Saturday, February 16, 2013

Multifamily Investment Trends

10:20 AM
Next up on the NAREIA cruise was a panel of multifamily investors. Re/Max wanted NAREIA to write curriculum for working with investors, as it is now a landlord's market. Rebecca MacLean presented slides on "To Rent or Not to Rent." Many baby boomers are ready to downsize and not wanting to buy again. Gen Y has a lot of student debt and job insecurity; they are doubling up with housemates as rental rates go up. Gen Y is less likely to buy and more likely to move for new jobs. Anthony Chara owns 9 SFRs and 1300 units. During the pre-bubble, he found it easy to find renters, long-term renters until 2010-11. But now he is finding so many new rentals in volatile markets like Vegas and Florida that make it difficult to find stable renters. Prokash, a building contractor in LA since 1995 owns 45 units in ten buildings; most of the rentals are Section 8. After bubble, many investors have moved into rental market to rent to Section 8. Rents had to be reduced. Biggest problem is getting capital to build. He has been setting up limited partnerships to provide financing (20/80% each partner in). Darrin Carrey owns 45 units in Dayton, OH. Stable rents there , but starting to see rents go up in nicer areas. Today he finds it easier to find qualified tenants. Laura See, Chicago, owns 260-300 units in nice locations. Rents never dipped, but quality of tenants has improved. 0% vacancy rate currently. Her rentals are mostly condo and commercial townhomes, all higher-end, more professional tenants. Anna Mills, 37 years as contractor, investor, owns over 50 SFRs and small multis. She does her own rehab, repair, and management. The quality of her tenants has improved in suburban school districts. No vacancies in 2 1/2 years. General comments were that landlords were not worried about tenant credit ratings. There is a different market for small multis vs SFRs such as allowing pets, parking, lesser rules. Class A do rent concessions, but B&C take less-perfect tenants. Different markets. No hard crimes, out of all properties. Lower quality tenants in apartments vs SFRs. Chara stated that he was getting rid of concessions on apartments now.Vegas is flooded with rentals and high unemployment rates. Phoenix and Nevada multifamily markets are great deals. Economic loss = concessions.


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