All Forum Posts by: Giovanni Isaksen

@Account Closed CCIM courses are strictly commercial. The issue is of course that while you can analyze a sfr rental nine ways from Sunday, in the end it's going to trade based on comps. Now there are major players who are trying to turn sfr portfolios into an institutional investment class but I think it's too early to tell what the minimum size a portfolio would have to be to qualify.

Another issue is that historically sfrs, if you really track all the costs as you would an apartment building or other CRE, don't return much more than breakeven* unless you're buying them at pennies on the dollar. And that's only an every three or four cycle opportunity (hopefully, at least for the economy) *I wrote a piece on this at the end of 2012: [REMOVED]

Second @Kevin Young on the CCIM course. You can also take it online theses days http://www.ccim.com/education/course/CH101/CH1012014

You won't have the networking opportunities but you'll have 90 days to complete so it can be fit into a busy schedule.

Good hunting-

@Kimberly T. I've also found the forums on citydata.com to be helpful and combined with street view can give a good indication of what a neighborhood is like but for me the acid test is would my mom feel safe walking around? Would I walk around there at night? In the daytime? Sometimes there's a big difference between daytime and night and absent going there or having someone there you trust, I'm not sure how that can be determined.

The other issue is the type of tenant your targeting and how well their views of neighborhoods match with citydata commenters. As I'm sure you know from Phoenix, good and bad locations can be scattered like a patchwork quilt and so between the 'common knowledge' of non-landlord folks (like the majority on citydata) and what you tenants find acceptable there be opportunities missed.

I don't know if it's a bubble but rentals are in high demand, vacancies are low and operators are pushing rents. But there is a limit in how far rents can be pushed and that's somewhere around 1/3 the median income for the area in most places. Rents above that starts to reduce the number of renters who can qualify for professionally managed properties. However in the bedroom communities surrounding the major coastal metros even those may be pushed beyond that because of the higher in-city rents.

Was on a call today with an operator who has about 35k units spread from the Southeast to the Upper Midwest and they're only targeting about a 2% increase in rents across the portfolio after several years of double digit growth. So I think in general the big leaps in rent growth have already been taken.

@Kimberly T. Given that most apartment brokers represent sellers, is there someone that you trust enough to steer you to the right neighborhood (even the right side of the street)? From the OC Phoenix is a five or six hour drive* and if the money you're going to invest is valuable, it would be worth at least two trips to make sure you're buying a good location.

*Ask me how I know this :)

@Kady Sesa 'Repurposing' is (once again) a growing trend, particularly in older cities with historic buildings. The key is to find the right size and shape building ('floor plate' is the industry term) at a price well below replacement cost and assume that the only salvageable part is the building shell and sometimes only the facade. In many cases you will be constructing a whole new building inside the shell (or behind the facade) of the existing one.

I wrote two posts on it last year here: Part 1 http://ashworthpartners.com/multifamily-big-winner-in-office-building-repurposing-cre/#more-3097

Part 2 http://ashworthpartners.com/multifamily-investors-and-residents-can-be-big-winners-in-office-building-repurposing-part-ii/

One thing to add to @Joel Owens excellent advice is that learning the neighborhoods is very important and unless you have someone there who you trust and who knows the neighborhoods, spending time on the ground is the only way to learn them well enough to know whether you should write an LOI on a property.

Good hunting-

@Nick Fitzpatrick the reports from the major CRE brokerages that @Michael Moikeha mentioned are available online at their websites. Marcus & Millichap, ARA, Hendricks Berkadia are a few. Also check the reports from the major multifamily research providers MPF Research, Axiometrics, CoStar are a few. There are also regional and local researchers and real estate economists which I posted about recently and I'm sure a search will turn them up.

The national orgs have research as well: NMHC and NAHB are two.

Good Hunting-

@Colleen F. plus with an upper unit you have warm floors that someone else is paying to heat!

Thank you @Jean Bolger for the mention. As has been covered, seller is asking full retail for a distressed property. Like the Fed though your seller is probably trapped at the zero lower bound; if he doesn't get his price he'll probably have to write a check to the bank to close.

We've passed on a couple deals like this recently too where the seller overpaid, went light on CapEx, undermanaged and now a couple years down the road want to get out without having created any new value to recoup their acquisition costs. Besides public speaking the other thing people would rather die than do is have to admit they took a loss on a deal and writing a check to close (as the seller) doesn't leave much wiggle room to construct a rationalization that their family and friends would believe.

They could have turned the property around themselves but are likely out of capital and the glamor has worn off (Spouse giving them he double L constantly).

Is he current on debt service? One way to make this work would be to short sale the property with the seller's lender, although if the market there is good and the loan is current and performing it would be tough going to get the bank on board.... unless the deferral of the maintenance has broken a covenant in the loan, or threatens to... just a thought.

Good hunting-