Multi-Family 2020

Investing in, constructing, renting, and remodeling healthy multi-family living environments is still important and even more important now that the coronavirus has rubbed our faces in the dangers of living and working close to other people. Since more land has not materialized in most cities to give us more room to live on and in, builders and investors need to be creative about how to design or redesign compressed housing that will prevent and control the spread of an infection that is viable in air and on surfaces. People are and will be looking for homes that keep them safe from infection.

The Problem of Close Quarters

The necessity of elevators and lobbies, as well as the cost of swimming pools and on-site gyms they pay for but cannot use are scaring renters away from large apartment complexes. These are the places where dwellers must maneuver around each other in tight spaces, share air for minutes at a time, and touch buttons and handles others touched just moments ago.

Photo by San Fermin Pamplona on Pexels.com

Consider in Your Budget Some New Things

To update your multi-family housing project in this time of coronavirus spread, include in your remodeling budget something new, such as, touchless and voice technologies that can improve the safety of getting into or out of a home without touching contaminated surfaces, new air handling technologies that vent air to the outside and clean air within an elevator or other room after each use.

If your project has many units on multiple stories, you may need to consider some robotic or AI technology that will keep the number of occupants in an elevator down to one at a time. Perhaps the elevator itself could be modified into a capsule that only holds one person at a time, a capsule that could be disinfected and dried automatically between uses. Ah that will be expensive. Some complexes would require numerous elevator capsules.

Photo by Miguel u00c1. Padriu00f1u00e1n on Pexels.com

It looks like fighting the virus will not be energy efficient. Supplying cleaner air includes containing contaminated air or exhausting it to the outdoors, diluting the virus in the air by injecting clean and filtered outdoor air, and cleaning the air within a room. Any of exchange of air with the outside will make temperature control more difficult and less energy efficient. Thus, to make your multi-family housing as safe as possible, you will likely need to install larger electrical capacity.

Smaller Price Tag for Separate Entrances

If a large complex seems to come with a price tag that is too high, there are smaller multi-family investment projects that have designs that handle the problem of indoor common areas by doing away with them. Small apartment buildings, duplexes, and joined houses work well as rental investments. They include individual entryways and even small yards or gardens.

Small units of 2 to 5 homes can easily be designed with individual outdoor entries that meet social distancing requirements. In one design I recently studied online at http://www.houseplans.com, the complex included 5 units. Each house was three stories, but the overall complex was only one housing unit tall. All homes included a ground-floor separate entrance. Those that had garages had two entrances counting the front door and an entrance from the garage.

Although this design might not be great for seniors because of the stairways, I found it a manageable complex size that allowed each home to be independent. Each unit in this design is roughly 1170 sq. feet with 2 beds, 2 baths, 3 floors, 1 garage, 3 levels, and separate outdoor entries. The garage and second bedroom or home office were on lower level. The living room, dining room, and kitchen with washer and dryer and utility room were on the second floor. The master bedroom, bath, walk-in closet and roof-top deck were on the third story. Five printed sets of plans cost $950.00.

If you need funding for your project, apply now. I am working online with the rest of you.

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Patrick St. Cin

W – 512-213-2271

Patrick@REICapital.cash

http://www.reicapital.cash/

References

https://www.houseplans.com/plan/5850-square-feet-2-bedrooms-2-bathroom-luxury-home-plans-1-garage-33631

Depreciation: Causes of the Fall?

What Can Make Real Estate Depreciate?

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.

Patrick StCin, 512-213-2271

e-mail: patrick@REICapital.cash

Appreciation: Causes of the Rise?

What Can Make Real Estate Appreciate?

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.

Photo by Alexander Wendt on Pexels.com

Development

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.

Patrick StCin, 512-213-2271

e-mail: patrick@REICapital.cash

Multi-Family News on multihousingnews.com

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

It’s Business: People Want Short-Term Rentals

Great News For A Short-Term or Vacation Rental Property Business

No matter where you go, if you stay overnight, you need some place to sleep and shower. For dairy inspectors in 1915, the YMCA or the bus station might have been okay, but real hotels have been the mainstay choice for years now and the RV is good for the family that spends lots of time outdoors.

However, the online vacation marketplace has made it easy for travelers to search online for all sorts of alternative places to stay. You can look for condos, cabins, homes, and apartments in locations all over the world. This trend is good news for people who own vacation homes or second houses that they want to rent out. It is great news for people who want to build a short-term or vacation rental property business.

You might think that you have to live in Myrtle Beach or Hawaii to start a vacation rental property business. But this is not true. You can start a business right in your own town, right here in Texas.

Truly, these online vacation home marketplace sites have revolutionized the short-term rental business. They are a great tool for the rental property owner. Not only do they make it easy to advertise your property as far as the web can reach, but they also allow you to receive funds from buyers securely. A few of these vacation rental marketplace sites are listed here so you can check them out for ideas:

Air BnB: https://www.airbnb.com/

Homeaway: https://www.homeaway.com/

VRBO: https://www.vrbo.com/

There are many things to consider with any investment or any time you start a new business. Most of the time, you need a loan. To get a loan on a property, you need to know what property you want and how much you need to borrow. Here are a few tips to help you get started on your short-term rental property business plan.

The Property: “A superb location”

Be inspired and look for a property that you love and consider whether it is convenient to public transportation and/or has easy parking for private cars? Look for a single-family home or for a large house that has been converted into a triplex. One good way to start is to live on one floor, rent out one floor fulltime, and rent one as a short-term vacation rental. Remember that each floor or living space will need to have a separate means of access. You can consider doing the remodeling yourself to make a large home into a triplex. Construction funds should be included in the funds you need for your business loan.

Laws: “You can’t fight City Hall”

Check the zoning laws for the local government to make sure the community does not have rules against owners renting out homes or offering rooms or floors of their house for short-term rent. Do this before you buy. As they say in the neighborhood, “You can’t fight City Hall.” Well, you can, but it will be expensive, and you will probably lose. So, check the laws before you invest.

Furniture: “Very clean and inviting with a comfortable bed”

A long-term rental can be rented without furniture, but short-term rentals need to be furnished so you will get rave reviews on the online websites and earn repeat customers. Put these items into your plan and trim them from there depending on your funds.

You will need to have a washer and dryer available. If you are choosing the triplex, one in the basement might do, but stackable ones on each floor would be a real amenity and earn you the coveted, “They thought of everything to meet our needs.”

You will need a refrigerator, dishwasher, microwave, oven, and the latest HVAC system.

For the bedroom you will need a bed or beds, bedroom furniture, sheets, blankets, pillows, comforter, end tables, lamps, dressers, flat screen TV, hangars.

For the living room you will need another flat screen TV, at least one couch, easy chairs, reading lamps, book cases, and maybe a rug.

For the kitchen, table, chairs, silverware and dinnerware, coffeemaker, and cookware.

You can great prices at antique shops and thrift stores for furniture and decorating items like mirrors, pictures, book shelves. Some of the items you need, you will probably need to buy new, like the linens and the HVAC systems.

The Welcome Package: “They were great hosts”

Put together a welcome package. This package will tell renters about what amenities are offered in the space and in the town. Include useful information about public transportation and sites of interest.

Advertise: “It was so easy to find them.”

Advertise on as many vacation home marketplace sites as possible to get your name out there, get the reservations flowing, and start receiving funds securely. It is also a good idea to build and maintain a website.

Be Available: “They were the friendliest people”

It is very important that you available for emergencies and questions and if possible to check guests in. Take calls from interested parties and be friendly.

Lowenstein_Apartment_Complex

Build from One to Many

Grow. If you love the business and are making some money, be obsessive about it. When you can afford it, buy another property and enlarge your business.

Now that you are ready with a property and a plan, I can help you with a loan program to purchase your rental property. I am happy to announce that a loan program is now available to purchase rental property for the purpose of building your short-term or vacation rental property business. We have funds available for single-family residential property, condos (warrantable only), and ocean beach front property.

I would be pleased to have you call or e-mail too.

 

Pat St. Cin

Patrick@InvestorsLendingSource.com

512-213-2271

Austin, Texas

 

Downtown by the River

If you watch much of the show “Buying Alaska,” you will be very familiar with the phrase, “It has a view.” In Alaska, it is all about mountains, glaciers, and sometimes a lake, but in many cities the desired view involves an urban river. According to an article in the Wall Street Journal, “The Latest Housing Hotspot Is Downtown and by the River.” I think that San Antonio already knows this.

“Urban Energy and Natural Beauty”

Ceclie Rohwedder, (WSJ, December 6, 2018) writes about couples in Minneapolis, Washington DC, and Omaha trading in their country homes for homes in remodeled power plants and other industrial buildings in downtown areas along urban rivers, buildings that have been turned into modern condos. What does their new home offer, she asks? “Urban energy and natural beauty” one couple says.

I must agree. Watching a river is like watching a fire, its mesmerizing. But it is interesting and beautiful too with boats, birds, and fishermen. And those old buildings left over after industry has moved on, I have often looked at them, the old brick warehouses and mills that sit along the elevated freeways of our cities, the ones with the fading billboards high up on one corner, and vacant windows. What is the architecture like, I’d wonder? They look so sturdy. They are not going to come down soon, but who is going to use them.

Americans Just want to Live Downtown

Well the city planners, developers, and investors are way ahead of me. They are turning these behemoths into housing with a view, housing near culture and sports arenas, and water. Young professionals and retirees alike, it seems, crave community and walkability along with a touch of nature. And Americans overall (this year anyway) want to live downtown. An urban riverfront close to downtown offers work, culture, and play.

These are the areas that are drawing people to look at the old and want to make something new out of it. It is the buying and the fixing up of the building that is the investment. But investors are doing this all over the country and people are buying.

So, even if you are not up for buying and remodeling the old paper mill down by the river, when you are looking for a house to buy as a fix-n-flip investment, do not forget to scout around in these riverfront areas of your town. There, in the shadows of the big buildings, might be some smaller projects, homes or shops, more to your liking.

Patrick@InvestorsLendingSource.com

512-213-2271

Austin, Texas

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