Category Archives: Multi-Family Housing

55+

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Renting and “aging in place,” but not alone, is a growing preference for aging baby boomers and seniors and offers a unique opportunity for investors who want to invest in and operate multifamily units.

Baby boomers are defined as those born between 1946 and 1964 while seniors are defined as those born before 1946.

According to research done by ARBOR, an increasing number of senior renters now live with unrelated adults across all multifamily property types. Small apartment buildings (5-49 units) have slightly higher shares of senior renters with roommates compared to large multifamily properties (50+ units). However, the co-living senior renter segment is growing the fastest in large-asset multifamily.

Co-living among seniors is highest in the single-family rental (6.1%), then the duplex/quadruplex (5%), next small-asset multifamily rentals (4.6%), and last, large-asset multifamily rentals (3.2%). To put this in perspective, among Millennial renters, the share of renters living with a roommate in a small-asset multifamily situation is 14.4%.

Sharing is motivated primarily as much by social connection as by income needs. According to Psychology Today, “20% of people over 60 frequently feel intensely lonely.” Loneliness can be a risk for heart disease, Type 2 diabetes, arthritis, and Alzheimer’s disease. Because of health risks associated with loneliness, seniors that share a home are actually dealing with their current and potential future loneliness.

In addition to social connection and apartment affordability, sharing is also motivated by personal security, and sharing of daily chores. The need to “age in place” is driving the increase in co-sharing seniors in the large asset multifamily rental because these buildings tend to be located near urban services and health care centers, have elevators and wheelchair lifts, and have higher levels of amenities.

Amenities Promoted in 55+ Adult Living

When looking over senior housing options available in Houston, I found most of the advertising in the higher end communities mentioned affordability, distinction, style, lifestyle, freedom from chores, and choice. Specific advantages and amenities listed by the higher end properties in the facility advertising included:

  • Independence
  • Affordability
  • Beautifully landscaped grounds
  • Luxurious and spacious interiors
  • Locations close to dining, entertainment, parks
  • Locations close to and medical centers
  • Diverse and colorful neighborhood
  • “Dynamic alternative to the ordinary”
  • “Live your lifestyle with passion”
  • Luxury
  • Style
  • Home
  • Distinctive living experience
  • Restaurant-style dining
  • Resort amenities
  • Complete freedom
  • Infinity pool
  • Court yards
  • Dog park
  • Wine tasting lounge
  • Media room
  • Chef quality demonstration living
  • It’s a lifestyle
  • Boutique, resort style

Amenities Advertised at Less Expensive 55+ Community Options

Retirement and 55+ community combinations in a lower price category advertised:

  • Activities and programs
  • Privacy
  • Aging in place
  • Gym
  • Garage
  • Outdoor grills
  • Designer living
  • “Trade your to do list for a bucket list”
  • Pet-friendliness
  • Outdoor pool
  • Yoga and art classes
  • Access to meals
  • Choices
  • Community
  • People of similar life stages
  • Leave home maintenance and yard work behind
  • Water gardens
  • Swimming pool
  • Computer room

The youngest of the baby boomers are approaching 55, and the huge number of 55+ adults who are still active but looking for reduced housing maintenance responsibilities and costs as they age and live within a fixed income makes this group a dynamic market for senior living situations. Not all are turning to apartment renting, but this tend is worth watching.

Competition for good rental properties is stiff, and in order to buy a property in a climate of competition you may need funds fast. 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. A perfect fit is out there.

Give me a call or send an e-mail. I am focused on funding your success.

Patrick StCin, 512-213-2271,

e-mail: patrick@REICapital.cash

Tech Considerations for Multifamily Housing

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Just this week, I said that one of the mistakes a real estate investor can make is not seeing the property in person before buying it. I said that so I could eat my words today, at least with regard to buyers of finished properties. I still think it is unwise for an investor to buy a property to fix, flip, develop, or fund without inspecting it in person. However, Multifamily PRO is reporting that augmented and virtual reality technology is expected to increase the number of residents willing to sign leases without visiting the property in person because they will be satisfied with viewing the property using virtual self-guided tours.

New technologies are and will be changing the apartment-buying, apartment-selling, apartment-living and apartment-operating experience. Considering this, investors, builders, and remodelers need to focus on communications and electronic infrastructure to support these new technologies when planning, budgeting for, building, and marketing multifamily housing. A few areas to focus on include:

Excellent Internet Connections

The first things to think about are internet connections, their quality, number, location, and security. Smart-home technologies like smart locks, lights, thermostats, as well as visual monitors for pets, children, and deliveries will be expected in the new high-tech apartment unit. These will impact the way the resident interacts with facility operators. For the resident, chat bots may make routine maintenance requests on behalf of the resident, reserve facilities, and schedule hair and dining appointments.  For the facility operator, chat bots may provide routine information to residents and collect repair orders and  rent payments. All these electronic interfaces will require excellent internet infrastructure in the multifamily complex.

Numerous Charging Stations and Outlets

The demand for electric cars, electric scooters, and electric-motor-assisted bicycles will drive the demand for charging stations and charging outlets at multifamily properties. Planning, budgeting, and locating these facilities for convenient access, exit, and safety will be important.

Locating Autonomous Vehicle Dropoff Points and Parking

Autonomous vehicles, both driven and flown, will need places to park and drop off clients, meals, and other products. This will affect the size of the parking area you will need and the layout of delivery sites around the building. Robots and drones may deliver and pickup within the apartment.  A drone may deliver to a dropoff point with directions for a robot that will complete the delivery inside the apartment community.  Conventional vehicles will also be expected to make deliveries and pickups and need space to maneuver.

Photo by JESHOOTS.com on Pexels.com

Facial Recognition

Artificial intelligence technologies will enable facial recognition for customer identification and for criminal background checks, and these facial recognition systems can track a person as they move around a property. This will improve security but raise privacy concerns.

Planned Office Space in Apartment

People working from home will need an excellent internet connection and may want an office available as part of their apartment.

An electronic interface between operator and potential buyer may be a way to design flexible space for the customer with the hope that they will stay longer in a space that fits them well.

These ideas, with some speculations added, came from the NAA Apartmentalize conference in Denver through reporter Andrew Stephens on Multihousing PRO.

REI Capital Resources built its reputation on finding private funding for investors for quick turn purchases and difficult situations. 

Give me a call or send an e-mail and share with me your plans and needs, and I’ll see what lending solution I can generate for you.

Patrick St.Cin

W – 512-213-2271
Patrick@REICapital.cash
Info@REICapital.cash fffff

Multi-Family News on multihousingnews.com

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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.

Austin

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.

REI Capital Resources Long-Term Rental Program

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%.

Give me a call or send an e-mail.

Patrick StCin, 512-213-2271,

e-mail: patrick@REICapital.cash 00000000 00

Levin on Trade Wars and Commercial REI

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According to a very interesting post written by Jeff Levin in the Forbes Community Voice, trade wars are affecting commercial real estate investing.

Jeff Levin has 3 decades of experience in the real estate arena and what he has to say makes a lot of sense to me. Of course, it should. He is a senior-level executive of the Forbes Real Estate Council and this is his area of expertise.

I want to summarize the points in his post for you here because they are so relevant to us as private money lenders and investors.

Scarce Funding Will Bring More Opportunities to Private Lenders

He first points out that the trade war between the US and China presents opportunities for those in the business of private lending because as Chinese investment decreases in the US commercial real estate market for new projects, funding is scarcer.

Levin suggests that tracking where the Chinese investment was the heaviest is where to look for projects that might need capital.

China is Selling Assets Bringing Down Prices

Beijing has apparently also mandated a sell off of asset portfolios. This is lowering prices for some types of commercial real estate.  According to Levin, “For sectors like office buildings, excess supply is depressing absorption rates, increasing vacancies and competition for tenants and squeezing rent growth.”

Levin advises that multifamily borrowers and office project borrowers refinance after construction is complete with a bank rather than relying on leasing income or sales to retire the debt.

Construction Prices Are Going Up

Construction prices are going up because the price of materials is going up due to tariffs on steel, lumber, aluminum and other materials from international suppliers.

Levin advise that borrowers put in contingency clauses that spread any unexpected risk due to the volatility of material prices among the investors.

Construction Delays

Construction delays are being caused by the tight labor market, but also because of the lead time required to obtain building materials.  Because delays increase overall risk, the number of new commercial real estate project starts are declining.

Levin says that despite more deals coming to private lenders because of the difficulty of securing financing, “Private lenders must stay on top of the collateral value in the cases where borrowers might not survive unforeseen project delays.”

I really encourage you to read this article on your own at https://www.forbes.com/sites/forbesrealestatecouncil/2019/06/04/four-ways-the-trade-wars-are-undermining-commercial-real-estate/#1c047a706957

REI Capital Resources works closely with its clients to determine the best path to take for an investment project that needs funding.  As a lender originating loans myself, I have more and improved funding solutions at my fingertips. 

Contact me at 
Patrick@REICapital.cash
512-213-2271 funding

References

Levin, J. Four ways the trade wars are undermining commercial real estate. June 4, 2019. Post at https://www.forbes.com/sites/forbesrealestatecouncil/2019/06/04/four-ways-the-trade-wars-are-undermining-commercial-real-estate/#1c047a706957ways-the-trade-wars-are-undermining-commercial-real-estate/#1c047a706957

Old Malls: Transformed in Texas

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While studying what is being done with abandoned malls around the country, I ran into the April 2, article in Dallas News by Steve Brown about plans for the struggling, not dead, Collin Creek Mall in Plano, along Highway 75. The mall is being redeveloped into a mixed-use village centered around a crystal lagoon.  The plans support dense property usage in the area with office space, multi-family apartments, single-family homes, senior-living units, a hotel, restaurants, retail space, a park and hiking trails with all the parking underground sharing the location where the mall is now. The developer, Centurion American, will begin construction in July 2019. Entertainment will be a big component of the project.


Crystal Lagoon & Real Estate Strategy

Wondering what a crystal lagoon is, I visited their website, crystal-lagoons.com, and found that the crystal lagoon is a water amenity that will increase the value of the surrounding real estate and allow higher rents to be charged for office space, hotels, and apartments because it actually brings the beach or water-front to the neighborhood, no matter where the neighborhood is in the world. Although it was developed first for private use, the public access lagoon model allows communities to be developed around the water feature. According to crystal-lagoons.com, the technology claims to make an unviable project viable. Remaking the land where old malls are located, in the middle of suburbs, into new communities for a long time has been a potentially unviable project. It is good to see that this concept can reform and reuse these massive abandoned spaces in our cities.

Sustainability

The crystal lagoons advertise that they are sustainable, using less chemicals, less energy than conventional pool filtration systems, and less water than parks and golf course, yet providing water as crystalline as swimming pools and tropical lagoons. They use any type of water, salt, fresh, or brackish and control evaporation with a film cover system and by capturing rainwater that falls.

Safe, Smooth, and Clean Water

Even along the coast of an ocean, the crystal lagoon concept offers a safe and controlled environment for water sports and beach activities.

Master-Planned Communities around Lagoons

Here in Texas, there are a couple of communities that include a crystal lagoon as part of their planned amenities. Like the Collins Creek Mall replacement project, these are master-planned communities where entertainment, shopping, and employment can be found within minutes of home.

One of these communities is Windsong Ranch in Prosper, Texas.  Another community, Lago Mar, is a 2,033-acre master planned community located along Interstate 45 in Texas City. The 12-acre Lago Mar crystal lagoon is opening in 2020. The entertainment district features multiple beaches, a floating obstacle course, a swim bar, a 10,000-square-foot beach club, and restaurants on the boardwalk. 

Balmoral in Houston is a 750-acre new home community in the West Lake area of Houston that offers Texas’ first crystal clear lagoon surrounded by glistening white sand beaches. The lagoon encompassed 2 acres of sparkling blue water that is 8 feet at its deepest and 3 feet in the swimming areas.

As you are considering investing in real estate, think about amenities like these. Are there any crystal lagoons, walking trails, fishing lakes, or theatres, near the property you are considering. These entertainment amenities affect the value of property and the amount of rent you can charge.

Focused on Funding Your Success

I can be reached at
Patrick@REICapital.cash
512-213-2271
Austin, Texas

Image credit: Azwar Thaufeeq [CC BY 3.0 (https://creativecommons.org/licenses/by/3.0)%5D

Multi-Family Rentals Are Real

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As the stock market dips and dives and quivers and stock market investors peer into the fog of the future trying to see where tariffs will take the economy, real estate stands firm, on a block, in a neighborhood, around the corner from this school or that office park, providing shelter to human beings.

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An investment is not safe though if you do not do your research and match the facts of the property and area situation with your needs, expectations, and goals. You might end up holding on to a property you would like to fix and sell quickly or find yourself with a rental that is more outgo than income. When considering investing in multi-family properties, be sure to pay close attention to these things:

  • the parking situation,
  • the safety of the neighborhood,
  • the quality of property management,
  • and to the location.

Multi – Family Property Class A
Properties are above average in terms of design, construction and finish; command the highest rental rates; have a superior location, in terms of desirability and / or accessibility; generally are professionally managed by national or large regional management companies.

You will pay more up front and have less to fix, but have income potential right away.

Multi – Family Property Class B
Properties that do not possess design and finish reflective of current standards and preferences; construction is adequate; commands average rental rates; generally are well maintained by national or regional management companies; unit sizes are usually larger than current standards.

Be prepared to make some repairs, do some remodeling and updating as tenants move out to keep the apartments occupied.

Multi – Family Property Class C
Properties that provide functional housing; exhibit some level of deferred maintenance; commands below average rental rates; usually located in less desirable areas; generally managed by smaller, local property management companies; tenants provide a less stable income stream to property owners than Class A and B tenants.

You will have to do more hands-on work with this class of property to handle the repairs and tenant turnover; but if you like hands-on involvement, there will be plenty of opportunities to employ your carpentry, plumbing, electrical, social, and bookkeeping skills. You might find some great deals.

Let me know if you have found any deals this month that you know you can turn around and resell or rent. I hope that I can be of help to you this month.
I can be reached at

Patrick@REICapital.cash
512-213-2271
Austin, Texas