September 19, 2018
Contributing Author: Michael McGovern
An enormous amount of concern goes into the decision to purchase and renovate multi-unit property and therefore becoming a landlord. Additionally, providing pro-active property management and the necessity of being on call can affect all aspects of life yet the rewards of creating quality housing while realizing a generous financial return can provide quite a benefit offsetting these demands.
Before agreeing to accept this business model and lifestyle it is critical to fully understand the process, therefore increasing the odds of having a financially and personally rewarding experience. It is also of great value to work with an experienced, licensed Real Estate Broker who can assist with the entire process from site selection to document review. Continue reading Things to Consider when Purchasing a Multi-Unit Commercial Property
May 15, 2018
Contributing Author: Jay Verro, CCIM
It’s no secret that the Multi-family investment sector has been a strong, solid, stable performer in most marketplaces for more than a decade and it does not appear it will change in the years to come. However, most sellers have yet to adjust their mindset towards proper valuations as interest rates rise. Over the past year, the 10-year Treasury, which has been as low as 2.02%, is now hovering in the 3% +/- range. When you couple this with a lender’s upward trending interest rates, the lender’s underwritten NOI compared to a seller’s provided income and expenses, there is a disconnect between bank valuations and seller’s expectations. Recently, these factors have had a negative effect on underwriting and ultimately on the perceived asset value.
I’ve seen this in smaller properties, as well as properties that are operated with a seller’s staff that are shared over multiple sites. It is quite common for the allocation of salaries to be reported artificially low on the property being sold, which is a significant piece of the underwriting process. Continue reading Are Sellers of Multi-family Investments Ready to Be Realistic on Their Value Expectations?