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. 136 Brian Willis & Gerry Tierney: Learn How Transit & Technology Changes Will Affect Your Property!

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automated transitTechnology is rapidly changing the way we look at the future. Innovations like automated transit are quickly nearing practical realities. In Tampa Bay, we’re seeing advancements in automated transit already, with the area being positioned as a proving ground for automated systems. Automation and other technologies will bring major changes to existing infrastructure.

No industry will be affected by these impending technologies more than real estate. From multifamily to retail, emerging technologies like automated transit will require an entire rethinking of real estate design and development. Urban planners, architects and developers need to consider these effects and start planning accordingly.

This episode, we discuss these changes on a local and national level. We look at what game-changing technologies are emerging and what urban planners and developers are doing to address these changes now.

Meet Our Guests

Tampa Bay sustainable transitBrian Willis is real estate attorney with Shumaker Loop & Kendrick. He is a leading advocate for integrated and sustainable transit in Tampa. Brian brings on-the-ground knowledge of the cutting-edge technologies here in Florida and how Tampa Bay is taking steps to integrate them into current real estate design and development.

 

real estate designGerry Tierney is an Associate Principal at Perkins + Will. Based out of San Fransisco, Gerry is a leading force for automated transit and mobility and adapting real estate design to suit these changing needs. He serves as the Co-Director of Smart Mobility Lab and has Collaborated with both UCLA – Berkeley and MIT in sustainability research.

Technologies Impacting Real Estate

  • Automated transit / autonomous vehicles
    • Autonomy integrating in public transit by 2020s
    • Subscription-based autonomous car ownership coming down the line

Future-proofing Current Real Estate Design

Urban planners, architects and developers needs to consider how current layout and designs will play into emerging technologies.

  • Adaptive Use
    • Big-box retail stores
    • Shopping malls
    • Existing parking structures
      • Vertical Parking vs. Horizontal
      • In-fill
      • Mechanized parking
  • Urban Design & Planning
    • Current developments built to accommodate automated transit
    • Changes to grid structure and street layouts
    • Rethinking asset classes
      • Industrial
      • Office
      • Multifamily
      • Retail

Resources

  • Contact Gerry at gerry.tierney@perkinswill.com or (415) 546-2933
  • Contact Brian at (813) 221-7165 or on Twitter @BrianWillisTPA

 

 

Ep. 135 Alex Rios: These Hot Design Trends Can Increase the Value of Your Multifamily Property!

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Whether you invest in multifamily or other commercial properties, if you’re investing for cashflow, you’re going to want your property to attract tenants. The design and function of a property goes a long way in enticing potential tenants. Updating your property with latest design trends and practical features can also increase the value of your investment.


 

multifamily design trendsThis episode, we talk with Alex Rios. As President of Rios Architecture, Alex has worked on many projects in many asset classes, including office, commercial, medical and multifamily. Lately, he has been actively involved with several multifamily projects around Tampa Bay, including several McKinley developments.

Alex knows that, for cash-flowing investment properties to attract tenants, they need to feature things that people will want. If you want to increase your property value and attract desirable tenants, staying up-to-date with current design trends is important.

Here are some of the hot design trends that can increase the value of your investment property!

  • Apartment investors looking for ways to make their property stand out to tenants
  • Tight multifamily market has led investors to look at value-add opportunities

Hot Design Trends

  • ‘Sophisticated’ look
    • Invest in palette, not singular items
  • Colors catering to relaxing environments
    • Light blues
    • Light greens
    • Accent colors
  • Floor materials
    • Luxury Vinyl Tile (LVT) mimics look and quality of wood, durable
  • Amenities need to cater to what your desired tenants want
    • Urban lifestyle trends very strong market
    • Digital/online age demands accessible internet
    • Pet accommodations
    • Encourage social interaction
    • Home office flexibility
    • Accessibility and walkability are important features

Investing for the Future

  • Plan for changes with new technology
    • Electric cars
    • Automated transit
  • Manage your construction costs
    • Account for high labor demand
    • Costs for new development materials

Contact Alex

By email: alex_rios@riosarchitecture.com

Website: riosarchitecture.com

Ep. 128 David Farmer: Get a Lead on the Next Hot Real Estate Market!

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Think you know the next hot real estate market?

Then you know a good real estate investment depends on more than just the property. It could have all the right physical features, but if it’s in an under-performing market, then the property will never produce a strong ROI. There are socioeconomic factors that affect an investment’s value. These factors can include: population growth, market supply, and municipal planning.

You can track these factors before making an investment decision using forecast models. You can track pertinent market data as it relates to an investment value. Real estate investors and developers use forecast models to determine what markets to focus on. They can also be used to track up-and-coming markets, so you can get a lead on the next hot real estate market!

get a lead on the next hot real estate marketThere’s few more qualified to talk about forecast modeling than David Farmer. A recognized civil engineer, and city planner, Dave has been in the real estate industry for more than 20 years. He has extensive development experience and is the former Chairman of SW Florida District Council for the Urban Land Institute.

He now lends his extensive real estate expertise to Metro Forecast Modeling (MFM), a population forecasting and modeling firm in Lee County. As CEO of MFM, Dave brings his understanding of growth drivers to forecast analysis.

Find out how you can use forecast models to get a lead on the next hot real estate market!

  • Population growth dictates housing demand which determines what development is needed
  • 2 types of forecast models:
    • Aggregated -  wide-scale analysis of an entire metro area
    • Dis-aggregated - Analyses based on designated zones within a metro area. Lee County is divided into 1400 traffic analysis zones.

Florida Market Forecasts

  • Lehigh Acres:
    • 1-2% vacancy rates, high housing demand
    • Need for commercial development
    • Poor planning makes aggregate development projects difficult
  • Downtown Sarasota:
    • Can accommodate higher density than currently using
    • Multifamily and commercial developments replacing existing small structures
  • Jacksonville:
    • Pent-up housing demand
    • 3000 additional units needed now
    • 1600 more needed by 2020
  • Orlando (City):
    • High housing demand
    • 8000 units needed over next 3 years

Contacts

  • You can contact Dave directly at dave@metroforecasting.com
  • You can find out more about MFM’s services by emailing info@metroforecasting.com

 

 

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. 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. 103 Reed Goossens: Talking Syndication of Multifamily Projects

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syndication of multifamily projectsLet’s face it, every real estate investor just starting out dreams of landing the huge deals. The question remains though: how to make it to the institutional level?

The answer comes with syndication. Syndication expands the opportunity to make larger deals by leveraging capital from a group of investors.

For singlefamily and small, residential multifamily, the first syndication deal can seem like a large step. There are a lot of moving pieces to keep track of in a syndicated deal that may seem complex to investors used to self-financing.

Reed Goossens knows the power in syndication.

A native Australian, Reed moved to the U.S. after educating himself in real estate investing. As a foreign investor, Reed saw the potential for earning cash-flow in U.S. real estate markets and set about acquiring properties.

Initially investing in small duplexes in tertiary markets outside of New York City, Reed had been using his own capital to finance deals.

He realized the need to scale his real estate investment goals and set about transitioning from residential multifamily to commercial multifamily through syndication.

Reed founded RSN Property Group and has been investing in commercial multifamily properties through syndication since 2011.

In addition to expanding his asset portfolio and investor base, Reed also hosts a podcast to educate foreign investors in the U.S. real estate market

Syndicating Investment Deals

  • SEC has strict rules for syndication under Regulation D
    • Rule 506 (b)  – allows for unlimited accredited investors (earn +$200k/yr. or personal worth of +$1 million); up to 35 unaccredited investors (earn under $200k/yr.)
  • Surround yourself with credible investors; find a mentor
  • Have pitch deck to educate potential investors on deal specifics
  • Private Placement Memorandum (PPM) – after sourcing investors, a PPM is needed
    • Drafted by syndication attorney
    • Outlines how deal is being syndicated under a regulation (e.g. Rule 506)
    • Tailored to individual investments
  • Syndication Contracts
    • Typically, 30 days for due diligence; 45 for larger properties
    • 15 days for financing and 15 days for closing
  • Preferred Returns
    • Limited investors get “x” percent of 1st earnings, decided in contract
    • Future returns split between limited partners and general partners (syndicators)

Resources

Reed and RSN Property Group are always on the lookout for value-add investment deals. If you think you have a potential deal, contact Reed at reed@rsnpropertygroup.com.

Reed also hosts a podcast that educates foreign investors on U.S. investment real estate markets- Investing in the U.S.: An Aussie’s Guide to U.S. Real Estate

Like many beginner investors, Reed learned about creating financial independence and the power of passive cash-flow through Robert Kiyosaki’s Rich Dad Poor Dad.

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