Deaton Investment Real Estate & The Wake County Apartment Association

Tuesday, July 24, 2007

Live from Boston...

As with many new real estate investors, I have read just about every book on real estate investing (as well as attended a few not so cheap "bootcamps".) With all of this preparation I was anxious to do my first deal. Unfortunately, the market in Boston where I live is not currently very conducive to real estate investing so I decided to go to Plan B and look outside my own backyard.

As a backup, I chose to explore the Triangle area. I chose the Triangle initially for two reasons: 1. I went to Duke so I knew a little bit about the area and, more importantly, 2. the Triangle fits my definition of an emerging market.

When identifying emerging markets the most important factor I look for is job growth. With job growth comes population growth and ultimately greater housing demand. In addition to the demand side of the equation, I try to estimate the housing supply in the market. I look at factors such as vacancy rates, concessions and whether rents are rising, stable or falling. From my research the Triangle appears to have very strong job growth as well as rising rents making it a very attractive market to invest in..

While it is important to understand the macroeconomic factors affecting a market, it is equally, if not more, important to understand the nuances of the sub-markets. In my opinion, the only way to gain this knowledge is by visiting the market and working with folks like Deaton who know the market so well.

Having identified a target market, I now faced the challenge of not only doing my first deal, but now doing my first deal remotely. To overcome this barrier, I knew I had to build a team in the Triangle area. I decided the logical place to start was by identifying commercial real estate brokers. Initially, everyone I came across seemed to deal in large scale commercial properties that were well beyond my investment capacity. Enter Deaton.

I came across Deaton in an advertisement in the Triangle Business Journal. Deaton was the perfect fit for what I was looking for. Not only did they help me build a team of mortgage brokers, property managers, insurance agents, attorneys, etc., but they also shared all of their market knowledge and served as a process guide as I completed my first deal. Throughout the entire process I found Deaton to be extremely helpful, responsive, honest and hard working. I would strongly recommend them to anyone considering investing in the Triangle area.

In summary, in my opinion the Triangle is a great place to invest given the strong job growth and rising rents. If the Triangle fits your investment criteria then I would recommend:

1. Tour the market with Deaton to understand the sub-market nuances. 2. Build a team to support your deal locally. 3. Run the numbers to make sure the financials meet your investment objectives. 4. Find a deal and pull the trigger.

Bradley Dufour

I couldn't say it better myself

In our ongoing efforts with investors from other parts of the country (actually, I'm going to cease classifying buyers by locale, an investor is an investor) we often find ourselves having to explain the geographic nuances of the market. This is a hard thing to do.

Unless they book a flight.

In fact, we have found that those investors who physically know the market, who have driven around seeing properties, are the ones who act the most intelligently when it comes time for that first purchase. Take Brad Dufour of Boston, MA, for example. We asked Brad for a few words on why he chose the Triangle for his first multi-family investment property after he purchased a quad we had listed on Spice Ridge Lane in west Raleigh. We were surprised (and grateful) by his response, which follows this post.

If you're a first time investor, read what Mr. Dufour writes above, and emulate it.

Monday, July 23, 2007

We're back.

Okay, so it’s been about a month since we last posted. But hey, the old stuff has good information for review.

Anyway, you’ve heard us mention on the radio, on the phone if you call and in this blog, that job growth is good for multi-family investment property. Well, nothing has changed since the last time we said it, except that more jobs have been created.

Network Appliance, a big fish in storage out in RTP, just purchased 72 acres for facilities that will eventually provide more than 600 jobs. Additionally, an article that came out today discusses the rising office rents in the Triangle, a very good sign that more companies are re-locating here and that local tenants are expanding.

We’re feeling the impact. But not as much as we hoped. In fact, the market is a bit odd right now. It’s certainly a good time to be a landlord but local buyers seem to be taking longer to realize it. As a result, the out of state buyers, mainly consisting of the CA, NY and FL contingent, are making their move. A majority of our phone calls are from investors looking to park money from dispositions in these states in Triangle rental property. The number of national “best places to live/do business/exercise/eat barbeque/walk on a sidewalk, etc.” lists seem to be some of the best drivers of this trend, as well as Web sites that market our properties to a larger, more national audience.

Speaking of which…

Deaton was interviewed last week by NuWire Investor, a new financial advice and resources Web site and online magazine. It’s a cool site. They pulled away from the traditional stock tickers, updates and numbers-based site and push news and information about real estate, wineries, emerging markets and globalization, for example. Anyway, we were interviewed for a piece that will probably run in October about the strength of the Triangle real estate investment market. The interview may also be available for download.