Five Real Estate Trends to Watch in 2016

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Tracking current trends in the real estate industry can allow you to achieve higher profits to help you make the most of your investments. The experts at the Urban Land Institute and PwC recently released their Emerging Trends in Real Estate US & Canada (ETRE) forecast report for 2016, which offers insights into the direction of the marketplace in upcoming years. Here are some of the most important “must watch for” trends identified in this influential report.

Must Watch Trend #1 — Secondary Markets on the Rise

While the highest real estate values and rental prices are typically found in large urban environments like New York and Los Angeles, less populous cities are also making a significant mark on the real estate industry. The ETRE forecast identifies San Diego, Denver and Austin as three cities to watch in 2016 thanks to the high degree of entrepreneurial investment and development underway in these real estate markets. Looking beyond the obvious primary markets and exploring investment opportunities in second-tier population centers can provide added opportunities for profitability and growth.

Must Watch Trend #2 — Office Buildings in Demand

Commercial properties have often been considered a bellwether for the entire real estate industry. Office space is currently in high demand in many areas; however, the configurations and expected amenities have changed considerably. Cafeterias are reentering the corporate arena to promote greater productivity in the workplace. Open floor plans and shared spaces are also in demand. Opting for commercial buildings that already have these features can save on remodeling costs and can boost lease fees for real estate investment.

Must Watch Trend #3 — Climate Change Reducing Demand for Parking

With more urban residents opting for public transportation, Uber or bikes to manage their daily commutes, the need for parking structures and lots to manage vehicle storage has been reduced considerably. Concerns about climate change and an added emphasis on green-friendly living may have had an impact in this area of the housing market. According to the ETRE report, some cities are reducing the amount of required parking for new housing developments. Tenants and city officials also take walkability scores into consideration when considering the need for parking in the residential real estate marketplace. And for those that still drive there are now services like Luxe that will park your car for you.

Must Watch Trend #4 — Sticking with the Suburbs

Despite many doom-and-gloom predictions about the death of the suburbs, these areas at the outskirts of large urban metropolises continue to attract families and individuals seeking a respite from the bright lights and noise of the big city. The suburbs are reinventing themselves, though, and providing many of the same options once only available in the heart of the city. This hybrid approach to residential areas will have a significant impact on housing for the foreseeable future.

Must Watch Trend #5 — Interest Rates on the Rise

The ETRE forecast also predicts that interest rates will begin to rise in upcoming months, making mortgages more costly and investments somewhat riskier. This also typically means a higher demand for rental properties, as higher rates generally result in less of the population being able to take advantage of mortgage loans. By acting now on the still-low interest rates and available bargains, investors can ensure the highest returns on investment for their real estate portfolio.

These five trends will likely have a large influence the rental and leasing marketplace and will have a significant impact on real estate investments across the U.S. and Canada. By taking these factors into consideration, you can enjoy higher profitability as the marketplace continues to evolve.

Top Fix and Flip Markets of 2015

This year’s best Fix and Flip markets have been announced according to the Q2 2015 U.S. Home Flipping Report.

Among markets with at least 50 completed single family home flips in the second quarter, those with the highest average gross ROI were Chicago, Illinois (61.2 percent), Dayton, Ohio (60.6 percent), Harrisburg, Pennsylvania (60.6 percent), Ocala, Florida (56.8 percent) and Baltimore, Maryland (56.7 percent).

biggest flipping returns

Metro areas with the highest average gross profits in dollars on completed single family home flips in the second quarter were San Jose ($261,946), Los Angeles ($171,954), San Diego ($141,483), Washington, DC ($139, 927) and Seattle ($131,028).

Check out more details of the report here.

Rents Continue to Soar

 

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Rents have been soaring across the country, even outpacing home values, according to a recent Zillow report. And it’s not just a big city problem. “Places that were more traditionally affordable are growing more quickly,” said Skylar Olsen, senior economist at Zillow. The reason is the current shortage of available rentals. “Vacancy rates are at very low levels, which continues to push rents higher,” said Andrew Jakabovics, senior director, Policy Development & Research at Enterprise Community Partners.

There is in-turn a lot of pressure on the rental market: Millennials are renting longer, housing inventory is tight and Baby Boomers are downsizing. There’s also been a shift in people wanting to live in more urban areas, where renting is more common. But there just aren’t enough “For Rent” signs to keep up with the demand. Rental construction also slowed in the aftermath of the housing crisis as confidence shrank. “We weren’t building enough so when the economy recovered, vacancy rates got very tight,” said Hans Nordby, a managing director with real estate research firm CoStar Group. “If you don’t build apartments, it pushes rents up.”

Adding more supply will eventually ease some price pressure, she said. “It just takes time to creep down the distribution. People living in the older units now that aren’t as luxurious migrate over to the new luxury units, and that opens up more units.” But it takes about two years for rental buildings to become available in many markets so the relief won’t be immediate.

If you have been wanting to get into real estate investing now is the time. Rentals are going to continue to rise as they are in high demand. Use Revestor.com to see what properties are the best investments for you.

If you have bought a property using Revestor to calculate your investment, we would love to hear about it! Comment below or email us your story: info@revestor.com.

Source: CNN/Money and Forbes

Why Housing Volume Dropped

This is what most in the housing industry have already felt in Oct, Nov, Dec 2013. As we predicted in a previous post below the loss of momentum from the Government shutdown would create the worst 4th quarter since the housing crash. The good news is that the news is always weeks to months behind. This report is what most of you have already felt.

Reports from Agents and Originators on the ground is that activity has picked up significantly in the new year. We see momentum starting to build toward a spring selling spree. What do you see in your market?

Fourth Quarter News and Data

We here at Revestor are predicting one of the slowest fourth quarters since the housing crash began (at least regionally). One of the main reasons we are seeing such a slow-down (as the U-T San Diego points out) is due to the Government shutdown. Typically momentum from October helps carry the market through the holidays. Obama basically halted all momentum and started the Holidays a month and a half early.

Revestor

This not only affected normal buyers but also affected investors confidence and motivation. This combined with rising mortgage interest rates created a perfect storm, almost to the point of the market falling off a cliff. You can also see the UT article with Dataquick comments here http://ow.ly/rQPvD

We are not yet bearish on the Spring so it can be a good opportunity for investors to pick up some good deals. Remember when there is fear there is opportunity.

What was your Favorite Real Estate Investing Article this Week?

Wow! You know the real estate market is back when all the news can talk about is housing, home prices, first-time homebuyers, mortgage rates, real estate investors, flipping, and more.

What a relief from all the negative doom and gloom, walk away, strategic default, foreclosure, debt, short sale, recession, garbage, victim talk “I didn’t have my glasses on when I was signing the papers and the notary forced me to sign my life away on the dotted line, someone else is to blame, and everybody owes me a handout” ahhh hallelujah. I don’t know about you, but I’ve heard enough of that crap. Onwards and upwards. Move on people (Just make sure you use Revestor’s tools this time around so you can make a better decision this time). The ones that lost their homes either, a.) got excited or greedy from the hype and jumped in because everyone else did, b.) bought more than they could afford c.) got over leveraged (too many properties/investments) d.) used their house as an ATM (RV, Boat, Car, Travel, etc.) e.) bought at the wrong time and were simply a victim of the neighborhood or market around them f.) all of the above.

Notice if person e.) would of held on he or she would be at even or maybe on their way back to even. FEAR causes us to a lot of stupid things so use math this time around please.

Oh hey, btw did you know next year the 7year waiting period will be over for the first wave of people that went through a foreclosure? The wave of “boomerang buyers” and “re-investors” is coming! Revestor may be a play on the phrase real estate investor, but also it may be a play on re-investor – in the spirit of those that got their butts handed to them that can now invest again! This is the group that is more committed than anyone else to not make the same mistakes they did before. This time they are committed to making better decisions based on better information and indicators. They are fighters and they’re eager to get back in the game. (Oh and btw they will continue to fuel the market).

The top two articles that I liked this week were; “Real Estate Rookies Face Obstacles Buying A Home” by Kathleen Doler @ IBD and “Gorilla Flipping Homes as Rebound Revives Rapid Trades” by Heather Perlberg @ Bloomberg.

The IBD article said (in part):

“…America’s housing market has seen dramatic improvements this year; properties are selling, foreclosures are falling and prices are rising. Still, novice buyers aren’t making the cut. Tight credit, investor competition, high down payments and college debt are all obstacles for today’s real estate rookies…”

Yun from NAR and Corelogic both weighed in on the #realestateinvestor vs the #firsttimehombuyer. It will be a battle for sometime…what is your take [COMMENT BELOW]?

The Bloomberg article said:

“…Profits are also climbing to the highest in seven years, with investors making an average $18,391 on each sale, more than triple returns in the first six months of 2012 and compared with losses of $13,206 two years ago…”

We all know the numbers are a lot higher in certain areas of the country, but remember flipping is just one exit strategy and may not be a strategy in your market for long. Remember never invest on potential appreciation alone, only flip if you can add value to the property and the sold comps make sense. Never invest in a buy&hold based on appreciation, ONLY positive cash flow.

“…Real estate professionals and amateurs by the thousands jumped into flipping before the housing collapse, artificially inflating demand as U.S. home prices doubled as measured by the S&P/Case Shiller 20-city index between January 2000 and July 2006…

…Yanir Ram, chief financial officer of DRI Holdings LLC, flips and rents houses in California, where the median price of single-family homes rose 34 percent in June from a year earlier. He said his company has sold from 30 to 80 properties a year since 2010…DRI Holdings buys houses that were built in the 1980s through the 2000s in Southern California and flips them for an average 15 percent return after a maximum of $15,000 in renovations, according to Ram. If they don’t sell quickly enough, properties can be converted to rentals…”

DRI Holdings sounds like they got it going on. I wonder if they use Revestor? What about the bigger boys? PERE [which stands for Private Equity Real Estate] lists Blackstone as #1 in their most recent list of the top real estate investment firms. I was surprised Carrington wasn’t on the list…I’m sure the list is for both commercial and residential. If anyone has the top 10 list of residential real estate investment companies let us know by putting the link in the comments and we will update the post. Here is the PERE list below as well:

The PERE 50

1 The Blackstone Group
2 Starwood Capital Group
3 Lone Star Funds
4 Colony Capital
5 LaSalle Investment Management
6 Tishman Speyer
7 The Carlyle Group
8 Goldman Sachs Real Estate Principal Investment Area
9 Brookfield Asset Management
10 MGPA
11 Morgan Stanley Real Estate Investing
12 CBRE Global Investors
13 Westbrook Partners
14 AREA Property Partners
15 Angelo, Gordon & Co
16 Prudential Real Estate Investors
17 Shorenstein Properties
18 CapitaLand
19 Fortress Investment Group
20 TA Associates Realty
21 Oaktree Capital Mangement
22 Bank of America Merrill Lynch Global Principal Investments
23 Walton Street Capital
24 Northwood Investors
25 Perella Weinberg Partners
26 Lubert-Adler Partners
27 AEW Global
28 Beacon Capital Partners
29 Orion Capital Managers
30 Alpha Investment Partners
31 DRA Advisors
32 KSL Capital Partners
33 ARA Asset Management
34 Rockpoint Group
35 Niam
36 Hemisferio Sul Investimentos
37 Hines
38 GI Partners
39 Cerberus Capital Management
40 GTIS Partners
41 Invesco Real Estate
42 Crow Holdings
43 CIM Group
44 Rockwood Capital
45 Berkshire Property Advisors
46 Harrison Street Real Estate Capital
47 GE Capital Real Estate
48 Kayne Anderson Real Estate Advisors
49 Spear Street Capital
50 Stockbridge Capital Group

Is anyone on the above list making it difficult for you to invest in your local market? We’ve been approached by a couple of the large institutions about customizing Revestor to their internal buying processes and business model. At this point we intend on keeping Revestor as a tool for real estate agents to help individual real estate investors search, find, analyze and acquire investment properties in their investment parameters.

Sorry for the typos…this is just a quick pre weekend post

Cheers!

Abraham Lincoln, Homeowner

Abraham Lincoln is back in the headlines with Steven Spielberg’s latest film, the eponymous Lincoln, doing respectable business at the box office. Of course, it’s a history buff’s dream, and the blogosphere has been dissecting and discussing Honest Abe ever since the film was released. Was the movie accurate? Just how good was Daniel Day Lewis?

We’re naturally wondering: What did Lincoln have to do with real estate? Well, without further ado, here are a few choice Lincoln facts.

Lincoln was a homeowner

According to the Lincoln Home National Historic Site in Springfield, Ill., Abraham Lincoln spent the formative years of his career that would see him ascend to the White House in a one-and-a-half story home with five rooms. He purchased the home – which you can visit today – for $1,500 from the Reverend Charles Dresser, who also performed his wedding to Mary Todd.

The house has gone up considerably in value since then, increasing from a mere $1,500 to priceless between 1865 and the present day.

You can view an entire list of Lincoln’s homes at the National Park Service website.

Lincoln passed one of the great pieces of real estate legislation in American history

Of course, you had to build the house yourself, but in 1862, Lincoln signed the Homestead Act, which allowed anyone who had never taken up arms against the Union to apply for federal land grants. And having seized massive tracts of western land throughout the country’s expansion, there was plenty to give away. Parcels were usually about 160 acres, although the act was later expanded.

The idea goes all the way back to Thomas Jefferson’s idea of the Yeoman Farmer: virtuous and independent-minded property owners who would form the backbone of democracy. In many respects, it’s an ideal we still admire.

Lincoln presided over some important Capitol improvements

The now-iconic U.S. Capitol was only partially completed during Lincoln’s tenure. The dome, which would be finished just year after Lincoln’s assassination, took roughly 11 years to complete at a cost of about $1 million, according to the official website of the Architect of the Capitol. Despite the Civil War, Lincoln refused to halt construction, saying that he took it as a sign that the Union would continue.

Does anyone know the story behind the log cabin?

Boost Your Real Estate Business With a Tablet

The tablet computer is probably one of the best things ever to happen to real estate professionals, who are constantly on the go. Not only are devices like the Apple iPad and the Samsung Galaxy Tab excellent presentation tools, but they can also eliminate the need to lug around the old-fashioned document folder.

Our guess would be that the real estate industry is second behind the medical industry in terms of tablet usage. (That is why Revestor is working on some top secret cool stuff when it comes to the tablet.)

 

Here are four reasons to take a tablet with you on your next walk and talk, whether you’re showing a home or checking one out for yourself.

Use it as a presentation tool

Apps like Keynote for iPad and OfficeSuite Pro for Android devices can be used to give what is basically an on-the-move PowerPoint presentation, but without the bulky projector. Photos also look great, especially on later models. It can be quick and effective to show improvements made to the home, before and after photos and other information, as well.

Store and review documents

Thanks to cloud storage apps like Dropbox, G Drive and Box, there is no need to lug around a heavy file of paperwork with you from meeting to meeting. There is also zero danger that you’ll forget to bring an important document. With your information stored in the cloud, you can be almost assured that you’ll have the answer to pretty much anything a client asks, directly at your fingertips.

Capture signatures

Digital signature apps are getting better and better. Apps like DocuSign and RightSignature allow you to capture and store signatures directly on an iPad or other tablet. And in most cases, these apps are compatible with a number of different formats, including PDFs and Word documents. This saves money and hassle when it comes to printing and sending documents.

One note: It’s worth it to invest in a good stylus. Sketching with your finger won’t create a good-looking or clear signature. A couple of the best models are the Jot Pro and the Pogo Sketch +.

A Forbes Contributor has Some Sobering Advice for Home Buyers

Financial analyst, newsletter writer and Forbes.com contributor Harry S. Dent has some tough-love advice for homeowners: The real estate bubble isn’t done bursting. Not even close.

Dent, a longtime economic forecaster and founder of the H.S. Dent Foundation, doesn’t have much of a reputation for optimism these days, but that’s not really how he sees his job. His last book, The Great Depression Ahead, more or less called the current collapse, which turned out to be far more severe than many people expected.

In a recent post for Forbes, Dent writes that, in his experience studying boom-and-bust cycles, prices almost always return to where they were, or just below where they were, prior to the inflation of the bubble. In the U.S.’s case, only a few communities – Phoenix, Las Vegas and Atlanta – have seen their bubbles fully erased. At the same time, major cities around the world such as London and Vancouver are still approaching their peaks.

To Dent, all this means that there is still trouble ahead. He describes the real estate bubble as something akin to a popcorn popper with different parts of the market peaking and popping at different times. But regardless, the heat is on every kernel.

To figure out their own home’s value, homeowners would be best served looking at what their property was worth near the start of 2000 – in the best-case scenario – and in 1996 in the worst-case scenario.

And if that’s cold comfort, well, wait a few years. All panics eventually end, says Dent, and patience may ultimately have its rewards. He suggests selling or renting until roughly 2015, when real estate should be available for bargain prices.

Here at Revestor we advise home buyers to proceed with caution and to look at all the key real estate indicators associated with the property you are about to purchase. Investors ask tough questions before they buy and so should you. Does the home rent for the payment? Is the property a good overall investment? Revestor will give you a good starting point so you and your Realtor can go out and do your own due-diligence. The more information you have the more likely you are going to make a better decision.

Dent’s view stands in stark opposition to the recent round of optimistic headlines showing housing markets improving as well as reporting a general optimism among industry analysts.

But given the severity of the most recent slump, perhaps Dent is on to something. Is it worth being once burned, twice shy?

One of the most recent – and heated – fights over executive pay is boiling up in the world of real estate.

One of the most recent – and heated – fights over executive pay is boiling up in the world of real estate.

At issue is the compensation package offered to David Simon, chief executive at Simon Property Group Inc., a real estate investment trust based in Indianapolis. It’s a big company, holding an interest in more than 300 income-producing properties in the U.S., including malls, outlets and other shopping centers, according to its company profile at The New York Times website.

And David Simon earns a big paycheck, with a stock award worth some $146 million.

But there’s a catch, as The New York Times reported in November in its aptly headlined story, “A Change in Carrots, Without a Stick.” Simon more or less has to show up to work in order to win his stock incentives. There are no performance metrics. He merely has to do his job.

This does not sit well with some of the Simon Property Group’s shareholders, including the Louisiana Municipal Police Employees’ Retirement System. This pension fund is suing the real estate company for not putting the award to a shareholder vote. You can read the full story for the legal ins and outs. There are a lot of them and, thanks to some creative language in the contract, Simon Property may be perfectly in the right.

But, in this case, it’s more the principle of the thing. Simon was not asked to meet any performance targets, related to stock price or any other metrics. He was merely asked to show up for work. According to the Times’ reporting, this was to encourage him to remain with the company for the duration of his contract.

Simon was number two among the highest-paid chief executives in 2011.

Now it’d be one thing if he were doing a terrible job. Lee Enterprises CEO Mary Junck received some $655,000 in stock bonuses in 2012 even while her company was shedding jobs left and right at its newspapers and other media properties, drawing howls of protest from within the industry. But Simon Property’s stock has been on the upswing since 2008, even exceeding its price before the Great Recession.

But does that exempt him from performance metrics?