Emerging Real Estate Markets Objectives Recognize and Profit
Emerging Real Estate Markets
Objectives Recognize and Profit From Emerging Markets Value Add Through Micro Repositioning Other Factors
In The Beginning…… 3 - 6 Families in Boston Emerging Markets Northeastern U – Economics Harvard Business School – OPM Portfolio of 8, 000 Plus Units Largest Residential Deal In Texas 2014 - 5, 220 Units
The Real Estate Market Cycle Buyer’s Market I Seller’s Market II Buyer’s Market I Seller’s Market I Buyer’s Market II
SMII BMI SMI BMII BMI
The Real Estate Market Cycle Buyer’s Market I Seller’s Market II Buyer’s Market I Seller’s Market I Buyer’s Market II
The Real Estate Market Cycle Buyer’s Market I Seller’s Market II Buyer’s Market I Seller’s Market I Buyer’s Market II
Sellers Market Phase I ü Supply of Property Dwindles ü Foreclosures start to decrease in number ü Properties Sell Fast ü Unemployment Low ü Prices/Rent Rising ü Speculation in full swing ü Construction starts accelerate – Condo Converters ü Existing properties changed to highest and best use/tear downs ü Demand At It’s Highest
Sellers Market Phase I Key Strategy Buy and Hold Flip
The Real Estate Market Cycle Buyer’s Market I Seller’s Market II Buyer’s Market I Seller’s Market I Buyer’s Market II
The Real Estate Market Cycle Buyer’s Market I Seller’s Market II Buyer’s Market I Seller’s Market I Buyer’s Market II
Sellers Market Phase II ü Time On Market Increases ü # of Properties Increases ü Rent become stagnant ü Still Getting Inflated Prices ü Potential for overbuilding ü Investment properties are bought on speculation/not cash flow ü Demand for construction and materials are still rising ü Foreclosures remain low but steady ü Business/Jobs Begin To Slow
Sellers Market Phase II Key Strategy Sell Off Inventory Flip
The Real Estate Market Cycle Buyer’s Market I Seller’s Market II Buyer’s Market I Seller’s Market I Buyer’s Market II
Buyers Market Phase I ü Price/Rents Falling ü Unemployment Highest ü Excess supply ü Time on market/longest ü No Speculation ü Existing inventory sitting idle, in need of repair ü Foreclosures sharply increase ü Construction – overpriced and stagnant ü Inv Prop At Lowest Levels ü Demand At Lowest Point
Sellers Market Phase I Key Strategy Buy and Hold For Cash Flow
The Real Estate Market Cycle Buyer’s Market I Seller’s Market II Buyer’s Market I Job Fulfillment Seller’s Market I Job Growth Buyer’s Market II Job Construction
The Real Estate Market Cycle Buyer’s Market I Seller’s Market II Buyer’s Market I Seller’s Market I Buyer’s Market II
Buyers Market Phase II ü Time On Market Decreases ü Absorbing Oversupply ü Job Growth Increases ü Prices Slowly Increase ü Demand begins to increase ü Very Little Speculation ü Existing Properties Being Rehabbed ü Foreclosure – competition fierce as numbers decline ü Rents Begin To Slowly Rise
Buyers Market Phase II Key Strategy Buy and Hold!!
Emerging Markets Large Markets – Late Innings Dallas Austin San Francisco Anaheim Atlanta Oakland Cape Coral Denver Orlando
Emerging Markets Money In Secondary Markets! Fort Collins, CO Columbia, SC Santa Rosa, CA Port St Lucie, FL Boise Knoxville, TN San Antonio Waco, TX Richmond, VA Montgomery, AL Daytona Beach Jacksonville, FL Chattanooga, TN Dayton, OH Manchester, NH Akron, OH St Louis Reno
Micro Repositioning 86 – 90% Occupancy B Property/A-B Area Upgrade Exterior - Landscaping, Parking Lot, Signage, Leasing Office, Minor Ext Repairs, Paint Exterior, Common Areas Interior – Carpet Cleaning, Paint, Spray Counter Tops, Lighting Package Total Cost - $1500/3, 500 per door Complete Time – 2/4 Months 18 Month Refinance Into Long Term Debt/ Equity Return
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