What is most important to a real estate investor these days? – Company press
You will be amazed at the amount of investor activity these days!
Recently, we talked about two types of investors. Investors who buy with their own money and those who don’t. The first is called private and the second is called institutional. As you know, individual investors generally take on debt in addition to their down payment. This allows institutional groups to have a pool of equity ready to be deployed.
We started the offer last week. So far we have received over 76 inquiries and 2 offers. The transaction is expected to trade at a record price. Here is another example: Newly rented Class A building – before construction is complete. A totally one-sided investor offered to buy it for a new lease. It was a comeback and a record breaking price. Our client said thank you! It is very difficult to find land and build it with the approval of the city. Their plan is to keep it for the long haul.
Both of the above are great examples of what is considered most important to investors these days. Pamper me by discussing some of my observations.
In general, motivation starts with money. Specifically, the source of these dollars. With our new offer, the real estate owner has purchased a building to accommodate his operations. He closed the deal in 2013 by combining the money he earned with a 90% loan from the Small and Medium Business Administration.
Flash forward. Its business model changed in 2018. I no longer needed a warehouse. We found him a tenant to replace his apartment. He later turned into a private investor, but previously owned a house.
So why sell it? After all, tenants give out nice checks every month. Two reasons. Moving the owner from the state to a tax-advantaged state means that if they sell, they will be exempt from California taxes. Plus, the market is hot! Take your boots and buy them elsewhere for the best results. What is the most important thing? Net cash flow – what’s left over after paying the bank and income tax.
Now, for a new class A lease and a unilateral offer, the situation is different. Let’s start with the money.
Prior to 2019, clients teamed up with Canadian pension providers. Structured was a fund with a clear purpose. Win an industrial transaction in the infill market (mainly the developing market). Existing structures and sites that must be reused are taken into account. The dollars invested will benefit retirees for years to come.
Therefore, as new projects are developed and sold, there is a greater shortage of investment grade real estate, which poses even greater problems. In other words, where to invest your profits. What is the most important thing? A long and sustainable income stream.
Are there institutional sellers these days? Rarely. People who use Wall Street to invest in equity, like real estate investment trusts, are dominated by how much they are allowed to dispose of each year. Other companies that buy on behalf of pension funds, such as CalSters and CalPERS, must keep a certain percentage of the pool in asset classes such as commercial real estate.
Sure, they were able to make a big profit by selling, but as mentioned above, so what? Bank returns and treasury bills are low. What can cause a sale? Remember our clients with Canadian retirement dollars? Usually, when a business plan is implemented (dollars are deployed), there is a sunset in the 5-year, 10-year, and 15-year agreements. Therefore, we can see that real estate with mature underlying assets is on the market. If their timing is now – what a great success!
Allen C. Buchanan of SIOR is a director of Orange Lee & Associates Commercial Real Estate Services. He can join to [email protected] Or 714.564.7104..
What is most important to a real estate investor these days? – Company press Source link What is most important to a real estate investor these days? – Company press