The Multi-Family Marketplace

Downtown Raleigh's Growth

2012-01-16T10:56:00.000-08:00

Downtown Raleigh Alliance says Red Hat's move downtown means purchasing power

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

2011-12-30T07:36:00.000-08:00

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

2011-12-22T10:38:00.000-08:00

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

2011-11-23T08:18:00.000-08:00

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

2011-11-16T13:18:00.000-08:00

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

Apartment Values, Rents Rise - WSJ.com

2011-11-01T11:26:00.000-07:00

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

2011-10-28T10:23:00.000-07:00

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

2011-10-24T14:01:00.000-07:00

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

2011-10-21T10:28:00.000-07:00

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?

2011-10-14T08:10:00.000-07:00

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%

2011-10-10T11:21:00.000-07:00

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

2011-09-30T07:46:00.000-07:00

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

2011-09-22T06:50:00.000-07:00

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

2011-09-21T07:33:00.000-07:00

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

2011-09-15T08:09:00.001-07:00

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

2011-09-09T11:40:00.000-07:00

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

2011-08-29T07:34:00.001-07:00

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

2011-08-25T14:14:00.000-07:00

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

2011-08-22T13:27:00.000-07:00

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

282 Apartments Under Construction in Cameron Village

2011-08-18T06:29:00.000-07:00

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

2011-08-05T07:32:00.000-07:00

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

2011-08-01T12:22:00.000-07:00

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?

2011-07-26T12:12:00.000-07:00

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.

2011-07-01T07:31:00.000-07:00

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

2011-06-21T06:09:00.001-07:00

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

2011-06-16T06:24:00.000-07:00

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?

2011-06-08T13:07:00.000-07:00

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

2011-06-02T05:55:00.000-07:00

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?

2011-05-31T08:00:00.001-07:00

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

2011-04-29T06:16:00.000-07:00

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

2011-04-20T11:50:00.001-07:00

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

2011-04-07T06:48:00.000-07:00

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

2011-04-05T09:00:00.000-07:00

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

2011-04-04T10:28:00.000-07:00

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

2011-03-16T06:30:00.000-07:00

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

2011-03-04T13:54:00.000-08:00

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

2011-03-01T09:29:00.000-08:00

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

2011-02-24T07:47:00.000-08:00

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

2011-02-22T06:24:00.000-08:00

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

2011-02-17T11:26:00.001-08:00

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

2011-02-01T07:09:00.000-08:00

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

2011-01-20T06:47:00.000-08:00

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

2011-01-10T08:24:00.001-08:00

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

2011-01-06T07:09:00.000-08:00

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.

Rent vs. Buy Data

2010-12-22T08:48:00.000-08:00

According to this data from the Economix blog of the NY Times, it makes more economic sense to rent in Raleigh, rather than purchase a home. If this is true, then does that mean rents are too low or home prices are too high?

Last day for Sweepstakes Centers

2010-11-30T09:23:00.000-08:00

It appears the day of reckoning is finally here and the little "casinos" that popped up across N.C. in the last couple of years will be forced to close their doors after today.......maybe. While the law claims to be clear that November 30th is the last day for these centers to operate, this article in the N&O points out that operators are trying to make adjustments to their games in order to remain in compliance with the law.
If the law wins (which it usually does) many retail center landlords will be sorry to see these tenants leave. However, many nearby residents will certainly to get rid of the "problems" that usually surround these places.

MyApartmentMap Launches Search Site

2010-11-04T06:28:00.000-07:00

Source: MultiFamilyBiz.com

MyApartmentMap has officially been released and represents the most comprehensive and feature rich apartment search available. Features include interactive maps, virtual neighborhood tours, apartment deal advertisements, and vertical searches that can identify specific housing needs. Basically, this site combines tools into one place that were previously on several different sites.

This site sounds like it will certainly be utilized by the internet savvy apartment renter. You should to make sure your 'for rent' apartments show up in the results.

Downtown/NCSU Development Approved

2010-10-21T06:15:00.001-07:00

A mixed use real estate development between Downtown Raleigh and NC State University has crossed the last approval hurdle. With a final approval vote of 6 to 1 (Crowder being the one who opposed) the Raleigh City Council gave the owner, a Charlotte-based developer, the re-zoning needed to begin the project which will include about 250 apartments. This announcement was made in the News and Observer on 10/20/10. As this article notes, the developer is still trying to finalize financing. You can get more information about the project on the developer's web site.

Downtown Raleigh Condo Auction

2010-10-12T08:02:00.001-07:00

36 Condo units in the West at North condo development will be auctioned off on Sunday, October 31, 2010. Starting bids will begin at $95,000 for the one bedroom units that have been priced at $220,000+. Two bedroom units will also be available.

The developer says they wanted to take a proactive approach to marketing and selling units. I think that is another way of saying...nothing is selling so we need to drop the bottom out of the price and see where the market is for this product.

They certainly are beautiful units in a great location. One question...if you want to live in Downtown, where do you go grocery shopping? For more details about the auction visit: www.westcondoauction.com
Happy bidding.

Front-Yard Parking a HOT Topic in Raleigh

2010-09-22T07:05:00.000-07:00

An ordinance was proposed to the Raleigh City Council last year to further restrict parking in a residential front-yard. The topic has become a hot political issue that is not necessarily divided down party lines. If you own real estate in Raleigh and are not aware of this, read here to learn more.

Foreclosures are GROWING

2010-09-15T11:26:00.000-07:00

Thought there were already a lot of foreclosures on the market...wait until next year. For the first eight months of 2010, the foreclosure rate is 14% higher than this same point last year. That means lenders will be taking these properties to the market to re-sell them at some point soon.

Are "DEALS" finally making their way to the market

2010-09-02T13:19:00.000-07:00

By our calculations and criteria (how much money we made this year vs. last) we are at 2 years and counting in this recession. Many sellers during this time have chosen to "hang on until things get better." This created a scenario where a limited number of properties were selling because buyers are not willing to pay a premium in this environment. So, it has been hard to tell how much prices have really fallen because there haven't been a lot of motivated buyers AND sellers to set the market.

However, things may be changing. Take a look at this recent N&O article. These comments suggest many sellers, particularly banks, have decided it's best to go ahead and sell their properties. More and more people are beginning to believe that this "downturn" may just be the "norm" for a while. This is creating an opportunity for buyers who have cash and are ready to pull the trigger on a "DEAL."

Have your apartment been bugged?

2010-08-18T09:52:00.000-07:00

They are nasty, they bite and nobody likes them. No, not spoiled children...bed bugs. And believe it or not, they are everywhere. It's becoming a common problem for apartment landlords, hotels and even business. A movie theatre in New York had to shut down this week to perform extermination measures.

In the past, people associated these little creatures with filth and slums. This is not the case anymore. Bed bugs do not discriminate and they can be transported from place to place without detection because of their size. Even worse, many attorneys say they would rather see a lawsuit over mold rather than bed bugs. These little things are a big liability.

My advice...if you have not studied up on this epidemic...get to it. Start here at Wikipedia. Second, find an exterminator that specializes in the treatment and removal of bed bugs and get them on your speed dial. Here is one in the Triangle area. There are even dogs trained to sniff for these things.

Job Growth Still Stumped

2010-07-23T09:04:00.000-07:00

One step forward...one step back. This seems to be the norm right right in the overall economy and the labor markets. While the Triangle area is healthier than many, our employment figures are not necessarily anything to brag about. As of June, the Triangle's unemployment rate increased slightly to 8%. Nearly 67,000 people were counted as out of work in the last survey, which doesn't include people who have stopped looking.

What do you think it's going to take to start creating jobs? How long do you think we will be in this "muddle through" economy?

More than 1 million foreclosures expected this year

2010-07-16T11:07:00.000-07:00

It just doesn't seem logical that our real estate market is going to see any significant price appreciation in the near future. Home sales and investment property sales are at all time lows and the current inventory is not being absorbed. Sellers (individuals, banks, and even government entities like FHA and HUD) that need to move their properties are having no choice but to continue lowering prices. Add to that, even more foreclosures are coming and it's hard to imagine prices going up anytime soon. We need job creation and we need it fast.

Downtown mised use development now has a church in the plan

2010-07-08T12:49:00.000-07:00

The development at the corner of Peace and Blount in Downtown Raleigh has been stalled for a while due to market conditions. As a result the developer has been looking to sell off pieces of the parcel in order to pay down some debt. Now, according to the News and Observer, someone may have answered their prayer. A church has part of the land under contract and hopes to begin building their worship center next year.

Check out this graph

2010-06-23T10:05:00.000-07:00

US home sales fell to a record low in May. The graph at the end of this article may be all you need to understand the magnitude of the crisis. When do you think we will see a significant improvement in the economy and the housing market...1 year, 2 years, 5 years, 10 years?

Who is the Victim?

2010-06-09T09:11:00.000-07:00

I wasn't sure how to react after reading this article, but I would be interested in your opinion.

Published in the NY Times, author is David Streitfeld
Owners Stop Paying Mortgages, and Stop Fretting

Raleigh and Durham Among Top 20 Surviving the Recession

2010-05-12T07:43:00.000-07:00

This article from Yahoo Finance list 20 cities that are "surviving" the recession better than most. On the list (not surprising to me) are Raleigh and Durham. The author cites technology and higher education as two of the primary reasons. Beyond those details, its interesting to see the other cities on the list...most of which are much bigger than Raleigh/Durham. (Picture of the Durham Athletic Park for you baseball fans)

The reality of foreclosures

2010-05-11T09:00:00.000-07:00

I thought this article in the NY Times captured an interesting viewpoint of the foreclosure crisis. To me it was informative, sobering and worth sharing so click this link and have a read.

Triangle vacancy rates are down...WHY?

2010-05-06T08:35:00.000-07:00

Over the last 12 months ending March 2010 the apartment vacancy rate in the Triangle area decreased from 10.3% to 8.6% (1.7%) while rents remained flat. In fact rents have trended up 1% over the last three years. These figures were reported by Karnes Reasearch and the Triangle Apartment Association in their bi-annual market report. This change came as a bit of a surprise to some who thought vacancies would remain high until the job market improved. Nonetheless, our apartment market continues to prove that it is resilient.

It seems several factors contributed to this vacancy decrease. It's easy to see that our population continues to grow, less people are buying homes and many people are being forced out of homes. However, the most signifcant factor at play is the relative lack of new apartments being built.

The level of apartments under construction has consistently fallen over the last 18 months to a point where, even in a challenging economic environment, demand for apartment housing in the Triangle is outpacing supply. This is great news for apartment owners. Imagine what might happen when we do see an improvement in the job market.

High On Another List

2010-04-22T09:55:00.000-07:00

Once again, North Carolina's capital city has been ranked is one of the best place to live. This time Raleigh came in #8 on the survey conducted by RelocateAmerica.com. You can read the full report here.

Foreclosure Filings Rise

2010-04-06T12:15:00.000-07:00

Could real estate prices decline further? It's possible, especially if foreclosure filings continue to increase. Triangle area foreclosure filings were up 58% in the first quarter of 2010 vs. Q1 of 2009. This article from the Triangle Business Journal has more details numbers.

In my opinion, until we see foreclosure filings fall significantly the market will continue to struggle and we will remain several years away from any significant price increases in the real estate market.

SWAT those Foreclosures

2010-03-17T12:18:00.000-07:00

"Prevention, Intervention and Stabilization," that is the new slogan for the Milwaukee Police task force assigned to minimize the collateral damage caused by foreclosures. Foreclosures are not only eye sores, but can serve as breeding grounds for criminal activity. In some towns, like Milwaukee, the problem has become significant enough that the Police are getting proactive. This article explains how officers are stepping into the community to provide support where foreclosures are common.

Wake County Apartment Association

2010-03-05T08:35:00.000-08:00

As we do the first Thursday of every month, members and guests of the Wake County Apartment Association (WCAA) gathered last night at the Golden Coral on Glenwood Ave. to network, learn and share some laughs. This meeting marked the 29th anniversary of the group which began in March of 1981 (the year I was born).

As the current leader of the group, I was honored that Mr. John Schrader, the original founder, agreed to speak last night. John shared a lot of great tips for those who already manage apartments and also provided some inspiration for those looking to get started. For anyone wanting to learn more about investing in real estate or managing apartments, I encourage you to visit the WCAA web site and check out one of our upcoming meetings.

Housing Shortage at NCCU

2010-02-12T07:57:00.000-08:00

North Carolina Central University, located just south of Downtown Durham, has been in the process of redeveloping and adding on-campus housing over the past couple of years. However, the process has left the campus with a severe shortage of housing for students. As this article from the Herald Sun states, almost all upper classmen are being forced to live off campus.

While this might not be ideal for the students or the administration, this certainly offers apartment owners in the surrounding neighborhood an opportunity to capture some well qualified tenants. And it doesn't look like the problem is going to be fixed anytime soon. Current building timelines estimate there could be a shortage for another 7 years or more.

Did someone say higher rents? Good news for Landlords?

2010-01-26T06:18:00.000-08:00

If you are a landlord, this economic downturn has produced one very positive result; decreased multifamily construction activity. As hard as it may be to find quality renters right now, imagine if new developments were still popping up around us like they were just two years ago. As this latest article from Multifamilybiz.com points out, multifamily construction has been hammered by the credit crunch.
David Crowe, the chief economist with the National Association of Home Builders says, "The vacancy rate for apartments is elevated now, but as the economy recovers and jobs return, the people who've been doubling up with relatives and friends will want a place of there own- and there may not be one."
This may upset developers who want to stay ahead of demand, but current landlords should be cheering this development as a potential source of improvement. Some industry experts with the NAHB expect rental demand to surpass current supply by mid-2011, with increasing shortages continuing through 2014. They believe this could push rents up as much as 10% in the next two years and more than 4% per year through 2015.

Another Wave of Foreclosures

2010-01-14T08:24:00.000-08:00

Get out your arc, there is another flood of foreclosures getting ready to hit the market. As reported in an article from HousingWire.com, there are an estimated 2.4 million foreclosures in shadow inventory that could reach the market this year and more than 1.5 million that were ready to be listed as of December 2009. These sources estimate prices could decline another 10% as a result.

It is certainly hard to imagine the real estate market stabilizing with this magnitude of foreclosures on the market. Even if there is an adequate supply of buyers (I do not think there is) to jump on these "deals," many of these properties do not qualify for traditional financing because of their condition. As a result, cash investors could be the final purchasers at even deeper discounts.

On the positive side, these properties have to be flushed out of the inventory at some point. In my opionion, the sooner that happens, the sooner the market will find the bottom. And, once we find the bottom, we can start working towards improvement.

Blackberry Maker Will Open an Office in Triangle

2010-01-06T12:47:00.001-08:00

According to the News and Observer today, Research in Motion (RIM) confirmed plans to open a research and development office in the Triangle. The company already held a job fair in the area and has started hiring. This is a big win for the local economy that has a tremendous supply of high-tech workers.

Details about the location of the office and the number of employees have not been released.

A gift for Habitat for Humanity - A plug for a parnter

2009-12-15T11:23:00.000-08:00

Atlantic BT Technologies recently launched a new web site for Habitat for Humanity of Wake County. Atlantic BT, also the web site design firm for Deaton Investment Real Estate, provided this site design as a gift in kind. Read the full release. The site is remarkeable and Atlantic BT should be commended for their work.

A few years ago when we set out to re-design our web site at Deaton we interviewed multiple companies and Atlantic BT quickly proved to be the best equipped for the task. They did a fabulous job and their user management tools and service have made our experience with them nothing short of extraordinary. Knowing that they also have a passion to give back to the community makes us even more excited and proud to call them a business partner.

For more information on how Atlantic BT can help you with your web site and internet marketing visit www.atlanticbt.com.

Is the Triangle Harvesting a New Berry?

2009-12-09T06:24:00.000-08:00

Just when the Research Triangle Park is about to take a huge blow with the closing of the Sony Ericsson office and the subsequent loss of 400+ jobs, there MIGHT be a new player rolling into town. And a big player at that. Reports indicate Research in Motion (RIM) the company that produces BlackBerry phones is interview for positions and is considering establishing a new office in the area. The News and Observer has the full story.

Not only would this mean more jobs now, but it support RTP's brand efforts to remain a hotspot for technology and innovation. Maybe this posting would have been more symbolic had I drafted it on my BlackBerry.

Want to Secure More Revenue?

2009-11-25T10:46:00.000-08:00

During these challenging times, many landlords are looking for ways to secure more revenue. A recent poll would suggest a good place to start is to secure the property. 96% of respondents said that crime rates influence their decision of where to rent. Additionally, amenities that increase a tenant's feeling of security are likely to warrant a higher rent. Examples would be security systems, guards on the property, security cameras and access gates. To get more ideas and details you can read more here.
Even more elementary, for smaller properties, better window and door locks and common area lights are an inexpensive way to help your tenants sleep better at night and improve your bottom line.

Concession Anyone?

2009-11-12T07:30:00.000-08:00

No, not the concession stand at the ballgame or the circus. Although, the apartment rental market has turned into a bit of a circus recently. My reference to concessions concerns the FREE rent and discounts landlords are shelling out to attract renters right now. The Triangle vacancy rate sits at about 9.5% as of September 2009 and rents have declined more than 1% or 2% in some markets over the last 12 months. The News & Observer ran a feature on this today.

It seems like a natural market cycle with the unemployment rate rising and the overall softening we've seen in the economy. Are YOU lowering rents or working harded to keep units occupied?

Home Buyer Tax Credit Extended and Expanded

2009-11-05T12:06:00.000-08:00

The $8,000 home buyer tax credit set to expire on November 30, 2009 has been given new life. This credit will now be extended until April 30, 2010 and expanded to include a $6,500 credit to buyers who have lived in their current home five or more years.

There are a few limitations, but this should help sales through the seasonally slow winter months. However, we could debate the long-term benefits and/or consequences.

Change isn't easy and often not wanted

2009-07-15T07:32:00.000-07:00

The buildings formerly known as University Apartments on Chapel Hill Road in Durham have been sold to a group from Alabama that specializes in student housing. Their plans are to renovate and upgrade the property to add value to the $3.3 million they paid for the property in May of 2009. However, residents and the community are meeting the effort with opposition because the increased rents will force many of the people to move. While the displacement of tenants is unfortunate lets hope the new owner is able to do what they want, with the property THEY OWN, without much interference.

NAR Economist coming to town

2009-07-09T08:45:00.000-07:00

The Triangle Commercial Association of Realtors has line up George Ratiu for the July showcase. He will be speaking about the current state of the commercial real estate market and give us his economic outlook for the industry. The event will be July 23rd in Cary. For more information click here.

Raleigh Keeps on Growing

2009-06-12T11:28:00.000-07:00

According to the Triangle Business Journal the population in the Raleigh area will more than double between now and 2025. This projected growth pace surpasses estimated growth of any other metro area during that same time. Read all the details here.

Roots of the Financial Meltdown Exposed

2009-06-01T06:28:00.000-07:00

These four charts are very telling. Perhaps the most shocking is the last chart showing the government's response to bring us out of this mess. Anyone think the fundamentals of capitalism are crumbling?

At the Bottom?

2009-04-28T08:31:00.000-07:00

Financial advisor Jeff Link has provided a chart of the DJIA ending April of 2009 and one ending in 1932. I encourage you to have a look and a read, they show a very similar pattern. Maybe we have started to turn the corner?

No Bull

2009-04-27T10:51:00.000-07:00

A local investor just introduced me to John T. Reed and I can't believe I have not heard of this guy before. Mr. Reed has been a real estate investor, property manager and broker. He has succeeded by focusing on the basics, NOT HYPE and offers to share his experiences with others through his web site, newsletter and books. I encourage everyone to check out what he has to say, especially his tips on Detecting a Real Estate B.S. Artist.

The fact I learned about him via referral and not a late-night infomercial validates everything he says.

Payment Protection not only for new cars, now rent!

2009-04-16T12:49:00.000-07:00

One of the biggest and best residential management companies in the U.S., Riverstone Residential, is now offering tenants the opportunity to enroll in an "insurance" plan that will pay their rent for 2 months if they lose their job. Residents can enroll in the Pink Slip Protection program for less than $10/month.

With clear parallels to the automotive manufactures, the plan should attractive new residents and help retain existing ones by offering them some peace of mind in a very difficult job market.

Early April Fools from the Fed

2009-03-19T08:00:00.000-07:00

Many folks, myself included, thought the Fed's announcement to buy Mortgage Bonds and Treasuries would cause interest rates to drop. Well that didn't happen. Want to know why? Mortgage expert Rich Paravella with Equity Services (rparavella@equitysrvs.com) offers some insight:

"There was a large announcement yesterday that the Fed was stepping in to purchase Agency bonds. This was to bring interest rates down to the lowest rates ever - Oops - Didn't happen. Below is article explaining why. If you read no further, remember this: Don't always believe what you hear. Email me for a real world explanation or status of the mortgage environment.

"Big news hitting the wires yesterday afternoon, as the Fed made a blockbuster announcement that sent Mortgage Bonds into rally mode. The Federal Reserve announced that over the course of 2009, they will purchase an additional $750B of Mortgage Backed Securities in an effort to help shore up the housing market and keep home loan rates low. On the announcement, Mortgage Bonds exploded higher, leaving prices within whiskers of the best levels ever.

However, as we stated in yesterday's Alert to Float: Their actions may keep a lid on rates, but not necessarily push them dramatically lower. And due to the issue we've also discussed of lenders still working at max capacity, they are very likely not going to pass all the gains through to our rate sheets, as we are already hearing this morning. The good news is that perhaps this will help lenders feel more comfortable staffing up a bit, as this purchase program will certainly keep rates from moving significantly higher any time soon - and this will also give time for the new 105% refinance plan to work as well. Bottom line - although the media is already spinning it differently, this is still not a time for clients to stay on the fence, hoping and waiting for lower rates. Home loan rates remain within inches of all-time historic lows, but may not necessarily move significantly lower based on this purchasing plan - waiting is a very risky move.""

Trickle-Down Economics

2009-03-09T09:52:00.000-07:00

A recent story from the News and Observer (which just announced layoffs) described the increased pressure many banks are applying to builders. This particular article highlights SunTrust and their demands for repayment or refinancing from one builder in order to avoid foreclosing on his homes. In the past, builders could refinance homes that stayed on the market longer than expected with a simple request. Now banks like SunTrust are increasing interest rates, requiring more equity in the deal or denying refinancing request altogether.

This lack of liquidity often puts the builder in a situation where he has to CHOOSE who gets paid. If he pays the bank, his contractors might not get paid, forcing them into financial harship. If he pays the contractor, the bank might foreclose and everyone could lose.

Basically, without the ability to refinance, the builder isn't the only one that stands to lose. Anyone who might have poursed resourced into the project could be stuck with unpaid debts. In fact, this trickle-down scenario has already caused many contractors to file bankruptcy.

Another TAX from the City

2009-03-04T07:54:00.000-08:00

I know your budget is already tight, but if own rental property within the City of Raleigh you now have another expense, a.k.a tax to pay. As of March 1, 2009 all owners of rental property inside the Raleigh city limits must pay to register their property with the city. This ordinance was basically passed to fund the Probationary Rental Occupancy Permit (PROP) inspections team. However, the proceeds collected will far exceed these costs and thus be transfer to the general operating budget for the city.

The city wants you to believe they are trying to punish bad landlords and 'clean up' our neighborhoods, but the execution of this goal has been terrible. What the city has done is impose burdensome restrictions and fees on good landlords that must be passed on to the tenants in order for the owner's business to remain profitable. You could make the argument that the city wants to eliminate rental housing and renters altogether.

Have you been living under a rock?

2009-02-24T11:46:00.000-08:00

The financial meltdown and gloomy outlook has some people wishing they could go hide away in a cave. Well for one family, the recession and lack of financing is forcing them out of their 17,000-square-foot, subterranean home. After purchasing the home in 2004 with a 50% down payment and a 50% loan from the seller for 5 years, Curt Sleeper cannot find a source to refinance because there are NO comparables for the property and no banks want to take the risk. Now he has turned to E-Bay to sell or find a lender and the response has been unreal. Let's hope they can find a way to stay in the 'home' since they just gave birth to their third child (in the cave).

More to lose than just Earnest Money

2009-02-19T12:11:00.000-08:00

Some people believe if they sign a contract to buy a piece of property and then decide to back out of the deal, the worst result would be a loss of their earnest money. This is not true. While every deal and contract is different, any party that defaults on a contract can be pursued for additional damages, assuming the other party can prove those damages.

In fact, one condo developer in Tennessee is taking aim at several buyers that backed out of purchase contracts. The developer ended up selling the units for significantly less than the original contract price and is asking the former contract holders to pay the difference, or be sued. It should be interesting to see the results.

Four Is The Limit No More

2009-02-09T11:36:00.000-08:00

Fannie Mae announced a new policy on February 6, 2009, to allow investors and second home buyers to own up to 10 financed properties. The new policy takes effect on March 1, 2009, and replaces the current 4-property limit. The restriction applies to the total number of financed properties, not just to the number sold to Fannie Mae.

Investor and second home borrowers that seek to own between 5 and 10 financed properties must meet additional eligibility requirements.

-Borrowers must have a credit score of at least 720. The maximum loan-to-value ratio is 70% or 75%, depending on specified criteria.
-Borrowers may not have any history of bankruptcy or foreclosure in the past 7 years, or any mortgage delinquencies of 30 days or greater within the past 12 months. Reserve and other requirements also apply.

WCAA Meeting - Thursday

2009-02-03T07:08:00.000-08:00

If you are interested in education and networking that relates to investing in apartments I recommend checking out the Wake Count Apartment Association. www.thewcaa.com
The group meets the first Thursday of very month to help provide it's membership with information to improve efficiency and profitability of operating apartments. Our next meeting will be this Thursday, 2/5/09 and the guest speaker will be Raleigh City Council Member Philip Isley. For meeting details, visit www.thewcaa.com

An update from Harvard

2009-01-29T07:16:00.000-08:00

Some really smart people have issed a new policy paper to encourage our elected officials to recognize and understand the differences between single-family and multifamily financing. Harvard University's Joint Center for Housing Studies and the National Multi Housing Council cite a need to keep multihousing financing affordable so that landlords can meet the needs of gorwing demand for rentals during the economic downturn. If our policy makers fail to prepare for this, financing for multifamily properties could get even harder than it is today. This is something to keep an eye on as regulators make decisions that affect Fannie, Freddie and FHA loan portfolios.

A little humble pie

2009-01-22T05:50:00.000-08:00

While the Triangle continues to fare far better than many cities across the country, I would encourage every landlord to be creative in your methods of keeping renters. In other metro areas the shift has taken place to a renters market. The article has a few ideas, but remember it's easier and typically cheaper to keep a good tenant than to find a new one.

Not the Lucky number: 7.2%

2009-01-09T08:43:00.000-08:00

Employment data was released today, Friday, January 9, 2009. Most people probably are not surprised to hear that unemployment continued to rise through the end of 2008. However, a national unemployment rate at 7.2% represents the highest it has been in 16 years. The unemployment rate in the Triangle is still in the low 6% range, but nonetheless it's higher than just a few months ago. That said, we hear vacancies are starting to increase, prompting owners to lower rents. If you are sitting on a vacancy now is probably not the time to be greedy.

Need some inspiration?

2008-12-30T10:50:00.000-08:00

Need some fresh ideas for operating and marketing your properties? Want to recapture some of the passion for your career? You may want to consider registering for Toni Blake's upcoming presentation on January 20, 2009, with dinner sponsored by the Triangle Apartment Association. Toni Blake is an international speaker, author and comedienne. Having invested more than 28 years of her life in multifamily housing, she tours over 50 cities each year inspiring thousands of industry professionals. This promises to be an exciting, entertaining and rejuvenating event.

"Good Year" will be a relative term in 2009

2008-12-12T13:34:00.000-08:00

The December issue of Multi-Housing News features a ranking of metro areas with the best apartment market conditions as we limp into 2009. At number six on the list is Raleigh, behind Washington, D.C., Denver, Minneapolis, Fort Worth and San Francisco. The statistics, provided by M/PF Yieldstar, are not predicting a banner year in the Triangle, but they suggest that Raleigh is an area that will weather the economic storm better than most. "Flat is pretty darn good this year-that can put a metro area in the top tier of all U.S. markets," according to Greg Willet of the Yieldstar research firm. Despite job losses and a growing shadow market, vacancies in the Triangle are expected to increase by less than one percent.

Raleigh's Growth Plan

2008-12-11T06:35:00.000-08:00

The City of Raleigh recently released it's latest comprehensive growth and development plan through the year 2030. You can view a copy of the plan at the City Website. Or for those with no patience, (like me) you can go straight to the executive summary. Additionally, the City will be hosting several briefings and informational sessions for the public to ask questions and comment on the plan. It's not often you have the opportunity to impact your City's development first hand, seize the opportunity.

Class, today we learn a new word, "Re-Default"

2008-12-08T11:28:00.000-08:00

Those in the mortgage business are becoming familiar with this word. In a report released today by the Office of The Comptroller of the Currency, more than half of the mortgages that were modified at the beginning of 2008 fell back into default within six months. That's right, more than half of the people who had their mortgages adjusted to make them more 'affordable' are now in re-default, meaning they are more than 30 days behind on payments.

“After three months, nearly 36 percent of the borrowers had re-defaulted by being more than 30 days past due. After six months, the rate was nearly 53 percent, and after eight months, 58 percent,” the Comptroller said in remarks at the Office of Thrift Supervision’s National Housing Forum today. These borrowers might have had their interest rates lowered, principal balances reduced, or a number of other measures taken to lower their payments, but these efforts seem to have delayed the inevitable. Read the full release and see for yourself.

Back to the drawing board?

More market information...

2008-12-04T09:48:00.000-08:00

Our good lender friend, Rich Paravella with Equity Services, sent us a general update about things in his world and granted us permission to share it with the rest of the world. Take it away Rich...

"Here's a brief update of what's going on. I've attached 2 articles, but will sum it up here for you:

Interest rates have come down recently - but mainly for borrowers with strong credit, good equity, and documentable income. Credit standards have tightened, which has made it more expensive - often prohibitively so - for many individuals to get a loan. Generally, individuals need a credit score of 620 to qualify for a loan, but they have to pay a fee equivalent to about
2.75 percent of the loan amount, which can translate into a rate of about 1
percentage point higher than the best rate available. For borrowers on
the fringe - low credit score, erratic documentation, high debt loads, et cetera - it may be possible, but that financing may be cost prohibitive in those cases.

Also, there is speculation about the gov't in effect, subsidizing interest rates at 4.5%. This is NOT official, rather just a talking point at present. If something like this occurs, it would likely be for Owner Occupied Purchases only - Not refi's.

http://www.nytimes.com/2008/12/04/business/04refi.html?ref=yourmoney

http://online.wsj.com/article/SB122833771718976731.html

November market report

2008-12-03T10:40:00.000-08:00

Well, things aren't much different than last month. The lights are still on and people are still investing in apartments. Just not as many.

Oddly enough, we set a record for quickest close in November. An Investor Network member who recognized a property close to others he currently owns, closed 2510 New Hope Church, a duplex, in less than a week from its initial announcement to the network.

In any market, it's not at all typical to get a property purchased in that sort of time frame, especially if going through the traditional channels. Not only are down payment requirements changing dramatically, but the entire loan process is under severe scrutiny, challenging closing dates, documentation, financial history and above all, patience. Nevertheless, there are reasons we are at this point and today's activity is a natural result. The market is recycling itself. And like an aircraft carrier, it takes a long time to turn around.

Everyone wants to know where the bottom is. We like to say the bottom is well, at the bottom. It doesn't matter where really and if this economy has demonstrated anything, it's that there is no concrete number, predictable activity or economic buoy that will signal the turning point. All that we should focus on now is weathering the storm by making careful decisions based on the squalls that lie ahead. There should be plenty more to tackle come 2009.

Deaton sales this month

2336 Lyon Street (outside listing) - Inside the Beltline Single-Family rental
List: $334,900 / Sold: $313,000
Total rent: vacant

2511 Stadium - Durham Duplex
List: $128,000 / Sold: $118,335
Total rent: $675

4405 Brockton - Mini-City area quadraplex
List: $285,000 / Sold: $285,000
Total rent: $1,600

203 S. Walker - Brick quad in Downtown Cary
List: $285,000 / Sold: $250,000
Total rent: $2,805

2510 New Hope Church - Well-maintained Duplex near Brentwood
List: $154,000 / Sold: $145,000
Total rent: $525

Regional Multi-family Sales this month

410 N. Guthrie Street - Durham Duplex
List: $17,500 / Sold: $16,000
Reported total rent: not reported*

327 Ridgecrest Road - Cary Triplex
List: $155,000 / Sold: $179,431
Reported total rent: $555

139 Rollins Acres Lane - Lillington Duplex
List: $39,900 / Sold: $36,000
Reported total rent: vacant

630 Middle Street - Durham Quadraplex
List: $124,400 / Sold: $110,000
Reported total rent: $1,800

100 W. T. - Selma Quadraplex
List: $219,900 / Sold: $205,000
Reported total rent: not reported

626 Middle Street - Durham Duplex
List: $14,900 / Sold: $14,000
Reported total rent: not reported

1916 Tischer Road - Raleigh Quadraplex
List: $238,000 / Sold: $228,000
Reported total rent: not reported

103 S. Maple Street - Durham Duplex
List: $19,900 / Sold: $17,000
Reported total rent: not reported

2211 S. Roxboro Street - Durham Duplex
List: $87,500 / Sold: $85,000
Reported total rent: not reported

500 Cascade Avenue - Eight units in Rocky Mount - forclosure
List: $179,000 / Sold: $150,000
Reported total rent: not reported

1702 Gunter Street - Durham Duplex
List: $34,900 / Sold: $25,000
Reported total rent: not reported

2000 Southgate Street - Durham Duplex
List: $49,900 / Sold: $37,500
Reported total rent: not reported

* Deaton does not confirm rents. They are reported by the listing agent

Simplifying the Application Process

2008-11-06T08:01:00.000-08:00

TransUnion has launched a new online tool for renters and landlords to make the application and screening process more efficient, less intimidating and more thorough. The tool, cleverly named "SmartMove" allows applicants to apply online without the need to provide their social security number. The system essentially creates an online database of tenants that can grant access to landlords that want to review their credit and criminal history. Sounds like a tool that makes things easier for everyone. For more information visit MySmartMove.com.

More denial?

2008-10-27T12:35:00.001-07:00

According to the Commercial Investment Real Estate magazine... "It'll be heaven in 2011" was one predictions made at September's Multi-Housing World Conference. Demographic shifts will boost the rental market in a couple of years, experts predicted. On the investment side, now is the time to buy, although steer clear of suburban luxury housing and condo development. Student housing and workforce housing are hot areas, particularly in urban areas, said Rob Brock, president and CEO of Pierce-Eislen. B and C properties in A markets are another good buy, said Keith Rosenthal, president of Phoenix Realty Group, who suggested purchasing at a discount to replace the cost of over-leveraging. But lenders are looking into investors' net worth and questioning the veracity of obtaining projected rents. "You've got to have a real substantiated story for value-adds," says David Carlson, managing partner at Redwood Capital Partners.

The above copy was originally published in the Nov.Dec 2008 of Commercial Investment Real Estate, written by managing editor Sara Drummond.

Sheriff Fighting Evictions

2008-10-09T06:20:00.001-07:00

Banks foreclosing on properties in the Cook County area of Illinois are running into opposition when trying to evict renters that may be occupying these properties. The Sheriff of Cook County is refusing to evict renters living in bank owned properties. The Sheriff states that it is unfair to kick people on the streets just because the property owner/landlord didn't pay their mortage. For more on this story - Eviction Protection
The Sheriff is still performing evictions for non-payment of rent.