As I sat in the last row (so I could sneak out early) of The 2008 Minnesota Real Estate Journal’s Apartment & Condominium Summit at Golden Valley Country Club last week, I realized that in this room full of brilliant and established real estate investors, there was just one question we all needed answered; What is the future going to look like for the Minneapolis/St. Paul Multifamily industry?

Below are some of the highlights of the Summit as well as interesting tidbits to chew on:

First off, the state of our current National economic conditions:

• National Vacancy Rate is between 6-8% respectively
• 5-6% Cap Rates Nationally
• Ages 18-36 make up the majority of the renter core
• 25% of total renters are immigrants
• Office employees make up the majority of renters for apartment buildings
• People who are being foreclosed upon are moving into Single Family Rentals
• Rental Rates will continue to be flat for at least 18 months
• Any Rental Rate increases will be based on the Consumer Price Index

Current and Future Outlook of the Twin-Cities Metro:

• Sub 5% Vacancy Rates Metro Wide
• Great Investment fundamentals in place
• Lots of buyers with Few properties on the sales block
• Investors Looking for Value-Add Opportunities
• Cash on Cash returns 8-10%
• Tenant Retention is Key
• Lenders are still a little tight and their Debt Coverage Ratios are 1.20-1.25 and 80% LTV’s are the absolute max
• Utilities are now starting to be passed on to renters in some complexes
• Senior Housing Rentals is now stable and ready for New Construction to peak it’s head out
• Green Design is Very Hot
• Lumber Construction Prices are falling but other costs are still on the rise

One other large thing to consider is the Twin-Cities Market was named a “Market to Watch” as Institutional Investors are starting to pour their money into current and future multifamily projects here.

As for the Condominium portion of the Summit, I walked out early and went to focus on growing my apartment portfolio along with the other 95% of the crowd. Enough said on the outlook for The Condo Market.

OK.  So you have a couple of  unsold units (pardon the pun) you need to unload and the”Free Commador 64 with Purchase” promotion is just not doing the trick to sell those last remaining ones.  Maybe you should try spicing sales up with a “Banana Hammock Optional” community pool as one complex has done in Florida.

Keith Morelli -Swimmers will have the option of wearing nothing at all at the Arbors at Branch Creek, a complex of 390 homes that landed on the idea to help move units in a down market.

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Trying to find a lender to finance anything these days is more of a challenge than trying to figure out how a flux capacitor can get you to travel back in time. However, there is lender who is willing to take the leap of faith with buyers these days. They are Cincinnati based Fifth-Third Bank.

By Nicholas Yulico

Fifth-Third Bank, like other lenders, has a large inventory of foreclosed houses on its hands as the result of borrower defaults on mortgages. These homes, called REO (real estate owned), are ones that have gone back to bank ownership because they were not sold at foreclosure auctions.

What sets Fifth Third apart from other financial institutions with significant REO inventory is the aggressive way in which the bank is making mortgages available to buyers of these REO homes.

The readily available financing is allowing Realtors to move homes more easily, especially in distressed markets such as Florida, where foreclosures are rampant.

“Other banks are not talking about mortgages,” says Mike Morgan, a real estate broker and housing consultant who heads Morgan Florida. “Here is Fifth Third saying ‘come to us for a mortgage.’”

“Other banks, when we talk to them about mortgages, we get a runaround,” Morgan says.

Read The Rest Of The Story…

A Bright Spot for Housing Investors

By VIVIAN MARINO

FALLING prices, tighter credit and rising foreclosures have taken their toll on the housing market, but there is one residential sector that could actually benefit from these economic woes: multifamily rentals.

The reasoning seems simple enough. “People still need a place to live,” said Richard Anderson, a senior real estate analyst at BMO Capital Markets, adding that “a bad homeowner could be a very good renter.”

Indeed, occupancy rates for apartments have remained stable, averaging in the mid-90 percent range, and rising in some cities, industry reports show. Homeownership, meanwhile, has fallen steadily nationwide. The ownership rate slipped to 67.8 percent at the end of 2007 from a peak of 69.2 percent in 2004, according to the Census Bureau.

Some would-be buyers are now waiting for home prices to bottom out, while others are finding it harder to get a mortgage after the shake-up in the subprime market.

All these factors seem favorable for landlords, but only lately have shares of apartment operators and, in particular, the real estate investment trusts that own and manage these multifamily developments, begun to reflect the trend. Many apartment REITs traded near their 52-week lows not too long ago, though they have been moving higher recently.

“People had been painting residential with a broad brush, and that’s what held back the stocks in 2007,” Mr. Anderson said. Many skittish investors seem to have eschewed all companies in the housing market, even those involved in rentals. “Now they may be looking for ways to play the residential market,” he said, “and one way to do that is to take a look at the rental business, which is once removed from the broader housing turmoil going on.”

Apartment REITs, which had average losses of around 25 percent last year, are up 15.6 percent, on average, this year through Thursday. (All property-holding equity REITs are up 3.2 percent, on average, according to the National Association of Real Estate Investment Trusts, while the Standard & Poor’s 500-stock index has lost 9.4 percent.)

So should investors be giving these REITs a closer look? Read the rest of this entry »

From Barron’s Edited by Robin Goldwyn Blumenthal:

The carnage in housing hasn’t spared any sector of the real-estate market. But favorable fundamentals could turn apartments into lucrative investments again. “The demographics are very supportive for apartments, with a lot of young people graduating from college,”says Sam Chandan, chief economist of real-estate research firm Reis. An estimated 82 million echo-boomers (baby boomers’ progeny) will be striking out on their own over the next seven years. While some surely will move back to the parents’ pad, many will join the ranks of the renters. So will an in-flux of immigrants and displaced home owners.

During the single-family housing boom, multifamily-market supply was very restrained: Site completions as a percentage of existing stock averaged 1% in the past five years, half the previous five year average. “It’s the best time in 30 years to be investing in apartments,” says Christopher Finlay, managing principal of Mission Residential, which does private syndications of apartments in growing middle markets like Salt Lake City-where’07 rent growth out paced the 4.4% average increase nationwide.

Shares of apartment real-estate-investment trusts fell 25% last year, more than the total REIT universe of 16% according to the FTSE Nareit index. But apartment REITs are only one of two sectors to be up year-to-date. Middle-
market apartment REITs possibly poised for turn around: Mid-America Apartment (ticker: MAA) and United Dominion (UDR), which don’t have big exposures to boom-and-bust markets.

You could say that Pandora Radio is the second coming of radio. Well, I’m going to step out on a limb and say just that. While Sirius and XM are planning their merger, Internet Radio is slowly creeping onto the scene as a main captivator of music junkies like myself.

During the work day, I spend endless hours on my computer and therefore always have my 3000+ song itunes library on shuffle. But now after being exposed to Pandora Radio, I will keep my itunes in hibernation.

Pandora is an automated music recommendation and Internet radio service created by The Music Genome Project. Users enter a song or artist that they enjoy, and the service responds by playing selections that are musically similar. Users provide feedback on the individual song choices — approval or disapproval — which Pandora takes into account for future selections.

While listening, users are offered the ability to buy the songs or albums at Amazon.com or iTunes Store. Over 400 different musical attributes (see List of Music Genome Project attributes) are considered when selecting the next song. These 400 attributes are combined into larger groups called focus traits. There are 2,000 focus traits.

MSN Radio stations now run off Pandora.com and use Pandora accounts rather than Windows Live IDs.

It’s both Free and Functional so take a chance and try it out for yourself!

Above: Gap Kids New Spring Apparel Line Apocalyptic Sheik

Associated Press-

LONGYEARBYEN, Norway — Norway opened a frozen “doomsday” vault Tuesday deep within an Arctic mountain where millions of seeds will be stored to safeguard against wars or natural disasters wiping out food crops around the globe.

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Karen Dandurant

PORTSMOUTH, NH — Rochester physician Terry Bennett said he rented a city building to people who worked for Sen. Hillary Clinton’s presidential campaign — and skipped town without paying the bill.

Making matters worse, Bennett said, the 3,000-square-foot building at 236 Union St. was left trashed. Campaign signs were left lying all over the place, he said.

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You be the judge!

By David Streitfeld - The New York Times

CARLSBAD, Calif. — Marty Ummel believes she paid too much for her house. So do millions of other people who bought at the peak of the housing boom.

What makes Ummel different is that she is suing her agent, saying it was all his fault.

Ummel claims that the agent hid the information that similar homes in the neighborhood were selling for less because he feared she would back out and he would lose his $30,000 commission.   Read the rest of the story…