Ep. 141 Brian Bailey: A Federal Reserve Commercial Real Estate Expert’s Outlook on Florida

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As part of the Federal Reserve’s wide scope of responsibility and oversight, the eight regional branches are tasked with monitoring residential and commercial real estate markets; tracking trends and data in order to more accurately adjust to market fluctuations affecting the economy. These studies provide hard data for the Fed to make economic adjustments, but they can also be a great gauge for real estate investors. Any successful investor will tell you that the ability to forecast changes in the real estate cycle is vital. As much as knowing your market and asset class, an awareness of other economic factors is important for mitigating investment risk.

The Federal Reserve Bank of Atlanta serves as the central bank’s regional authority for the southeast. It tracks real estate markets for the region, including Florida and offers comparisons on a national scale. Our guest this week is a commercial real estate expert with the Fed’s Atlanta branch.

Florida commercial real estate outlookBrian Bailey is a Senior Technical Expert in the Supervision and Regulation Division of the Federal Reserve Bank of Atlanta. Specializing in commercial real estate, Brian tracks and analyzes emerging trends in the southeastern region and provides thought leadership on commercial real estate and guidance for the central bank.

Brian brings a diverse background in commercial real estate finance and acquisitions to the Fed. He has over 15 years of experience in commercial real estate finance, having managed financing for millions of square feet in real estate holdings for several large-scale equity and development firms. Brian received an MBA with concentrations in Real Estate and Finance from the University of Florida and has earned a CCIM designation.

You won’t want to miss this commercial real estate outlook on Florida!

 

 

 

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. 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. 104 Landlord Tales – Tax Credits on Green or Sustainable Property Endeavors

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cost segregation; tax creditsTax Credits

They sound nice, but real estate investors may think that they are not so easy to come by. Those investors who do happen upon them find usually find themselves bogged down by the IRS’ strict stipulations surrounding them.

Tax credits are, in fact, tools set in place to help investors grow their portfolios and while they may seem complex, they are accessible to any investor willing to do a little extra leg work.

While nobody should be expected to know the entire IRS tax code, real estate investors should be aware of some very helpful tax credits that can be applied to their assets.

Michele Pasquale, of Meridian Financial Solutions spoke with us previously about increasing your bottom line through cost segregation.

This week she discusses some more tax credits that real estate investors can apply to green or sustainable property endeavors.

179D

  • Instated in 2005 Energy Policy Act and renewed annually
  • Potentially set to expire end of 2016
  • Tax deduction for energy efficient additions to commercial buildings +30,000 s/f
  • 3 common components
    • Building envelope
    • HVAC
    • Lighting
  • $0.30-$1.80/SF in tax credits
  • Calculated on energy efficiency of entire building set to ASHRAE requirements

45(l)

  • Residential tax credit for developers of energy efficient buildings
  • Potentially set to expire end of 2016
  • dollar-per-dollar deduction
  • $2000/unit or dwelling
  • Qualifying factors
    • Apartments, Condos, Town homes
    • New construction or rehab up to 4yrs
    • 3 stories tall or less

Disposition

  • Tax credit for removal and retiring of building fixtures or components
  • Book value of components can be written off as business deduction
  • Components can not be purchased within same year as tax year filing with deduction and must be no longer in service

Have more questions on these or other possible tax credits? Call Meridian Financial Solutions for a free quote at 561-252-7282

 

 

Ep. 102 Michele Pasquale: Deferring Taxes with Cost Segregation

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cost segregationFor real estate investors, it’s all about the bottom line. Investors are always looking at how they can save on costs and expand their cash-flow. While many real estate investors might be aware of certain tax-breaks that can be taken advantage of for investment properties, deferring taxes through cost segregation may be one that investors overlook. Institutional investors are probably aware of this tax advantage, but smaller, individual investors or those just starting out in real estate investing may be unaware.

For Michele Pasquale, the bottom line is helping investors to get more out of their properties. Michele is owner and managing member of Meridian Financial Solutions. By working directly with investor clients and through alignment with CPA firms, Meridian seeks to establish effective, long-term tax-planning strategies resulting in greater ROI potential for investors. Michele brings over 16 years of experience in real estate acquisitions and finance to help investors maximize cash-flow. This episode, Michele shares some things investors should know about deferring taxes through cost segregation.

Cost Segregation

  • Tax-planning tool to help investors defer federal income taxes
  • Allows property owners to accelerate depreciation, resulting in reduced taxable income levels
  • Cost segregation study identifies all construction costs that qualify for accelerated depreciation
  • Breaks costs into depreciation values of 15, 7 and 5 years, so they can be written-off in a shorter time-span
  • Dependent on size and property type
  • For buy-and-hold investors

Cost Segregation Qualifiers

  • T.V. outlets
  • Wiring
  • Distribution panels
  • Dated jacks
  • Sinks and drains
  • De-mountable partitions
  • Floor coverings

When does Cost Segregation Apply?

  • Buying, building or renovating a property
  • Investors can go back 10 years or more on existing buildings and catch up on past depreciation
  • Before building or renovating, factor in cost segregation studies into design plans
  • Tax-planning strategy for 1031 Exchanges and Estate Planning

Tax-deferral, Not Tax Elimination

  • Investors should be aware that costs segregation is a strategy for deferring taxes to increase cash-flow. Taxes are applied at sale.

Contact Meridian Financial Solutions at (561) 252-7282 for more info about cost segregation and get a free estimate for tax-deferral savings.

Sandra Adomatis: Energy and Sustainability Initiatives to Increase Your Bottom Line

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sustainabilityCommercial real estate investors and developers know the term: “Green”. In Florida, it seems that “green” is the phantom criteria for real estate: many have heard of it, few have seen it. The term brings to mind vague notions of sustainability and energy efficiency, but what exactly is it? What is the merit in “going green”? As an effort to shift toward sustainability becomes a rising trend in the nation, Florida continues to lag behind as commercial developers and investors grapple with the nebulous nature of sustainability and green construction.

Sandra Adomatis, SRA, and LEED green associate is an appraiser with a focus on green initiatives and sustainability in real estate. Based out of Punta Gorda, Florida, Sandra has over 25 years of experience in real estate appraisal in the state of Florida. Sandra is a green valuation expert for the Appraisal Institute. Through course development, seminars and literature, Sandra has been helping commercial real estate investors integrate sustainability and energy efficiency into their investments.

  • 6 Elements of a True Green Building
    • Site orientation
    • Water efficiency
      • Low-flow plumbing, greywater recycling, rain barrels/cisterns, energy star rated washing appliances
    • Energy efficiency
    • Environmentally-friendly materials
    • Clean air circulation
    • Operations & maintenance
  • Adapting Existing Structures
    • Lighting
    • Heating/cooling
    • Insulation
  • Energy Modeler/building scientist
    • Assess what existing structures can handle for energy and sustainability adaptations
    • Calcs-Plus (Florida)
  • Green building investment appeal
    • Low-interest, flexible financing exclusive to green buildings
    • Cost-saving on appliances and utilities
    • 2-10% sale premiums vs. traditional structures
  • Resources and Info

To find out more about sustainability options or for appraisal services, visit Susan’s website or email her at adomatis@hotmail.com

Ep. 88 Beshears & Associates: Update of the Multifamily and Self Storage Market in Florida

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e2bc79_37043315246c4693996f91e865cad488 e2bc79_e3001e806a764241a578a62d31aad77cReal estate investors in Florida know that the market has seen a steadily increasing return to normalcy since it bottomed out in 2010. Asset classes of all types have been undergoing a resurgence as the market continues to correct itself. With investing outpacing development though, investors are seeing access to viable properties tightening up. Investors need to become more creative when finding deals and stay ahead of new trends arising.

David Beshears, head appraiser and owner of Beshears & Associates, has been appraising properties in Florida for over 20 years and he is very knowledgeable about the self storage market. John Miller, senior appraiser and realtor for Beshears & Associates, specializes in multifamily asset classes, having completed over 200 multifamily appraisals since 2008. This episode, David and John discuss where Florida markets are at, particularly in the multifamily and self storage market.

Multifamily

  • 4% vacancy in Tampa area markets
  • Uptick in rental rates across sub-markets
  • High occupancy rates causing higher appreciation in Class B and C properties
  • Class A properties new builds at $2/sqf (Central Tampa Sub-market: Hyde Park, Westshore, Downtown Tampa, Davis Islands)
  • 3300 units entitled to construction; 2200 scheduled for 2016 completion
  • Class A super properties arising in suburban markets (Riverview)
    • Luxury trend in new developments (zero-entry pools, state-of-the-art amenities)
  • No new builds for Class B and C properties
  • Cap Rates (Tampa): Class A: 4.5-5.25%; Class B: 5.25-5.75%; Class C: 6.5-9%
  • Value-add opportunities still available with focus on interior of units

Self Storage

  • Traditionally lag behind multifamily cap rates by 150-200 basis points
  • Self storage market similar to multifamily market
  • Subject to overbuilding in 3rd tier markets
  • 12% of market owned by institutional investors
  • Value-add opportunity for private investors
    • Online/web presence
    • Upgrade security and lighting
  • Cap rates: Class A: 5-7%; Class B: 7-9%; Class C: 9% and up
  • Major markets in need of new development
    • Opportunity for developers if they can find land
    • 2-3 acres at $5-8/sqf is ideal

Beshears & Associates offers a newsletter providing an overview on a variety of asset classes in Florida, including the multifamily and self storage market. To check out their newsletter and to find out about the other services they offer, visit their website at www.beshears.net