The 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
3% job growth
Statewide rent growth: 4%
I-4 Corridor rent growth: 6%
Florida Multifamily Markets
4000 MF units online, last 12 mo.
65% absorption rate
3.7% rent growth
Class A: 4.5% cap rates; Class B: 6%
5,500 MF units online, last 12 mo.
4.8% rent growth
8% rent growth in last 12 mo.
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
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 firstname.lastname@example.org.
We started the Invest Florida Show podcast with the goal in mind to create a living archive of actionable, Florida-centric real estate investing information. Not only have we been able to realize our vision, but Invest Florida has grown to become an effective real estate marketing vehicle – not only for our own lead-generation, but for our guests’ businesses as well.
Podcasting has been growing in popularity over recent years and more and more professionals are realizing the potential of a podcast to extend their reach and network.
When Florida Realtor Magazine asked us to contribute to their cover story on the power of podcasts in building a professional brand, we were honored to take part.
For 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.
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
Sinks and drains
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.
Time is money. Property managers spend a lot of money on their time and this is true whether they are managing residential, multifamily or commercial properties. Often times, property managers may get caught up in the timing of things, letting their financial records and organization fall by the wayside. Not only does this cause added stress on the property manager, but it can also hurt the value of a property. When it comes time to sell a property or to refinance, proper financial details mean everything in determining how much the property is valued at.
Dan Pepper knows the importance of organizing and recording all the financial details of a property. Through his company, Palm Companies, a combined investment and property management firm, Dan oversees 190 multifamily units with nearly 50 units managed by Palm. With so many factors to keep track of, paying attention to financial details has become imperative in streamlining property management efficiency. This episode, Dan shares what he has learned about managing properties effectively and increasing property value by organizing and tracking financial details.
Automated Property Management Systems
streamline record keeping, bill pay and rent collection
Appfolio – good mid-market, fully-integrated automated system; 80+ units
Import photos or scans of bills for services and expenses into an easily accessible database
Capitalizing Expenses vs. Annual Expenses
Clearly define and categorize expenses that are capital improvements and what are annual expenses
Buyers can reconcile their investment concerns with detailed records
Lenders can asses precise values on properties
If unfamiliar, google search “capitalizing expenses”
Dan and Palm Companies are focused on multifamily properties ranging between 30-150 units in Southwest Florida. They focused primarily on property management ventures currently, but are open to viable multifamily deals. Palm Companies also has an interest in retail investments. Check out their website for more information.
Full-time real estate investors know more than anyone that there are only so many hours in the day. Finding time to actively land new investments can be hard when its necessary to manage other investment properties. Maximizing time is one of the most valuable tools a real estate investor can have. Shortening the time you spend on your investment properties can greatly improve your quality of life as a real estate investor.
Gavin Welch, an entrepreneurial real estate investor, knows just how precious his time is. With seven properties in his portfolio and work commencing on an apartment development, Gavin has a lot on his plate. With a goal in place of acquiring 25 investment properties, Gavin simply cannot afford to spend time on everyday property management concerns for each of his properties. He has implemented a method that allows him to attend to his current investment properties while providing himself enough flexibility to focus on his investment goals.
provides automated information for tenants and clients to call in for property info and maintenance requests
Limited property showings
Schedule property showings and open houses for set days and times cuts down on time spent visiting investment properties
Auto pay system for tenants
Tenants pay automatically when monthly bill is due. Landlords and property owners don’t need to spend time tracking down payments
Bandit signs circulate property availability
Youtube videos provide property details and photos
Using the same materials and paints on all properties greatly reduces time on maintenance and up-keep
Gavin is currently in the market for viable single family investment properties in the Lakeland, FL area. Suitable fix-and-flips or rental property offers may contact Gavin through his website by going to the Contact Us page. Listeners should also check out Gavin’s own podcast, The Real Estate Loop for more investing advice.
Commercial 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
Low-flow plumbing, greywater recycling, rain barrels/cisterns, energy star rated washing appliances
Investors want to know that their properties are insured against any unforeseen damages. The last thing a real estate investor wants to do in the event of an emergency is argue with their insurance company over an insurance claim. Insurance companies are a business and all businesses look towards minimizing costs. If damages occur, most insurance companies will attempt to mitigate costs on an insurance claim in order to avoid costly expenses, but this can hurt investors trying to recoup loss of income on a property.
Ray Altieri III is Vice President of Business Development for Altieri Transco American Claims Corporation. Together with his company, Ray strives to ensure that insurance policyholders receive proper payment in the event of an insurance claim. As public adjusters, Altieri Transco represents insurance policyholders throughout a claim to guarantee that they receive proper recompense from insurance companies. This episode Ray discusses how investors can avoid getting burned when making an insurance claim on an investment property.
When to Get a Public Claims Adjuster?
A.S.A.P – A Public adjuster should be brought in on a claim as soon as possible to build an accurate cost for coverage from the ground-up. Adjusters for insurance companies will attempt to minimize costs for coverage
How Are Public Adjusters Compensated?
Typically, public insurance claim adjusters receive a percentage of the overall settlement, usually 10%
Tips for Investors
Insurance Applications – Investors should be aware of the information entered into insurance applications. Incorrect or missing information may result in a voided insurance claim
Emergency Services – Costs for emergency services on an insurance claim are not paid by insurance companies, they are paid by the policyholders. Investors should understand these costs and how they affect coverage on a claim
Those who know the Florida real estate market know the influence of foreign investors. Foreign capital, especially in South Florida, has fueled real estate development in the state. Despite its slight recline with the growing strength of the US dollar, foreign investing remains a big part of the Florida real estate market.
Jerome Abecassis, a native of Paris, France now residing in Florida has made a name for himself and his company TIJ Group, LLC investing foreign capital in the Florida real estate market. Moving here in 2003, Jerome began investing in South Florida real estate and quickly established TIJ as a leader in foreign investing in the Florida real estate market. TIJ now owns and manages 200 units in South Florida and owns 160 units in the Detroit, MI area. This episode, Jerome shares his unique approach to investing and gives an outlook on the Florida real estate market.
Florida Real Estate Market
Foreign investing returning post-financial crisis
American markets seeing higher returns on investments than foreign markets
South American investing strong in South Florida market
For new investors, marketing to potential investment opportunities is never the easiest part or most enjoyable part of building a strong and successful investment base. Even for seasoned investors, it can be difficult to maintain a steady level of return in increasingly competitive markets. In Florida large, multi-family market areas, including Tampa and Miami have recently seen a decrease in number of closings on property transactions.
As founder the largest direct-mail marketing site in the nation YellowLetters.com, Michael Quarles is an expert in the field of marketing and with over 1000 real estate deals under his belt, he can provide invaluable insight and tips on how to market and find winning investment properties. He shares with us some tried and tested marketing strategies proven to boost number of returns on investments.
Marketing is “oxygen and water” for business
Cast a wide net: Cluster Marketing offers greater returns
Cold Calling/Cold Greeting
Direct-Mailing is an effective marketing strategy
Variety of mailings available
Yellow Letters – formatted to appear as handwritten notes
Greeting Cards – sent in line with corresponding holidays
Zip Letter – formatted to appear as government checks
Market to properties that hold sufficient equity-base
When marketing to commercial investments, use professionally drafted letters or professional ad-copy
Michael’s Tips for Successful Marketing:
Know and Employ Predictable Marketing Strategies
To find out more about the variety of direct-mail pieces available, visit: YellowLetters.com
Michael also has a blog where he offers advice and mentorship for investors who want to “stop investing passively and start investing massively!”