Posts tagged News
Flat news at the USD Residential Real Estate Conference
Dec 15th
We attended this years 12th Annual Residential Real Estate Conference at the University of San Diego and here is a quick summary of the event.
For both California and San Diego, the forecasts for 2012 are predicting only a slight decrease in the number of distressed homes and flat prices due to
- Low consumer confidence
- Tough credit qualifications
- Lack of hiring by employers.
We are not yet at a long term equilibrium in home ownership rates and many more “strategic” defaults are in the pipeline for the banks & a higher % of distressed inventory is selling as short sales vs. REO. This strategy is helping banks minimize their losses and are processing the short sales in half the time.
At GII We can attest to all of this through our deals. It appears that not only will our single-family renovate and sell strategy fit the market conditions in 2012 it may be time to start buying and holding more properties.
Highlights from Fannie Mae chief economist Doug Duncan, PhD:
- New housing starts at long term rate for household formation by 2015
- 20% of us home values are underwater
- 0% growth in small business hiring in 2012
- 1.6% growth in US GDP in 2012
- Gdp is at prerecession levels but employment has not recovered and will remain at same level through 2012
- 75% of americans think economy is headed in wrong direction
- Reaching levels of historical % of ownership and rental properties
- Long term home ownership level expected to be 65%
Highlights from USD Assistant Professor Ryan Ratcliff, PhD:
- 12% unemployment rate in CA
- SD nonfarm unemployment increased 7% and has only declined 3%
- CA average resale home price down 5% year over year
- SD resale prices have only declined slightly year over year
- $100-300k is the price range of most distressed sales in 2011 in San Diego
- Best CA employment gains were in high tech and business services, worst sectors were manufacturing and construction.
Highlights from USD Associate Professor Alan Gin, PhD:
- Best SD employment gains were in health care services, admin. and support services, real estate and hospitality (theme parks)
- SD gained 24k jobs in 2011
- SD unemployment rate dipped just below 10%
- Gin’s local consumer confidence indicator is down 2% in SD
- Job growth in SD expected to be 15-20k in 2012
- 5k home and multifamily units authorized in 2011 – up from 3k in 2009 and 3.5k in 2010
- 2.5k of the 5k in 2011 were multifamily (comprised mostly from a couple big projects – this is up 128% from last year
Burnham-Moores Center Presentation Slides
Presentations from the 12th Annual Residential Real Estate Conference,
December 13, 2011:
- Doug Duncan, PhD, vice president and chief economist of Fannie Mae
- Alan Gin, PhD, associate professor at the University of San Diego
- Ryan Ratcliff, PhD, assistant professor at the University of San Diego
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GABHART INVESTMENTS COMPLETES MULTI-PROPERTY FUND AND RETURNS 24% ANNUALIZED TO INVESTORS
Oct 26th
For Immediate Release
SAN DIEGO, Release Date – Gabhart Investments Inc. sold the last property in its first micro fund, Gabhart Real Estate Opportunity Fund Series 1, LLC. The fund was invested in the purchase, rehabilitation and sale of multiple single-family homes over a 13-month period.
The homes were located throughout San Diego County with resale prices ranging from $250,000 to $500,000. All of the properties were bank-owned or short sale purchases with rehabilitation costs ranging from $30,000 to $100,000.
Gabhart Investments is currently managing three active funds focused entirely on 1-4 unit residential properties. “Our strategy with the funds is to minimize risk for our investors by purchasing multiple properties in each fund located in different sub-markets throughout Southern California. Investors benefit from an average of profits from several projects and they are also insulated from a lapse in one sub-market”, says Curtis Gabhart, CEO.
The investor partners in Fund 1 achieved a 22% to 26% (24% average) annual internal rate of return on their capital depending on their investment date. One of the many unique features of the fund is that as each property sells, investors receive a portion of their capital allocated to that project along with estimated profits. “This structure is attractive to our investor partners as it provides short-term cash flow and allows them to reinvest back into another fund or invest elsewhere,” says Nick Walsh, investment manager.
Gabhart Investments is currently partnering with multiple investors in their Series 5 fund. “We’re interested in working with partners that understand our current business plan and share our longer-term goal of expanding into new markets and investments. For example, we are in the process of creating a new fund to invest in first trust deeds within our niche market to provide investors with monthly cash flow and an alternative to our equity partnerships,” says Gabhart.
About Gabhart Investments Inc.
Gabhart Investments Inc., headquartered in San Diego, Calif., is a real estate investment and advisory firm specializing in the fundraising of micro funds for the investments of distressed single & multi-family residences in Southern California. www.gabhartinvestments.com
***The information within this site does not constitute an offer to sell or a solicitation of an offer to buy any securities. Financial results are un-audited company estimates only and are not necessarily indicative of future results which may vary substantially from those set forth herein.
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Transitioning to Commercial Real Estate
Jun 22nd
This year I have been invited to present a morning and afternoon class for the San Diego Association of Realtor s annual real estate expo.
SDAR is hosting it so there is no cost (sdar charged $45 for this class when I taught in their offices last year) but I will be up-selling ginzu knives and snuggies
What do you get the dad who has everything for Christmas? A superman Snuggie
at the end of the presentation. Nothing like having snuggies for the whole family as long as yours is of Superman!
Just kidding. Any of you who have been to these courses know I don’t sell anything except……. the fact I am a buyer and that providing you with tools I have learned and used you’ll consider calling Gabhart Investments when you have a great property for sale.
Ok here is the sch-peel
In this class you will learn if the highly lucrative, highly competitive business of commercial real estate brokerage is right for you. This business niche is not for everyone, so attend this class and find out if you are up to the challenge.
Commercial Real Estate Course topics
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What is commercial real estate?
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Market outlook
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How long will it be before I make money?
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What are the risks?
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Do I need experience in commercial real estate?
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How to leverage your existing client base to turbo charge your success
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Choosing the right company to work for
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Additional resources to get more information on commercial real estate
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Here is what we are not covering
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How to analyze a property (I will talk about what you may want to know/learn and where to get that information)
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This is a good intro if you are thinking about making a time or money investment into the commercial side of things.
It’s not for everyone so don’t expect a bunch of ra ra sis boom ba that anyone can get rich doing it. I will give you a no nonsense run down of the business as I have experienced it.
I will say that if there is a way to get into Real Estate with little or no money (not little or no time) then commercial real estate may be a great avenue. This is what allowed me to transition from doing Real Estate as a hobby to a career that has been very rewarding (and challenging – NO GET RICH QUICK GRASS HOPPAH)
I will say
Real Estate gives me flexible hours (not short hours but time availability to do things like see my kids plays at school during the day etc.)
And work from my H2Office while not in my physical office. Check out this awesome set up.
Real Estate gives you the flexibility to work from anywhere! My second home office…
This Friday at the Town & Country Resort in San Diego
http://www.sdarexpo.com/html/exhibitorOpp/Breakout.html
10:00 a.m. – 11:15 a.m & 2:45 p.m. – 4:00 p.m
Also don’t forget to follow our real estate adventures by going to our individual property websites…….
That San Diego is so hot right now!
Jan 28th
University of Nevada may have beat Boise State’s football team, but noone is laughing about either town’s real estate market. Meanwhile, San Diego is on the move and getting recognition as one of the healthiest residential markets in the country. Mortgage interest rates and home prices are starting to rise, so we’re likely to see more buyers enter the market that want a quality turn-key home with appreciation potential. 
San Diego ranks #1 for home buyers in 2011
Dec 8th
Read the full article here: http://realestate.msn.com/article.aspx?cp-documentid=26601873>1=35006
B of A resuming foreclosures in 23 states
Oct 19th
As you probably know, on October 2, 2010 Bank of America announced that they were halting all foreclosures in the US due to allegations that the bank was using faulty paperwork to foreclose on homeowners. Lawmakers urged other banks to do the same but the Obama Administration wasn’t having any of it, claiming a national moratorium on foreclosures would be harmful to the fragile real estate market (fragile, chaotic, whatever you want to call it). Starting Oct. 18th, Bank of America resumed foreclosures in the 23 states that require a court order to foreclose, an estimated 102,000 cases. They expect a plan of action in DC and the other 27 states in a couple of weeks. This news, combined with high unemployment and steady property values, means we will continue to have a steady supply of distressed inventory that needs to be purged by the banks. Gotta go, my phone is ringing off the hook with hungry agents.
Click here to watch a short clip: B of A Foreclosures Resume
Making Money in Housing – CNBC.com
Aug 31st
Making Money in Housing – CNBC.com.
Following is a 7 minute video that was aired the 24th of August on CNBC with Hessam Nadji of Marcus & Millichap Advisory Services, and Alex Goldfarb of Sandler O’Neaill & Partners.
The subject of the interview is how to make money in the housing sector right now
Here are some key points.
- Apartments leading recovery by demand, followed by industrial properties
- The Commercial Real Estate sector usually trails the economy by 6 months and Multi-Family is usually the first to recover (which is starting to happen) due to there short terms leases. The meaning is that since the apartment leases are usually a year or less they can be adjusted upward as the market or that segment improves.
- Starting to see multi-family REITS doing better. Raising there rents on average of 5% over the last 12 months.
- Home ownership is going down which is good for rentals.
- Some people are realizing that owning homes is very expensive and only having to write one check for their rent is attractive.
They also talked briefly about the fact that institutional investors are looking at core trophy properties and locations. They are much more conservative and are betting that once a recovery happens that there will be above average rent growth due to the supply constrained markets they are in and the lack of multi-family construction that has been done.
I know many of you probably wonder why a company (institutional/REIT) would buy buildings at 5 CAP rates and it is a good question. What you need to consider though is they are usually more conservative and they are comparing these investments to T Bills which are giving almost no returns.
Private investors are looking at non core properties B & C. This is what most of us will buy.
Personally I am thinking that it is time to start considering Apartments again (remember I am more of an apartment investor than houses but it is the houses where we are making the returns right now because there are not many attractive apartment deals we are finding).
I don’t believe in just jumping right (back) in. I like to wait until there is some type of pricing trend because right now there is not enough sales in San Diego to be able to accurately price apartment buildings.
It’s also good to watch other people work out the kinks and really study the market/niche you are going into. Knowing the market (your niche) better than your competition is how you create opportunities for yourself. For example if you know rents can be 20% higher than your competition because you know that segment better you have the advantage of making better choices.
