Companies like Target Corp., Costco Wholesale Corp. and Best Buy Co. are carrying on with expansion plans at virtually the same pace as in years past.

“We continue to look at a standard of 100 net new stores a year,� Target spokeswoman Anna Goeppinger said. In fact, Target’s rate of expansion has quickened, as it built 118 new stores last year and is on pace for 116 this year. In 2005 and 2006, the company added 86 and 88 new stores, respectively.

For the most part, today’s retail giants don’t suffer in the same way that most retailers do when gasoline prices climb and pocketbooks get pinched. While they may make adjustments, they’re big enough to absorb the shock, according to industry experts.

“They really are looking through the economic time because their stores will open after the bad economic times have passed,� said Jim McComb, president of retail consultancy McComb Group based in Minneapolis, home to Best Buy and Target headquarters.

Rental Market Largely Unchanged in Wake of Housing Crises, Confirms Study

Novato Calif.–Rents are growing modestly, occupancy is unchanged and the rental apartment segment appears to be immune to the problems occurring in other housing sectors, according to a recent study released by RealFacts, a multifamily data specialist. The RealFacts database included more than 3.16 million rental units in 15 states (mostly in the Western part of the U.S., but also including others like Florida and Texas).

Despite our best efforts to keep focused on our investing business, sometimes our busy schedules prevent us from spending sufficient time working our business. It can be rather frustrating to want to dedicate time and effort to real estate but not be able to for whatever reasons. Unfortunately, many investors in this situation will eventually throw in the towel and completely shut down their investing efforts. This is a terrible mistake, and we shouldn’t have this knee-jerk reaction when life’s responsibilities pull us away from our real estate activities.

If you completely stop all real estate activities for a period of time, when you do find the time again, you will come back into the market cold and have to start from square one. A very simple and easy way to stay in touch with the market while you are “away� from the business is to spend a few minutes everyday looking at property listing sites (literally a few minutes is all you need). Even though you may not have time to look at properties and make offers, it will be tremendously value to stay in tune with what is going on in your investment areas and your local market by simply keeping abreast as to what homes are on the market, how long they are sitting, what they are selling for, etc. Now, when your schedule is freed up and you can start working your business again, you are not coming in cold but are aware of market trends and know what has been going on during your “hiatus�.

Posted by Carter Brown

I’ve blogged in the past about investors’ concerns about getting stuck with properties. It is never a good thing when you have a property for sale and aren’t getting any interested parties, especially if you can’t make the payments. Hopefully, you don’t get in this situation because you are diligent in evaluating your deals and the numbers before buying them. There are many different things you can do to make your property attractive to buyers buy one that is an absolute must is curb appeal. Curb appeal is simply what your property looks like “from the curb� or the condition of the exterior. It is absolutely critical that when a buyer pulls up to your property they are impressed with what they see.

A survey of almost 500 real estate agents commissioned by JELD-WEN Windows & Doors indicates the increasing importance of curb appeal in selling a home.

According to the Real Estate Agent Community Trends survey, 82 percent of practitioners polled said buyers unimpressed with a home’s exterior will not want to look inside. The results also found that 90 percent of respondents said a sale depends on first impressions of the front entry, while 91 percent said the home’s exterior is just as important as what is inside.

Additionally, 75 percent of those surveyed said natural light is important; while the appearance of windows and doors and the presence of energy-efficient products were mentioned by 71 percent and 63 percent, respectively.

Universal design features are gaining in popularity as well, according to 65 percent of agents.

Source: BuildingOnline (03/18/08)

Posted by Carter Brown

I frequently talk with investors and hear investors talking about how they are scared to death of “getting stuck with a property�. I think we all know, or at least have heard, prices have come down in most markets, there are a lot of houses on the market and good deals are to be had. However, what sense does it make to buy a property if you can’t sell it? I have blogged in the past about how homes are still selling albeit at a slower rate and only the “right� properties or those in good areas that are a good value are selling.

But what about renting? Who cares if you can’t sell a property as long as you can get a good tenant who is going to cover your mortgage, taxes, insurance, etc? Finding cash flow properties is a much easier task now that prices have come down. Areas that have historically been difficult to buy positive cash flow properties in are now full of cash flowing properties. The market is going to turn positive. It is a very lucrative strategy to be buying properties now at a discount, renting them out for some positive cash flow and waiting until prices start moving north again. Once prices start moving up again, those that bought, will be sitting on a significant amount of equity and great cash flowing investments.

I’ve included a brief article about rental demand and where rents have gone lately.

Rental Demand Pushes Rates Up

It’s getting harder for renters to find an affordable place to live with rents rising and availability falling.

The median asking rate for rentals has jumped 14 percent, from $591 a month during the fourth quarter of 2003 to $673 a month in 2007, according to the U.S. Census Bureau. Vacancy rates are down from last year, and average rent is projected to rise 5.3 percent in 2008, up from a 3.1 percent increase in 2007, according to the NATIONAL ASSOCIATION OF REALTORS®.

“We’ve seen demand for rental housing go up,” says Mark Obrinsky, chief economist at the National Multi Housing Council. “The ownership side is retrenching, and we’re seeing the demand going to the rental side. There’s a lot of hesitancy to buy. Others can’t get (financing), so they’re remaining renters longer.”

Here are median rents for the first quarter of 2008 in 12 major metropolitan areas:

Atlanta: $986
Austin: $907
Boston: $1,645
Chicago: $1,355
Las Vegas: $1,056
Los Angeles: $1,699
Miami: $1,368
New York: $1,751
Phoenix: $939
San Francisco: $1,810
Seattle: $1,211
Washington D.C.: $1,687

Source: Rentometer and USA Today, Mark W. Williams (04/22/2008)

Posted by Carter Brown

Graduate Coaching Call 4-21-08.

Tonight's call discusses investing in self-storage units.

Now is the time to be in the market folks. No one knows when the market is going to turn, but we are slowly starting to hear that the bottom has been hit or is close. There are great buying opportunities for those active and diligent investors.

Here is a quote from the Director of the office of Federal Housing Enterprise Oversight. I’ve also included some home pricing information that I found interesting. As you can see, home prices are way off from a year ago and deals are there for the taking. One note is the prices have fallen significantly, but rents have not. Homes that a year ago would not cash flow now may very well cash flow with the lower acquisition price.

OFHEO Director: Markets Shows Improvement

There are “some good signs” that the severe downturn in U.S. housing markets might be approaching an end, says James Lockhart, director of the Office of Federal Housing Enterprise Oversight.

“It’s going to take a while, but we’re starting to see some bottoms,” Lockhart says. “It may take another six months or so, but hopefully we’ll start pulling out of it.”

But, Lockhart says, the idea of freezing mortgage rates would be a mistake to recovery. Presidential candidate Sen. Hillary Clinton had proposed the idea of a rate freeze.

“You’d really cause market dislocation. … I think we’re going to have to let the market work,” Lockhart told CNBC television in response. “Interest rates have come down dramatically, and people are going to be able to refinance.”

Source: Reuters News (03/28/08)

1 yr price change from January ‘07 - January ‘08

Atlanta -4.8%
Boston -3.4%
Charlotte 1.8%
Chicago -6.6%
Cleveland -8.5%
Dallas -3.3%
Denver -5.1%
Detroit -15.1%
Las Vegas -19.3%
Los Angeles -16.5%
Miami -19.3%
Minneapolis -10.0%
New York -5.8%
Phoenix -18.2%
Portland -0.5%
San Diego -16.7%
San Francisco -13.2%
Seattle -1.3%
Tampa -15.0%
Washington -10.9%

Source: Standard and Poors and Fiserv

Posted by Carter Brown

Sublease Vacancy Rates Holding Steady by Arthur Jones, Economist

April 11, 2008 - “About Real Estate” published by Torto Wheaton

Sublease vacancy rates are a small but important component of the overall or total vacancy. While
sublease vacancy tends to be a fraction of total vacancy, it represents movement, so this rate that
can tell us a great deal about the overall health of the office market. During the last recession,
spurred on by the dot-com bust in 2001 and the events of September 11th, sublease vacancy rates
rose as high as 3.7%, as employers tossed in their keys. The fallout from the last recession was
nothing if not devastating for the office market, which did not recover fully until 2004.

As fears of a recession are again at the forefront, all eyes have turned toward the condition of the
office market and, yes, this includes sublease vacancy rates. Since we have seen some upward
pressure on cap rates and vacancy rates have risen to 12.9% in the first quarter of 2008, we cannot deny that there have been some signs of weakness in the market; but it is a little too soon to panic.

The office market is still on solid footing and sublease activity has remained subdued, though overall
vacancy rates have increased.

Sublease vacancy rates have gained some attention over the past few months as office market
analysts have looked for an up-tick in sublease activity, which would signal that more serious
problems may be facing commercial real estate. As sublease space becomes available, it
competes with existing space and is often offered at a discount. Increasing sublease activity in the
office market would be a sign of trouble for landlords, who already face decreased demand as
employment growth has slowed.

While there has been some sentiment in the media and among real estate professionals that
sublease activity has already started to pick up amid a slowing economic growth, these claims
appear to be based on anecdote rather than hard evidence. The latest data we have on sublease
vacancy rates show that, while total vacancy has increased, the sublease vacancy rate remained
unchanged during the first quarter of 2008. In fact, the sublease vacancy rate, at 1.3%, is at its
lowest level since the last recession.

SINGLE-FAMILY RENTALS SHADOW APARTMENTS

The effect of single family rentals on apartment rents has varied widely across the country. The size of the pool of single family homes and condominiums in relation to the number of apartment units is a major factor in the relationship.

In some markets, such as Miami and Phoenix the “shadow market� (i.e.the number of houses and
condominiums being offered for rent is so large relative to the number of apartment units that it
results in reductions in the apartment rents.

Contrast that effect with cities like New York and San Francisco with high barriers to development
and housing shortages and the impact of slowing home sales on apartment rents is minimal or
non-existent.

Where any area falls between thes two extremes depends on the number of houses and
condominiums offered for rent compared to the number of apartments in the area.