CO MULTIFAMILY NEWS: Investing Lessons

by Compass Commercialon 27 February 2020in Central Oregon Multifamily News

As you likely know, Warren Buffett, the CEO of Berkshire Hathaway, made his considerable fortune investing in the stock market. Mr. Buffett has also done well investing in real estate and many of his stock market principals carry over to real estate investing.

So what did Mr. Buffett learn from his real estate investments?

Buy when most are selling and sell when most are buying. Mr. Buffett once said, “I will tell you how to become wealthy. Be fearful when others are greedy. Be greedy when others are fearful.” Restated, buy when most are selling and sell when most are buying.
Don’t concern yourself about daily valuations. Warren Buffett bought properties at bargain prices and knew that over time, they would make good investments. “Games are won by players who focus on the playing field,” he quipped, “not by those whose eyes are glued to the scoreboard.” As he likes to say, “our favorite holding period is forever.”
Property management is often undervalued and underappreciated. You don’t need to be a real estate expert to achieve satisfactory returns, but you do need to turn over management to someone who is well qualified to manage the property for you.

Thanks to Doug Marshall for contributing these Warren Buffett nuggets. Doug Marshall is the award-winning author of Mastering the Art of Commercial Real Estate Investing, and a multifamily mortgage broker with Marshall Commercial Funding. If you need advice on multifamily financing, Doug can be reached at 503-614-1808 or check out his website at marshallcf.com.

The Central Oregon multifamily market remains robust. Vacancy rates are steady and 2019 had modest rent growth.

Very few owners are selling and there is heavy buyer demand. Is this a market being driven by fear or greed?

If selling your multifamily property is on your horizon, now is a great time to call us at 541.322.1230 or 541.848.4060.

The Central Oregon Multifamily News is published by brokers Ron Ross, CCIM and Terry O’Neil, CCIM.

To find out about new multifamily listings, sign up for new listing alerts by going to: compasscommercial.com/mfnews.

Click here to view the full PDF Newsletter.

Plan in Advance for Selling

by Compass Commercialon 6 March 2019in Central Oregon Multifamily News

The following content is taken directly from the Central Oregon Multifamily News, Winter 2019 issue.

Topping the headlines in Central Oregon multifamily news is statewide rent control, and it does appear this measure will be passed. As usual, small businesses, like most Central Oregon rental property owners, must find a way to operate in the face of government headwinds. It seems like a better legislative approach would be to find ways to increase the supply of rental housing by encouraging and incentivizing housing providers, not targeting and obstructing them.

The good news is that the market continues to do well, driven by strong in-migration. A significant amount of new supply coming online in recent years has caused vacancy rates to inch up and rent increases to slow dramatically. Both are healthy developments as the free market continues to be most effective for regulating supply and demand and ultimately rental rates.

THINKING OF SELLING?
We strongly recommend proactively preparing your property in advance of going on the market. Surprises kill deals! They also reduce net sales proceeds and cause unnecessary pressure and stress.

Prior to putting your property on the market:

Tour all units. You could be very surprised at what some of your tenants may be up to. There is an old adage that applies here “you get what you inspect, not what you expect.”
Have your trusted contractor go through the units with you including the attic and crawlspace. Take care of deferred maintenance. Doing this proactively on your own timeline is cost effective, as opposed to operating under the pressure of deal timelines, appraisers, inspectors, and lenders.

This should not only apply when getting a property ready to sell but should also be considered on at least an annual basis. If you want to really get a gold star when putting your property on the market, consider having a complete building inspection done prior to hitting the market.

The Central Oregon Multifamily News is published quarterly by brokers Ron Ross, CCIM and Terry O’Neil, CCIM.

To receive the email or mailer, contact Ron at 541-322-1230 | rross@compasscommercial.com or Terry 541-848-4060 | toneil@compasscommercial.com.

To find out about new multifamily listings, sign up for new listing alerts by going to: compasscommercial.com/mfnews.

Multifamily News: Vacancy Rate Stabilizes

by Compass Commercialon 23 October 2018in Central Oregon Multifamily News

The following content is taken directly from the Central Oregon Multifamily News, Fall 2018 issue.

New apartment construction is making headway in the region-wide housing shortage and affordability problems.

The market is healthy and working.

There is more housing availability, and rent growth has slowed dramatically from the recent years of double digit increases.
New apartment construction in Bend has been modest but steady. Some West Coast markets, have seen an oversupply of new construction, driving up vacancies with long periods of lease up times for new buildings. Rent growth has declined in a few markets. So far, Bend has not experienced that, as new construction has been somewhat restrained by high costs, shortage of land, and regulatory burdens and costs.

Sales activity is modest. Buyer demand remains strong but is tempered by higher
interest rates and price resistance. Many owners are still reluctant to sell, largely due to tax considerations.

It is still a great seller’s market. We are always happy to provide free Broker Opinion of Values for your multifamily properties. We are well-versed in 1031 exchanging and can answer many of your questions regarding the 1031 exchange. We also provide consulting on preparing properties for sale. Ideally, this process should begin well before actually putting a property on the market.
Contact us early if you are thinking of selling!

The Central Oregon Multifamily News is published quarterly by brokers Ron Ross, CCIM and Terry O’Neil, CCIM.

To receive the email or mailer, contact Ron at 541-322-1230 | rross@compasscommercial.com or Terry 541-848-4060 | toneil@compasscommercial.com.

To find out about new multifamily listings, sign up for new listing alerts by going to: compasscommercial.com/mfnews.

Multifamily News: Interest rates and cap rates

by Compass Commercialon 10 May 2018in Central Oregon Multifamily News

The following content is taken directly from the Central Oregon Multifamily News, Spring 2018 issue.

Many have prematurely predicted rising interest rates for the last several years. It does appear that rising rates are finally a reality. The question now is “how far and how fast?”

Rising rates could hamper performance and returns for investment real estate. Cap rates will go up as financing costs rise. When investors can get a better return on “risk off” investments, like US treasuries, they will demand a higher return on investments like real estate. The answer to the “how far and how fast” question is critical to how rising rates will impact multifamily real estate values going forward.

A moderate and measured rise could have little negative impact. However, it will put further pressure on the bottom line. There is legitimate concern about how much further rents can rise locally, after the explosive increases over the last few years. The twin trends of rising rates and plateauing rents pose significant headwinds to valuation increases. A sharp and prolonged rate increase would be more significant perhaps resulting in some backing up on values.

“The twin trends of rising rates and plateauing rents pose significant headwinds to valuation increases.”

The above chart illustrates apartment sales metrics for the last two years including cap rates. It is likely that we witnessed the low water mark for Bend cap rates in 2017 with the rates in the mid 4’s.

The Central Oregon Multifamily News is published quarterly by brokers Ron Ross, CCIM and Terry O’Neil, CCIM.

To receive the email or mailer, contact Ron at 541-322-1230 | rross@compasscommercial.com or Terry 541-848-4060 | toneil@compasscommercial.com.

To find out about new multifamily listings, sign up for new listing alerts by going to: compasscommercial.com/mfnews.

Apartment Vacancy Rates - Multifamily Outlook

Multifamily Outlook: Learning from national trends

by Compass Commercialon 20 December 2017in Central Oregon Multifamily News

Recently, Ron Ross, CCIM was published in the Cascade Business News for an article on what we can learn locally in Central Oregon about the multifamily industry from national trends. Below is an excerpt of the article as published by CBN. Read the full article as published in the CBN here.

“Real estate markets are no doubt independently local in nature. Central Oregon seems to be as wildly independent as anywhere in the country. As a sub-tertiary market, we have always been more volatile both on the way up and the way down. In the good times, we command surprisingly low cap rates driven by limited supply and strong investor demand. During the most recent recession we crashed harder than most places, but recovered strongly and rapidly.

However, we should still observe and learn from national trends. We are not an island, nor are we immune from national market forces. It has long been observed that Central Oregon has a strong correlation with both California and Portland markets, and to a lesser degree, Seattle.

In the November/December issue of the Commercial Investment Real Estate magazine from the CCIM Institute an insightful article by Beth Mattson-Teig entitled Sailing Ahead: Will the renter pool keep up with the robust development pipeline? points out the following national trends:

1. Continuing strong, but slowing demand for apartment rentals.
2. Record levels of new construction.
3. …”

Read the full article as published in the CBN here.

*Graphic reprinted with permissions from Commercial Investment Real Estate, the magazine of the CCIM Institute, November 1, 2017, Vol. XXXVI, No. 6.
Learn more at www.ccim.com/cire-magazine
If you wish to read the article referenced in Ron’s article from Commercial Investment Real Estate in full, click here.

Multifamily News: Vacancies up, rent growth slowing

by Compass Commercialon 30 November 2017in Central Oregon Multifamily News

The following content is taken directly from the Central Oregon Multifamily News, Fall 2017 issue.

The Central Oregon multifamily market continues to be a healthy landlord market. It is still a great time to own residential rental properties.

Data collection is challenging in our market. In past years a local appraiser surveyed the market and was the statistical market expert for many years. They have long since ceased doing those surveys. In more recent years the Central Oregon Rental Owners Association surveyed its members and released a report annually. However, it seemed to generate controversy as critics disputed their data and accused them of being self-serving, thus they ceased surveying and reporting.

Currently, the best source of this data is CoStar, a very expensive subscription service. Compass Commercial is one of the few member organizations in Central Oregon. CoStar data is showing a Bend vacancy rate of approximately 3.9% and Redmond at approximately 5%. Those rates are up from the reported 1-2% vacancies during the last several years.

They are reporting modest rent increases during the last year of about 3% in Redmond and 4% in Bend. This is a substantial slowdown from the double-digit increases experienced over the last few years.

What does this mean for multifamily property owners? The market is reaching a plateau. Rent increases have outpaced incomes substantially, so continued upward pressure is not sustainable. An increasing supply of new construction is slowly impacting the vacancy rate and absorption has been slowing. All in all, a normal and healthy market cycle. And still is a great time to sell, as there is limited inventory for sale and strong buyer demand.

The Central Oregon Multifamily News is published quarterly by brokers Ron Ross, CCIM and Terry O’Neil, CCIM.

To receive the email or mailer, contact Ron at 541-322-1230 / rross@compasscommercial.com or Terry 541-848-4060 / toneil@compasscommercial.com.

To find out about new multifamily listings, sign up for new listing alerts by going to: compasscommercial.com/mfnews.

Category : Central Oregon Multifamily News