Small Balance Commercial Loans Now Available from REI Capital Resources and Current Offerings

As a direct lender and financial intermediary, we have the opportunity to place the most competitive financing options in the market.  We look forward to winning your business and creating a long-term relationship.  In addition to our core offerings of Ground-Up New Construction ($200K to $45M – Loan Amount), Fix/Flip Projects, Long-term Rental Property Acquisitions and Refinances, Airbnb or vacation rental acquisition and refinancing, and Commercial Property Lending including Apartments, we now have the ability to place loans with multiple small-balance commercial lenders.  The small-balance commercial loan amount falls between $100,000 to $10.M.

Types of properties that can be funded: 

  • Multifamily 
  • Commercial Condo 
  • Multi-Use – Primarily Residential 
  • Multi-Use – Primarily Commercial 
  • Office 
  • Retail/Wholesale/Strip Center 
  • Warehouse 
  • Light Industrial 
  • Self Storage 
  • Mobile Home Park 
  • Automotive 
  • Day Care – Free Standing/non-residential 
  • Restaurant/Bar 

Loan Programs Available: 

  • No Doc (min FICO 700)  –  $100,000 to $2.5M 
  • Full Doc (Min FICO 600) –  $500,000 to $10.0M 
  • Lite doc (Min FICO 650)  –  $100,000 to $2.5M 
  • Bank Statement (Min FICO 650) – $100,000 to $2.5M 

Loan Terms: 

  • Amortization – 15, 25, 30 yr 
  • Term – 5, 7, 10yr 
  • Rates – from 5.5% 

Here are more details of our core lending products of Ground-Up New Construction ($200K to $45M – Loan Amount), Fix/Flip Projects, Long-term Rental Property Acquisitions and Refinances, Airbnb or vacation rental acquisition and refinancing, and Commercial Property Lending including Apartments.

  • 1. Fix and Flip Loans – up to 90% Of Purchase with 100% of Rehab, experienced, or first-timer investors
  • 2. BRRRR – Buy, Rehab, Rent, Refinance and Repeat loans are available.  Loan programs include 5/1 ARM, 7/1 ARM, 30 Year Fixed Rates.
  • 3. Rental Property Loans – Purchase – Refi – Cash Out.  SFR 1-4 units and AirBnB properties.  Loan programs include 5/1 ARM, 7/1 ARM, 30 Year Fixed Rates.
  • 4. Ground Up Construction Loans
  • 5. Portfolio Loans for SFR – 2-4 units and Multi-Family
  • 6. Bridge Loans – Loans to Pay off current Lender – 1-2 Year Loans.
  • 7. Multi-Family Loans from 5 doors to 300+ doors.  Value-Add Purchase, Turn-Key Purchase, Bridge, New Construction, Agency and non-Agency loans
  • 8. Commercial and Mixed-Use Properties
  • 9. Haz. Ins. Co you can use. https://affiliate.nreig.com/RichardTurner­

Do you need funding for your BRRRR investment?  Basically, the loans look like this:

  • LTV – up to 88% of Cost / 68% LT Market Value
  • DSCR – 1.20 based on Market Rents (1.30 if less than 3yrs rental experience)
  • Experience – Min 5 flips or rental / 5yr look back
  • Loan Terms  – 7 yr  (5yr Fixed+2yr Floating)
  • Interest – Intro Rate 4.9% (increases with credit below 740, max 5.8%), First-year – no interest payments (rolled into loan principal)
  • Loan Terms – 12yr (10yr Fixed + 2 yr Floating)
  • Interest- Intro Rate 5.2% (increases with credit below 740, max 6.1%), First-year – no interest payments (rolled into loan principal)
  • Origination Points – 3% (2 to lender + 1 to us)  need to get a Broker/Client Agreement at 1%
  • Prepayment – Step Down 3-2-1  (No PPP if Origination Points Increased by 1%)

Some of our lenders will work with the following background issues:

  • Litigation with another Lender
  • Bankruptcy (10yr lookback)
  • Foreclosures (since 2012)
  • Delinquency with suppliers
  • Outstanding RE Liens
  • RE Loan Delinquency

Our lenders are ready to work with contractors and investors.  Now is a good time to buy a distressed property but be aware of the risks and understand what you’re getting into.  Distressed homes offer a unique buying opportunity for real estate investors, but the average home buyer should probably look elsewhere.

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

This image has an empty alt attribute; its file name is apply-now-button.gif

http://www.reicapital.cash/

Patrick St. Cin

W – 512-213-2271

Updates to our Loan Offerings – More for you as a Real Estate Investor

We are a direct lender and financial intermediary, which gives us the opportunity to place the most competitive financing options in the market.  Below is what we specialize in.  We look forward to winning your business and creating a long-term relationship: Ground-Up New Construction ($200K to $45M – Loan Amount), Fix/Flip Projects, Long-term Rental Property Acquisitions and Refinances, Airbnb or vacation rental acquisition and refinancing, and Commercial Property Lending including Apartments. Here are more details of our core lending products.

1. Fix and Flip Loans – up to 90% Of Purchase with 100% of Rehab, experienced, or first-timer investors

2. BRRRR – Buy, Rehab, Rent, Refinance and Repeat loans are available.  Loan programs include 5/1 ARM, 7/1 ARM, 30 Year Fixed Rates.

3. Rental Property Loans – Purchase – Refi – Cash Out.  SFR 1-4 units and AirBnB properties.  Loan programs include 5/1 ARM, 7/1 ARM, 30 Year Fixed Rates.

4. Ground Up Construction Loans

5. Portfolio Loans for SFR – 2-4 units and Multi-Family

6. Bridge Loans – Loans to Pay off current Lender – 1-2 Year Loans.

7. Multi-Family Loans from 5 doors to 300+ doors.  Value-Add Purchase, Turn-Key Purchase, Bridge, New Construction, Agency and non-Agency loans

8. Commercial and Mixed-Use Properties

9. Haz. Ins. Co you can use. https://affiliate.nreig.com/RichardTurner­

We are also very excited to be working with a new lender that will provide funding for the BRRRR investment concept.  Basically, the loans look like this:

  • LTV – up to 88% of Cost / 68% LT Market Value
  • DSCR – 1.20 based on Market Rents (1.30 if less than 3yrs rental experience)
  • Experience – Min 5 flips or rental / 5yr look back
  • Loan Terms  – 7 yr  (5yr Fixed+2yr Floating)
  • Interest – Intro Rate 4.9% (increases with credit below 740, max 5.8%), First-year – no interest payments (rolled into loan principal)
  • Loan Terms – 12yr (10yr Fixed + 2 yr Floating)
  • Interest- Intro Rate 5.2% (increases with credit below 740, max 6.1%), First-year – no interest payments (rolled into loan principal)
  • Origination Points – 3% (2 to lender + 1 to us)  need to get a Broker/Client Agreement at 1%
  • Prepayment – Step Down 3-2-1  (No PPP if Origination Points Increased by 1%)

The lender will work with the following background issues:

  • Litigation with another Lender
  • Bankruptcy (10yr lookback)
  • Foreclosures (since 2012)
  • Delinquency with suppliers
  • Outstanding RE Liens
  • RE Loan Delinquency

This lender is geared up to work with contractors and investors.  They understand the issues they come into and have a system that helps to prevent further erosion of the borrower’s track record or credit.

One of their claims is that 95% of applications pass thru the system to get a loan.

If you’re planning to buy a distressed property, now may be a good time to buy. Just make sure you’re aware of the risks and understand what you’re getting into.  Distressed homes offer a unique buying opportunity for real investors, but the average home buyer should probably look elsewhere. 

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

This image has an empty alt attribute; its file name is apply-now-button.gif

http://www.reicapital.cash/

Patrick St. Cin

W – 512-213-2271

Photo by Andrea Piacquadio on Pexels.com

ANNOUNCING: Bridge FICO Bands Lowered to 600+ Minimum Requirement

Photo by Amina Filkins on Pexels.com

We’re constantly analyzing data to train our machine learning models and inform our credit policies. Recently, we’ve lowered our bridge FICO minimum requirement to 600+ for qualifying clients. With newly expanded FICO bands, you have the potential to approve different clients and scale your business. Please note that all terms and borrowers are subject to credit approval.
We’ve also increased our bridge rehab limit to $500k maximum for clients of all REI experience levels. Take advantage of our other bridge loan program highlights, such as:

  • Rates as low as 6.5%*
  • Minimum 600+ FICO – new
  • Max $500k rehab size with up to 100% of rehab costs covered – new
  • Loans from $50k to $3MM
  • 12, 18 & 24-month terms
  • Up to 90% of the purchase price
  • Up to 75% of after-repair value

If you’re planning to buy a distressed property, now may be a good time to buy. Just make sure you’re aware of the risks and understand what you’re getting into.  Distressed homes offer a unique buying opportunity for real investors, but the average home buyer should probably look elsewhere. 

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

Patrick St. Cin

W – 512-213-2271

Patrick@REICapitalResources.com

http://www.reicapital.cash/

Diamonds are not forever but Real Estate Is … Make Wise Investing Choices!

Would you ever think to compare diamonds and real estate? At first glance, they seem like two completely different things.  However, they are both hard assets that are cost-prohibitive to acquire for the average US worker.  However, you can sell both “assets” quickly and not realize their full value in the marketplace.    Let’s first compare the similarities and then differences from an investment perspective.

Real Estate is a better long term investment than diamonds

Similarities

Hard Assets:

  • Both Diamonds and Real Estate are Hard Assets similar to other commodities
  • Negatively correlated with bonds and stocks, so when stocks crash both appreciate in value

Long Term Investments

  • Suitable for investors who are not looking for fast returns on their investment
  • Risk losing money if you try to “flip” your investment too early or didn’t acquire at the right price below market value

Additional Utility

  • Provide the investor with enjoyment and value
    • Diamonds are pretty to look at and make the person or people associated with the diamond have better social value 
    • Real Estate provides rental income and in the case of short-term rentals – owners can enjoy the property and generate revenue when not in use.

Differences

As investors, we all know that not all hard assets, such as real estate or diamonds, have the same return on investment.  In fact, ROI performance varies greatly even among real estate classes:  residential property, commercial real estate, agricultural property, etc.  Financial crises prove time and again that real estate is a highly volatile asset.   Diamonds are a closed market that is stable and less risky.  However, there are still differences among the rate of returns on diamonds such as the colored diamonds are less risky.

  • Maintenance Fees
    • Diamonds don’t have a maintenance fee … you’re ROI is based on the price you paid upfront for the diamond
    • Real Estate requires maintenance and repairs and possibly property management fees.  All these factors need to be carefully considered before acquiring property and affect your return on investment.
  • Portability
    • Several millions of dollars can fit in your fist and transport in a pocket … the irony for not being the rarest stone they have the highest size to value ratio of the natural resource category.   This is how historically (since the silk road trail) wealth was transported long distances and across borders.
    • Real estate can’t be moved. Real estate is not physically portable and the value does not transfer easily either.  However, 1031 exchanges are a great way to transfer appreciation as you sell your property.

At REI Capital Resources, we prefer real estate investing to diamonds.  In fact, diamond prices are extremely volatile – shooting up 249% from 1978 to 1980 before falling 77% by early 1986 – but the value of diamonds has also long been propped up by a number of artificial sources.   Real estate can be utilized and provide rental income.  As the number of cloud and work from home startups rise, commercial real estate is increasingly valuable to investors to provide “server farms” to meet bandwidth demands.

We are not saying diamonds aren’t valuable or important – especially as emergency currency and making your future or current spouse a little happier this valentine’s day.  We’re saying don’t buy a diamond as an investment with the idea of retained value.  If you look at diamond prices since the 1970s, there has been “Too Much Price Volatility & Demand Uncertainty To Be Considered Investable” by numerous sources.  Also, the use of diamonds as a symbol of a woman to be married is only about a 100-year-old custom.  There are numerous other stones considered rarer.  Thank you, Madison Avenue for making weddings a thing to save money for and cause the intelligent investor to consider generating a new stream of revenue.

We love this quote by Milton Friedman, “The speculator is looking for hidden weak spots in the market,” and acts as “the advance agent of the investor, seeking always to bring market prices into line with investment values.”   Diamonds don’t provide an adequate hedge against inflation, and most people would be better off with more practical financial planning, than investing for catastrophe purposes.  The diamond while a modern symbol of one’s love and commitment to another is expensive and ranks low when compared to value stability.

Diamonds vs. Gold vs. S&P 500

YearGold ROI  %Diamond ROI  %S&P500 ROI  %
2004000
200536-110
200657323
200797291
200811911-22
200917619-7
2010254507
20112763915
20122182437
20131852061
2014172873

*Data courtesy of the Rappaport Diamond Index, Kitco, the World Gold Council and Yahoo Finance. Diamond prices reflect monthly averages based on a 1-carat diamond. Gold prices are based on average annual London PM fixed prices. S&P 500 prices reflect average monthly adjusted closing prices. ROIs are cumulative.

The chart shows when the stock market suffered historic losses, diamonds at best served as a short-term hedge and very quickly fell behind the returns of alternative investments.

Therefore, I would recommend a 3 bedroom house that generates a positive return on investment that you can set aside the money after a year to buy your sweetie her diamond.  If she loves you, she’ll wait a year knowing a diamond is coming.

Rent Payments 😶

The National Multifamily Housing Council’s rent payment tracker found that 92.1 percent of apartment households made a full or partial rent payment by August 27. The survey included 11.4 million units of professionally managed apartments across the country.

This is 210,458 households down from last August and compares to 93.3 percent of households paying last month (July 27, 2020).

When the economy collapsed because of coronavirus shutdowns, the federal government helped with additional unemployment benefits, stimulus checks, and a moratorium on evictions and foreclosures. Those who did not lose their jobs cut back on costs, paid off debts, and made home improvements 🔨🔧(WSJ.com). Those who did lose their jobs made it through the crisis but, according to Ben Eisen’s WSJ article, now are not sure they can pay their next month’s rent (WSJ.com).  

People are uncertain about the economy. Gasparro & Kang report in their WSJ article that one indicator of this anxiety is that spending on groceries 🍗🍺🧀🍦dropped sharply in mid-August particularly in states with high unemployment.  

The federal government’s $600 per week additional unemployment benefits ended July 31. People who got those benefits and the $1200 economic stimulus payment from the federal government spent that money. Another round of stimulus has been discussed in Congress, but no agreement has been reached so far.

Doug Bibby, the President of the National Multifamily Housing Council (NMHC) (nmhc.org), said “Lawmakers in Congress and the Administration need to come back to the table and work together on comprehensive legislation that protects and supports tens of millions of American renters by extending unemployment benefits and providing desperately needed rental assistance.”

Photo by Kelly Lacy on Pexels.com

“The [multifamily housing] industry remains encouraged by the degree residents have prioritized their housing obligations 🔑🏡so far, but each passing day means more distress for individuals and families, and greater risk for the nations housing sector. If policymakers want to prevent a health and economic crisis from quickly evolving into a house crisis, they should act quickly to extend financial assistance to renters.”

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.

Give me a call or send an e-mail.

Patrick StCin, 512-213-2271,

e-mail: patrick@REICapital.cash

References

https://www.nmhc.org/research-insight/nmhc-rent-payment-tracker/

Ben Eisen, “How’s the Coronavirus Economy? Great or Awful, Depending on Whom You Ask.” WSJ.com. September 2, 2020. Available at https://www.wsj.com/articles/hows-the-coronavirus-economy-great-or-awful-depending-on-whom-you-ask-11599039003?mod=hp_lista_pos4

Annie Gasparro and Jaewon Kang, With Second Stimulus Checks on Hold, Americans Spend Less at the Grocery Store.” WSJ.com August 27, 2020. Available online at https://www.wsj.com/articles/with-stimulus-checks-on-hold-americans-are-spending-less-at-the-grocery-store-11598526249

Rental Concessions

Landlords should not bear all the risk of another government shutdown, but tenants are being more aggressive about demanding pandemic language in new leases, this according to reporter Esther Fung’s article, Retail Landlords Offer Pandemic Clauses in New Leases, August 25, 2020 in WSJ.com.

Covid-19 is persisting in many parts of the country and it is hard to tell what will happen now that schools begin to open and fall and winter approach. When the government ordered nonessential businesses to shut down due to the Covid-19 pandemic, many households lost their income and businesses lost their sales. Rents became hard to pay whether you were paying rent for your home or paying rent for your retail shop or office.

Photo by Gustavo Fring on Pexels.com

Previous force majeure language in lease contracts did not specifically mention “government mandated shutdowns in response to a global pandemic” under what was categorized as an “Act of God.”  Force majeure language in lease paperwork allows tenants to terminate leases or reduce rent in extraordinary circumstances.  However, the WSJ article cited above by Fung points out that “force majeure language in a lease hurts owners’ ability to get financing for the property.”

Landlords of both multifamily units and retail units have had to offer concessions to retain tenants and attract new ones. Philippe Lanier a principal for a property developer managing retail properties in Washington DC told Fung, that as a landlord, “You have to provide the tenant an easy decision. If you make it complicated, you’re not going to get this done.” Philippe Lanier, EastBanc

Percentage Concessions and Shorter Leases

What is a simple concession in a lease agreement? Lanier offered to cut the base rent by 50% if retail stores are forbidden to operate their businesses and this same concession could apply to an apartment tenant loses their job in a mandatory shut down. In Lanier’s agreement, the difference would be repaid in 6 equal installments that begin on the first day a business can reopen, or a tenant returns to work.

In Detroit, Bedrock, offered to waive base rents in return for 7% of gross sales for eligible tenants, which include restaurants and retailers. (WSJ.com) This company was also allowing the use of security deposits for other purposes.

Some investors are signing leases with shorter terms and that are more revocable by either party.

Photo by Bich Tran on Pexels.com

With rents taking a hit in large cities across the country it is hard to tell how long it will take an investor to make a profit on a rental property. Location still seems to matter, but the location may be in smaller towns and the suburbs near large cities rather than in the large metropolitan areas themselves.

Clear, simple language in a lease is best but the concessions themselves can be as creative as you are.

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

Patrick St. Cin

W – 512-213-2271

M – 505-239-3026

Patrick@REICapital.cash

http://www.reicapital.cash/

Transform an Office Building into a Home

Many people are transforming rooms in their homes into home offices, but some people are transforming commercial spaces into homes.

Unused and Vacant

Today, CNN reports that outdoor retailer REI is selling their newly finished unused 8-acre corporate campus in Bellevue, WA as they redefine their experience of “headquarters.” Their new model they say will make remote working the “normalized model” for headquarters employees and the future headquarters building will be instead multiple satellite campuses in the Seattle area.

Businesses all over the US are seeing what REI is seeing and adjusting their business models. Office building occupancies are going down in the downtown areas of large cities across the US primarily because of the effect of the coronavirus pandemic and its associated lockdowns. Businesses are either moving, transitioning to remote working, or closing altogether. Landlords of downtown office buildings in big cities are in danger of losing the income from their properties as companies move to small communities or have their staff work from home. If the landlord has a mortgage and cannot keep up with their payments, they could lose the building. These buildings are then left vacant.

According to STR, a global hospitality data and analytics firm, hotels are suffering as well. Their data show that a fifth of hotel properties are still closed and have been since March. Many of these hotels will not survive the pandemic.

This devastating business and economic situation may offer a sliver of optimism if we look at investing in converting office buildings and hotels into much needed housing.  

According to an article in realtor.com (https://www.realtor.com/news/trends/office-hotel-conversions-to-housing/) office buildings and hotels in urban downtowns are attractive for conversions to apartment housing because they have wifi and cable infrastructure in place, parking areas, and common areas. While offices will require more plumbing to provide bathrooms and perhaps kitchens to each apartment, hotels can be converted less expensively because they are already divided into individual spaces with individual bathrooms.

Creating Affordable Housing

One example of a hotel converted to apartments is Plato’s Cave at 3524 Keetor St. in Branson Missouri. Repvblik (pronounced Republic) LLC, a Los Angeles based firm, converted a vacant six-building Days Inn into multi-family or workforce housing. The complex includes studio apartments, renting for $495.00 a month, and one-bedroom apartments, renting for $695.00 a month. According to its website, https://www.platos-cave.com/pictures-of-units, the complex incudes a gym, commercial kitchen, large dining area, an outdoor pool and beach volleyball on the property. There is plenty of parking and it is right on the strip within walking distance to the jobs there. It is affordable housing that is so badly needed.

Living and working in crowded downtowns were very popular until the pandemic hit these communities so hard. It is not clear how many people will be willing to move back to crowded downtowns after the pandemic ends or if it lingers for years. It looks certain that there will be many vacant office buildings and hotels around by the end of 2021 or when long-term leases run out. Landlords will have to keep their prices in line with demand and it is too soon to tell what demand will be.

Too Early to Give Up

Clare Trapasso, the author of the article, “As the Pandemic Empties Office Buildings, Can Those Spaces Help Solve the Housing Crisis” says, “… it may be too early to write the obituary of urban office buildings and hotels, as many did in the wake of 9/11.”

However, development can drive what happens, so you might want to be thinking about a strategy to help cities, people in need of housing, and your own financial security by seriously studying the risks and rewards of converting vacant downtown office space and hotel space into affordable housing in your own city.

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

Patrick St. Cin

W – 512-213-2271

M – 505-239-3026

Patrick@REICapital.cash

http://www.reicapital.cash/

References

Trapasso, Clare, Realtor,com, As the Pandemic Empties Office Buildings, Can Those Spaces Help Solve the Housing Crisis, August 12, 2020. com (https://www.realtor.com/news/trends/office-hotel-conversions-to-housing/)

CNN,  Leah Asmelash and Alison Kosik, August 13, 2020. https://www.msn.com/en-us/news/us/outdoor-retailer-rei-to-sell-sprawling-new-and-unused-headquarters-to-shift-to-remote-work/ar-BB17VDuG?ocid=msedgdhp

Platos Cave website: https://www.platos-cave.com/property-tour

Picture of downtown, USEPA Environmental-Protection-Agency / Public domain

Senior Renters Are Attractive

As families migrate away from the high population concentrations of the northeastern cities, looking for more space, a lower cost of living, expanding employment opportunities, and lower taxes, they are likely to bring along their senior members who tend to retire close to family. These seniors will need housing, and despite the health crisis that has occurred in skilled nursing settings across the country during the pandemic, other senior living environments, such as independent living, assisted living, and memory care communities can still claim that seniors are better off in their care versus at home (MHN article). Independent senior living is attractive because seniors can be protected from uncontrolled interaction with younger family members better in an apartment than in a single-family home where multiple generations live together.

Photo by Tristan Le on Pexels.com

For investors in and operators of senior living communities, seniors make attractive renters because they do not depend on employment income to pay their rent. According to a July 16, 2020 MHN article, rent collection in the senior living real estate sector has remained strong during the pandemic. For other commercial real estate multi-family sectors, federal unemployment benefits and loan and rent forbearance measures have bolstered rent collections for a few months, but the true rent collection and apartment occupancy picture in the long term will not begin emerging until after the end of July when government unemployment benefits expire. It is uncertain how many renters will be able to keep paying their rent, how many vacancies will be created, and how rental rates will be affected by the withdrawal of federal program support.

According to the National Multifamily Housing Council, 87.6 % of renters made full or partial rent payments by July 13. That is slightly down from a month ago and from the same period last year.

Marketing a senior living community may require appealing to the adult children of seniors as much as to the seniors themselves. According to Brett Gelsomino, Vice President of ZOM Senior Living some amenities to consider in new multifamily rental construction projects for seniors and in remodeling projects include amenities that ZOM is putting in its South Florida communities:  walkable locations nearby, pools, lounges, dining venues, library, and business centers, garage parking, valet service. He expects that there will be pent-up demand for senior living communities by mid-2022.

Demand for senior living communities could rise as soon as the covid-19 pandemic expends itself and people can move about again. Hopefully by 2021. Who knows? If you have the funds and the desire, building through low economic times is good for the economy and good for your mental wellbeing. If you need funding, apply now.

This image has an empty alt attribute; its file name is apply-now-button.gif

I am working online with the rest of you.

Patrick St. Cin

W – 512-213-2271

M – 505-239-3026

Patrick@REICapital.cash

http://www.reicapital.cash/

References:

Laura Calugar, Multifamily Housing News. https://www.multihousingnews.com/post/close-up-on-south-floridas-senior-housing-sector/ July 16, 2020.

IvyLee Rosario, Multifamily Housing News. https://www.multihousingnews.com/post/national-multifamily-report-may-2020/ July 19, 2020.

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.

This image has an empty alt attribute; its file name is apply-now-button.gif

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

Investing in Apartments – Commitment and Study

Even in the coronavirus pandemic crisis investing in rental apartment property can still be a good way to add thousands of dollars to your income in the long term. If you buy apartment real estate that is in a good location with growth potential, but that is not too expensive, this real estate investment will likely recover after the crisis passes according to (Brad Hunter, Forbes.com). However, the investment takes funds and commitment over the long haul.

Appreciation

There are two way to make money from rental real estate. The first, appreciation, is a rise in value over time. This profit can only be realized by reselling the property after some time has passed or after you have made upgrades that add to the value. Generally, real estate appreciates in value over time if you are in the right location. Be sure to study employment and home buying trends in your local area before purchasing rental property.

Cash Flow & Coronavirus

You can also make money in the form of cash flow by collecting rents as income. The coronavirus pandemic is affecting the apartment rental real estate industry because many people, more people than we have ever seen before, have lost their income in only a few weeks, unemployment claims are up all over America, and tenants may not be able to pay their rents for the next couple of months. This will impact the ability of landlords to make money. Either the landlord forgives the rent and eats the loss for a while to keep the tenant, or the renter is evicted, and the property becomes vacant. In either case, the landlord is not receiving income on the property and may have to seek forbearance from their own lenders.

If a landlord has paid off his or her own mortgage on the property or if he or she has established an emergency fund as Dave Ramsey suggest (daveramsey.com), they will be able to weather the storm caused by the jobs lost in the pandemic shutdown.

Jobs and Renting

Either the jobs come back after the danger from the virus is past and businesses reopen, and the renters stay, or a new set of renters materialize because those people who are no longer able to afford their own homes move to apartments and construction of new homes slows because of coronavirus-driven delays caused by labor shortages, and supply shortages. More people may need to rent. In this case. It is likely the landlord’s income will return after some shaky months.

Photo by Michael (Black) Ritter on Pexels.com

Asset Rebound

Because the income potential should rebound, rental apartment property should not lose its value overtime as an asset. If the building itself remains sound, there is no reason why the property value will not increase as other investments tank and real estate once again looks solid and reliable compared to stocks. Also, if interest rates remain low, investors will be willing to take on more debt and are not restrained from purchasing property at higher prices. This will help investors who plan to sell their rental properties make a profit.

Single-Family Rentals

Investments in single-family rental homes may also benefit in the long run as more people work from home and need more room than apartments afford. Brad Hunter also suggests in his article on Forbes.com that the single-family-built-to rent-industry may benefit as people need that specially designed home office space with its own door and bathroom.

Due Diligence

Investment in rental real estate should remain attractive but be sure to do your due diligence.

Study everything from location, jobs, virus hotspots, distancing trends, supply chains, virus rebounds as they occur, and what the kids are doing now.

References:

Dave Ramsey online at https://www.daveramsey.com/blog/how-to-invest-in-real-estate

Forbes online: https://www.forbes.com/sites/bradhunter/2020/03/24/coronavirus-impacts-on-real-estate–why-you-need-to-think-short-term-and-longer-term/#6f2133345f6f

Investopedia, The Impact of Interest Rates Changes by the Federal Reserve. https://www.investopedia.com/articles/investing/010616/impact-fed-interest-rate-hike.asp

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Patrick St.Cin

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