WCAA Meeting - 1/5/12 - Wake County Economic Development

Happy New Year! The next meeting of the Wake County Apartment Association will be Thursday, January 5, 2012.

Last month our group returned to the Golden Corral on Glenwood Ave and the panel discussion was a big hit. Let's kick the New Year off with another great meeting.

At Thursday's meeting we will be joined by Casey Cronce, research manager for Wake County Economic Development. WCED serves as the lead economic development agency for Wake County. As such, WCED assists businesses with their relocation and expansion plans, and markets Wake County as one of the best places for business in the United States. Casey will provide some of WCED's business and demographic data and share some of the exciting economic developments within Wake County.

I look forward to seeing everyone for an informative meeting on 1/5/12.
Time: Dinner and Networking 6:00 - 7:00 PM / Presentation 7:00 - 8:00 PM
Where: Golden Corral on Glenwood Avenue (next to Fat Daddy's)
Cost: Meetings are free but you MUST purchase dinner and eat if you attend

Investors pour money into Triangle apartment boom - Real Estate News - NewsObserver.com

Investors pour money into Triangle apartment boom - Real Estate News - NewsObserver.com

....... [Investors are being drawn to apartments both by their steady cash flow and their improving fundamentals. The turmoil in the residential housing market has increased demand for apartments as more and more people lose their homes to foreclosure or find that they can no longer qualify for a mortgage.

"There aren't as many units being delivered in the next two to three years to keep up with demand," said Jeff Glenn, an investment broker at CBRE in Raleigh. "So there's enormous rent growth potential that we're seeing." ........]

Read more here: http://www.newsobserver.com/2011/12/22/1726229/investors-pour-money-into-apartment.html#storylink=cpy

WCAA Meeting - 12/1/11 - Panel Discussion

The next meeting of the Wake County Apartment Association will be held Thursday, December 1, 2011 at the Golden Corral on Glenwood Ave/Hwy 70 in Raleigh. We have assembled a fantastic panel that will be discussing various topics and questions related to the apartment market. The panel will include Jesse Sorrel, Steve Deaton and Beau Dawkins. As you can see in the brief descriptions below (with links to their respective websites) the experience, expertise and knowledge of the local apartment market accumulated between these three individuals is nearly unmatched.

Jesse Sorrel is Owner and Broker in Charge of Rhyne Management. Rhyne manages thousands of rental properties in the Wake County area and Jesse has decades of experience as a property manager and owner-operator of apartments.

Steve Deaton is Owner and Broker in Charge of Deaton Investment Real Estate. Steve has more than 25 years experience focusing on the brokerage of apartment properties in the Triangle. Additionally, Steve owns and manages a portfolio of invesment properties inside Raleigh's Beltline.

Beau Dawkins is the Owner and Operator of Dawkins Properties. Dawkins Properties owns and self-manages more than 100 rental units in the Raleigh area. An integral member of the WCAA, Beau has accumulated his portfolio over the last 8 years and is very hands-on in the operations at his properties.

This meeting is a rare opportunity for our group and should be very informative for everyone. Happy Thanksgiving. See you on Thursday, 12/1/11.

Time: Dinner and Networking 6:00 - 7:00 PM / Panel and Open Discussion 7:00 - 8:00 PM
Where: Golden Corral on Glenwood Avenue (next to Fat Daddy's)
Cost: Meetings are free but you MUST purchase dinner and eat if you attend

Apartment REITs: These Are the Salad Days - Developments - WSJ

Apartment REITs: These Are the Salad Days - Developments - WSJ

Apartment Values, Rents Rise - WSJ.com

Apartment Values, Rents Rise - WSJ.com: By DAWN WOTAPKA

Strong growth of rents and occupancy levels of rental apartments have pushed some building values to record levels as Americans shift away from home ownership.

While concerns about the economy are cooling the market for most other types of commercial real estate, apartment rents and occupancies continue to be boosted by demand from millions of people who are victims of foreclosure or are unwilling or unable to buy their own homes.

At the end of the third quarter, 5.6% of the nation's apartments were vacant, down from 5.9% in the second quarter, and the lowest level since 2006, according to Reis Inc., a real-estate data service.


.Rents are up even in some cities that have been hard hit by high unemployment and the housing crash, like Orlando, Fla., Detroit and Phoenix. Effective rents, which include landlord discounts in some markets, rose to $1,004 a month in the third quarter, up 2.3% from a year earlier, according to Reis. Of the 82 major markets that Reis tracks, only Las Vegas saw rents decline compared with a year earlier.

Forecasters say rent increases could slow or stop if the economy weakens further. But for now, these trends are producing outsized returns for real-estate companies, compared with other commercial-property classes.

Values of apartment buildings in the best locations—with modern amenities like resort-style swimming pools and outdoor movie viewing areas—went into record territory in the third quarter, according to an index compiled by Green Street Advisors. The previous record had been set in the second quarter of 2007.

Investors who bought apartment buildings just a few years ago are selling for big profits. Regency Club, a 372-unit complex in Jackson, N.J., with two swimming pools and tennis courts, sold for $44 million in August, compared with $39.9 million in early 2009, according to Marcus & Millichap.

At the same time, though, the rise in rents is squeezing large swathes of the middle class by increasing living costs just as wage increases are anemic and unemployment high.

Glen Guile, a 40-year-old information technology and marketing employee for an auto-parts company in Raleigh, N.C., says he's looking on Craigslist, an online classified-ad service, for a roommate because he just heard his $629 rent for a one-bedroom apartment could be increased another $30 to $40 a month. He's already working a second job at a Costco store. "I don't get a day off. I work seven days a week," he said.

But thanks to rising rents and occupancies, some analysts predict that real-estate companies will have the highest growth in property net income this year and next year since 2006.

Associated Estates Realty Corp. kicked off the earnings season for apartment-building companies Monday by reporting a 12.5% year-over-year increase in funds from operations, a common metric used by real-estate companies to measure performance. When looking at apartments owned for a year or more, rents for Associated's 12,000-unit portfolio were up 4.6% compared with the third quarter of 2010.

"Some people try to make the argument that what's going on in the job market affects apartment demand," said Jeffrey Friedman, Associated's chief executive. "We don't believe that."

The apartment sector has been insulated from high unemployment because it continues to inhabit a sweet spot in the economy created by demographic factors and the anemic home sales market. The U.S. is expected to see 1.5 million rental household formations in 2011, a record year, according to Green Street.

The main reason for the rental increase is a faster-than-expected decline in the home ownership rate, according to Green Street. The nation's rate came in at 66% in the second quarter, down from 66.4% in the first quarter and 66.9% in the second quarter a year ago, according to the Census Bureau.

Some industry watchers say the rate could fall to as low as 60%. Each 1% decline in the home-ownership rate represents the movement of one million households to rentals.

If a current tenant balks about a lease renewal including higher rent, Mr. Friedman says he isn't overly concerned. "There's someone coming right behind them who can afford it," he said.

To be sure, the economics of apartment investments aren't detached from the concerns about financial problems in Europe and the possibility of a double-dip recession in the U.S. As a result, landlords have started to temper rent growth in some areas, including Denver, Atlanta and the Baltimore area, according to Green Street.

If another recession hits and unemployment rises, millions of renters could likely double up or move home with their parents, putting a crimp in demand. "People just aren't going to write bigger and bigger rent checks into infinity," warns Andrew McCulloch a Green Street analyst.

The high rents are also being supported by a lack of new supply. Developers have scrambled to launch new projects, but most of them won't start hitting the market until late 2012. Roughly 8,200 new apartments hit the market in the third quarter, the second lowest number since Reis began tracking data in 1999.

Write to Dawn Wotapka at dawn.wotapka@dowjones.com

WCAA - Next Meeting 12/1/11

There will be no meeting of the Wake County Apartment Association in November. Perkins Restaurant has closed, but fortunately we were able to reserve the private meeting room at the Golden Corral on Glenwood Avenue for December 1st. I am excited we have a chance to move back to this location.

The manager was reluctant to reserve the room for us into 2012, but agreed to give our group a "trial run." We need to have a large group and everyone in attendance must eat. Basically...in exchange for the room reservation we need to show that our group brings a lot of paying customers so they will welcome us back.

I hope that most of you will go ahead and put 12/1 from 6 PM - 8 PM on your calendar. Details for the meeting will come in a few weeks.

Buying a house not part of the 'American dream' for some :: WRAL.com

Buying a house not part of the 'American dream' for some :: WRAL.com: Raleigh, N.C. —
The shaky economy has some college graduates rethinking the traditional "American dream" of buying a house.

North Carolina State University senior Ben Galphin is more focused on looking for jobs all over the country.

"Everybody strived for that coming out of school – get a job, buy a house, start a family, the whole thing," mortgage banker Jeremy Salemson said Wednesday. “Now, the reality is they are not finding jobs or not finding jobs that are paying enough to feel they can qualify for a traditional mortgage."

Many people are opting to rent, which homeowner Jackie Armstrong sees as a waste of money.
“I would encourage people my age to buy a house, because if I had not stayed here for 18 months and was renting, I would have spent around $18,000,” she said. “That’s a considerable amount. Even if I sell this for as much as I bought it 18 months ago, I'm still not throwing money away.”

Armstrong cautioned that people should be confident and stable in a job before opting for a mortgage, a big fear for 20-somethings in the recent economy.

“If things continue to go down, would I have a paycheck?” Galphin worried. “It's something where I don't want to be sealed in to a 20-year agreement with a bank and can't hold up my end of the bargain.”

Salemson said the Triangle housing market has fared better than other areas, in part because of the diverse work opportunities in the area.
Reporter: Tara Lynn
Web Editor: Kathy Hanrahan

Housing Crash Continues

By: Dawn Wotapka and Alan Zibel

Here’s even more bad news for housing: Sales of previously occupied homes in the U.S. fell last month. September’s existing-home sales decreased by 3.0% – more than expected – from a month earlier to a seasonally adjusted annual rate of 4.91 million, the National Association of Realtors said Thursday.

The market is “in a holding pattern. It’s not breaking out,” said Lawrence Yun, the trade group’s chief economist. (We’ll point out that this holding pattern has been going on for some time.)

The results show that the housing crash continues. The foreclosure crisis drags on, exacerbated by the fact that many Americans owe more on their homes than they’re worth. That has plenty of would-be buyers jittery and stuck on the sidelines. In addition, requirements for loans are tighter than ever and, now, the size of loans backed by government entities including Fannie Mae and Freddie Mac have fallen, hurting housing even more. The limits, which went into effect at the start of this month, vary by location but are now $625,500 in expensive markets such as New York and San Francisco, down from $729,750.

According to the Realtors, the median sales price came in at $165,400, down 3.5% from $171,400 a year earlier, showing that the nation’s depressed home values have yet to stabilize.

The inventory of previously owned homes listed for sale, meanwhile, fell at the end of September to 3.48 million. That represented an 8.5-month supply at the current sales pace, slightly above the healthy level of about six months. (Keep in mind that plenty of would-be sellers have pulled their homes off the market or are waiting to sell.)

Foreclosures and other distressed properties represented about 30% of sales, showing such deals remain a big part of the battered marketplace. Investors purchased 19% of homes in September, up a hair from a year earlier. First-time buyers accounted for 32% of deals.

Here’s what industry watchers had to say:

Ian Shepherdson, economist, High Frequency Economics: “With mortgage demand still dead we expect no serious near-term movement. Prices continue to decline, with the y/y rate trending at about -4.5%. This is a significant barrier to recovery, because most people tend not to want to borrow multiples of their annual incomes to purchase depreciating assets, no matter how low is the nominal mortgage rate. Housing will recover in time as the labor market picks up and people start moving around the country to take up new jobs, but for now the market is dead.”

Jed Kolko, economist, Trulia: “Today’s month-on-month drop in existing home sales won’t be the last drop we see. The current month-on-month decline in home-purchase mortgage applications, released by MBA yesterday, indicates that sales – which lag mortgage applications – will continue downward.”

Dan Oppenheim, analyst, Credit Suisse: “We think these levels of months’ supply continue to indicate current and future pricing pressure, suggesting downside risk to existing and new home pricing (NAR inventory also would not include shadow inventory not for sale). We think home builders will need to adjust pricing lower to remain competitive with the more attractively priced existing home market.”

Should a First-Time Buyer Be A Landlord?

A great Q&A that appeared on WSJOnline.com

By JUNE FLETCHER
Q. I am a single professional in my 20s who rents with a few roommates. I read your comments about how Austin is a good place to invest in property, given the volatility of the stock market. I, too, am considering it. I am thinking of buying a three-bedroom, $150,000 house in a good neighborhood. With help from my family, I can put 20% down. If I rent out the extra two rooms, the income will cover the property tax and mortgage. But I travel a lot for work and I am not sure whether my company will transfer me or if I even want to stay in this area. Should I do it?

--Austin, Texas

A. I applaud your desire to invest in your financial future. And landlords get generous tax breaks while collecting rental income. But from what you've told me, I recommend holding off buying a home.

Managing a property—which includes screening tenants, collecting rents, paying bills and keeping the lawn mowed—while you are traveling is difficult. But my bigger concern is that you are not sure if you are even going to stay in the area. Unless you buy a fixer upper at a discount, rehab it and resell it quickly, the only way to make money in real estate is to hold on to a property until it appreciates. Even though prices have been rising in Austin, you will need to stay in the area for at least a few years to recoup your costs on a market-rate house.

As a homeowner and landlord, you will have many expenses besides taxes and a mortgage. Assuming you put 20% down on a $150,000 house in Austin, you will have to pay an estimated $4,938 in closing costs, according to Zillow's calculator. You also will have to budget for repairs and maintenance—expect to pay between 1% and 3% of the home's purchase price each year—as well as for repainting and freshening the rooms when tenants move out. You will need insurance, and if you have a homeowners association, you will have to pay dues. When you sell, you will have to pay a broker's commission, probably around 6% of the selling price, and some fix-up costs.

Rental income will help to defray these expenses, but you cannot depend on a steady stream. There will be periods when one or more of the rooms will be vacant, and you may have to shoulder some extra costs to evict someone who doesn't pay the rent. You should have about six months of mortgage payments in reserve to cover these possibilities. You also should have cash on hand to handle expensive emergencies, like a furnace that conks out in a cold snap. Since you will have to tap family funds for a down payment, it doesn't sound like you have enough of a cushion yet.

That doesn't mean that you should give up on the idea of owning property. Just postpone it until you know where you will live and are on a more solid financial footing. In the meantime, continue to familiarize yourself with various neighborhoods and properties, talk to lenders and work with a real estate agent who understands your situation. Then you will be in a position to act when you are ready to put down roots.

Write to June Fletcher at fletcher.june@gmail.com.

Wages for young college graduates down almost 10%

This sobering chart comes from The Wall Street Journal Blog

Citing research from the US Census Bureau, recent college graduates without graduate degrees have seen a larger decline of income between 2000-2010 than any other age group.

WCAA Meeting - Thursday, 10/6/11 - Capital markets overview and Q&A with Jeff Burgess

The next meeting of the Wake County Apartment Association will be Thursday, October 6, 2011. We are very fortunate to welcome Jeff Burgess as our guest speaker for this meeting. Jeff founded Equity Services, one of the largest independently owned mortgage companies in N.C. and now serves as Branch Manager for PrimeLending in Raleigh. Jeff offers insight to the capital markets from more than 25 years of experience. In addition to covering investment property financing options, Jeff hopes to discuss your questions about market expectations, forecasts, trends and anything else that relates to real estate finance.

Don't miss this meeting. It will be one of the most informative of the year.

Time: Dinner and Networking 6:00 pm - 7:00 pm. Speaker 7:00 pm - 8:00 pm.

NEW Location: Perkins Restaurant off Capital at I-440 - http://www.perkinsrestaurants.com/
2657 Appliance Court
Raleigh, NC 27604
919-828-7375

Guest are always welcome.

Property Performance to Diverge Further; Job Stagnation Continues

GlobeSt.com - Property Performance to Diverge Further; Job Stagnation Continues - StreetSmart Article

This is a good read. Click the link above.

Raleigh, NC ... Ranked as America's Best City

Source: BusinessWeek.com

By: Venessa Wong and provided by Bloomberg Businessweek and Yahoo

Click the link above for the full article, introduction below...

Which is America's Best City?

Based on such metrics as school performance, green space and cultural amenities, Raleigh, N.C. ranks No. 1 in Businessweek.com's first Best Cities ranking

Ask most people in which city they would most want to live and usually their answer would be shaped by such realities as proximity to their jobs and what they can afford. But suppose you could choose to live anywhere you wanted regardless of cost? What if you could live in a city that offered a wealth of culture, entertainment, good schools, low crime and plenty of green space? Many people might opt for the obvious choices, such as New York or San Francisco, but, great as they are, data reveals there are other cities that are even better.

Businessweek.com spent months working with data that would help us to identify the best cities in the U.S. We looked at a range of positive metrics around quality of life, counted up restaurants, evaluated school scores, and considered the number of colleges and pro sports teams. All these factors and more add up to a city that would seem to offer it all. When we began the process we had no idea which cities would come out on top. The winner? Raleigh, N.C.

More people doubling up = contraction in number of households

The WSJ has offered a great commentary on findings from the US Census Bureau that 69.2 million, or 30% of Americans, were doubled-up in 2011, up from 61.7 million adults, or 27.7%, in 2007. While moving in with family can keep someon from poverty it has a negative affect on the overall economy by decreasing the number of consumers. But that is pretty much common sense. If someone doesn't have a job, they don't have much money which means they need a cheap (or free...thanks Mom and Dad) place to stay.

Here is one clip from the article but click the link above for the complete story:

"Much of the increase comes from young people, ages 25-34, living with their parents. Some 5.9 million, or 14.2% of 25-to-34 year olds, lived with their parents in 2011, up from 4.7 million before the recession.

“These young adults who lived with their parents had an official poverty rate of only 8.4%, since the income of their entire family is compared with the poverty threshold,” David Johnson chief of the Housing and Household Economic Statistics Division at the U.S. Census Bureau said. “If their poverty status were determined by their own income, 45.3% would have had income falling below the poverty threshold for a single person under age 65.”"

Just imagine what a little job creation would do....

Flood Insurance

Most landlords I know dread the annual (or monthly) insurance bill. While they recognize the protection insurance provides, they doubt they will ever need it and pay little attention to the policy details. Additionally, most property owners never consider getting flood insurance unless their property is in a flood area and the lender requires it. After all, it just adds to the cost.

Well, after Hurricane Irene and the flooding witnessed in the Northeast, it might be time for property owners to re-think their position on flood insurance. After all, flooding can happen almost anywhere if enough rain hits the ground and the typical drainage system fails.

I would encourage you to read through the National Flood Insurance Program website to educate yourself. For as little as $10-$20 a month you can insurance small rental properties against flood damage if they are in low-to-moderate risk areas.

WCAA Meeting - Thursday, 9/1/11 - Free Attorney

The next meeting of the Wake County Apartment Association will be this Thursday, September 1, 2011. Our speaker for the evening will be WCAA favorite, attorney Will Brownlee. Mr. Bownlee is one of N.C.'s most experienced landlord attorneys. The meeting will be a great opportunity to learn and ask your landlord-related legal questions.

Time: Dinner and Networking 6:00 pm - 7:00 pm. Speaker 7:00 pm - 8:00 pm.

NEW Location: Perkins Restaurant off Capital at I-440 - http://www.perkinsrestaurants.com/
2657 Appliance Court
Raleigh, NC 27604
919-828-7375

Guest are always welcome.

Red Hat Confirms Move to Downtown Raleigh

The long awaited and highly anticipated move of Red Hat's headquarters to Downtown Raleigh was announced on Thursday afternoon, 8/24/11. Most folks assumed this was going to happen, but it appears to be a sure thing now. Citing this release from WRAL Red Hat will occupy the Progress Energy building when they vacate. Most likely this move will be somewhat temporary while Red Hat develops and builds the larger space they need.

Deaton Newsletter Available

Deaton's August 2011 Edition of the Investment Real Estate Report is available at this link.

282 Apartments Under Construction in Cameron Village

Crescent Resources has completed their purchase of land at the corner of Clark Avenue and Oberlin Road and construction/demolition has begun. When completed, the 2.6 acre site will see 282 apartments and 16,000 SF of retail space. It is the first apartment development within Cameron Village. Source - http://www.multifamilybiz.com/News/3494

78 SF Apartment - Rented for $800 a month

You read it correctly, there is an apartment in Manhattan renting for $800/mo that is less than 80 SF. The resident shares a bathroom with other residents, has no kitchen, works from home and seems to be perfectly content. Read more about the apartment and watch the very cool video at this link - http://www.msnbc.msn.com/id/44004150/ns/business-real_estate/

WCAA Meeting - 8/4/11 - 2011 Tax Update and Tips for Real Estate Investors

The next meeting of the Wake County Apartment Association will be Thursday, August 4, 2011. Our speaker for the evening will be a returning guest, real estate CPA, Kevin Bassett.
http://www.bassettcpas.com/

Kevin has more than 15 years of experience as a CPA focused on real estate clients. He has written books on tax strategies for real estate investors and often holds seminars on related topics. We are fortunate to have Kevin join our group this month to share tax updates for 2011 and some of his tips for real estate investors.

NEW Location: Perkins Restaurant off Capital at I-440 - http://www.perkinsrestaurants.com/
2657 Appliance Court
Raleigh, NC 27604
919-828-7375

Time: Dinner and Networking 6:00 pm - 7:00 pm. Speaker 7:00 pm - 8:00 pm.
Guest are always welcome.

Should Foreclosures Be Rented? Should the Government Have a Say?

A clip from an interesting article/blog post on the WSJ Online below, link to full article here.

"The Journal writes today that one idea gaining support in Washington is an effort to pull some of those properties off the market and rent them out, either on homes owned by federal agencies or loan giants Fannie Mae and Freddie Mac.

These firms and U.S. banks currently own more than 500,000 foreclosed homes, and there’s another 2 million loans in some stage of foreclosure. The high share of distressed sales in many struggling markets is contributing to continued declines in home prices.

“Can we find a way to try and reduce that overhang or to try to provide incentives for investors to covert them?” said Federal Reserve Chairman Ben Bernanke in testimony to Congress last week.

Critics worry about the risk of the government as landlord. One solution: sell federally backed foreclosures to investors who would have to agree to rent them out for a to-be-determined period of time. Investors would rehab the properties, fill them with tenants, and hire a national property management firm to oversee the day-to-day landlord needs."

Happy Fourth of July! No WCAA meeting in July.

There will be no meeting of the Wake County Apartment Association in July. I wish everyone a blessed 4th of July. God bless the men and women have and continue to sacrifice for the United States of America.

An Interactive Census Map

Courtesy of the NY TIMES comes this Interactive Population Map that provides a great visual for population patterns between 2000 and 2010. You can browse population growth and decline, changes in racial and ethnic concentrations and patterns of housing development.

It's worth checking out and clicking around for 10 minutes. You will learn something.

Raleigh/Cary apartment communities sell

Just this month, two apartment communities in Raleigh and one in Cary sold to a single purchaser at an average price of $54,000/unit. The communities are 20 to 30 years old.

This price falls in-line with the recent upward pressure on values for larger apartment communities. A major contributing factor in this trend is the availability of attractive financing from GSE's Fannie Mae and Freddy Mac for larger apartment communities and portfolios. Unfortunately, similar financing options are not as available for smaller communities (less than $1 million).

More bad news for home builders? More good news for apartment owners and developers?

From THIS ARTICLE

"The state of the nation's housing is sobering," said Eric S. Belsky, the managing director of the Joint Center for Housing Studies, which wrote the report. "Total housing construction over the previous decade now barely exceeds the lowest level of any ten-year period in records dating back to 1974."

"If employment growth, especially among young adults, continues to pick up and homeownership rates continue to slide," the report says. "renter household growth should remain strong." That in turn will result in higher demand in rental housing, perhaps prompting more multi-family construction, authors say.

Federal Government Considering Real Estate Dispositions to Cut Spending

Through an aggressive push in Washington, DC, to cut costs and improve operational efficiencies, the federal government's listings of properties for sale could balloon from less than a hundred or so to include potentially thousands of properties - and also, reduce the government's reliance on leased space. Read the rest of the article.

One highlight from the article:

"Last week, the House subcommittee on Economic Development, Public Buildings & Emergency Management approved a bill (the Civilian Property Realignment Act) that calls for setting up a commission to identify real estate properties that would be put out for sale. Rep. Jeff Denham (R-CA), chairman of subcommittee, sponsored the bill with the full backing of the President, who has directed federal agencies to accelerate efforts to eliminate unneeded properties, setting a goal of saving $3 billion by the end of 2012."

WCAA Meeting - Thursday, 6/2/11 - Is your rent high enough?

The next meeting of the Wake County Apartment Association is this Thursday night, 6/2/11. We will be meeting at a new location, Perkins Restaurant off Capital Blvd and the I-440 Beltline.

During this week's meeting I will be sharing the results of the latest Triangle Apartment Market Report from Karnes Research and TAA. The report documents a rental market that is strong and getting stronger. After reviewing the highlights (including employment data, absorption stats, vacancy rates and forecasts) we will take a close look at detailed rent comparables and trends within specific submarkets around the Triangle and Wake County. I would also like those in attendance to consider sharing a sample of their current rental rates and ideas for negotiating new leases and renewals. This group discussion and information sharing should better equip everyone to maximize revenue in the coming months.

I have had 3 different landlords/managers tell me recently that this is the best rental market they have experienced in more than 10 years. Let's make sure we seize the opportunity.

NEW Location: Perkins Restaurant off Capital at I-440 - http://www.perkinsrestaurants.com/
2657 Appliance Court
Raleigh, NC 27604
919-828-7375

Time: Dinner and Networking 6:00 pm - 7:00 pm. Speaker 7:00 pm - 8:00 pm.
Guest are always welcome. Membership is currently $15/year.

The Coming Housing Calamity

I will give credit to a fellow Broker, Mike Attayek with City Gate Real Estate Services, for sharing this article with me. It's a bit academic, but very thought provoking and even builds upon my post earlier this month on Oil Prices and Real Estate suggesting urban rental markets are due for big rent growth.

The article, The Coming Housing Calamity, is written by Robert Steuteville off New Urban Network. He addresses issues like the coming great senior sell-off, rising household sizes, dropping home ownership, and tighter lending standards (accompanied by good graphs). He makes the point that the coming years will be a disaster for homebuilders and home ownership rates will decline, despite an increasing population. For some this is bad news. For apartment owners, landlords and managers that should mean higher rents and lower vacancies.

Renovation of Durham Building Delayed

The sale of the old Liggett & Myers cigarette building (where my wife's grandparents worked for 30+ years), known as the Chesterfield building, is scheduled to close June 30th. The local purchaser, Josh Parker and his parnters, originally planned to take ownership and begin renovations this Spring, but early July is the new target date to begin construction.

The Chesterfield building has been geared up for redevelopment for years, but partnerships gone bad and lack of financing have continuously delayed the project. Nonetheless, it seems to be just a matter of time before "Chesterfield Partners" has controll and begins transforming the building into a mix of apartments, office and retail.

Redevelopment of the site is one of the last pieces needed to bring together Downtown and the Brightleaf Square area. A history of the project, photos and additional links can be found on this site, which happens to be the best blog about Durham there is.

More Factors Making Apartments Favorable

Financing changes initiated by the government could continue to make it easier for apartment developers and operators to find financing while also making it more difficult for some home buyers to obtain loans. This article featured on MultiFamilyBiz.com explains these pending changes in more detail.

WCAA Meeting - Thursday, April 7, 2011 - Legistlative Update

The next meeting of the Wake County Apartment Association is this Thursday, 4/7/11. Our focus for the meeting will be on pending legislative issues, the biggest of which is House Bill 554 (described in previous post). Cheryl Houseman, Government Affairs Director for the Triangle Apartment Association, will help us understand where the bill stands and what we can do to help push it towards approval. Attorney Norm Praet will also be available to provide details about this bill and some of the other 'hot' legislative news.

For years we have been waiting for some "landlord friendly" legislation ... let's seize the day. Join us Thursday night so we can make our support for this bill heard loud and clear.

Location: Golden Corral on Millbrook Road, at the corner of Capital Blvd. Address: 2909 East Millbrook Road, Raleigh, NC 27604 - p) 919-872-0500. Time: Dinner and Networking 6:00 pm - 7:00 pm. Speaker 7:00 pm - 8:00 pm. Guest are always welcome. Membership is currently $15/year.

HB554 Residential Building Inspections

http://www.ncga.state.nc.us/gascripts/BillLookUp/BillLookUp.pl?Session=2011&BillID=H554 The above link will allow you to download a copy of this newly proposed bill. As our friend Attorney Norm Praet says on his blog "If enacted this bill will be one of the BIGGEST success stories for the NC Apartment Industry!" Basically this bill has the power to end unjustified municipal inspections and registration programs like PROP. If you are a landlord you need to be aware of this bill and make your voice heard in support of it. More to come, but this will be the primary topic of the WCAA meeting on Thursday night, 4/7/11.

Oil Prices and Real Estate

Depending on how closely you follow this issue you might be surprised at the magnitude of results from an internet search with the words "oil prices and real estate."

First, you will quickly learn that oil prices are going up. There is almost no debate about this fact, the only thing experts don't agree on is how much. Global oil consumption continues to rise as our world's ability to produce oil as near the peak. As I write, the average costs of a gallon of gas in Raleigh is $3.51 and estimates for 2011 and 2012 don't suggest we will see relief from these prices. The unrest in Iraq and Saudi Arabia (the two largest producers of oil) only adds to fears that oil supplies could be further restrained causing additional price pressures.

So, what do rising oil and energy prices mean for our economy as we continue with our "muddle through" recovery (borrowing a term from John Mauldin). Most folks quickly point to inflation and the overall rise in costs for all goods. As an owner of real estate, and more specifically apartments, you might think this is all good news and in general I would agree. Inflation typically means higher rents and an increase in values as interest rates rise and construction of new units slows.

However, you can't lump all housing into one category and assume the outcome will be uniform. After all, what is the first lesson you learn in real estate? Location makes a difference ... a BIG difference. I encourage you to consider the differences between housing in the suburbs and housing near urban and employment centers. Will the desire to commute 30+ minutes to work increase or decrease as gas prices rise? Will access to public transportation or walkable living environments become more desirable during an inflationary period?

I believe we could be on the verge of an interesting cycle in the real estate market. While inflation could push all housing prices up, you can make a case that homes and apartments close to employments hubs, retail or shopping centers and downtown areas will see a greater rise in rents and prices than homes in rural or even suburban areas. This is certainly something to consider when making your next investment decision.

Census shows Triangle is still growing....FAST

Census numbers show Triangle is 1.6 million strong
Source: News and Observer

BY: RICHARD STRADLING AND STEPHANIE SOUCHERAY - Staff Writers

Despite the bursting of the dot.com bubble in 2000 and the Great Recession 10 years later, the Triangle continued to attract tens of thousands of newcomers a year. The area is now home to about 1.6 million people, according to census numbers released Wednesday.

The numbers show that the six-county Triangle region added about 400,000 residents, roughly the equivalent population of Durham and Orange counties.

The growth was led by Raleigh, which added 127,799 residents, and Cary, which grew by 40,698. Wake's smaller towns also grew at a blistering pace; five of them - Fuquay-Varina, Holly Springs, Morrisville, Rolesville and Wake Forest - have more than doubled in population since 2000.

Click here to read the full article: http://www.newsobserver.com/2011/03/03/1025817/triangle-is-16-million-strong.html

Next WCAA Meeting - TUESDAY, 3/8/11

This month we are going to try something different that will break the "first Thursday" routine. Our next meeting is going to be on Tuesday, March 8, 2011 from 6 PM to 8 PM. I apologize to those who have a schedule conflict, but for those who can attend this will be a wonderful opportunity to see first-hand a program that is making a difference in our community. Furthermore, as a landlord, you will learn about your opportunity to meet the housing needs of StepUP participants who are being taught to be accountable, self-sufficient and paying residents.

Location: StepUP Ministry office at 1701 Oberlin Road, Raleigh - proceeding across the street to White Memorial Presbyterian Church
When: Tuesday, 3/8/11 - 6PM to 8PM
Dinner at the church will be free. Please RSVP to me (tfurlow@deaton.com) by Friday, 3/4 so I can provide a head count for a group.

More information about StepUP and what to expect...

StepUP Ministry (www.step-up.us) is a non-profit, faith based organization devoted to teaching, counseling and mentoring low-wage and homeless individuals to change their lives and become self-sufficient. StepUP places participants in well-organized jobs and vocational training. Upon successful completion of these steps, participants reach the Life Skills Program which is the heart of the ministry. Every Tuesday night at White Memorial Presbyterian Church more than 50 adults meet with teachers, co-partners and personal case managers who are committed to promoting personal, spiritual and financial development within each participant.

Our group will meet Steve Swayne, the Executive Director who will answer questions and provide more details about his organization. After meeting with Steve we will head across the street for dinner and to observe their weekly meeting. An integral part of this Life Skills development is for participants to budget, secure housing and begin making dependable rent payments. Thus the opportunity for landlords. StepUP is a source for responsible tenants and an opportunity to assist someone in their journey to become self-sufficient.

Found another good blog

I found this blog today and thought it was worth sharing. MultifamilyInsight.net
The first two posts are pretty good reads for the small, multi-family investor. There is one about "Why People Sell" and another about "How to Validate Rental Income". Check it out.

Investors Confident Entering 2011

A special report from Marcus and Millichap and NREI show that investors are planning more acquisitions in 2011. Improving fundamentals, lower interest rates and prospects for rent growth are fueling investor confidence. The data points and information produced from this research survey highlight the optimism across the apartment industry and I suggest you read the full report.

New home development coming near Wade/RBC Center

Lennar Homes (www.lennar.com) recently purchased 40 acres of land near the Intersection of Wade Ave. And I-40. The site is very close to the RBC Center where the Carolina Huricanes and NC State Basketball teams compete. Five years ago you could have expected the end-product home to be $400K to well over $500K. However, Lennar's ability to purchase the land at "today's" prices should result in townhomes and signle family homes between $170,000 and $370,000. If that proves true, Lennar will probably be very successful selling in the new neighborhood...to be called "Inside Wade." For more about the deal read David Bracken's article in the News and Observer.

Wake County Apartment Association Meeting

The next meeting of the WCAA is Thursday, 2/3/11. The speaker will be attorney Norman Praet and he is going to cover multiple landlord and real estate related topics. In addition, he will be available to answer any questions you want to ask an attorney (for free). Mr. Praet is an experienced real estate attorney that focuses on landlord-tenant law. You can follow his blog at http://nclandlordlaw.blogspot.com

The meeting is located in the Golden Coral at 2909 East Millbrook Road in Raleigh (near the intersection with Capital Blvd.) Dinner and networking are between 6:00 PM and 7:00 PM and the speaker starts at 7:00 PM and wraps up around 8:00 PM. Guests are always welcome for free. Membership to the WCAA is just $15/year.

Stop Believing Email Forwards

Not only are email forwards annoying, they are often false. I got one this morning that really put me over the edge. Have you seen this one? It starts, "This should stimulate the Real Estate Economy. Did you know under the new Health Care Bill ALL real estate sales are subject to a 3.8% sales tax?" The email then goes on to state that this will go into affect until 2013 and you should blame it on the nasty politicians.

I don't want to sound like I am defending politicians (trust me, that's not my purpose at all), but it is important to know that this information is not true. There is a real estate related tax of 3.8% in the new Health Care Bill (which is not good for the real estate industry), but it will NOT affect ALL real estate transactions. In fact, it will likely not affect anyone selling their primary residence. Nonetheless, this is something real estate practictioners and investors should be aware of...and upset about.

You can read the details about how this might impact real estate investments at this article from The National Association of REALTORS and here is a clip from that:

"...when the legislation becomes effective in 2013, it may impose a 3.8% tax on some (but not all) income from interest, dividends, rents (less expenses) and capital gains (less capital losses). The tax will fall only on individuals with an adjusted gross income (AGI) above $200,000 and couples filing a join return with more than $250,000 AGI."

Good News: Triangle to Keep BIG Employer

Red Hat is expected to stay in the Triangle and add jobs. Governor Bev Perdue went to Twitter this morning to give everyone a heads up that the big announcement would be coming soon and it would have a big impact on Wake County. See this WRAL report for more on the announcement and Red Hat.

More Tax Paperwork For Landlords

Someone shared this link with me from the Washington Examiner. This expains that anyone receiving rental income must begin reporting ALL PAYMENTS TO CONTRACTORS ABOVE $600 for the year beginning in 2011. So, start collecting Tax ID numbers and social security numbers because you now have to give every contractor you use a 1099 form to report what you paid them.