Here in the Buckeye State, lawmakers are moving a bill forward that would require property owners to notify renters if the property goes into foreclosure.
This is not the worst idea in the world, and stems from a growing multitude of renters, particularly multifamily and single family residents (I even read where this is affecting trailer owners in a mobile home park) who are being forced out of homes they don't own but have paid dutifully on through their monthly rent. Currently, at least in Ohio, there is no mechanism that forces a landlord to notify tenants that the property has gone into foreclosure, ostensibly giving them a heads up that their world may be changing.
It has passed the Ohio House of Representatives and is moving through the Ohio Senate.
Similar bills have either been passed or are being considered in a number of other states.
Responsible owners will have no problem with this measure.
Monday, May 18, 2009
Monday, May 11, 2009
Think About It
Any time you wisely purchase a piece of income producing property, you are enabling other people to make payments into your private pension plan.....
America On Sale
Is America for sale? Not in a bad sense, but for investors, this is a time of unparalleled opportunity.
There are bargains galore, and my good friend and colleague at Prudential Commercial, Tim Mehan, has penned a great piece on how people who recognize the economic signs are buying everything they can get their hands on.
As Tim says, "Some of the richest men in history made their fortunes in times just like this. The greatest factor in achieving their goals was, and is, overcoming fear. Fear will cripple even the best of plans, if not managed effectively."
Click here to read Tim's excellent essay, "America on Sale."
There are bargains galore, and my good friend and colleague at Prudential Commercial, Tim Mehan, has penned a great piece on how people who recognize the economic signs are buying everything they can get their hands on.
As Tim says, "Some of the richest men in history made their fortunes in times just like this. The greatest factor in achieving their goals was, and is, overcoming fear. Fear will cripple even the best of plans, if not managed effectively."
Click here to read Tim's excellent essay, "America on Sale."
Friday, May 8, 2009
Private Investors Drivung Equity Market
There is money coming back into real estate investment. Funding sources that is. But make no mistake -- private investors are driving the equity market these days.
Small private equity groups are flooding the marketplace and investors are targeting cash-on-cash returns over internal rates of return, according to panelists on the equity investment session at the recent Apartment Finance Today Conference.
According to Apartment Finance Today magazine, the most active equity investors today are smaller private syndicators or funds raised more at the grassroots level in country clubs and other groups of wealthy individuals. In fact, a lot of money is being taken out of the stock market (what is left of investments there) and moved into private investments.
What is most interesting is that lenders have changed their tactics and are giving extensions. Plus the government is getting involved, says Eric Snyder a senior VP with Buchanan Street Partners, an investment management house. "I'm not sure the distress will be the level that is generally thought of." He suggests that the perception that distressed multifamily assets are going to flood the market is misplaced.
While more distressed assets may hit the market, lenders are trying a new model: "Amend, Extend, and Hope." Many of the distressed assets coming to market are on the low end. And lenders, who used to foreclose then dispose of properties, are instead moving to the above philosophy, tending to only bring to market low-end, Class C assets. Tyler Anderson at CB Richard Ellis' institutional group, says banks generally are not begging people to take these properties off their hands. Instead, they are "trying to figure out what the asset is, manage it as best they can, and sell it at the appropriate time."
Says Apartment Finance Today: "While some institutional buyers are asking for internal rates of return of more than 20 peercent over a five-year-term, the active investors today are focusing on cash-on-cash returns of between 8 percent and 12 percent."
Keep in mind this change is because cash-on-cash returns are easier to underwrite. They look at immeidate cash flow, as it works like a certificate of deposit (CD). When a bank pays a 5 percent return on a CD, it means you get 5 percent of the deposit amount. Internal rate of return (IRR) deals are more complex and underwrite for differeing amounts of annual cash flow.
The magazine piece agrees with my long-time philosophy -- Sellers should target cash-on-cash buyers, who will typically pay more for an asset than IRR driven investors.
Small private equity groups are flooding the marketplace and investors are targeting cash-on-cash returns over internal rates of return, according to panelists on the equity investment session at the recent Apartment Finance Today Conference.
According to Apartment Finance Today magazine, the most active equity investors today are smaller private syndicators or funds raised more at the grassroots level in country clubs and other groups of wealthy individuals. In fact, a lot of money is being taken out of the stock market (what is left of investments there) and moved into private investments.
What is most interesting is that lenders have changed their tactics and are giving extensions. Plus the government is getting involved, says Eric Snyder a senior VP with Buchanan Street Partners, an investment management house. "I'm not sure the distress will be the level that is generally thought of." He suggests that the perception that distressed multifamily assets are going to flood the market is misplaced.
While more distressed assets may hit the market, lenders are trying a new model: "Amend, Extend, and Hope." Many of the distressed assets coming to market are on the low end. And lenders, who used to foreclose then dispose of properties, are instead moving to the above philosophy, tending to only bring to market low-end, Class C assets. Tyler Anderson at CB Richard Ellis' institutional group, says banks generally are not begging people to take these properties off their hands. Instead, they are "trying to figure out what the asset is, manage it as best they can, and sell it at the appropriate time."
Says Apartment Finance Today: "While some institutional buyers are asking for internal rates of return of more than 20 peercent over a five-year-term, the active investors today are focusing on cash-on-cash returns of between 8 percent and 12 percent."
Keep in mind this change is because cash-on-cash returns are easier to underwrite. They look at immeidate cash flow, as it works like a certificate of deposit (CD). When a bank pays a 5 percent return on a CD, it means you get 5 percent of the deposit amount. Internal rate of return (IRR) deals are more complex and underwrite for differeing amounts of annual cash flow.
The magazine piece agrees with my long-time philosophy -- Sellers should target cash-on-cash buyers, who will typically pay more for an asset than IRR driven investors.
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