The dealmakers running America’s private equity firms see opportunity in one of the most distressed precincts of the U.S. economy: residential housing. The New York-based real estate buyout fund GTIS Partners will spend $1 billion by 2016 acquiring single-family homes to manage as rentals, founder Tom Shapiro said on Jan. 24. That followed announcements earlier in January that GI Partners, a Menlo Park (Calif.) private equity fund, expects to invest $1 billion and Los Angeles-based Oaktree Capital Management will spend $450 million on similar housing deals. “We are starting to see this as a billion-dollar opportunity,” says Shapiro.

Why the enthusiasm? For starters, the U.S. government is eager to clear out the foreclosed properties now on its books. The Federal Reserve, in a study released in January, urged the government to explore ways to reduce the glut of bank-owned homes, including by selling them to investors to rent out. On Feb. 1, Fannie Mae (FNMA), the government-controlled mortgage agency, extended the first invitation to investors to apply for joint ventures to buy bulk foreclosed homes and manage them as rentals. The Obama Administration hopes to market some of the 210,000 homes repossessed by Fannie Mae, Freddie Mac (FMCC), and the Federal Housing Administration, which insures mortgages, during the first quarter of 2012.

Cerberus Capital Management, Deutsche Bank (DB), Fortress Investment Group (FIG), and Starwood Capital Group are among the potential investors that responded to an Administration request in September for proposals on how to dispose of the government’s inventory of foreclosed homes, according to a list obtained by Bloomberg through a Freedom of Information Act filing.

Some would-be investors are dubious. Ken Hackel, in charge of securitized products strategy for Stamford (Conn.)-based research and brokerage firm CRT Capital Group, says investors should be cautious about buying properties in markets such as Las Vegas, where a transient population and an economy dependent on a single industry might make it hard to recoup their money. “For the kind of properties I looked at—and in most cases—capital markets aren’t excited to finance” deals to buy foreclosed properties and rent them out, he says. Moreover, investors need to do more than make the math work, says Shapiro: They will have to deal with the rather unglamorous responsibilities of finding tenants and maintaining properties. “We think the important thing is on the operations and management side, as opposed to playing a numbers game,” he says. “The key is being able to efficiently manage these homes.”

Even so, low prices and high demand for rentals make the market intriguing. The U.S. homeownership rate fell to 66 percent at the end of 2011, from 66.3 percent in the third quarter, the Census Bureau said on Jan. 31. It peaked at 69.2 percent in June 2004. “The share of Americans who are willing and able to own their own home is still falling,” Paul Diggle, an economist with Capital Economics in London said in a Feb. 1 note. “The flipside is more households in the rented sector and fewer properties lacking tenants. This is helping to drive rents, and therefore landlords’ returns, higher.”

Single-family home rentals can generate cash flows that are 3 percentage points higher than apartments, says Gregor Watson of McKinley Capital Partners in Oakland, Calif., which has spent $100 million in the past two years on more than 400 foreclosed homes in Western cities. “This will be a new institutional asset class in the next 24 months,” he says.

About 7.5 million homes with a market value of $1 trillion will be liquidated through foreclosures or other distressed sales by 2016, according to a 2011 report by Oliver Chang, a Morgan Stanley (MS) analyst. That will add to the estimated 20 million single-family homes already serving as rentals, which have yielded annual returns averaging 8.1 percent since 1990, Chang concluded.

Shapiro says his firm expects to buy homes in bulk from banks, Fannie Mae, and Freddie Mac. To focus its operations, GTIS will concentrate on Nevada, Arizona, and California—states with the three highest foreclosure rates—and Florida. GTIS expects to hold its homes about five years, waiting for housing prices to recover before selling, Shapiro says: “Our intention is to rent them, to hold them for the long term.”

The bottom line: Buyout funds are raising billions to convert foreclosed homes into rentals, which Washington hopes will improve the housing market

By John Gittelsohn is a reporter for Bloomberg News.

Article at http://www.businessweek.com/magazine/your-next-landlord-might-be-a-buyout-fund-02022012.html#

By Shawn Massey, CCIM, SCLS

Posted by admin in General Retail News, Mid South Retail News | 0 comments

Whether you are a new or seasoned real estate investor/developer if you think you can manage your own commercial real estate and investment properties by yourself the answer is you will not be good at it and you really do not want to go that route with very few exceptions!  By choosing the right property manager, a real estate investor can both dramatically boost THEIR profits and increase THEIR success in THEIR real estate investment business.

FOR IMMEDIATE RELEASE

Contact:  Andrea Tsakanikas

Tel. 954/630-1300

Email:  Info@iLuxRE.com

 iLuxRE Announces Property Management Services “by-owner” for clients on a budget

 FORT LAUDERDALE, FL, March 15, 2012—According to Themes on the Economy(R), Chief Economist Diane Swonk assesses the U.S. housing market’s prospects for recovery. The good news is that there are opportunities for investors in single-family homes, which can be renovated and rented out. 

What does that mean for individual investors?  It offers smaller investors an opportunity in buying and renting out properties for an additional income source.   And in many cases, these landlords are choosing to manage their own rental in order to retain control and reduce costs for a higher monthly return on their properties.

iLuxRE is a South Florida licensed real estate brokerage that specializes in management advisory services for properties.  The principals of iLuxRE have been in the property management industry for over 2 decades and understand the complexity and challenges faced with management.  Denice Davitian, COO, of the company states “in order to be successful in management all owners expect to see the highest returns on their properties, which means keeping costs minimal.  How is that accomplished?  Simply by automating the steps required to oversee a property with systems in place and a simple, but efficient software program.”  The company offers full service property management which includes tenant relations and property maintenance and has now added the “By-Owner” service as an additional option.  Property Management by Owner offers owners an economic way to manage their own properties, while saving them time and money with an automated and efficient tool.  This program offers owners:  Secure, on-line Tenant rent collection, Tenant Relations on-line portal, Rental Applications submission, Available Credit and Background check (additional fee applies), Document portal to upload documents for the renter, Bill payment tracking, work order on-line submissions, 24/7 on-line access, and “Property Manager on-line” available by email to ask general management questions.  And the best part is that it is affordable at $19.99 per month with no contract or minimum period.

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For more information please contact iLuxRE at 954/630-1300 ext 3 or email Info@iLuxRE.com or sign up at www.iLuxRE.com/property-management and scroll to the bottom for “Subscribe” button.

http://www.dsnews.com/articles/homeownership-and-vacancy-rates-drop-2012-01-31

Management Advisory Services

That’s where a team of specialized facilities management specialists from the Real Estate & Construction field divisions come in as PM’s (Project Managers) and ORM’s (Owner’s Representatives). It is imperative that an advisor has had their own “boots on the ground” and understand FM (Facilities Management) from all perspectives. This knowledge includes the creation of a system of integrated reporting and process management to efficiently and cost-effectively manage real estate assets from one centralized location. The advisor that understands the management side of the day-to-day operations (including owner, corporate, site, vendor perspectives), as well as the process of implementing more efficient systems, is successfully able to act as a liaison to alleviate an organization’s unnecessary costs, time and labor.

Important to attain advisory assistance in:

•  Owner’s Representation
• Project Management
• Asset/Property/Facilities Management
• Capital Asset Programs & Scheduling
• Vendor Contracts & Review
• Property Inspections
• Productivity & Performance Review/Measurements
• Training/Vetting Key Staff
• Budgets & Financial Analysis
• Software Implentation & Reporting Customization

Why would vetting, bidding and attaining national vendor contracts be beneficial to an organization? Simply stated, many of the same repairs across a region for a multitude of locations can be negotiated based on bidding from several vendors. This important process can offer reduced expenses for a larger volume of locations, with a standardized repair cost.

Why would software implementation make a difference in how we manage our organization’s work orders since we don’t own the assets? When realizing the number of steps and human intervention required when a repair is needed at a location, using a work order software program takes unnecessary human contact out and alleviates extra labor, time and delay in completing repairs. Not to mention costs incurred that may be the landord’s responsibility.

Why is it important for Quality Control procedures to be implemented for basic repairs to some of our locations? In many cases, the repair was not completed properly, which can lead to future repair costs that could have been alleviated by a knowledgeable inspection at completion of the initial work order. And for many of our clients a national service contract with negotiated, standarized rates cover a multitude of costs making budgeting and forecasting more accurate and easily applied.

When your organization is overwhelmed with the daily tasks for basic work order and maintenance of a high volume of assets it is challenging and almost impossible to find the time or the clear overview to create better processes and procedures to alleviate costs and labor and reducing the annual budget. That is where a consulting team is key.