Sober Look: As <b>real estate investing</b> fades, the Chinese jump into <b>...</b> | Real Estate Investing |
- Sober Look: As <b>real estate investing</b> fades, the Chinese jump into <b>...</b>
- In Spite of ARCP Setback, Non-Traded REITs Hope to Regain <b>...</b>
- The Top Markets for <b>Real Estate Investment</b> in 2015 - YouTube
- Third Avenue On <b>Real Estate Investing</b> [VIDEO] - ValueWalk
- The Most Important Factors For <b>Investing</b> In <b>Real Estate</b> - Investopedia
- Your Best <b>Real Estate</b> Move: Flip or Hold in 2015? - AOL <b>Real Estate</b>
| Sober Look: As <b>real estate investing</b> fades, the Chinese jump into <b>...</b> Posted: 04 Jan 2015 11:18 AM PST In China, real estate investing has been a bit out of style lately (see chart). What is the latest hot investment? Stocks of course, as the Shanghai Composite makes new multi-year highs. In fact the index is up some 58% over the past 6 months - after being stagnant for years (see post from 2012).  Some of this is of course driven by the Shanghai's linkup with Hong Kong (see story). But there is also a significant increase in domestic demand. China's brokers have been quite busy, as (according to Reuters) "new A-share account openings topped 500K every week in December"
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| In Spite of ARCP Setback, Non-Traded REITs Hope to Regain <b>...</b> Posted: 07 Jan 2015 06:05 AM PST Editor's Note: An earlier version of this article incorrectly referred to American Realty Capital (ARC) as American Realty Capital Properties (ARCP). An accounting scandal that has "handcuffed" one of the largest non-traded REIT sponsors in the country is at least partly to blame for a dip in fundraising activity in 2014. After a record year of fundraising in 2013, at $19.6 billion, fundraising activity took a step back in 2014 to about $15 billion, according to data from Robert A. Stanger & Co. Inc., a real estate investment banking firm based in Shrewsbury, N.J. It is not too surprising that momentum slowed after a big year of liquidation events in 2013. However, another contributing factor has been that American Realty Capital Properties Inc. (ARCP) and affiliates of its former external manager became embroiled in a highly-publicized accounting scandal. "That scandal has caused their fundraising to drop precipitously as broker-dealers have suspended the sale of their products," says Kevin Gannon, president and managing director with Robert A. Stanger & Co. In October, ARCP revealed that the company made a $23 million accounting error in the first half of the year that was intentionally not corrected. The error created a crisis for ARCP and resulted in the resignation of key executives, including Nicholas Schorsch, who recently resigned as executive chairman of ARCP. Schorsch also resigned from his position on the boards of directors of non-traded REITs managed by Cole Capital, a non-traded REIT sponsor owned by ARCP. Schorsch is the co-founder of both American Realty Capital Properties (ARCP) Inc. and American Realty Capital (ARC). ARC is a full-service investment advisory firm that sponsors a series of investment programs with an emphasis on publicly registered non-traded real estate offerings. ARCP is a publicly traded REIT focused on investing in single tenant freestanding commercial properties subject to net leases with high credit quality tenants. ARCP also acquires and manages assets on behalf of Cole Capital non-traded REITs. Currently, ARC and ARCP are two separate legal entities. However, up until a year ago ARC served as the external manager for ARC. ARCP officially became a self-managed REIT in January 2014. In addition, David Kay has stepped down as CEO of ARCP and as a member of the board, while Lisa Beeson resigned as president and COO. The FBI is reportedly conducting a criminal investigation of the company due to the reported accounting errors. Traditionally, ARC has been the dominant sponsor in the non-traded REIT industry. American Realty Capital's year-to-date sales as of November exceeded $5.9 billion, accounting for 42 percent of the market share in the non-traded REIT sector, according to Stanger. "American Realty Capital's fundraising has certainly taken a hit, which has pulled back on some of the momentum that we have seen in the first nine months of 2014," says Brian Ruben, head of the national non-traded REIT practice at consulting firm Deloitte. According to Ruben, sales of American Realty Capital's non-traded REITs declined 58 percent in November compared to October. "So there is certainly impact there," he says. House of cards?The crisis at ARCP could also impact fundraising at Cole Capital, which ranks as one of the top non-traded REIT sponsors as well. The $1.3 billion in sales year-to-date as of November ranked Cole Capital as the second largest non-traded REIT sponsor, with a 9.3 percent market share, which is slightly higher than competitors such as W.P. Carey Inc. and Griffin Capital Corp. ARCP acquired Cole Capital in early 2014. Combined, ARC and Cole have raised about half of new funds coming into the non-traded REIT sector over the last two years. "If they are handcuffed a little bit, that could pose some challenges, but it also creates opportunities for other sponsors that come into the space to sell product," says Ruben. Other sponsors are seeing an uptick in fundraising, which would point to the fact that broker-dealers are still selling the investment product. "We're hopeful that the situation at American Realty Capital Properties, the publicly traded company that owns the Cole products, will be able to self-contain it," says Gannon. However, it will take time for the company to resolve investigations by multiple government agencies. And it also remains to be seen to what extent those investigations will impact the company going forward. "We would expect that it would take a year or more to get to the bottom of the issues, not because of anything additionally wrong, but just caution on the part of regulators," says Gannon. Despite challenges facing ARCP, Gannon anticipates a robust year of fundraising for the non-traded REIT sector in 2015. Robert A. Stanger projects that fundraising among non-traded REITs and non-traded business development companies (BDCs) will be in excess of $30 billion in 2015, a jump from the $20 billion in fundraising activity that occurred in 2014. One reason for the optimism is that one of the largest deals of the year, the $3.4 billion merger of Griffin-American Healthcare REIT II Inc. with NorthStar Realty Finance Corp., closed in December. Griffin investors will receive a payout on that investment, and that capital is expected to come back into the sector in the form of new reinvestments in January and February, notes Gannon. In addition, there are a number of liquidity events already in the pipeline for 2015. "I think the momentum that we saw in the first seven calendar months of 2014 slowed down in fourth quarter, but there's projected to be at least five more liquidity events for 2015 that have been announced," says Ruben. For example, CNL Lifestyles Properties Inc., Industrial Income Trust, New York REIT and Philips Edison Grocery Center REIT are among companies that are reportedly exploring their options. "If you go back to the fundamentals of the market, there is a lot of dry powder, a lot of capital on the sidelines waiting to be deployed," Ruben says. | ||
| The Top Markets for <b>Real Estate Investment</b> in 2015 - YouTube Posted: 02 Jan 2015 02:27 PM PST Ratings have been disabled for this video. Rating is available when the video has been rented. This feature is not available right now. Please try again later. | ||
| Third Avenue On <b>Real Estate Investing</b> [VIDEO] - ValueWalk Posted: 02 Jan 2015 09:29 AM PST
Third Avenue: Differentiated Real Estate Investing  | ||
| The Most Important Factors For <b>Investing</b> In <b>Real Estate</b> - Investopedia Posted: 06 Nov 2014 09:13 AM PST Compared with other types of investments, real estate investing involves a relatively favorable risk/reward profile, but with relatively low liquidity (ease of entry and exit). Let's see some of the most important factors to be considered for investing in real estate. I. Location of the Property Why is it important? The age old punch line "Location, Location, Location" still rules and remains the most important factor for profitability in real estate investment. Proximity to amenities, peaceful conforming areas, neighborhood status, scenic views, etc. are major factors for residential property valuations; while proximity to markets, warehouses, transport hubs, freeways, tax-exempt areas, etc. play an important role for commercial property valuations. What to look for? A mid-to-long term view, about how the locality is expected to evolve over the investment period. Today's peaceful open land at the back of a residential building may be developed into a noisy manufacturing facility in future, making the residential valuations less profitable. It is advisable to conduct thorough check about ownership, type and intended usage of neighboring areas, establishments and free land in the locality. II. Valuation of the Property Why is it important? Real estate financing during purchase, listing price during sale, investment analysis, insurance premium and taxation - all depend on Real estate valuation. What to look for? Commonly used Valuation Methodologies include:
III. Investment Purpose & Investment Horizon: Why is it important? Given the low liquidity and high value investment in real estate, lacking clarity on purpose may lead to unexpected results including financial distress, especially if the investment is mortgaged. What to look for? Identify which of the following broad categories suits your purpose and prepare yourself accordingly:
IV. Expected Cash Flows & Profit Opportunities: Why is it important? The investment purpose & usage influences cash flows and hence profit opportunities. What to look for? Develop draft projections for the following modes of profit & expenses:
V. Be Careful with Leverage - Know the Pitfalls: Why is it important? Loans are convenient but may come at a big cost - you commit your future income, to get utility today for a cost of interest spread across many years. Real estate financing needs higher amounts and hence has higher exposures. Understanding it properly allows you to benefit from it to the maximum, while ignoring the risks can lead to major pitfalls. What to look for? Depending upon your current & expected future earnings and paying capability, consider the following:
VI. Investment in New Construction vs Existing Establishments: Why is it important? New construction properties usually offer attractive pricing, the option of customization, clearly documented amenities and clear titles. The investor has to deal with only the construction company as a counterpart. Risks include delay in possession, increase in costs, no awareness about neighborhood, etc. Those on resale have vice-versa factors and may need a more thorough check on ownership, documents and legal matters. What to look for?
VII. Indirect Investments in Real Estate: Managing physical properties over a long term horizon is not for everyone. There are also a few alternatives to indirectly invest in the real estate sector and aim to reap the benefit. What are the Options?
The Bottom Line Real estate investments offer a good high value risk-return profile. Thoughtful consideration of the above mentioned factors in mind will enable investors to reap the benefits while mitigating the risks. | ||
| Your Best <b>Real Estate</b> Move: Flip or Hold in 2015? - AOL <b>Real Estate</b> Posted: 04 Jan 2015 11:08 PM PST  AlamyHome sales are projected to increase next year, which could work to the advantage of investors. By Joel Cone Wild fluctuations in the nation's real estate cycle have taken investors on a roller coaster ride since the early part of this century. From overheated home prices to the housing crash to the post-recession era, investors have had to adjust and adapt their investment strategies to market conditions. So which strategies are best for real estate investors next year? The Big Picture for 2015 Looking at the nation's housing and economic indicators, there is plenty of positive news to justify continued investor optimism in 2015. Home sales –- both existing and new -- are projected to increase next year, which is welcome news for fix-and-flip investors. At the 2014 Realtors Conference & Expo, Lawrence Yun, chief economist for the National Association of Realtors, predicted a rebound for existing home sales for the next two years and projected the national median existing-home price will rise at a moderate 4 percent in each of those years. On the new home front, David Crowe, chief economist for the National Association of Home Builders, said in an October webinar that multi-family housing starts were projected to hold steady in 2015. "Multi-family housing starts have rebounded back to normal since the downturn, mostly due to the strong demand for renting," said Yun, who also noted that renter households have increased by 4 million since 2010, while homeowner households have decreased by 1 million. Two major concerns remain: tight lending standards, which continue to keep people who could otherwise afford to buy a home from qualifying for a loan, and interest rates, which could reach 5 percent by year-end. Looking at the Numbers Daren Blomquist, vice president at RealtyTrac, says he believes 2015 is going to be a better year for buy-and-hold investors than for flippers -- with the caveat that real estate values vary from area to area and property to property, so investment strategies will have to adjust accordingly. According to RealtyTrac's numbers, the volume of properties being flipped has declined dramatically, down from the most recent peak of 8.8 percent of all single-family home sales in the second quarter of 2012 to 4 percent of all home sales in the third quarter of 2014. "As home-price appreciation slowed down, the flippers have become less active in this market as well," Blomquist said. "The interesting thing is that the volume of flipping is going down, but the average profit on a flip is staying very strong. The gross profit has stayed strong for the past three years, in the 30 percent range." For buy-and-hold investors, rental properties did well in 2014, although gross rental return was down slightly compared to 2013 in the 586 counties surveyed by RealtyTrac. "This year was not as good for buying rentals as last year," Blomquist said. "Last year, we had a 10 percent return because home prices went up, even though rents went up. Returns have slipped a bit because the cost of acquisition went up." Still, Blomquist said he believes it is a good time to buy rental properties, because the dynamics of this market are right. "We will see it flatten out because home prices are starting to flatten out as well. That will allow rents to catch up with home prices, which is good for buy-and-hold investors, but not as good for the flipper," Blomquist says. Some Local Perspectives Denver: William Bronchick, a best-selling real estate author, attorney and longtime investor, expects 2015 will be a good year in the Denver market for owning rental properties, but not as good for flippers. "It's a great market for rentals, because people still can't get loans and there's so many renters," Bronchick said. "The lending market is tight, so there are more renters, so higher rental rates and lower vacancies make for a great rental market. On (the) other hand, inventory is low, so if you can get your hands on a good motivated property, then you're good for a flip." The Southeast: Investor and trainer Larry Goins, working in North Carolina and South Carolina, said market conditions in those states are good for both flippers and rental property owners. "There are deals to be had, but you have to work harder to get them," Goins said. "I like to buy lower-priced houses and rent them or do lease options or seller financing." Andy Heller, a real estate investor and trainer who has specialized in the Atlanta market for decades, said that since the market crash, a buy-and-hold strategy has made more sense, because investors could buy property very inexpensively. "Most of the country has settled into a more normal appreciation, especially in the last six months or so," Heller said. "Allowing for the fact that we're in a time of normal appreciation, what strategy is the best? Both. We don't have an overheated market and we don't have a collapsing market." Phoenix: In the Phoenix area, supply-and-demand economics will dictate the right investment strategy in 2015. "The Greater Phoenix market has been in low supply and low demand for 15 months now," said Alan Langston, executive director of the Arizona Real Estate Investors Association. "We're not sure that's going to change anytime soon. Our market's been stagnant for a long time, but that doesn't mean real estate investing has been bad. It's been different." Langston said he believes investors will continue to be successful, whether they are rehabbing and flipping houses, or holding onto rentals -- but they will have to approach the business differently than they did before. "If you know what you're doing as a real estate investor, you're going to adjust what you need to adjust so you do well on your property," Langston said. "If you're an informed investor, you're going to be fine." Investor Activity Varies Auction.com, the online real estate marketplace, recently released survey data collected from investors bidding on properties across the country, which confirmed that buying property to hold and rent is currently favored over flipping nationwide. However, investor intent varies considerably between online and offline investors, regions, and property prices. The study showed that purchasing property to rent is more prevalent in the Midwest and South, while there appears to be a higher propensity for flipping in the Northeast. The flip-versus-rent split is nearly even in the West, with a very slight preference toward renting. "Real estate investors appear more likely to flip a property in those regions where home values are higher," said Rick Sharga, executive vice president of Auction.com. "Higher prices can translate to a faster and potentially more significant short-term return on investment. The hold-and-rent strategy seems most popular in markets where home prices are lower, allowing investors to charge a more competitive monthly rental rate and still produce reasonable returns over an extended period of time." |
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