As I am approaching the end of my first month as an intern at Gabhart Investments, I’d like to reflect on what I’ve learned, and what has changed thus far.
What I’ve Been Doing
Over the past few weeks, I have been spending a lot of time reading the material Curtis has provided me on Property Valuation & Investment Analysis. Although it is mainly an overview of the subject, it has proved to be some highly valuable content. This material essentially picked up where I left off in my Real Estate Investment Analysis class that I took last semester at San Diego State. I have been brushing up on subjects like tax benefits, 1031 exchanges, expenses, leverage, returns, evaluating cash flow, and much more. I still have a great deal of learning to do on these subjects, but it is exciting to see how what I’ve learned in the classroom correlates to real world applications. It is my intention to continue to read up on these subjects and ask as many questions as I can.
I’ve also been observing how Curtis and his team assemble marketing packages for commercial properties they are listing. I was doing things similar to this at my last internship at Realty National, so I’ve enjoyed seeing how this translates in the commercial arena
Commercial Real Estate Blog Posts
Another task I have taken on is the editing of Curtis’s blog posts. My first edit was a post on property walkthroughs. One tremendous benefit of doing this has been the information I’m learning is sticking much deeper than if I just glanced over it. It’s proved to be a great learning tool for me and I’ve even taken on the task of researching some of the topics I was curious about. Writing has always been a passion of mine, so getting the opportunity to revise and write some stuff has been great. I’m excited that I will get to continue to edit blog posts during my time here.
This past week I had a great learning opportunity with Curtis to do a walkthrough of a 13-unit apartment building in Fallbrook. I was able to learn about some of the things you should be looking for in a property, both on the interior and exterior. This was a neat real life application after reading Curtis’s article on property walkthroughs. This is certainly the kind of stuff you’d never learn in a class room.
13-Unit Apartment Building In Fallbrook
La Jolla Multi-Family Building
Another property we looked at was a 5 unit multi-family building in La Jolla. This was a very intriguing property because it had great bones, was less than a block to the beach and offered several routes for renovation. When walking the property, we looked at things like the condition of the floors, the bathrooms, kitchens, balconies, electrical, etc… It was far from move-in-ready, however, at the right price this could prove to be a great deal.
Curtis and Abe inspecting the condition of the upstairs balcony
the interior of the detached studio
Co-Star Lunch & Learns
In addition to the property walkthrough, I’ve also attended two Co-Star lunch and learns with Curtis and his assistant Dianne. The one that stood out to me was on the housing forecast over the next few years in San Diego County. I enjoyed this meeting because this is a real problem we will be tasked with fixing over the next decade. This past semester in my investment analysis class I did a great deal of research on this subject, so it was neat to hear the industry take on the issue.
Lastly, I have very much enjoyed the opportunity to pick Curtis’s brain. He’s always offering me valuable tips and knowledge about real estate and just life in general. Whether it be tips on client relations, listing properties, or even just financial management, I’ve been trying to act like a sponge of knowledge. He’s always honest about things and I respect that.
My views on real estate are growing stronger than ever and I’m excited all the learning opportunities that lie ahead. I am finding that the San Diego Commercial Real Estate Market contains more possibilities than I ever could have expected. Stay posted for my final update in August!
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: