U.S. stocks markets are closed Thursday in observance of Independence Day and will close early at 1 p.m. ET on Wednesday.
Foreign financial markets will be open on Thursday, July 4.
The New York Stock Exchange and the Nasdaq will resume normal trading hours on Friday.
The Securities Industry and Financial Markets Association also recommended the U.S. bond market to close early at 2 p.m. on Wednesday and close altogether on Thursday.
The next market holiday is Labor Day, which falls on Sept. 2.
Depreciation is a decrease in the value of an asset overtime. When doing your due diligence research before making an investment in real estate, be sure to look around and consider those lurking circumstances that might decrease a property’s value.
Although location affects the value of property most because real estate is by its nature real and tangible, supply is also a critical factor in how real estate is valued.
Supply
Overabundance means there is more of an item or resource than is needed or can be afforded by buyers, so it’s value goes down because no one buys it at the current price. The value will continue to go down until it reaches a point where buyers decide it is worth the price to store, use, and maintain the asset until the value goes up again. One example of this is the overabundance of condos that were launched in Miami right as demand fell because of a shortage of foreign buyers that was reported in the wsj article, “In Miami, There Are too Many Condos and Not Enough Foreign Buyers,” by Candace Taylor.
Location
New businesses and a new reputation may also impact the value of properties. For example a related article in the wsj reported recently that visitors to Miami’s South Beach has doubled in 10 years. The article “Wealthy Buyers Say So Long to South Beach,” by Candace Taylor, points out that the construction of new hotels on Miami Beach has made it a hot spot for spring breakers and the masses of students who come to party but not to buy has caused traffic congestion, litter, loud parties, and more danger in the neighborhood. As a result, the properties are not so attractive to wealthier buyers and the prices of upscale condo sales have tumbled in the first quarter of 2019.
Other natural changes near a property can affect its value. Some obvious ones are wildfires, sink holes, and earth quakes. Another is global warming. One reason Miami beach prices are falling according the same wsj article by Taylor is because of fears that sea levels will rise. Homes and condos at lower elevations have lost some value because of these fears.
Neglect and Lack of Maintenance
Abandoned homes tend to lose value because they are not lived in or cared for. They slowly fall into disrepair.
Global Investors
The value of houses can also go down because of events that affect buyers from other parts of the world. The wsj article mentioned previously explains that severe economic and civil disruption caused by socialist and totalitarian regimes in countries like Venezuela, Argentina, and Brazil can affect the ability of their once-wealthy citizens to purchase property abroad as the value of their currency falls compared to the dollar.
In the commercial real estate arena, as Jeff Levin pointed out in the Forbes Community Voice, trade wars between the United States and China has reduced funding for new building projects because China is decreasing its investments in U.S. commercial real estate and selling its assets, which brings down prices.
Competition for inexpensive properties to invest in and improve or to rent out for income is usually pretty stiff. As a broker and a direct lender, it is my job to help you get a hard money loan easily and quickly. Private Lenders, not banks, are willing to help you fund your project based on the value of the property and its after renovation value. We have money to lend and you need money quickly. A perfect fit is out there.
Give me a call or send an e-mail to the contacts below.
Appreciation is an increase in the value of an asset overtime. Depreciation is the opposite, a decrease in the value of the asset overtime. When doing your due diligence research before making an investment in real estate, be sure to look around and consider those circumstances that increase a property’s value. Tomorrow, we will talk about those circumstances that might cause a property to depreciate.
Engraved in every real estate investor’s memory is the fact that location affects the value of the property most because real estate is by its nature real and tangible, a building, land, flora, fauna, and natural resources.
Using our imaginations and our memory, let’s review several things that can increase the value of an asset
Supply
Scarcity means there is a limited amount of some item or resource, so it becomes harder to find and worth more when you do find it due to competition for the limited resource. One example of a shortage creating a rise in value is the situation with single-family starter homes in the United States and the world. Although lower in price, single-family starter homes have become more valuable because there are not enough of them.
Location
Some changes in a vicinity that increase home values may not
be due to a physical change nearby, for example the employment rate goes up, the
local economy improves, and/or the crime rates go down. These changes may be
due to a new business coming in, but also may be due to regulatory changes that
lower taxes or technological changes that allow people to work at home.
A physical change near the property can affect its value. Sometimes the value of a house goes up because of something that moves into the neighborhood or nearby, for example a water park or amenity that brings tourism or a research facility or fulfillment center that brings jobs and workers. Sometimes something that was there all along is discovered or becomes more appreciated than it was before, for example mountains and foothills with a view or the solace of desert spaces. Sometimes, a land use regulation may change causing a mini land rush.
Development causes appreciation of houses. Let’s say that you buy bare land on the edge of a community and build on it. The value of the property will appreciate at least the value of the house. If you buy in what is already known as the best district, you will most likely pay a premium price for that reputation and it will not go up over time because it is at the top already. If you buy in a place with a poorer reputation, such as a school district, and better management, government programs, or community involvement begins to improve the school district’s reputation, the homes in the area will likely appreciate.
Additions or Updates
Additions, enlargements, or updates of a home itself will appreciate its value depending on what is added and the quality of the materials and workmanship. These additions to quality might include finishing the basement, adding a screened-in porch, updating the bathroom or kitchen.
Global Investors
The value of houses can also go up because of things that happen in another part of the world that affects buyers or sellers. Economic disruption or lack of opportunity in one country can cause people to invest in another country and move there, increasing the value of the property in that area. Wars and trade wars can also affect property value in a global economy. The wsj explains in a recent article that after housing prices fell in the United States, Latin Americans bought up luxury homes and condos in Miami.
Tomorrow, we will talk about what circumstances might make a property depreciate.
Competition for inexpensive properties to invest in and improve is usually pretty stiff. As a broker and a direct lender, it is my job to help you get a hard money loan easily and quickly. Private Lenders, not banks, are willing to help you fund your project based on the value of the property and its after renovation value. We have money to lend and you need money quickly. A perfect fit is out there.
Give me a call or send an e-mail to the contacts below.
In a recent interview with Larry Booth, Lucy Chen Blatter of
Mansion Global ask Booth, “What
does luxury mean to you?” He answered,
“light and space, particularly in New York, where you don’t have any of it.
Chicago has some of it.”
When asked about the most valuable amenity to have in a home
right now, he answered, “It’s about Community.
The amenity is the community.”
“We’re finishing a building in Chicago, on Lake Shore Drive, that has an
amazing rooftop. It’s like a country
club on your roof. We didn’t do the
balconies because no one uses them.”
“Spend money on the building. Spend as much as you can on architecture and on space and light. Because it never loses its value.”
Larry Booth of Booth Hansen
Boissier: Freedom, Protection, and Wellness
For Luxury hospitality designer Dorothee Boissier of the
firm Gilles & Bossier, Paris, “Luxury is linked to freedom, and feeling
protected, too. It’s also something that
brings you wellness. It can be simple, but it makes you feel well.” (Blatter, Mansion Global, June 10, 2019) Ms.
Boissier also says a boat is the most incredible way to be hidden and still in
the city, to travel the world, and be able to stay in great luxury.”
In her opinion, the most valuable amenity to have in a home
right now is a garden.
Kotchen: WiFi, Wellness, and Comfort
For New York Architect, Andrew Kotchen, also interviewed by Lucy Chen Blatter this month, Luxury
is an experience and not an aesthetic, “It’s about comfort.”
When asked what the most valuable amenity to have in a home
right now, Kotchen says, “Other than good Wi-Fi, which is the biggest thing
people complain about, the most valuable amenity in projects we’re doing now is
a wellness component, gyms and light therapy spaces.”
Not everything we do is in the luxury category, but we can still dream and try to add some of these priceless features into our fix-n-flip or fix-n-rent projects, like space, light, wellness, a garden, and a rooftop.
We offer asset-based and experience-based loans for long-term
rental projects, including multi-family projects with the following terms: min
FICO 650, BPO required, Up to 85% of purchase price, Cashout/Refinance up to
65% LTV (BPO), Max of 80% ARV, Interest rates starting at 6.5%, and points as
low as 2.25%.
Although installing a deck, patio, fire pit, outdoor
kitchen, lighting, and fountains on an investment property once might have been
risky, the current popularity of “health and wellness” have made buyers more inclined
to look for features in a landscape that add opportunities to increase their
wellness and to build community. For a real estate investor, this trend may justify
increasing the landscape budget so that it can include features that invite
people into the backyard where the sun, fresh air, sights of trees and flowers,
sounds of leaves or water. Amenities that
soothe and refresh after a hard day at work may attract buyers looking for
wellness. Lights, water features, decks, and fire pits provide places where
families and neighbors can gather and might be attractive to buyers seeking
both wellness and community.
An article in webmd.com,
“Do You Need a Nature Prescription?” by Carol Sorgen, points out that researchers
have found evidence that time spent in a natural setting, “whether walking in a
park or gardening in your backyard improves mood, self-esteem, and motivation.”
In the suburban backyard, working with the land you have, a real estate
investor can tap into ecotherapy elements to attract buyers in 2019. The article
by Sorgen, states that taking in the forest atmosphere such as the odor of
wood, the sound of running water, and the scenery of a forest can provide
health benefits for children and adults, including relaxation, reduced stress,
lower pulse rate, and lower blood pressure. Danielle Small, writing for homluv.com
says that creating a woodsy retreat in your backyard and adding water and
lighting to your backyard may provide a real treat for a homeowner at the end
of a hectic day.
Buyers are well versed in health and wellness these days so adding a fountain, waterfall, or a small pond along with a comfortable seat in the backyard may very well appeal to them from a health perspective as well as from a lawn-eating, lower maintenance perspective. Fountains and waterfalls can be made to blend into nature or to stand out and make a statement. A few strands of star-like lights in the trees can add a sense of serenity, calm, and romance to the backyard too.
As a real estate investor, common sense, tried and true, backyard landscaping techniques combined with some of the newer wellness and outdoor-living trends may be a useful combination to know as you plan your project budget and marketing campaign.
The fix-n-flip loan program is one of my most popular real estate loan programs. Competition for houses is tight. The ability to get fast funds to buy and remodel a property is important. As a broker and a direct lender, it is my job to help you get a hard money loan easily and quickly. Private Lenders, not banks, are willing to help you fund your project based on the value of the property and its after renovation value. We have money to lend and you need money quickly. A perfect fit is out there.
When you first start a fix-n-flip project, you need to decide how much to invest on landscaping the front and back yards and include this in your funding request. If you decide to stick to the minimum, bring the yards up to the standards of the neighborhood but not much higher, you are looking at the declutter, clean, maintain, and disguise course of action.
Clutter weighs us down, stresses us out, destroys focus, and creates a terrible first impression. Clutter can also be hazardous and ugly. Most fix-n-flip investors, landscapers, and remodelers have a line item on their budget sheer for performing maintenance and cleaning up. This is the first level of landscaping, the cheapest and the most necessary. First impressions are so important that the labor and materials required to clean up the front porch and yard and the driveway and backyard should definitely be included in your renovation budget.
Make Safe
Inspect the yard for hazards like glass, pieces of metal, and chemicals and clean these up first so later workers and home buyers will not be injured. Clean out downspouts, gutters, and window wells, replacing any missing or damaged parts. Repair fences, level and repair walkways and patios, replace broken patio or porch railings or steps. Paint.
Declutter
Next, you can declutter the landscaping, digging or pulling out weeds and plants that are dead, refreshing mulch, planters, and container gardens. Gardendesign.com recommends removing plants that are ugly, messy, or overgrowing a sidewalk or porch, simplifying the landscape. Since you have already made the property safe, you can pay high school students out of school for the summer to help you with these removal, maintenance, and cleaning activities.
Disguise
Gardendesign.com also lists some inexpensive remodeling tricks that can be done to or with backyard structures, like garden sheds, equipment boxes, and walls to disguise garbage bins or a neighbor’s driveway. These structures can be renovated into beautiful features instead of eyesores without too much expense using repurposed materials, like rough barn wood and antique hinges, antique doors and gates.
Adding Plants While Protecting Your Return
Now you may want to consider adding plants and amenities
that will appeal to buyers. At one time you certainly would get back any investment
you made plus some in landscaping both front and back. In an article written in
2013, “Landscape your Home to Sell: 5 Tips to Save Green,” Debbie Abrams Kaplan
interviews real estate experts for bankrate.com on what
landscaping techniques might sell a home faster. Margaret Woda of Maryland says
that you could recoup as much as 215% of your landscaping investment, but only
68% of your kitchen renovation expenses.
On the other hand, Frank L. Lucco, a Houston appraiser and
realtor, interviewed in the same article, says that installing a deck, patio,
fire pit, outdoor kitchen, lighting, and fountains are a good ideas, but added
that you should “install them if you want them, but you won’t recoup the
costs.”
Reduce Maintenance
Add plants sparingly and add plants that grow well in the environment you are in, so they do not require too much water, fertilizer, or pruning. Add flowering plants to add a spot of color. Gardendesign.com suggests investing in an irrigation system, using perennial plants that come back every year and are adapted to the climate in a yard because these reduce the amount of labor and attention involved in maintaining a landscape.
Whether you add or subtract plants and amenities from the landscape, reducing your costs in the renovation should translate into reducing your buyer’s labor while they live in the home, an important selling point. Buyers at a minimum want to fit into the neighborhood they buy into without too much labor or additional outlay of money. They also want to come home to a house that is safe and does not consume all their free time in lawn and garden care.
Our fix-n-flip loan program is one of our most popular real estate loan programs. Competition for houses to fix-n-flip is tight. The ability to get fast funds to buy and remodel a property is important. As a broker and a direct lender, it is my job to help you get a hard money loan easily and quickly. Private Lenders, not banks, are willing to help you fund your project based on the value of the property and its after renovation value. We have money to lend and you need money quickly. A perfect fit is out there.
The multi-family housing market is a viable market segment
in many metro areas as people move in from the suburbs to be closer to work and
to entertainment. I scanned many articles and blogs on multihousingnews.com and am here
sharing with you some of the statistics I found for our Texas market.
According to the “Austin Multi-family Report – Spring 2019” and an article on the “Top Multi-family Completions in Austin,” both by Anca Gagluc in the Multi-Housing News, the Austin multi-family market had a strong year in 2018 with rent growth of 4.5% despite 11,000 units coming online. The 11,000 units that were constructed and rented in 2018 were in the upscale lifestyle segment and the 20,500 units underway in 2019 are also targeted for that same segment of the market.
The largest multi-family projects delivered through the end
of May 2019 included
Bexley Round Rock, 330 Units, Round Rock
Hillstone at Wolf Ranch, 332 Units, Georgetown
Latitude at Presidio, 337 Units, Cedar Park
Crestview Commons, 353 Units, Austin
Terra, 372 Units, Austin
Multi-family housing can come in several classifications,
affordable, lifestyle, senior, student, or worker housing. Most of the
inventory discussed here is in the Lifestyle segment. A multi-family unit in
the lifestyle segment is one that offers amenities that improve your daily
life. These may be as simple as open areas and great walking trails or more
expensive shared amenities like a stable, fitness center, or sauna and pool.
The lifestyle property is supposed to enhance your life. It is in effect a
neighborhood, or a community. Lifestyle communities are generally upscale in
price, can even be luxurious, and often do not meet the need for affordable
housing.
Austin added 36,800 jobs in 2018, up 3.5 % from the previous
year. Occupancy rates for Austin
multi-family housing rose to 94.4% as of March 2019 and rent growth was 3.7%
percent through April 2019.
Dallas-Fort Worth
According to the “Dallas Multi-family Report – Spring 2019” from Anca Gagiuc in Multi-Housing News, the Texas multi-family market continued to show plenty of supply, dampening rent growth, which was 2.8% year-over-year through March, slightly below the U.S. average.
More than 26,800 units were delivered in 2018 with an
additional 44,700 underway as of March 2019.
The metro remained a nation leader in job creation last year, adding
102,500 positions for 2.6 percent expansion. Last year’s multi-family
transaction volume was $5 billion.
Investors have already traded nearly $900 million in multi-family assets
in the first quarter of 2019 at a per-unit-price of $105,032. The average
Dallas-Fort Worth rent is expected to rise 4.3% in 2019.
Houston
According to the “Houston Multi-family Report – Spring 2019” from Laura Calugar in Multi-Housing News, the Houston multi-family market showed rent growth on a downward slide, but the market was still strong, underpinned by employment gains and economic expansion. Houston’s occupancy rate was 92.4%, down 140 basis points from the previous year, fueling fears of overbuilding.
Houston added 72,600 jobs in the 12 months ending February
2019. Last year’s transaction volume was $5 billion. Roughly 14,000 units were under construction
as of March 2019, most of that geared to high-income residents. The average
Houston metro rent is expected to rise 2.2% in 2019.
REI Capital Resources is a funding source for SFR Fix-n-Flip,
Fix-to-Rent, and Refinance projects as well as larger commercial projects such
as office buildings, 5-40 door multi-family buildings, and many others.
These programs vary wide and far throughout the gamut of lending. Call or
e-mail for more information.
We offer asset-based and experience-based loans for long-term
rental projects, including multi-family projects with the following terms: min
FICO 650, BPO required, Up to 85% of purchase price, Cashout/Refinance up to
65% LTV (BPO), Max of 80% ARV, Interest rates starting at 6.5%, and points as
low as 2.25%.
When you see the term “experienced-based funding,” it means that in order to secure financing to expand your single-family, or fix-n-flip business, you will need to show the lender that you know what you are doing. You need to provide proof of your experience in the area of your investment strategy and in the local real estate market.
If your investment strategy is to build and rent or build and sell, the lender will want to know that you have experience successfully building and selling homes in the neighborhood or area you are planning to build in. If your strategy is fix-n-flip, your lender will want to know that you have experience in renovation and know how to price the home so it will sell in the neighborhood it is in. If your strategy is fix-and rent, the lender will want to know if you have experience renting or managing a rental or if you plan to partner with a company that has this experience.
As Samantha Goldberg, at Arbor.com reminds us, borrowers with understanding of the market and what types of property will rent at what levels will be attractive to lenders. Be prepared to support your investment strategy with a plan and experience.
She also suggests that securing
financing with a lender you have done business with before is a good idea. Develop
a long-term relationship with your lender, showing that you pay back your
loans.
I’d like to be that lender. Send me an e-mail and I’ll see what funding
solutions REI Capital Resources can match with your needs. We are always “focused on funding your
success.”
REI Capital Resources Residential Construction Loan Program
We
offer asset-based and experience based loans for residential construction on
the following terms: Min FOCI 650, appraisal required, up to 90% of cost of lot
+ build, Up to 100% of construction costs if lot is free and clear, Max of 70%
ARV, interest rates starting at 8.25%,and points as low as 3.5%.
Don’t forget, give me a call or send me an e-mail.
The single-family rental is the fastest growing segment of the housing market according to research done by the Urban Institute. This is a very interesting area of opportunity for private lenders and it pays to keep up-to-date on the market so that no opportunity is missed.
Single-family rentals have outpaced single-family ownership and multi-family housing in recent years. This is partly due to millennials that are forming households and entering the single-family housing market, moving up from multi-family living to single-family rentals to gain additional space for a growing family. Renting still works for them because they need the ability to be transient and move if their jobs require them to, and many cannot afford single-family ownership because they are carrying massive student loan debt, have not been able to save for a down payment, and are faced with stricter lending terms. Downsizing baby boomers are also attracted to single-family rentals for some of the same reasons, including no down payment, maintenance services, and the ability to move if they choose.
According to an article on Builderonline.com
by Lauren Shanesy, the demand for single-family rentals has allowed builders to
increase sales by selling to rental operators on a wholesale basis and has prompted
a number of developers to tap into the market with a new product, the cohesive
single-family rental community filled by niche renters with lifestyle needs
that are unlike those of apartment renters.
Planned Rental
Home Communities
AHV Communities is one community builder
that is building in Texas, offering resort-style amenities, energy efficient
homes, maintenance-free living, and professional management with the freedom and
flexibility of a lease. One of these communities is Pradera, luxury rental homes in San Antonio.
Another is Creekside
Ranch in New Braunfels. Both offer club house, pool, green space,
maintenance services, and sophisticated floor plans.
Management Efficiencies
and Flexibility
Shanesy continues, “Many individual
investors who bought distressed or foreclosed single-family rental homes have
been priced out of the market by competition from institutional investors in
recent years.” However, these individual
rental homes are spread out and not located in communities, so the
institutional lenders have a more difficult time managing them efficiently. Some
investment companies have begun looking to builders to purchase whole
communities of new homes that they can manage. They sell some of the homes and
rent others, allowing the investors the flexibility to sell if homeownership
goes up or rent if homeownership goes down.
A Mature Market
Samantha Goldberg, in the article “Top
Trends to Watch in the Single-Family Market,” at Arbor.com/blog/
reports that panelists at the State of the SFR Industry panel at the IMN’s 7th
Annual Single-Family Rental Investment Forum, held in Hollywood FL say that incoming
capital, new private lenders and institutional lenders, and technological
innovations helpful for management are the top trends to watch in the
single-family rental market over the next few years.
According to the same article, the single-family
rental market sector achieved 3% year-over-year rent growth in 2018 and 2%
year-over-year rent growth so far in 2019. The West Coast and the South East
had the biggest rent gains in the last year.
There is still a shortage of housing
for the U.S. workforce and this means that the nonluxury single-family rental market
has room to grow, providing opportunities for private lenders, developers, and
investors to add inventory in the workforce living space.
REI Capital
Resources Long-Term Rental Funding Program
REI Capital Resources is a funding source for
SFR Fix-n-Flip, Fix-to-Rent, build-to-rent, and Refinance projects as well as
larger commercial projects such as office buildings, 5-40 door multi-family
buildings, and many others. These programs vary wide and far throughout
the gamut of lending. Call or e-mail for more information. I’d like your
business.
We offer asset-based and experienced-based long-term
rental program loans on the following terms: at a min FICO of 650, a BPO is required,
up to 85% of purchase price, Max of 80% ARV, Interest rates starting at 6.5%,
and points as low as 2.25%.
REI Capital
Resources Residential Construction Loan Program
We
offer asset-based and experience based loans for residential construction on
the following terms: Min FOCI 650, appraisal required, up to 90% of cost of lot
+ build, Up to 100% of construction costs if lot is free and clear, Max of 70%
ARV, interest rates starting at 8.25%,and points as low as 3.5%.
Give
me a call or send me an e-mail.
Patrick St.Cin
W
– 512-213-2271
Patrick@REICapital.cash
References
Lauren Shanesy on Builderonline.com,
“The Rise of the Single-Family Rental.”
Samantha Goldberg, “Top Trends to
Watch in the Single-Family Market,” Arbor.com/blog/
According to Realtor.com’s May 2019 monthly housing trend report, the national median listing price for a home sets a new record at $315,000. Despite the continued rise in home prices, rising wages, more inventory, and declining mortgage rates, have made 74 of 100 metro areas more affordable to buyers in their market.
“…the boost in affordability has yet to translate into more home sales perhaps because. while the shift in trend is welcome, the current monthly savings are small and some buyers are waiting for markets to tip further in their favor.”
The top ten cities showing the
biggest improvements in availability of affordable homes also added decreasing
listing price. The ten include:
Charlotte, North Carolina, median
home price $329,450
Dallas-Fort Worth, Texas, median
home price $350,000
Austin, Texas, median home price
$369,995
Cape Coral-Fort Meyers, Florida, median
home price $299,900
Portland, Oregon, median home price
$474,975
Atlanta, Georgia, median home price
$335,00
Lakeland-Winter Haven, Florida,
median home price $231,500
San Francisco-Oakland, California,
median home price $954,500
Des Moines, California, median home
price $288,000
San Jose-Sunnyvale, California, median home price $1,167,444 000.
This data isnot telling us that that there are more homes in the lower prices for first-time home buyers. According to the realtor.com report, the number of houses below $200,000 decreased 8% year-over-year, and the number of houses priced above $750,000 increased 11%.
The data is telling us that the price of homes in a specific metro area market, when compared to the price in the same market, became more affordable over the past year to the residents in that market. The market itself may still be a very pricey market, but the buyers in the market with increased income and lower interest rates are more able to afford the median home.
San Antonio-New Braunfels, Texas was
also one of the 74 metro areas that became more affordable over the last year with
a median home price of $295,000. Houston-The Woodlands et al, Texas metro area registered
no change year-over-year with a median home price of $324,945.
So affordable homes in the lower prices are still needed to round out the market and where there is a demand, investment will follow.
REI Capital Resources is a direct lender as well as a broker of funding solutions. We offer short and long-term financing options and are eager to support your project with funding.
Please give me a call when you find that perfect real estate investment and know how much money you need. We are “focused on funding your success.”
Patrick
St.Cin
512-213-2271
Patrick@REICapital.cash
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REI Capital Resources 