Monthly Archives: February 2014

Redlands California….Prospecting for Appreciation in Multi-Family.

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The perfect scenario is owning income property which is appreciating quickly and simultaneously producing great net cash flow.  Residential income property investors are constantly attempting to balance the see-saw between highly appreciating geographic markets (typically coastal beach communities with rather high GRM’s) and other areas in southern California with lower purchase prices, lower GRM’s and better net cash flow numbers (typically away from the coast/beach).

When searching on LoopNet, Costar, Zillow and of course MultiFamilyOWL, multifamily investors eventually notice some very low GRM, great net cash producing, low purchase price duplex, triplex and fourplex properties throughout Riverside and San Bernardino Counties. Cities such as Hemet, Riverside, Perris, Apple Valley and Moreno Valley with asking prices and cash flow that make income property investors mouth water at first glance.  For savvy, experienced multifamily property owners these cities can be amazing investments.  However, for the purpose of this post we are looking just at a possible gem located amongst these cities.

Redlands California is located in San Bernardino at the base of Big Bear Mountain where Interstate 10 and Interstate 215 merge.  Upon walking through Redlands renovated downtown and riding your bike through the charming tree lined streets near the expanding University of Redlands campus, it is very apparent that Redlands is a city on the rise.  Green well cared for lawns, new small business store fronts opening and large franchise company names moving in.

Duplex, Triplex and Fourplex properties are quite common in Redlands and there is typically a good inventory available to choose from as properties remain on the market a little longer as the area is just being rediscovered by investors.  Rents still remain quite similar to the neighboring cities, however as Redlands continues its modernization and expansion of the University campus, the rental market will distinguish itself and appreciate beyond the adjacent cities. Click the following link to search available Redlands duplex, triplex, fourplex properties now: http://multifamilyowl.com/properties/index/1/#list-view Even further to the east is Mentone California which looks to be benefitting from its neighbor’s re-vitalization and could be the next gem to begin purchasing some multifamily investment properties in.

Burbank, California. Great tenant base of accountants and actors!

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Burbank, California currently has a good inventory of duplex, triplex and fourplex investment properties available for sale.  With no rent control, reasonable valuations, close proximity to Hollywood and a strong employment market, income property buyers should take a closer look at Burbank.

Burbank has large publishing, and motion picture and sound recording industries which comprise 12% of all industries in the city, as well as a large percentage of its residents working as accountants and auditors (25%). The Walt Disney Company has its headquarters in Burbank and employs 7,900 workers and Warner Bros employs 7,400, which makes them the top two employing companies in the city.

Using the CRMLS as our reference, there have been four multifamily closings thus far in January/February 2014 in Burbank.  The closed sales consist of one duplex (closed 01/29/14 at $605,000), two triplexes (closed 01/17/14 at $680,000 & 01/24/14 at $753,000) and one fourplex (closed 02/04/14 at $800,000) .  More sales are still needed to accurately form an analysis of sales averages thus far for 2014, but this is certainly a healthy start for the year.

Long Beach California: Landlords-Government-Tenants Working Together!

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Section 8 has been misunderstood and sometimes feared by investment property owners throughout the city of Los Angeles.  However, in many cities throughout Los Angeles, Section 8 is a very organized, fair and efficiently run government program which creates an equally beneficial symbiotic relationship between the property owner/landlord and the tenant receiving government assistance.  A high percentage of multifamily property owners in Long Beach California are benefitting greatly by implementing the government subsidized program on their small duplex, triplex, fourplex properties they own as well as large commercial apartment buildings.

The below information has been taken directly from the www.longbeach.gov website and is extremely informative for multifamily property owners who are looking to learn more about the government subsidized programs:

I’m a property owner, how do I find out more about the program?
The HACLB Housing Choice Voucher program assists over 6,000 families in the city of Long Beach. To meet the demand for housing we need good landlords and invite your participation.
Participants of the Housing Choice Voucher/Section 8 program typically pay between 30% – 40% of their adjusted income for rent while the housing authority via federal dollars from the Department of Housing and Urban Development (HUD) cover the difference between the approved contract rent and the tenant’s rent payment. This guarantees that landlords will receive a portion of the rent on time each month.By becoming our partner in the Housing Choice Voucher program you make it possible for low-income families to enjoy quality, affordable housing and in return owners enjoy:

  • Stable payments
  • Annual unit inspections
  • Fair market rental rates
  • On time monthly payments
  • Enforceable renter obligations defined in the lease addendum
  • Periodic owner newsletters

These rents reflect the small area fair market rents for Long Beach only.

FY 2013 Fair Market Rents:

 

0 Bed

1 Bed

2 Bed

3 Bed

4 Bed

5 Bed

6 Bed

7 Bed

90802

$730

$900

$1170

$1600

$1800

$2070

$2340

$2610

90803

$950

$1160

$1510

$2070

$2320

$2668

$3016

$3364

90804

$810

$1000

$1300

$1780

$2000

$2300

$2600

$2900

90805

$770

$940

$1230

$1690

$1890

$2174

$2457

$2741

90806

$750

$910

$1190

$1630

$1830

$2105

$2379

$2654

90807

$860

$1060

$1380

$1890

$2120

$2438

$2756

$3074

90808

$1020

$1250

$1630

$2230

$2500

$2875

$3250

$3625

90809

$870

$1070

$1390

$1910

$2130

$2450

$2769

$3089

90810

$750

$910

$1190

$1630

$1830

$2105

$2379

$2654

90813

$690

$840

$1100

$1510

$1690

$1944

$2197

$2451

90814

$850

$1040

$1350

$1850

$2070

$2381

$2691

$3002

90815

$1100

$1350

$1760

$2410

$2700

$3105

$3510

$3915

The Housing Authority of the City of Long Beach is participating in a demonstration project that will use Small Area Fair Market Rents (FMRs) as defined by zip codes. All Requests for Tenancy Agreements received after November 15, 2012 for contracts executed December 1, 2012 or later will apply the 2013 Small Area FMR.

The use of zip codes as the basis for FMRs is intended to provide tenants with greater ability to move into “Opportunity Neighborhoods” with jobs, public transportation and good schools.

Subsidy levels will generally not exceed the small area amount. Higher rents may be reasonable based on the amenities but the final approved rent will be capped at what is affordable based on the individual family’s income.

As a property owner you are entitled to screen potential tenants and set rules and regulations that are in conformance with California Tenant Law. Ownership information is not required until a Housing Choice Voucher/Section 8 voucher holder attempts to rent your unit. You may advertise the listing for free by submitting it online using Our Upgraded Rental Listing Service. Quarterly owner orientations are scheduled throughout the year, you may check the website for dates or contact Monique Lathrop at 562 570-5490 or by e-mail at monique.lathrop@longbeach.gov. We appreciate your consideration of the Section 8 program and look forward to partnering with you to provide affordable housing to Long Beach families.

Santa Monica Wins! Highest Rent Averages in Los Angeles County

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The 2013 USC Casden MultiFamily forecast recently crowned Santa Monica California with the highest average rent in all of Los Angeles County. “The Santa Monica submarket contains 2.4 percent of the multifamily rental inventory in Los Angeles County. Over 200 new multifamily rental units were completed in the submarket since 2009Q3. In the first two quarter of 2009 there was a negative absorption of over 200 units; however, since then 415 units were absorbed in the submarket. As a result, the vacancy rate declined from 4.1 percent in 2009Q3 to 2.9 percent in 2013Q2. The average rent in Santa Monica was $2,328 in 2013Q2, which was a 2.8 percent increase from the rent in the previous year, and was the highest average rent in all of the submarkets in the County.”

At the time of this post there were 22 available multifamily duplex, triplex, fourplex income properties in Santa Monica, California listed on the CRMLS.  Four duplexes and two triplexes, priced from the low one million range to the mid three million range (location playing a huge roll in the massive difference in prices). There are five 4-plexes listed available with an average asking price right around $1,600,000 and eleven commercial multifamily apartment buildings (five or more unit apartment buildings) with an average CAP Rate between 3%-4%. Thus far in the 1st quarter 2014,  five multifamily residential income apartment buildings have  already closed escrow with an approximate average of $400,000 per unit sales price.  Nine more multifamily investment properties are currently in escrow providing for a very robust absorption rate of available inventory.

With the highest average rental rates in Los Angeles County, Santa Monica California’s multifamily property market is attracting investors from all over the state, country and world.

Huntington Beach California 4-Plex Heaven.

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Huntington Beach California is a huge beach community in north/central Orange County offering multifamily investors a wide range and inventory of duplex, triplex and fourplex residential income property options.  This blog post will be focussing on some of the early 2014 statistics for 4-plex (fourplex) closed sales, opened escrows and available properties using the CRMLS for reference.

As of the third week of February 2014, there have been six 4-plex multifamily property closed sales.  Throwing out the high and the low, the average sales price so far this year is $1,096,000 with the average gross scheduled income being $64,051.  With these figures we can calculate the average GRM (gross rent multiplier) thus far in 2014 to be right around 17 for closed fourplex properties in Huntington Beach California.

With seven 4-plex properties currently listed as active and eight fourplexes currently in escrow, it is very evident residential income property investors are loving the ROI (return on investment) Huntington Beach California is offering.  4-plexes still qualify for residential loan programs and a large percentage of the fourplexes in Huntington Beach were built in the 1970’s and offer one or two larger townhouse style units which are awesome for the super savvy owner occupying investors.

Although the absorption rate of fourplex properties listed for sale in Huntington Beach is extremely high, the multifamily market is very fluid with new properties hitting the market daily.  Currently there are over 18 active residential income multifamily duplex, triplex, fourplex and commercial apartment buildings looking for buyers.  Huntington Beach California may offer the perfect combination of appreciation, income generation and location for your next investment property purchase.

 

 

 

 

Costa Mesa California multifamily income property inventory update February, 2014.

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With rising rents, close proximity to thousands of high paying jobs in Irvine and much lower Gross Rent Multipliers than neighboring  cities such as Newport Beach and Corona Del Mar, Costa Mesa California continues to be a favorite pick for residential income property investors.

Costa Mesa, California multifamily investment property inventory statistics showing tight inventory during January and February 2014.  Only seven weeks into the first quarter 2014, Costa Mesa has already had two triplex multifamily closings and one fourplex multifamily closing per the CRMLS.  In addition to these closings, Costa Mesa has had seven duplex, two triplex and one fourplex multifamily property enter escrow over the past  seven weeks per the CRMLS.  At the time of writing this blog (three and a half weeks into February), there were only eleven multifamily properties currently available as active for sale on the CRMLS.  Of these eleven active properties, seven are duplex multifamily properties, two are triplex multifamily properties and two are fourplex multifamily properties.

For those multifamily property investors frustrated with the lack of duplex, triplex and fourplex inventory in Costa Mesa California, I highly recommend investigating the Huntington Beach California residential income investment property market.  Huntington Beach California offers similar gross rent multipliers found in Costa Mesa California (in regards to the duplex, triplex and fourplex markets) also with rising rents, land appreciation and beautiful beaches.  Huntington Beach California’s massive multifamily investment property market will be reviewed in our next blog post.

San Clemente, Capistrano Beach and Dana Point California Multi-Family Status Report February 2014

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The South Orange County multifamily residential income property markets of San Clemente, Capistrano Beach and Dana Point continue to show strong indicators of rising property values as well as rising residential rental rates.  With the improving local and national economy all three cities are experiencing more visitors/vacationers which in turn has created the demand for more short term rentals.  The conversion of many traditional apartments into short term “vacation rentals” is decreasing the supply of traditional residential apartments available for longer term one year leases, thus driving rental rates higher.

As of early February of 2014 there have already been four closed duplex property sales this year with six more duplex properties in escrow  throughout San Clemente, Capistrano Beach and Dana Point California.  There were only sixteen duplexes currently for sale throughout the three cities at the time of this blog post.  With this current absorption rate San Clemente, Capistrano Beach and Dana Point will continue to see strong appreciation in its duplex, triplex and fourplex multifamily property real estate markets.

Newport Beach Ocean Front Duplex For Sale

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http://www.postrain4.com/cb/2008oceanfront/mls.php Immaculate ocean front duplex with exceptional location and residential/commercial zoning just south of the Newport Beach Pier offering two fully furnished units. The upper unit is a two bedroom, one bathroom with a large ocean front balcony to enjoy sunset dinners while viewing the beach activities and awesome surf. The lower unit is also a two bedroom one bathroom with a front patio directly on the famous Newport Beach boardwalk, sand and surf. Each unit comfortably occupies seven people. The property was completely remodeled in 2004 including kitchens, bathrooms, plumbing, electrical, fireplace, tile flooring, ceiling fans, new interior/exterior. This is an unusual investment opportunity and property. It is currently very successfully managed and operated as a Vacation Rental having many repeat tenants drawn in from established domestic and international markets. All existing websites, rental contracts and deposits, furnishings, appliances, linens and kitchenware are included in the sale to ensure a smooth transfer with no interruption in occupancy during or after the sale! Exceptional location just south of the Newport Beach Pier. This is truly a unique oceanfront property with so many options, call or email me today for a private viewing.

To view some great pictures and video of this amazing property visit the property’s private website at: www.2008OceanFront.com