We attended this yearsÂ 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 predictingÂ onlyÂ a slight decrease in the number of distressed homes and flat prices due to
Low consumer confidence
Tough credit qualificationsÂ
Lack of hiring by employers.Â
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-familyÂ renovate and sellÂ 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%Â and has only declined 3%
CA average resale home price down 5% year over year
SD resaleÂ prices have only declined slightlyÂ 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, worstÂ sectors wereÂ 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 expectedÂ to beÂ 15-20k inÂ 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 wereÂ 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:
SAN DIEGO, Release Date â€“ 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. â€œOur 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-marketâ€, 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. â€œThis 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,â€ says Nick Walsh, investment manager.
Gabhart Investments is currently partnering with multiple investors in their Series 5 fund. â€œWeâ€™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,â€ 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.Â 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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The London GroupÂ are reputable economic advisors to the San Diego real estate community. Here are someÂ hot points from their latest reports and interviews…along with what we’re doing about it.
–Invest in assets with promise, or those that are stable. Employ a conservative approach and don’t go for the home run just yet. (we are specializing inÂ many small residential projects with a quick turnaround while keeping our eye on the multifamily market for bigger opportunities)
–Purchase in good metropolitan markets – those with diversified economies with limited potential for new supply, growing populations and good quality of life. (sounds like San Diego so we’re staying here!)
–Forclosures have not surged yet in San Diego due to more short sales occurring before property becomes bank owned. They estimate San Diego foreclosures in 2010 to be 10,000, down from peak of 20,000 in 2008. (we are starting to see and pursue more short sale opportunities versus REO)
–27% of all San Diego listings are distressed sales (this is still a large percentage but the key is building relationships with agents and banksÂ to get the best deals before the competition)
–San Diego has added 10,500 jobs so far in 2011, representing a 2% growth rate. (home valuesÂ are still bouncing around at the bottom because we are not creating enough jobs to give buyers the confidence to come off the sidelines – as a result we are focusing on quality and pricing aggressively for a quick sale)
For Immediate Release: GABHART INVESTMENTS INC. CEO TO TEACH APARTMENT INVESTING WORKSHOP
SAN DIEGO, CA (Dec 4, 2010) — Gabhart Investments Inc. CEO Curtis Gabhart will teach a four-hour interactive workshop named Commercial Real Estate 101 “ How to Buy & Sell Apartments on Saturday Dec. 4, 2010 from 10 a.m. to 2 p.m. at the Double Tree Club Hotel in San Diego. The workshop is designed to offer educational insight on how to break into the apartment market, in addition to presenting attendees with the opportunity to gain professional contacts, advanced industry information and the necessary tools to succeed in today’s market. Pre-registration fees are $49 or $99 at the door.
The workshop will focus on key fundamentals, including:
Learn the Right Time to Start Buying Apartments
Where to Find Deals Before They Hit the Market
How to Analyze Potential Deals Like An Expert
Proven Ways to Develop A Winning Presentation to Earn the Confidence of Investor Partners
Top Gimmicks & Traps To Stay Away From
I am very excited to host this workshop with REI Wise. This workshop, accompanied with future workshops, will provide the insights on how to look and think about investing in apartments. In today’s dynamic and uncertain economic times, for investors to try and figure out what time to buy, sell, or hold is the big question right now. The time to look at apartments is now, as this market is seeing on of the strongest recoveries across real estate assets. The investment strategies and inside information acquired from these workshops will provide you, as an investor, the tools needed to succeed in today’s uncertain real estate market.
Curtis Gabhart has spoken at several engagements ranging from transitioning from residential to commercial, apartment brokerage, condo conversion, raising capital, etc. Gabhart is a respected commercial real estate investor who specializes in apartment acquisitions and dispositions, ownership and operations. His expertise lies in the repositioning apartment buildings for maximum performance and value at resale. In the past, Gabhart was an owner and principal of ACI Apartments Inc., where he was involved in over $250 million transacted & has personally transacted over $40 million in his own deals.Â ACI Apartments has repeatedly been recognized as the most successful income property brokerage firm in San Diego. Gabhart currently serves as a board member on the University of San Diego’s Burnham Moore’s Center for Real Estate Commercial Real Estate advisory board and also served as the past President of the San Diego Commercial Realtors Association, was on the 2009 Board of Directors of the CCIM San Diego Chapter.
As you probably know,Â 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.Â 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,Â Bank of AmericaÂ 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.Â This news, combined with high unemployment and steady property values, means we will continue toÂ have a steady supply of distressed inventory that needs to be purged by the banks.Â GottaÂ go, my phone is ringing off the hook with hungry agents.Â