Monday, July 28, 2014

New Construction Facts

There is no doubt that the financial crisis of 2012 burdened the younger generation to a larger extent. Today, this same generation is poised to drive the demand for housing in most parts of the United States. After many years of downturn, the US home building industry is solidly contributing to the economic growth of the country at large. One important factor to take note of in this growth is the expansion of multifamily construction such as condominiums and apartment buildings.

Home ownership remains down for the younger generation

Although there has been a growth in the property sector in most parts of the United States, home ownership is still down in 2014 for the young generation. The overall number of homeowners is at an all time low compared to where it ought to be relative to the degree of population growth.

What has this resulted in?

Due to these trends, there has been an upsurge in rental units’ demand, which in turn has led to a reduction in vacancy rates and has driven the demand for multifamily development upwards. With few units available for an ever-growing number of renters, 2013 truly marked a significant rise in multifamily construction.

The future of multifamily construction in the United States

Experts argue that multifamily development in the United States is expected to spur economic growth in 2014 and in the years to come. This element has allowed housing to significantly contribute to the growth of the economy for the first time ever in seven years. Some states and cities such as New York, San Francisco, Boston, San Jose, Northern New Jersey, Washington DC, Orange County, Los Angeles, San Diego and East Bay are widely touted as top markets in terms of asking rents for multifamily construction.

Monday, June 16, 2014

Apartment Market Outlook: 2014

Renting seems to have become the norm for a generation of would be-buyers priced out of the housing market. About 66.5% of American households owned the homes they lived in at the end of 2010 according to the U.S. Census Bureau. That figure stood at 67.2% at the end of 2009. Last year (2013), the number of home owners dropped by 30,000 compared to 2012; during this time, a total of 1.1 million renter households were added.

Interestingly, though, the decline in buying is not being driven by foreclosures pushing potential buyers out of the real estate market. It seems more people, especially the younger generation, are being made to believe that owing a home is no longer a lucrative investment. The rates amongst people aged 55 and above remain rather consistent.

So, why are people renting rather than buying? Most cite fear for continued fall in home prices as the main reason for not buying. Some are uncertain about the stability of their jobs while others decried tighter credit standards for mortgages as an impediment.

For real estate investors, now is the time to take advantage of this trend towards renting. With the continual increase in demand, the apartment market has a positive outlook for the year 2014.

Monday, May 19, 2014

Recognizing False Apartment Reviews

Honesty sometimes feel like a rare commodity between apartment owners and tenants. As technology provides us all with greater insight into the thoughts and actions of ourselves and others, it may seem as if dishonesty is the only way to make us stand out from the rest of the crowd.

However tempting it may be to post fake reviews of apartments or to "pad" the amenities offered in our facilities, we have to keep in mind that these behaviors aren't just unethical, they're downright illegal. Fake apartment reviews are worthless in the long run and if you have a problem with your property that's serious enough to require falsehoods, it's better to spend your time fixing what's broken instead of simply covering it up.

In a perfect world, being upfront and honest with our tenants would be all the encouragement needed to ensure an ethical partnership between all parties. Unfortunately, despite our best efforts, some individuals will use social media or online reviews to harm our reputations. Here's what to do if you find yourself the target of negative apartment reviews: 

1.  Make reviews a priority. Check apartment review sites first thing every morning to prevent any nasty surprises. 
2.  Respond to all reviews, if possible. Thank the poster for leaving feedback and keep your tone professional when asking how to resolve disputes. 
3.  Don't incentivise reviews. Overly glowing reviews, combined with negative ones, send out a warning signal to potential tenants. 
4.  If you receive a review that you feel is unfair talk to the webmaster of the review site. You may be able to get it removed. 

Thanks to the rapid expansion of social media and review sites, we're able to communicate more effectively with our customers than ever before. Make sure you're sending your potential tenants the right message.

Thursday, April 24, 2014

Identity Theft: Keeping Renter Data Safe

Identity theft is a serious concern to both consumers and retailers. According to the Federal Trade Commission (FTC), it's the fastest growing crime around the globe. Annually, about 10 million individuals fall victim to identity theft, or about 19 people per minute.

The landlord-tenant bond is one that involves trust between both parties. It's important for apartment owners to have access to the financial records of those who live in their buildings, but it's equally crucial that this information be kept out of the hands of criminals. Here's what every landlord or commercial real estate investor needs to know to keep their tenants safe.
  • Take care to check the background of all employees. 70 percent of all thefts of identity last year were perpetrated by an employee of a business or by the victim's coworker. Thoroughly vetting your employees may reduce the risk of identity loss. 
  • Dispose of all information properly. Thieves have no problem rooting around in trash to get the information they want, so it's not enough to just toss out sensitive documents. Instead, use a shredder on all tenant information. 
  • Protect your computers. Stop hackers in their tracks by using password protection on files and ensuring that your virus protection and firewall are kept up to date. Avoid storing sensitive information on laptop computers, which can be easily accessed. 
  • Protect your mail. Don't allow mail to pile up outside of your office. If it's not delivered inside the building, invest in a locked mailbox that will keep thieves at bay. You may want to consider purchasing locked boxes for your tenants to use as well. 
Identity thieves thrive when information holders get careless or lazy. Setting up good habits now means less chance of aggravation in the future.

Monday, March 31, 2014

Data Sources for Average Apartment Rents

A source of contention between property managers and real estate investors is how to set the price for a rental property. Outside of your business model and profit margin expectations you have to also consider what the current market will sustain and what similar properties are renting for in the local economy. There are resources available to help you determine what a reasonable asking price should be for apartment rent and what you can expect to receive for your properties.
  • Typical residential rent prices are provided by the U.S. Bureau of Labor Statistics in the Consumer Price Index which provides data for government statistical information and is an important resource of economic trends to use when setting your rental rates.
  • Census data concerning rental prices is available through the American Community Survey. The Census Bureau further provides Statistics of Market Absorption as a quarterly and annual report showing asking prices for newly constructed apartment communities.
  • HUD is another government agency that provides its information to the public concerning rental rates. HUD provides information concerning rental rates in both metropolitan areas and rural rental properties in the estimates of Fair Market Rents.
  • The National Multifamily Housing Council (NMHC) provides information on their website that includes regional statistics on the going rate for apartment leases.
  • NMHC offers public distribution of reports concerning median rents, monthly distribution of rent payments and apartment rent as a percentage of household income.
The use of these resources provides you with factual and immediate, current information about rent prices nationally and how that compares to your local situation. Use these facts to judge where and when you want to invest in buying or building rental space along with how to best determine the lease value of those spaces.

Saturday, March 22, 2014

The Investment Return on Apartments

Why is investing in apartments seen as a great option? Does it really guarantee investment return as many people see it? These are questions that many people have never gotten the right answers to. Apartments are a great investment platform, not just in the United States but also across the world. These investments are bound to bring in a myriad of investment returns in the near future.

The aspect of investment return

Whenever you want to invest, you need to appreciate that these returns can exceed or even fall short of those that were registered in the past. However, demographic trends suggest that the demand for apartments will continue to grow moderately in the year 2014 and the coming years.

Short average development periods

Another aspect that makes investing in apartments a good option is that they have generally lower development periods. This aspect makes it easier for support to relatively adjust to changes in demand. This then results in a reduction in amplitudes of building cycles. Finally, rental controls and various forms of regulation in regard to rental property are less extensive today in the United States than in most countries all over the world.

The past and what we can expect in future

In the year 2006, the United States had a total of 17.6 million apartment residences. The value of all these apartments was estimated at a total of $1.87 trillion at the end of that year, which was generally an all time high. The total value of all these apartments has been rising at an exponential rate since that time through a period that included the state of economic recession. Direct investments in apartments have provided a competitive investment return relative to other major property types in the United States.

Friday, March 7, 2014

Top Apartment Resident Complaints

Some apartment residents have legitimate complaints about what they dislike in their apartment. These complaints need to be addressed because any business is more successful with satisfied customers, especially in the real estate business. Empty apartments not only don’t produce income but require holding costs and continued maintenance expenses while empty.

Infestations are a top concern for tenants. Nobody wants bugs in their home, and apartment residents can’t be held responsible for the effects of their neighbor’s problems as bugs cross between apartments. Fumigation is simply a business expense for apartments and has to be included when determining the monthly payment amount.

Other maintenance problems are also high on the list of tenant complaints. Whether it’s a leaky roof or a leaky faucet, apartment residents hold an expectation that repairs will be conducted properly in a timely manner. It is, appropriately, their expectation that the rent payment is for an apartment with all the advertised amenities to not only be there but to also function properly.

Legal issues are rarely taken to court by a tenant, but compose a variety of complaints about how the lease is handled. Deposits that aren’t returned, lease terminations that aren’t handled properly and evictions fall in this category. To handle these complaints, make sure to address these issues in your business plan so you know you haven’t done anything wrong. Set up a separate account to hold deposits until after the tenant leaves, and make sure to use all the proper legal procedures when conducting an eviction.

In some cases, these complaints can’t be avoided, as some tenants make excuses for being late on their rent payment. All you can really do is make sure the complaints are unfounded and minimal as you take care of your apartments responsibly.