yeh Florida is a hot mess. There's gotta be a dip coming down there, but who knows when.
So far it's lower because we're getting married later. So people have gotten out their jollies and are little more ready, IMO. And a higher % is just choosing no marriage at all.
A
anon_0k9zlfz6lz9oy
Guest
I dont know the answer to this however been thinking the following about the shore 2nd home market.
1) there are so many people who have had family homes for decades that are paid off and when that owner dies, kids are just keeping it. To carry it only costs like $20K/yr if paid off and you basically cant rent a decent house down there for $20K for a month in July.
2) when peoples elderly parents are dying and theyre inheriting $$ and their primary homes up north maybe theyre selling those and using the money to buy shore houses?
Shore market is insane so im just thinking aloud here
1) there are so many people who have had family homes for decades that are paid off and when that owner dies, kids are just keeping it. To carry it only costs like $20K/yr if paid off and you basically cant rent a decent house down there for $20K for a month in July.
2) when peoples elderly parents are dying and theyre inheriting $$ and their primary homes up north maybe theyre selling those and using the money to buy shore houses?
Shore market is insane so im just thinking aloud here
We have owned on a fairly quiet street in Belmar close to beach since 1999. I think since then may 4 or 5 houses have been sold in our immediate area, and 3 of those were after the owner passed away. Many houses stay in the family. That is our hope for our beach house.
Work from home also playing a role. I know people who just moved to those areas permanently. The Gross Rent Multiplier in shore towns is almost equivalent to Manhattan. Makes zero sense but in a nutshell you don't buy down there for an investment, people do it for emotion.
Long term trends will be affected by demographics as the baby boomer generation moves through their life cycle. US is not really a growing population except for immigration. May cool down Real Estate in the long term...
You have to figure in how expensive rentals have gotten. A share in a nice house is the property tax alone on a smaller house or condo.
Been hoping for the southern NJ shore market to come back to earth (especially Stone Harbor and Avalon). As of now, nope. Still nuts! :)
A
anon_0k9zlfz6lz9oy
Guest
I know this is a residential based thread but office and some retail is taking an absolute bath. It was easy to see it coming as tech advanced. But heres an eye popping one. Crystal Mall in CT went to auction with about an $81,000,000 loan and received a top bid of $9.25 million. So basically a $72,000,000 loss. Theres multiple loans in Cali going into default in the summer not being able to pass debt yield tests. Those loans combined come close to $1 billion. https://www.ctinsider.com/business/article/crystal-mall-fetches-9-25-milliom-at-auction-18104683.php
A
anon_0k9zlfz6lz9oy
Guest
Beginning in 2030 the demographics become more challenging age wise. We are in the best position of any country in the world demographics wise but thats not saying much.
Great book to read is “Big Shifts Ahead” by John Burns. It’s a book I read years ago that has really shaped my investment thesis.
Malls have been dying since 2016. That’s old news. All commercial properties are under pressure. Including MF.
A
anon_0k9zlfz6lz9oy
Guest
malls and office have been dying a slow death.
I don't see too much MF pressure other than people who placed bridge debt on C/D-Class properties with aggressive underwriting in shit areas. Where are you seeing this pressure?
Again, mall yes but office no. Valuation for office in 2021 was ridiculous. A large MF portfolio was essentially foreclosed on and transfer to a new owner in CA. Blackstone is about to default on a NYC MF portfolio. MF will take a hit unless Fed cut rates.can’t have cap rates inside of RFR.
Help me understand how buying 4 caps and rates move to 7 is not a problem with MF? Unless rents are still skyrocketing in those areas (and idk the answer to that) I would be squirming holding that stuff. Who is currently buying MF with rates at 7 asides from 1031 people?
How does this work for the lender and Simon?
Simon put money down, and walked away, basically giving the property back to the lenders. So they lost their down payment and were home free, correct?
For the lenders, perhaps their actual loss is less clear?
"The auction of the mall came a little more than six months after its former owner, Simon Property Group, and fellow investors completed the transfer of the retail center to lenders, rather than pay off $81 million due on a commercial mortgage secured by the property."
A
anon_0k9zlfz6lz9oy
Guest
Sales volume has plummeted. Sellers have no reason to sell unless theyve owned forever and just wanna cash out
However, show me 7 caps and then give me a pen and tell me where to sign. 7 caps dont exist in my space. Were getting quoted on deals this week 5.10%, 67% LTV, 7 year term, 30 year am, full i/o
Last edited by a moderator:
Private market cap rates are 5 nationally. Investors looking at positive leverage in year one with agency debt.
Not sure what everyone is talking about with the plummeting stuff. Lots of real estate types performing well including losgistics, storage, senior, student, med office, hotels, data centers and a fair bit of retail including neighborhood and community centers. Office is 6% of the public reit market but larger in the private market. And not all office is bad office. C/D malls have been dying for a decade. Old news, no new retail build is leading to positive fundamentals for the remaining.
That being said, anyone who bought within the last two years, floating and uncapped is not in a good spot. Those with low fixed rate debt, are in good shape. Know of an Mf deal in Austin that could trade sub 4 cap because new buyer assume 7 years of 2.5 IO and goes into class A product with a 6 cash on cash.
A
anon_0k9zlfz6lz9oy
Guest
Im talking total sales volume. As in number of sales.
MF is doing well overall. To your point, floating/uncapped/no reserves are the only ones stressed
As in, what the new owner wants to do with it? Current BW mayor and council are a hard no on any residential.
Oh I agree, caps have been compressed in that space for a while. I just don't know who is doing a deal right now in this environment but you answered my question with sales have plummeted So I guess everyone holds until rates drop (I think happens in the next 6-12 months personally) or until ARMs expire (that would get interesting as it's already happening in commercial this year and next).
@pmvon and @kyk1827 I actually have a theory (at least in NJ where the tenants have so many rights) that its easier to develop multi-family than it is to buy it and force appreciation. Our property management company has a handful of clients with small MF buildings and I swear we make more money than the owners. Rents are low, people are not stupid they won't give them up. Can't really get them out unless they fall behind on rent and most people are too short sighted and don't try to buy them out either (don't understand that).
I rather find the land, build, immediately have market rate (or higher rents). JMO in NJ anyway.
I rather find the land, build, immediately have market rate (or higher rents). JMO in NJ anyway.
A
anon_0k9zlfz6lz9oy
Guest
Its just very expensive to build in a lot of places. Thats the only issue for some. Midwest markets have actually done the best of any over the past month. Indy, some iowa markets, unconventional
Just odd for them to own something so specific. Don't believe you see that often but that's why I was asking.
They have a large commercial real estate portfolio. Not only do they own, they also do financing as part of their investment portfolio.
You are starting to see institutional capital flow into the SMF space as it remains inefficient. Of course, the ability to move tenant rents remains key and turnover is part of that though one can buy vacancy. Local laws are an important consideration with some markets better than others. Interestingly enough most of the capital that is there already is in SF, La and Brooklyn, markets you expect to have more regulation in that regard.
Obviously, the debt issue (hard to find an article not with a paywall!):
Commercial real estate is headed for a crisis worse than 2008, Morgan Stanley analysts say
More than half of the $2.9 trillion in commercial mortgages will be up for refinancing in the next couple of years, according to Morgan Stanley.
www.usatoday.com
Actually, it’s a good time to buy right now. Valuation isn’t skewed by cheap money. It’s like your view on stocks.
So you’re worried about commercial real estate debt? Not equity? Any specific type of real estate or market? Or is all real estate debt in trouble?Obviously, the debt issue (hard to find an article not with a paywall!):
Commercial real estate is headed for a crisis worse than 2008, Morgan Stanley analysts say
More than half of the $2.9 trillion in commercial mortgages will be up for refinancing in the next couple of years, according to Morgan Stanley.www.usatoday.com
A
anon_0k9zlfz6lz9oy
Guest
Id be worried mostly about office in areas that arent bizz friendly, high tax and ultra restrictive zoning.
But yeah, office in general. Maybe @RutgHoops can speak to what hes seeing. I think hes involved in office
Similar threads
Kirk is a top 20 OC in America, Most Here Dont Know What Hes Trying to do, We Explain In The Thread
- anon_0k9zlfz6lz9oy
- The Round Table 2
