • Property had suffered from neglect

Changing Strategy

  • Evicted all current tenants
  • Rehabbed entire property, inside and out
  • Structured leasing as condo-apartment type w/ one model unit completed while construction was ongoing
  • Created brand identity
  • Started community engagement activities

The Results

  • 3 1/2 year project, cap expenses at $400k
  • Property raised market rent 60% in area
  • Identified potential of revitalizing fringe market properties
  • Focused on developing branded communities rather than street addresses

Kurt is still an active apartment investor, looking for multifamily deals in Tampa and Jacksonville up to 50 units. To contact Kurt with a potential deal, email him at kurt@wccompanies.com.

For any other questions or to find out more about services offered by WC Companies, visit their website.

Ep. 113 Elysia Stobbe: Diversifying Risk with Geography and Asset Class

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investor mortgages, diversifying riskNo Risk, No Reward

No matter the size or experience of the investor, this is a widely-held belief. However, it is not simply about risk, but rather smart risks.

Diversifying risk is a key strategy for real estate investors looking to expand their bottom line.

Increasing the Bottom Line

We are pleased to welcome back to the show, Elysia Stobbe, NMLS# 146751. Listeners will remember Elysia from Episode 108, in which she discussed updates to SFR investor mortgages.

In addition to being a branch manager with NFM Lending, Elysia is a successful investor with over 30 property deals under her belt, doing deals in and around Jacksonville, FL. She is also a published author. Her best selling book, How to Get Approved for the Best Mortgage Without Sticking a Fork in Your Eye helps single family investors in obtaining secure, prime mortgages.

This episode of Landlord Tales, Elysia discusses her transition to multifamily investing and diversifying risk with geography and asset class. Through expanding focus into the multifamily asset class and remaining open-mined about market areas, Elysia learned that diversifying risk is a great way to increase returns.

Diversifying Risk

  • Multifamily offers greater cashflow potential than single family while minimizing tenant turnover risk
  • Multifamily cap rates typically 2-4% higher than single family
  • Remain open-minded about potential market areas
  • Distressed properties can be made rentable

Finding Deals

  • Networking with wholesalers is great way to find distressed multifamily properties
    • Craigslist; Bandit signs – WeBuyUglyHouses, iBuyHomes
  • Realtors
  • Property Managers
  • Real Estate Investment Associations (REIAs)

Resources & Links

To catch up on past shows, visit our archives page!