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Closing Summary

Many thanks to Mr. Smith for trusting in our team to help facilitate his 1031 Exchange from his apartment building in Van Nuys to a 7.26% cap NNN Rite Aid in Washington.

Mr. Smith's goal was to enjoy his retirement by alleviating himself of the rigors of management-intensive apartment buildings. By helping him purchase this turnkey asset built in 2008, we secured a steady income stream for him and his family from a national credit tenant, without the responsibilities of property management.

Property Highlights

National credit tenant | Absolute NNN with no landlord responsibilities | Long-term lease w/ six 5-year options | 10% rent increases every ten years | High sale volume per square foot

Thinking of selling?

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From fast, direct offers from motivated and qualified buyers, to detailed listing and marketing proposals, we provide customized solutions to suit your precise needs.

We take a professional, full-service approach in representing you in the sale of your property, and we look forward to earning your business!

Last modified on Wednesday, 14 May 2014 17:12

"Location, location, location" is still the factor that matters most of all in determining how much money renters pay each month for an apartment they call home, according to recent data from the top 100 most searched markets on Apartments.com's website. 

 

Even in some of the largest and most expensive cities, renters can end up paying around $1,000 a month if they explore creative solutions, such as looking for apartments in nearby neighborhoods or suburbs, splitting rental costs with a roommate, or committing to a longer- term lease in exchange for lower rent. 

Read More ...

The use of limited liability companies is often the preferred form of entity for new real estate ventures. In some states, the total filings for new LLC's now exceed the filings for corporations. Beware of the new LLC laws that are growing in acceptance across the country and how this new law may affect you and the LLC's that you form for your real estate ventures.

 

The National Conference of Commissioners on Uniform State Laws issued for enactment by the states it's newly recommended form of LLC Act, called the Revised Uniform Limited Liability Company Act in 2006. Since then, eight states (California, Florida, Idaho, Iowa, Nebraska, New Jersey, Utah and Wyoming) and the District of Columbia have enacted the new LLC law, and the law is pending adoption in South Carolina.

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Thursday, 10 April 2014 18:18

Tenant refuses to give landlord a key ...

Question: One of my tenants is an attorney and is always quoting the law to me. Recently, he changed the locks, citing security issues, as there was a burglary on our block. He is refusing to give me a key. What are my options?

 

Answer: Your first option is to never rent to an attorney. They make terrible tenants. Check your lease agreement. Most agreements provide that the premises cannot be altered without the landlord's written consent. This would be considered an alteration. You should serve your "Perry Mason" with a Notice to Perform or Quit, giving this tenant 3 days to supply you with a key. If "Perry" does not comply, an eviction should be commenced.

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Last modified on Thursday, 10 April 2014 18:25
Thursday, 10 April 2014 18:02

Tenant failed to pay rent ...

Question: I recently bought my first rent controlled building in the City of Los Angeles. After the first month, one of the existing tenants failed to pay the rent so I served a 3-day notice to pay the rent or quit. When the tenant failed to pay the rent, my attorney filed an unlawful detainer action. At the trial, the tenant admitted he never paid the rent. His only defense was that I had not registered the unit with the Los Angeles Housing Department or served him a copy of the Registration Certificate. The unit is actually registered, but I did not serve a copy of the Registration Certificate. The judge ruled in favor of the tenant. Did the judge follow the law correctly?

 

Answer: The Rent Stabilization Ordinance for the City of Los Angeles clearly requires that the Registration Certificate be served on each tenant before a 3-day notice can be served. Even though the unit was registered, if you did not serve the certificate, the judge properly ruled that you did not comply with the law. If you need a copy of the Registration Certificate you can obtain one online at: (https:/lahd.lacity.org/Billing). It is good idea to serve the certificate with a copy of the 3-day notice to prevent this situation.

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Last modified on Thursday, 10 April 2014 18:24
Thursday, 10 April 2014 17:59

Market Watch - April 2014

The fed is continuing their reduction in bond buying and ironically the saving grace of low interest rates is typically bad news. First with East Coast blizzards, and currently the Ukraine geopolitical issues, the trend and momentum is still in the direction of rising interest rates.

 

Second quarter financial news could very well spurn a flight from low yielding rate bonds into the more aggressive equities. Needless to say investors need to capitalize on these rates and terms now, especially all non-cash buyers. 

 

By: Gill Figueroa, First Commercial Capital

Last modified on Wednesday, 20 August 2014 23:02
Friday, 28 March 2014 17:48

Market Watch - March 2014

After hitting a low of 1.55% on March 18, 2014, the 5 Year Treasury has since proceeded to increase over .20 basis points - an increase of over 12%  - due to the market's fear that the Federal Reserve may soon scale back it's bond buying program.  For existing owners and commercial real estate investors, this move requires action if they are to capitalize on the soon to be fleeting 40 year low in interest rates.

 

As the aforementioned data and East Coast winter's thaw suggest, a negative impact on interest rates could be imminent. With consumer spending likely to spike upward as a result, a federal reserve move  is inevitable.  Therefore, don't wait, now is the time to lock in those rates.

Last modified on Friday, 28 March 2014 17:53
Tuesday, 28 January 2014 02:01

Market Watch - January 2014

Due to the coupling of weaker than expected retail sales and global currency dislocations, the 10-year Treasury resistance threshold of 3% remains unbroken. Investors have sought refuge from volatile emerging markets in safe haven assets like the US Treasury, causing an approximate 0.20 basis point dip in interest rates.

 

It is likely that this trend will only strengthen as global capital continues to move toward minimizing risk and American investment opportunities. As a result, it seems that a growth curve gap between multifamily investments and retail assets is inevitable. Retired multifamily investors can take advantage of this opportunity and invest in management-friendly triple-net (NNN) transactions.

Last modified on Tuesday, 28 January 2014 02:07
Thursday, 26 December 2013 23:03

2014 Capital Markets Outlook

The Federal Reserve's most recent decision to reduce its level of bond buying is likely to increase bond yields and trigger a rise in interest rates. For example, the 10 Year Treasury Note which has been trading under 3% could very well break that resistance, leading to an eventual 0.250% to 0.500% point correction in the market.

 

Such a rate increase certainly affects the borrowing leverage apartment buyers can obtain. To demonstrate, using today's overall qualifying rate of 4.25% with a standard 1.20 debt service, a property that yields a Net Operating Income of $40,000 would qualify for a loan amount of $562,000. If rates increase by 0.500%, the loan amount would be reduced to $530,000, representing an almost 5% difference in leverage for a borrower.

 

Overall sentiment remains very positive. Implementation of the new Dodd-Frank Walll Street Reform and Consumer Protection Act which requires creditors to make a reasonable, good faith determination of a consumer's ability to repay any consumer credit transaction secured by a dwelling of 1-4 units will create significantly more financing options for borrowers since more banks will venture into the commercial lending sector, fostering more competition and potential increases in their multifamily funding capacities. The renter pool is also likely to increase as some cities continue to experience gentrification as a result of more and more industries shifting to a 30-hour work week due to our nation's health reform laws.

 

While we remain very bullish in terms of vacancy and rental values, buyer and sellers who act now and take advantage of current market conditions significantly benefit by procuring better terms while avoiding the pitfalls that come with interest rate increases, stressed cap rates, and less leverage.

Last modified on Thursday, 26 December 2013 23:25
Monday, 10 June 2013 17:04

Job Growth's Effect on Multifamily

A recent GlobeSt.com article - "California Labor Market Surges Ahead" - shared much welcomed news about the 2% annual increase in jobs (roughly 285,000 of them) in the state of California since last March. And in March of 2013 alone, the EDD reported a statewide gain of 25,500 jobs with Los Angeles County leading the pack with 11,900. Coming out of a recession, news of job growth is always a plus, so how has it been affecting the multifamily sector?

 

1. Household formations are on the rise...

During the crisis, when jobs were in the doldrums, we saw the public shying away from homeownership in favor of renting. We also saw young adults living with their parents or taking on roommates. Now, with the improvement of the labor market, there's been an uptick in new household formations, both in single-family and multifamily.

 

2. Rental demand is up...

The single-family residential market is red hot. It's great for those with cash or those who can qualify for a loan under today's strict lending guidelines, but for those who can't, renting is the next best alternative to homeownership, and it beats living with mom and dad.

 

3. Effective rent growth rate is on the decline...

Rents are growing at a slower pace and have been for the past three quarters. As a point of comparison, in 3Q2012 the rent growth rate was at 0.90%, followed by 0.70% in 4Q2012, and most recently 0.40% in 1Q2013, according to the latest LA Metro REIS Report. I say this is a supply and demand issue; perhaps the byproduct of the completion of nearly 2,000 new units builders have added to the rental inventory over the past five quarters in the LA Metro area alone.

And consider this...could the declining rent growth rate combined with the recent uptick in interest rates be a sign that we're fast approaching -- or perhaps we have already approached -- the peak of the multifamily market?

 

4. Investors' appetites for risk may increase...

While there will always be demand for "safer" investments such as turnkey properties in prime locations where the returns are smaller but more stable, investors will start seeking opportunities with more risk, a.k.a. more upside, as the fundamentals of our economy continue to improve, especially if interest rates remain low.

 

How has the job market been affecting your investment plans? If you've been trying to time the apartment market, now is a good opportunity to evaluate your portfolio and make an informed decision. Call us today to see how we can help you maximize the value of your property in today's market.

Last modified on Tuesday, 10 December 2013 06:34
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