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Month: September 2022

3.02* Return in 5 Years – Story of Boston Wood Apartment

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james kandasamy austin

Our Boston Woods investment was located a short 10 min drive from the Medical Center in San Antonio, TX at Intersection 110 and Loop 410. We were able to find this deal using an off-market strategy, reaching out to the sellers directly. Using an off-market strategy in procuring a deal can help make it a more advantageous investment. It is comprised of 174 originally split into 3 locations: FKA Cumberland, Villa Madrid, and Westchester. Constructed originally in 1970, 1974, and 1984 respectively. We combined the three properties into one – Boston Woods. Purchasing deals at the market cap rate can be a great investment as long as there is a value-add component, which in this case there clearly was. Our decision to merge the three properties into one not only streamlined this property- but was a huge marketing advantage as well.   Acquisition Purchased in November 2016, 6.51% cap rate Cash out of pocket: $3.76 million Initial Financing: $4.66 million at 4.61% Capital Repairs: $1.52 million Purchasing deals at the market cap rate can be a great investment as long as there is a value-add component, which in this case there clearly was. Our decision to merge the three properties into one not only streamlined this property- but was a huge marketing advantage as well.   How Did We Find the Deal? Off Market Strategy Using text blast campaign to Sellers. Negotiated with Sellers for almost 8 months. Sellers are partners with bad relationships. Sellers are sophisticated Land developers/brokers Learn to Find Deals using an Off-Market Strategy Previous Management Marketing Issue Top three Largest PM companies in San Antonio Right strategy Managing Three Properties as One Horrible marketing with phone greetings with 3 different names.   We increased rental income from $.75/sq. foot to $.92/sq. foot. We utilized multiple crews for the rehab, implementing a partial rehab plus full rehab strategy to slow resident turnover and keep tenant occupancy up throughout the process.     We spent $1.3 million within 12 months of acquiring this property with a total budget of $1.5 million. It’s important to pump capital into the property ASAP to increase valuation. By doing this we were able to quickly convert $1.3 million cash in the bank to $75k NOI – a 50% increase.   At the end of this project: We increased rent by $130 per door Reduced expenses from 67% to 48% NOI increase of 86%- with a value increase from $6.9 mil to $13 mil Cash flow increased 7/8% based on the initial investment Altogether an INCREDIBLE 117% return from Initial Investment! Boston Woods is a prime example of Achieve’s focused strategy, skillful execution, and top-tier returns. Key takeaways from this investment include strategies of off-market acquisition, choosing a property with a value-add component, choosing to name the property with a marketing advantage, using a near-to-far rent comp, having multiple crews for the rehab- utilizing a partial plus full rehab to keep occupation and rent up during the process.

Austin Housing Market Predictions 2022-23

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The Austin housing market is shifting. The market reflects what is happening in other major cities across the country. While activity appears to have slowed slightly in recent months, home prices in Austin are still on the rise. Home values are over 13% higher than they were in June 2021, when compared with historical averages of 5-6%. As a result, the Austin real estate market is exhibiting indications of slowing down. However, it should be noted that fewer homes are being sold than in previous years. The trend of a slowing growth rate in sales indicates market stabilization, but the demand is still outpacing the supply in a market where housing prices have reached all-time highs. As a result, Austin home prices are skyrocketing, and buyers are bearing the brunt of the burden. Low inventory, high buyer demand, and rising prices will continue throughout the year; however, there are signs that the market will eventually cool off when inventory rises or prices reach their apex. The median sales price is surging in double digits and will continue to rise over the next twelve months. The Austin Board of REALTORS®‘ Mid-Year 2022 Central Texas Housing Market Report shows that a triple-digit gain in active listings year over year pushed housing inventory levels over 2 months. The market is moving towards pre-pandemic sales activity and inventory. The Austin market is not balanced, and it still favors sellers. Homes still closed at over 100% of the list price on average in June. Residential home sales declined 20.3% year over year. There is an influx of homes on the market. The median price rose 13%, setting a record of $537,475. New listings jumped 19.6% to 6,160. Housing inventory increased to 2.1 months of inventory, up 1.5 months from last June — a sign of a seller’s real estate market. Austin Housing Market Predictions 2022-23 Austin’s housing market is likely to continue the trend of recent years as one of the hottest markets in the nation. The biggest drivers of residential real estate demand are Austin’s economy, which has diversified and strengthened over the past two decades, and companies like Google and Tesla moving operations here. As more companies move here, that means more people looking for homes, and Austin is also attractive to outside investors. With a steady influx of job creation in the pipeline, the housing market will continue to post strong numbers well into 2022. Big companies moving here will also play into what happens to the housing market.Corporate relocations are at an all-time high and the housing demand is rising rapidly. Because of this, the supply cannot meet the demand, and this region has a higher probability of withstanding economic downturns.According to their report, the value of the Austin Metro housing market grew by $141 billion or 126% in the past decade. In 2010, the market was worth about $111 Billion. In 2019, Austin’s total housing value grew $22 billion or 9.5%, year-over-year.NeighborhoodScout’s data shows that real estate in Austin has appreciated 169.47 percent over the last ten years, which is an average annual home appreciation rate of 10.42%. This figure puts Austin in the top 10% nationally for real estate appreciation. During the latest twelve months, Austin’s appreciation rate was 26.34%.According to the Zillow Home Value Forecast (ZHVF), Austin-Round Rock Metro’s home values have gone up 25.2% over the past year and are expected to rise by 7% by June 2023. Austin High Rise Deal Coming Soon..!!! Stay Tuned for more updates. If you would like to be notified of our future opportunities, please join our investor network below.  Join Our Investor List

Midyear Multifamily Market Outlook

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As the Federal Reserve has increased interest rates and inflation has risen, the likelihood of a recession in the near future has grown. The sharp rise in interest rates has already impacted volume as borrowers and investors may have sidelined deals until volatility levels out. Despite the increased uncertainty, multifamily performance is expected to remain strong for the year. Multifamily fundamentals have begun to moderate in the second quarter – a trend which is expected to continue throughout the rest of the year – with growth projections still well above long-term averages: Gross income is projected to increase by 6.8% and the vacancy rate to remain unchanged at 4.8%. Rental growth has been exceptionally strong, up 16% over the year ending in June. Occupancy has remained above the long-term average. Tight rental markets indicate that the number of construction permits issued and the number of housing starts will have a limited impact on the market this year. Due to the volatility of Treasury rates, we expect total originations for the multifamily sector to contract slightly in 2022 to $440-$450 billion, but underlying multifamily fundamentals will continue to attract investors. Texas Multifamily Outlook – July 2022 According to most objective metrics and standards, multifamily assets in major Texas markets still represent strong investment propositions relative to other commercial sectors and the stock market. Houston After losing thousands of jobs to the flu pandemic, Houston recovered all of them by 2022, with multifamily construction directly benefiting from the bounce in economic growth. Rents rose 0.7% in April from three months earlier, to $1,293, while the occupancy rate for stabilized apartments in the 12 months ending in April was 94.1%. Average Rent: $1,293 (0.7%) Unemployment Rate (%) : 4.1% Average Occupancy Rate (%): 94.1% New Apartment Units Under Construction: 23,382 Dallas-Fort Worth In Dallas-Fort Worth, the pace of growth in apartment rents continued in the first half of 2022, driven by in-migration and company expansions and relocations. The average rent rose 1.2% on a trailing three-month basis through May, to $1,525. The occupancy rate was up 90 basis points in the 12 months ending in April. Average Rent: $1,525 (1.2%) Unemployment Rate (%) : 3.2% Average Occupancy Rate (%): 96.2% New Apartment Units Under Construction: 47,011 Austin The growth of the Austin metro area has been spurred by its reputation as an eclectic, creative community. The population grew by 28% in the last decade and housing demand is on the rise, which has led to a trend of rising rents. Although the rates softened during seasonally slow periods, rents have since picked up again and reached $1,744 on a trailing three-month basis through May. Occupancy rates are at 95.7%. Average Rent: $1,744 (0.8%) Unemployment Rate (%) : 2.5% Average Occupancy Rate (%): 96.2% New Apartment Units Under Construction: 42,118 According to research from the National Multifamily Housing Council (NMHC) and National Apartment Association, roughly 4.3 million new apartments will be necessary by 2035 to meet increasing demand. Texas, Florida, and California account for 40% of future demand and will collectively require 1.5 million apartments by 2035. Join Us For A Daily 60-second Coffee Break Series For Passive Investing In Commercial Real Estate With James Kandasamy, The Best-selling Real Estate Author And Mentor.

Multifamily Real Estate As A Hedge Against Inflation

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Inflation is a serious concern for investors. When inflation is up, interest rates tend to be up as well. That’s because the Federal Reserve will raise interest rates if inflation increases to keep it in check. When interest rates are high, it makes sense for investors to look at other ways to make money. One way is through multifamily real estate. Multifamily real estate is a good hedge against inflation because it’s an asset that can increase in value and provide income. As inflation increases, the value of your property will increase. In addition to selling it at a higher price, you also have the option to rent it out and make money from your investment. When you buy a multifamily property, you’re purchasing more than just a house. You’re buying an asset that can be rented out and generate income for you. This means that if inflation increases, your property could also increase in value. This is one of the most important reasons why investing in real estate is one of the best ways to protect yourself against inflation. High Inflation And The Stock Market When inflation rises rapidly, it becomes difficult for investors to make money on the stock market because stocks are considered long-term investments and tend to increase more slowly than inflation over time. For example, if inflation were 10 percent per year, stocks would have to go up 11 percent just for the investor to break even after taxes and fees were removed from their returns. Multifamily Real Estate As A Hedge Against Inflation Inflation is a severe concern for real estate investors. Inflation can erode the value of investments in real estate and other assets, making it harder to generate income. However, there are several ways that investors can hedge against inflation to protect their portfolios. One way to hedge against inflation is through multifamily real estate investments because this asset class has historically withstood the economic pressures of rising prices. This makes sense when you consider that the cost of living also increases over time. As rents rise, so does the demand for more affordable housing options such as apartments and condominiums. Multifamily real estate is an asset class that can hedge against inflation in a few different ways: It can provide a relatively stable cash flow over time. It can act as an inflation hedge because it increases in value over time. The property’s value is based on its income stream, which increases as rents increase due to rising rents and inflation. For example, if you own a building that brings in $2 million per year in rental income and your annual mortgage payment is $1 million per year, your net cash flow (income minus expenses) will be $1 million per year (assuming no vacancies). This means that if you are paying 6% interest on your mortgage loan, the value of the building is $20 million ($1 million / 6% = $20 million). If the building appreciates by 3% per year (which would happen if rents were increasing), then after five years, it would be worth $22 million ($22 million – $20 million = $2 million). While you still pay off your mortgage loan at 6%, your net worth has increased by 3%. Another way to hedge against inflation is by ensuring that your properties are well-maintained and managed effectively. If you own an apartment building with tenants who are happy with their living situation, they’ll be less likely to move out or complain about problems with their apartments. This means your property will remain more valuable than others in its area and allow for future appreciation in its value over time. Final Thought Overall, multifamily real estate is an excellent investment to hedge against inflation when prices rise. Of course, it’s still important to research before you dive in and buy property, but once you’ve chosen the right location and established a sound financial plan, you can start building wealth with prudent and practical means. Join Us For A Daily 60-second Coffee Break Series For Passive Investing In Commercial Real Estate With James Kandasamy, The Best-selling Real Estate Author And Mentor.