Real Estate Investing Worcester

According to the latest report from Trulia Worcester, MA still offers real estate investors some of the best value and deals in the country. So just how does Worcester stack up, and what resources can help income property investors maximize the opportunities?

Giant online listing platform and data compiler Trulia’s latest Bubble Watch report pegs Worcester, Massachusetts one of America’s top 10 most undervalued metros. In contrast to Austin, Texas which was considered as almost 20% overvalued as of the 4th quarter 2014, Worcester was evaluated as 15% undervalued in terms of housing prices.

This puts Worcester on par with real estate investment bargains in Detroit, MI and Akron, Dayton, and Cleveland, OH, only being located in the economically superior northeast. This new data should make Worcester truly stand out for both investors throughout New England and global property investors looking to expand portfolios in the US. According to surveys earlier this year around 80% of US millionaires and foreign investors said real estate was their top pick, and would be increasing investment this year.

Worcester’s proximity to Boston also promises continuing improvements to fundamentals. Local house prices and rents will keep growing as inflation and rising living and housing costs drive more further outwards from Boston, and as businesses and workers are able to maintain and improve lifestyle and revenues thanks to better connectivity, and remote working.

Lower barriers to credit and increased pressure on lenders to inject capital into the market is not only making it easier for MA real estate investors to capitalize on current opportunities, but in turn will elevate property values and returns for investors. Lenders like Indianapolis based Rental Home Financing are offering new investment property loans for bulk purchases of single family homes, expanded credit approvals for apartment buildings, and refinance loans to expand rental portfolios, as well as loans for foreign nationals.

Still, it is no secret that realizing the maximum benefit from opportunities like this comes down to property management, especially for out of area, or overseas investors. In fact, many may find it smart to consult a local Worcester, Mass. property management company before closing so they can verify and back up assumptions on rents, rental demand, local occupancy rates, and typical operational costs, etc.

There are a number of factors to look at when selecting a property management service you’re your Worcester income properties, however finding a professional firm and team that shares your values and strategy is really what matters and will dictate performance when all other factors are equal.

In summary; Worcester, MA offers some of the best value property deals for investors in the US today. Capital is plentiful. Yet, to fully maximize returns and rewards find a great match in a local property management company early.

return on investment

What best practices and property management strategies can help commercial real estate owners maximize the ROI on their repairs?

Some see multifamily, office and retail property repairs and replacement needs as a pain, and drain on resources and cash flow. Others approach them as an opportunity to elevate their returns, and have a plan to maximize returns at every step, even when that means fixing something that’s broken.

1. Don’t Defer Property Maintenance

Deferred maintenance is not just bad business it has a negative impact on property value, and can become a serious financial liability. Tackle issues early, save money, and increase equity and income.

2. Leverage Your Property Manager for Contacts

No serious commercial real estate investor ought to be attempting DIY management. A good property management firm can pay for itself, even just from access to reputable and reliable contractors. These relationships can often ensure priority being placed on work needed, and help gain discounts to overall volume of work a management company orders from contractors.

3. Do it Right the First Time

Landlords wincing at the cost of making repairs certainly can’t afford to continuously re-patch and redo repairs because of poor quality short cuts. Do it right the first time. A great maintenance philosophy can go a long way to attracting and keeping the best tenants, and improving total returns.

4. Build up Reserves

Real estate investing is often chosen as a fast path to wealth and extra income by those that desperately need a quick fix. However, savvy commercial property investors recognize the wisdom and necessity of setting aside reserves for maintenance and repairs. Even if resources are tight at the beginning it is only smart to contribute to a reserve account monthly or at least quarterly in order to be prepared for replacements and regular issues that will arise. Being prepared will avoid running into a cash crunch and bringing down returns.

5. Use Renovations as a PR Opportunity

Renovations can actually become highly profitable investments in a macro way if they are turned into PR opportunities. This can be achieved through signage, local and even national news media.

Commercial mortgage lenders are dramatically opening up access to credit for multifamily investors.

Multifamily properties have caught their second wind in the US real estate recovery, and aggressive mortgage lenders are now stepping in to fund even more investors eager to expand into this space.

Apartment buildings experienced sizable demand at the beginning of the new upturn as institutional investors sought to scoop up everything possible that offered attractive yields. Then investors of all sizes turned their sights on single family homes. As the economy has been fighting its way back, home prices have rebounded, and investors realize that for a variety of reasons millions of Americans will remain renters for many years to come, multifamily is resurging again.

Multifamily apartment buildings have many clear advantages for investors of all sizes. They often offer a lower cost per unit, can provide higher ROI on improvements, provide built in diversification, and don’t lure independent investors into thinking they should try DIY property management.

The attraction to multifamily apartments is even driving many investors to significant new innovations. In the Northeast we have seen modular apartments popping up in high cost, high density areas. On the West Coast, more builders have dropped building properties for sale to construction luxury townhouse rentals. We’ve also seen some controversial cases of condos being bought up and consolidated so that buildings can be converted back into rentals.

However, individual real estate investors and small investment groups have recently seen mortgage lenders more interested in opening up the doors to single family property investors. The largest funds in the US broke into this arena at the beginning of 2014 with new buy to rent lending arms, and have since opened more conduits to flow their cash through. It has also apparently been a highly intelligent strategy to help cash out many that borrowed their money to buy REOs in bulk early in the crisis, so that they can make good on maturing debt.

Apartment building financing hasn’t been a total desert, but options haven’t been attractive as they could, nor competitive. This may have all changed at the end of August 2014. A new announcement from commercial mortgage lender Rental Home Financing declares new exceptions are being made to enable more investors to fund multifamily apartment building investments.

These new relaxed underwriting guidelines include allowing financing for those with bankruptcy, charge offs and foreclosure, up to 30 year amortization, and credit scores as low as 600.

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Real estate businesses, tenants, and commercial property investors bear the brunt of the hit from Google’s latest search engine ranking changes. So how bad is it? Who is being affected? What does it mean for the real estate industry and investment performance? How can this be turned around?

Google Switches Up Online Advertising Again

Tech publication G-Code Magazine, and the Best Transaction Funding blog raised the alarm this week as the impact of Google’s new Pigeon update began slamming many US businesses and real estate services.

Early analysis showed over half of Google searches affected by the new adjustments which elevated national directories and platforms such as Zillow and Yelp to the top of local search terms. In many areas and searches local business results appear to have been completely eliminated by Google, in favor of these giants as well as press related directories.

The Impact on MA Businesses

This new algorithm change clearly has major consequences for Massachusetts businesses. Office building and retail tenants could find they no longer show up in Google searches. That means consumers can’t find them and choose to do business with them in person, or online.

When tenants suffer major losses in business landlords lose out in rental bumps tied to performance. If businesses fail it can mean months of unpaid rent, lengthy vacancies, and high repair and improvement costs. This all means a hit to commercial real estate investment returns.

The direct impact on local MA real estate businesses and private landlords is set to be even more significant. If for rent ads aren’t seen and local Mass. real estate brokerages don’t show up in Google search or directory listings they are going to find internet and phone leads drying up fast, while their rental and for sale inventory sits on the market.

Countering Google’s Latest SEO Update

The bottom line is that Massachusetts businesses, restaurants, cafes, shops, landlords and Realtors could find income comes to a grinding halt, unless they take action, and leverage help fast.

Direct methods of countering this change and moving back up the search rankings for MA companies and independent professionals include soliciting more Yelp reviews, getting listed in more business directories including both national online ones, and niche online magazine directories. Diversification into other forms of online marketing such as PPC, Google Adwords, and article marketing can reduce further business interruptions and elevate visibility immediately.

Deploying the help of a local professional property management company that has the size and marketing team to overcome these challenges and which can help keep up occupancy and business performance could also be one of the best moves for real estate investors, landlords, and their tenants.

Downtown Worcester MA

Worcester, Mass. was just named one of the most undervalued housing markets in the US. So how does Worcester stack up for real estate investment on the national stage? What other factors might be working in favor of multifamily investors?

According to a new report from Trulia, Worcester, Massachusetts is one of the 5 most undervalued housing markets in America. So how cheap is Worcester real estate? How much more attractive is it for multifamily investors than other parts of the nation?

Trulia’s Top 10 US Metros for Undervalued Housing Prices:

  1. Akron
  2. Cleveland
  3. Detroit
  4. Dayton
  5. Worcester
  6. Memphis
  7. Toledo
  8. Chicago
  9. Lakeland-Winter Haven
  10. Providence

According to the data Worcester housing prices are trading15% undervalue. This compares with sizzling, frothy markets like LA which were already considered 17% overvalued as of the second quarter 2014.

Boston, New York, DC, and other northeastern property markets have also rebounded rapidly, both in home sales prices, and rental rates. Poor credit and lunar leaps in asking rents are literally pricing many boomers, middle-aged families with kids, and Millennials out of the markets they have lived and worked in. As seen in the recent Google fiasco in California; lawyers and tech entrepreneurs rich with new money are hiking up real estate prices, with little care about their own workers having to endure more than an hour in commuting each way. Some online comments suggest a systematic approach to driving out lower income individuals from top cities, in order to attract wealthier residents, and higher tax revenues.

For Massachusetts real estate investors this could mean seeing substantial migration towards areas like Worcester which offer more affordable housing.

With attractive, low borrowing and acquisition costs and rising rents and values, Worcester could be one of the most profitable housing markets in the country for buy and hold multifamily apartment investors. Higher rents and sales prices next year will add increased yields and capital gains to solid equity positions, proving high ROIs and security.

Worcester’s sustainable rate of growth, with house prices up just over 4% during the first half of 2014 suggest an extended growth period for local investors. However, it is crucial for property investors to recognize that maximizing opportunities and multifamily performance will be directly linked to execution, and specifically the quality of daily property management.

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Shifting business trends are making real estate far more important in the corporate world, are changing the dynamics of what’s in demand, is literally altering the landscape, and creating new investment and profit opportunities for commercial real estate investors…

So what’s changing? How is it impacting commercial and residential real estate? What factors may be make or break in future profit potential for landlords and investors?

‘Corporate Shifts’

The CCIM Institute recently ran a feature on Corporate Shifts highlighting just how much more important real estate is becoming in the corporate world. According to the April 2014 article and underlying surveys more and more real estate experts are reporting directly to the C-Suite, and more companies are recognizing their property holdings hold the future of their organizations.

Commercial real estate is becoming more important as the current upcycle can mean more growth and profit potential from real estate investments as main profit margins shrink and even move into negative territory. At the same time workplaces are increasingly becoming one of the top tools for recruiting and retaining top talent. Office design is now also directly tied to employee performance and productivity.

Beyond stunning architecture and workplaces like Apple’s Mothership, this is extending to corporate housing like Facebook’s new apartments.

According to the report just 8% of commercial real estate companies have not been using outsourcing, and within the next 2 years as much as 40% of the work force is expected to be working remotely.

Office, Retail & Multifamily Shifts

Office

The fallout of these trends in the office sector is likely to mean more acquisitions, adding to current relocation shifts to less expensive locales in secondary markets or on the outskirts of major hubs. Companies will be looking for fresh, trendy space, while commercial real estate investors will find huge profits in value add and renovating existing buildings. Companies will need les square footage per employee, but demand spaces be more efficient.

Retail

Technology only continues to boost the performance and profitability of retail and retail investment properties. However, remote working and walkability trends are likely to push much of the best gains to local shopping centers and strip malls versus mega malls.

Multifamily & Residential

The new U.S. real estate boom along with business relocations is enabling more small landlords to sell, and making it more attractive for them to sell. This is driving up rents quickly, while creating more local transaction volume as tenants move.

There are many opportunities to increase income from existing properties, with no lack of demand for units. Tenants are prioritizing proximity, additional services such as internet and are looking for easy move-ins.

Property Management

All of this is only making property management more valuable and important than ever. A savvy local expert and establish full service property management firm that is wired into these trends knows how to make a property stand out, maximize property value and improve income and performance.

property_management Worcester

What’s all the buzz about traffic data in the commercial real estate industry today?

The U.S. real estate industry continues to rebound, with ongoing price gains bucking predictions. Global investors are anticipated to significantly up their stake in U.S. commercial property, and are increasingly investing outwards and expanding into other than staple gateway cities.

However, savvy investors and landlords continue to be selective in their investments and improvements, and have a keen focus on finding ways to add value.

A side effect of this cautious yet growing appetite has been fueling big data as a hot buzz topic. Most recently this focuses on traffic data.

So why is traffic data so important in commercial real estate investment and property management today and where does it come from?

Perhaps the most common use of traffic study data in commercial real estate today is in site selection. The best information can help business buyers and tenants, investors and their agents find the best properties, and the best fit for their needs.

More recently this has been a tool for finding value add opportunities and bargains with larger potential future value.

However, there is equal if not more value in traffic data for existing commercial property owners. Uses include finding ways to maximize perceived value of units to lease, leasing units faster, and increasing total property performance.

It can also be an important factor when borrowing or raising funds. Tenants and future buyers want it too, and just being able to provide great data can be a way to stand out and increase value by itself.

However there have been significant challenges and disparity between what industry professionals and market players want and what has been available to them. Until recently this field has been plagued by poor, out of date data, information that doesn’t account for new development and changes and is often anything but detailed or visually appealing.

Commissioning new, customized studies can be extremely expensive, unreliable, time consuming and downright impractical. Traditionally they have required hiring hands to stand out and clock passing vehicles and pedestrians, or outsourcing the process through expensive and extremely slow challenges.

Thanks to technology this is changing fast. One alternative in particular – using sensors either to track Wi-Fi enabled phones and devices or to detect motion can come with many superior advantages, especially if the information is delivered in a great format.

fish-going-to-new-house

What big real estate trends are being seen in the market now, where are they going and what opportunities are they creating for commercial real estate investors?

It’s easy to make predictions, but now that we have one foot in 2014 what’s really going on?

1. Coworking

Coworking has exploded in popularity over the last couple of years thanks to new startup activity and businesses seeking to minimize overhead. According to the National Association of Industrial and Office Professionals Workplace Innovation (NAIOP) the U.S. now leads in coworking spaces with 781 centers as of 2013.

From 2012 to 2013 membership in these spaces is reportedly up 117%. As entrepreneurs and large corporations discover the diverse range of additional advantages of leveraging coworking spaces membership could explode even further.

2. Crowdfunding

New real estate specific crowdfunding portals are being launched rapidly in order to capitalize on the trend, respond to JOBS Act developments and fill the void between opportunity and traditional funding.

Among these new industry platforms are Fundrise, Realty Mogul, Crwd.com, and RealtyShares.

3. Multifamily

A survey of global commercial real estate investors in 2013 showed over 70% planned to build on their portfolios in 2014. According to Beech Street Capital’s new survey almost half of multifamily housing investors plan to grow their holdings in 2014. Capital One Bank’s head of commercial real estate seconded this, saying demand for acquisition financing in this sector was up. Over 40% of survey respondents also expected renovation activity to rise with some investors adding value to existing holdings and others buying and improving existing buildings.

4. Walkability

Even though primary gateway cities may be being traded for secondary ones by investors seeking better growth and returns multiple publications and new books are proclaiming that walkability is one of the hottest trends of the moment.

There are a number of reasons for this including environmental awareness, individuals minimizing expenses, desire for better work life balance and the age of new home buyers and those entering the workforce. Plus of course cities want to squeeze in all of the tax revenue they can and maintain density in order to protect their own profit margins.

This is leading to renewed exploration and development of mixed used retail and rental apartments, live-work units, and compacting the space between industrial, office, retail and residential space.

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The last few years set to be a good season for U.S. property especially the retail property sector. However, commercial real estate investors and retail property landlords own moves will continue to make a significant difference in short and long term returns.

So what best practices and intelligent investment actions can help commercial investors maximize their retail property potential?

1. Technology

Upping the tech on your property and for your tenants can make a massive difference. Competition is hot between retail shopping centers today. Those with the best technology, technology that helps consumers and tenants can make a massive difference in appeal. New technology like the Apple iBeacon being promoted by digital developers like PassBee Media is upping the game of individual retailers with laser precise location based mobile marketing for increasing same customer and store sales while reducing labor expenses. Better performance for tenants means better building performance, unit demand, rents, tenants, value and income, and returns growing exponentially from all of these factors compounded.

2. Community

Individual retailers and the building as a whole will perform far better now and over the long run if some effort is made to build in community and build loyalty by going above and beyond just being bricks and mortar.

3. Great Leases

Amateur retail investors are often preoccupied with simply filling units. Good leases make all the difference. A great lease makes all the difference in short and long term performance and returns. It determines how motivated renters will be to perform, the opportunities to raise rents, and the financeable and salable value of the property in the future.

4. Asset Protection

Even though we may be set for some of the best times for real estate ahead and many are rushing ahead, bullish on appreciation and rising rents, asset protection should still be a significant priority. This means keeping an eye on proactive maintenance, taxes, insurance and liquidity.

5. Property Management

There is no question property management makes all the difference. So do your homework and select the best property management service that will reduce liability and increase profitability.

Check out our recent post: The Top 6 Dangers of Hiring the Wrong Property Manager.

Or else we’re liable to lose you in the snowdrifts…

According to new data from SingleHop just 6% or fewer businesses impacted by weather survived. This will certainly apply to many real estate businesses in the New England, and their tenants. So what makes the difference in surviving and thriving and not?

The statistics compiled in an infographic by SingleHop show that only 6% of companies without a disaster plan can survive if their data centers go down for just 10 days. Additionally only about half of all businesses that shut down will ever reopen, while 93% will ultimately go bankrupt within the following year.

The scariest part is that weather is responsible for over 30% of business downtime. Just having data centers hit can be disastrous, but Massachusetts businesses also have to deal with blizzards, freezing weather, and potentially other natural and man-made disasters including hurricanes which can disrupt income and work.

So how can real estate investors and industry firms insulate themselves from these storms and increase their odds of being one of the survivors?

1. Have a Disaster Plan

Obviously one of the best ways of increasing odds of surviving and thriving is to have an emergency and disaster plan established well in advance of a situation. Going further; have systems in place which automatically kick in when disaster strikes. A great example of this is emergency phone routing and call forwarding which directs calls to other numbers.

2. Diversification

Diversify into a greater number of buildings instead of just one larger investment. Diversify investments into different areas. Have staff, storage and operations spread among multiple locations.

3. Access to Money

Vendors are still going to expect to be paid even though banking may be disrupted. Have access to cash and alternate banking solutions to be on the safe side.

4. Have a Plan for Dealing with Tenants

Direct property damage may occur and tenants are going to want answers about repairs. Also expect tenants to be late on rent because their own businesses and incomes have been disrupted. Simply clearing house and making threats is not likely to be the best solution in the long run. Instead have a plan; know what you will do, what you can do and what you can’t and make sure you property managers are on the same page.

5. Have the right property management firm in place

Have a property management team equipped to weather storms and that knows how to handle these situations efficiently and as profitably as possible.