Posts Tagged ‘ howard bell ’

Apartment Buildings as Investment Property

Why Do It

In general, rental property is better positioned for this downturn than most other properties. According to the National Multi Family Council, U.S. apartments have provided the highest risk-adjusted long-term returns of all real estate asset classes and with less volatility.

5 Reasons:

  1. Because investment income property is a cash flow business it has benchmarks and standardized methods for determining value. Cash flow provides the investor with an objective evaluation tool. 
  2. Leases are generally one year, rental income makes relatively quicker adjustments than long term AAA leases or larger shopping malls etc. Apartment buildings have 12-14 month development cycles and can react in a timely fashion to the needs of the market place. 
  3. Apartments have a lower cost of capital and availability of debt capital thanks to Fannie Mae and Freddie Mac. Its a matter of policy. 
  4. Demographic trends are favorable. As a result, demand for rental housing in the U.S. is expanding at the strongest pace since the mid-1980s.  3 million new renter households were created as a result of new household formation, declining rate of home ownership, foreclosures bringing new renters to market and the echo boomers coming of age. Continue reading this post

Posted by: Howard Sobel on June 1st, 2009 under Guest Bloggers

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The Property Management Contract – Issues and Insights

The property manager will be taking on significant responsibilities with the owner’s real estate. You will be effectively handing your property over to another.  It is important to look at the contract, at a minimum it must:

  1. Name all parties to the contract
  2. The legal property address
  3. Define the responsibilities of the manager and the owner
  4. Enumerate all  fees and commissions for leasing or real estate sales.
  5. Define the term of the contract
  6. Both parties must sign and date the contract

Agency — What Is It? Continue reading this post


Posted by: Howard Sobel on April 30th, 2009 under Best Practices, Property Management


Rent Control, Managing Rentals and the GRM

The San Francisco Rent Board sets price controls on residential housing effectively acting as a price ceiling, except when an apartment becomes vacant. Then the owner/manager can bring rents up to market rate. If the unit was occupied for 10 or even 20 years, eventual increases to the prevailing market rate represents a spike in cash flow.

In fact when a building with long standing tenants comes up for sale it’s a great selling point. It’s not hard to see future value when you are looking at a few units renting for $350 that would easily rent in today’s market for $1,500.

Not Everything Is Rent Controlled

In San Francisco, limits to rent increases are mandated and administered by the Rent Board with some exceptions:

1. New Construction: Mandated by state law, all building constructed after June of 1979 are exempted
2. Subsidized Housing: such as HUD housing projects.
3. Dorms, monastery’s and nunnery’s
4. Residential Hotels: If you have less than 28 days of continuous tenancy.

How it Works Continue reading this post


Posted by: Howard Sobel on March 28th, 2009 under Property Management, Regional


The State of San Francisco Rental Markets

I’ve been looking through some recent reports to try and sleuth out the general economic level of malaise and I’m am happy to say that we are not yet feeling the pain in a serious way. The San Francisco Apartment Association magazine prints a nicely detailed economic overview by Mat Sheridan. The first chart shows us that the San Francisco employment rate is less that the state unemployment rate by a little less than half. At 4 to 5%, our jobless rate is painful, but not devastating. Our vacancy rates are still less than 5% and we are among the top rental markets in the country.

I have this theory…..San Francisco is host to huge commuter busses that stop in most areas of the city. They pick up workers from Google, Apple, EBAY, Genentech and other south bay companies. The commuters are picked up in central locations throughout the city and driven to work and back. This has brought huge numbers of well paid employees whose only alternative to living and in San Francisco and working in the south bay was to endure a hour plus commute or take Caltrans.

The bus alternative is a no cost convenient way to live in San Francisco and work in Silicon Valley. The net of this, (my theory) is that San Francisco and Silicon Valley are becoming economically interdependent and this has fueled our rental boom. The health of the tech industry is even more closely aligned to the economic health of San Francisco than ever before. The human typography of this city has been undeniably altered.

San Jose as a Leading Indicator Continue reading this post


Posted by: Howard Sobel on March 20th, 2009 under Guest Bloggers, Market Trends

1 Comment »

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