AIA 3 14 12 -Final Slides - dyersheehan.com · Title: Microsoft PowerPoint - AIA 3 14 12 -Final...
Transcript of AIA 3 14 12 -Final Slides - dyersheehan.com · Title: Microsoft PowerPoint - AIA 3 14 12 -Final...
Apartment
Investor AcademySUCCEED in 2012! Capitalize on Today’s Market Trends
Dawn Dyer, PresidentDyer Sheehan Group, Inc.
CA DRE License #01231389Ventura, CA
(805) [email protected]
March 14, 2012
All information provided above is from sources deemed reliable, but no guarantee or warranty is stated or implied herein.
Apartments Outperform
Other Assets
� Strong Fundamentals
� Demographic Trends
� Barriers to Home-Ownership
� Economic Issues
� Lifestyle Choices
� Supply Constraints
Apartment Investor Academy | Ventura County Apartment MarketMarch 14, 2012
Apartments Provide Safe Harbor
with Upside Potential
� Basic Commodity Item
� Short-Term Leases
� Low Vacancy During Recession
� Strong Demand Factors
� Rent Appreciation Anticipated
� Leverage
Apartment Investor Academy | Ventura County Apartment MarketMarch 14, 2012
Demographic Trends
� Generation Y
� Aging Boomers
� Single Person Households
� New Americans
� Alternative Family Structures
Apartment Investor Academy | Ventura County Apartment MarketMarch 14, 2012
Housing Crisis & Mortgage Meltdown
� New Demand from those who Lost or Bailed
� Changes in Consumer Psyche
� Tougher Mortgage Requirements
� Affordability and Flexibility
� Homeownership -vs- Rent & Invest
Apartment Investor Academy | Ventura County Apartment MarketMarch 14, 2012
Lifestyle Choices
� Live/Work/Play
� Eco-Friendly
� Lock and Leave
� Freedom
� Mobility
Apartment Investor Academy | Ventura County Apartment MarketMarch 14, 2012
Source: Construction Industry Research Board
Apartment Investor Academy | Ventura County Apartment Market
March 14, 2012
Ventura County Building Permits
0
500
1000
1500
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4500
5000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Tota
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Single Family Permits Multi-Family Permits
All information provided above is from sources deemed reliable, but no guarantee or warranty is stated or implied herein.
Does Your Property Portfolio
need a Tune-Up?
� Optimize Performance
� Conduct Annual Review � Leases
� Operating Statements
� Taxation Issues
� Insurance & Risk Management
� Maintenance & Capital Improvements
� Debt to Equity Position
� Consult with key Investment Team Members
� Make Adjustments at Property or Portfolio level
Apartment Investor Academy | Ventura County Apartment MarketMarch 14, 2012
The Value of Investment Property
is based on the
QUANTITY &
QUALITY
of the Income Stream it produces!
Apartment Investor Academy | Ventura County Apartment MarketMarch 14, 2012
Valuation Methods for
Multi-Family Property
� Price per Unit (market comp)
� Price per Square Foot (market comp)
� Gross Rent Multiplier (GRM)
� Capitalization Rate Analysis (Cap Rate)
Apartment Investor Academy | Ventura County Apartment MarketMarch 14, 2012
CAPITALIZATION RATE
CAP RATE = Annual Net Operating Income (NOI)
Purchase Price (or Market Value)
MARKET VALUE = Annual NOI (excl. mortgage pmt.)
Market Capitalization Rate
Apartment Investor Academy | Ventura County Apartment MarketMarch 14, 2012
NET OPERATING INCOME
NOI = Gross Scheduled Income
- Vacancy & Credit Loss
- Total Operating Expenses
(Excluding Mortgage Payment)
Apartment Investor Academy | Ventura County Apartment MarketMarch 14, 2012
Key Elements of
Net Operating Income
� Income (Rents & Other Income)
� Vacancy Reserve
� Operating Expenses
� Replacement Reserves
Apartment Investor Academy | Ventura County Apartment MarketMarch 14, 2012
Operating Expenses
(Normalized)
� Property Taxes (Prop. 13 + Assessment Districts)
� Insurance (Adequate Coverage)
� Property Management (Professional & On-Site)
� Maintenance & Repairs (even if DIY)
� Gardening /Pest Control
� Licences/Legal/Accounting
� Utilities (Separate Meters?)
� Replacement Reserves ($250/unit)
Apartment Investor Academy | Ventura County Apartment MarketMarch 14, 2012
Apartment Investor Academy | Ventura County Apartment MarketMarch 14, 2012
Property Name: XYZ APARTMENTS # OF UNITS BED + BATH SQ. FT. MO. RENT $/SQ FT Purchase Price: $ 3,240,000
Property Address: 1234 Main Street 12 1 + 1 650 $900 $1.38 Percent Down: 30.00%
Anytown, USA 12 2 + 2 950 $1,200 $1.26 Cash Down: $ 972,000
Cross Street: 1st Street Current Cap: 6.85% No. of Units: 24 Projected Cap: 5.41%
Lot Size: 0.68 acres Current GRM: 10.66
Year Built: 1988 Projected GRM: 10.66
Net Rentable Area: 38,958 sq. ft. Price per Unit: $ 135,000
Thomas Page/Grid: 999 XY Price per sq ft: $ 83.17
E S T I M A T E D A N N U A L E X P E N S E SCURRENT PROJECTED CURRENT PROJECTED 1st 2nd
Property Taxes*: $ 22,000 $ 35,640 Tax & License: $ 950 $ 950 Loan Balance:
Insurance: 9,840 13,635 Electricity: $ 1,500 $ 1,500 Loan Type:
Advertising & Promo: 0 1,200 Water/Sewer: $ 9,480 $ 9,480 Interest Rate:
Property Mgmt: 12,153 18,144 Trash: $ 2,700 $ 2,700 Remaining Term:
Office Expense & Bkpg: 0 900 Gas: $ 1,390 $ 1,390 Monthly Payment:
Maint. & Repairs: 12,153 18,230 Legal/Accounting $ 1,250 $ 1,250 Name of Lender:
Gardener: 2,400 2,400 Reserves: $ 6,000 Assumable:Total of Estimated Annual Expenses: $75,816 $113,419 Comment: Informational only; does not affect analysis
* Based upon Purchase Price. Estimated Annual Expenses per Unit: $3,159 $4,726 calculations.
S C H E D U L E D G R O S S I N C O M EC U R R E N T P R O J E C T E D 1st 2nd
Total Monthly Rent: $ 25,200 • • • $ 25,200 • • • Loan Amount: $ 2,268,000 $ 0
Monthly Laundry Income: 120 • • • 120 • • • Loan Type: Conv./Variable Conv./Variable
Other Monthly Income: • • • • • • Interest Rate: 5.00% 5.00%
Total Monthly Gross Income: 25,320 • • • 25,320 • • • Loan Term: 30.00 Years 30.00 Years
Annual Gross Income: 303,840 • • • 303,840 • • • Monthly Payment: $ 12,175.11 $ 0.00
Less Annual Vacancy Reserve: 6,077 2.00% 15,192 5.00% Name of Lender: XYZ Bank XYZ Bank
Gross Annual Operating Income: 297,763 • • • 288,648 • • • Balloon Payment: $ 0 $ 0
Less Annual Expenses: 75,816 24.95% 113,419 37.33% Comment: Net Annual Operating Income: 221,947 • • • 175,229 • • •
Less Annual Loan Payments: 146,101 • • • 146,101 • • • Annual Pre-Tax Cash Flow: 75,846 7.80% 29,128 3.00%
Plus Annual Principal Reduction: 0 • • • 0 • • • Note: All information provided herein is from sources deemed to
Total Annual Pre-Tax Return: $75,846 7.80% $29,128 3.00% be reliable, but no guarantee or warranty is stated or implied.
Comments: For additional information, please contact:D Y E R S H E E H A N G R O U P , I N C .
808 E. Santa Clara Street, Suite A Ventura, CA 93001(805) 653-8100 • Fax: (805) 653-8105
E X I S T I N G F I N A N C I N G
N E W F I N A N C I N G
M U L T I - F A M I L Y I N V E S T M E N T P R O P E R T Y I N F O R M A T I O N
G E N E R A L I N F O R M A T I O N A N A L Y S I SU N I T M I X & C U R R E N T R E N T D A T A
Optimize Performance of Your
Investment Real Estate Portfolio
� Update Market Valuation Regularly
� Depreciation Schedule
� Debt to Equity Ratio
� 1031 Exchange as Wealth-Building Tool
Apartment Investor Academy | Ventura County Apartment MarketMarch 14, 2012
2011 Multi-Family
Sales
Parker ShawCA DRE License # 01740891
Multi-Family Investments
Dyer Sheehan Group, Inc.March 14, 2012All information provided above is from sources deemed reliable, but no guarantee or warranty is stated or implied herein.
2011 Multi-Family Transactions
2011 National Data 2011 Ventura County
Data
Total Sale Volume $57,000,000,000 $181,375,500
YOY Change 27% 25%
Average Cap Rate 6.5% 6.27%
Average Price/Unit $102,000 $132,802
Average Monthly Rent $1,064 $1,435
YOY Change 2.4% 2.9%
Vacancy Rate 5.2% 3.4%
YOY Change 1.4% .73%
Apartment Investor Academy | Ventura County Apartment MarketMarch 14, 2012
All information provided above is from sources deemed reliable, but no guarantee or warranty is stated or implied herein.
Ventura County Total Transactions(5+ units)
0
10
20
30
40
50
60
'01 '02 '03 '04 '05 '06 '07 '08 '09 '10 2011
Yearly Transactions 10-Year Average
Apartment Investor Academy | Ventura County Apartment MarketMarch 14, 2012
All information provided above is from sources deemed reliable, but no guarantee or warranty is stated or implied herein.
Apartment Investor Academy | Ventura County Apartment MarketMarch 14, 2012
Ventura County Transactions by City
All information provided above is from sources deemed reliable, but no guarantee or warranty is stated or implied herein.
2011 Ventura County Multi-Family Transactions(5+ Units)
All 2011 Sales
2011 Sales
w/o Alara & Parc Rose
Total Transactions 21 19
Total Sale Volume $181,375,500 $51,275,500
Average Sale Price $8,639,929 $2,698,711
Average Cap Rate 6.27% 6.5%
Average Price/ SF $168 $162
Average Price/Unit $132,802 $121,647
Total Units 919 381
Average # of Units 44 20
Apartment Investor Academy | Ventura County Apartment MarketMarch 14, 2012All information provided above is from sources deemed reliable, but no guarantee or warranty is stated or implied herein.
Ventura County Average Cap Rate
4.5%
5.0%
5.5%
6.0%
6.5%
7.0%
7.5%
8.0%
8.5%
9.0%
'01 '02 '03 '04 '05 '06 '07 '08 '09 '10 2011
Apartment Investor Academy | Ventura County Apartment MarketMarch 14, 2012
All information provided above is from sources deemed reliable, but no guarantee or warranty is stated or implied herein.
Apartment Investor Academy | Ventura County Apartment MarketMarch 14, 2012
All information provided above is from sources deemed reliable, but no guarantee or warranty is stated or implied herein.
January 2012
Ventura County Rent Survey
Dawn DyerPresident
Dyer Sheehan Group, Inc.
March 14, 2012
Apartment Investor Academy | Ventura County Apartment MarketMarch 14, 2012February 23,
2011
Ventura County Vacancies
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Jan
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ou
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wid
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aca
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Ra
te
All information provided above is from sources deemed reliable, but no guarantee or warranty is stated or implied herein.
Apartment Investor Academy | Ventura County Apartment MarketMarch 14, 2012
Average Ventura County Rents
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Mo
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$0.00
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$1.00
$1.20
$1.40
$1.60
$1.80
$2.00
Re
nt
in $
oe
r S
F
Average Monthly Rent Average Rent in $ per SF
All information provided above is from sources deemed reliable, but no guarantee or warranty is stated or implied herein.
Apartment Investor Academy | Ventura County Apartment MarketMarch 14, 2012February 23,
2011
Average Two Bedroom Apartment Rents
Ventura County, January 2012
Ca
ma
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o
Fil
lmo
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Mo
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ark
Oja
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all
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Ox
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rd/P
ort
Hu
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Pa
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Sim
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all
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Ve
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Th
ou
san
d O
ak
s/W
est
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illa
ge
Co
mb
ine
d A
rea
s
$800
$900
$1,000
$1,100
$1,200
$1,300
$1,400
$1,500
$1,600
$1,700
Av
era
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Mo
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Do
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All information provided above is from sources deemed reliable, but no guarantee or warranty is stated or implied herein.
Supply Constraints
� Access to Development Capital
� Land and Production Costs
� Entitlement Hurdles, Delays, and Litigation
� Fees, Infrastructure, and Offsite Improvements
� Parking Standards
� Limited land zoned for Multi Family
� SOAR, GOD and MS4
� NIMBYs and BANANAs
Apartment Investor Academy | Ventura County Apartment MarketMarch 14, 2012
Multi-Family Investment Outlook
� Strong Market Fundamentals
� Supply/Demand Imbalance
� Most Affordable Housing Type
� Low Vacancy Rates
� Changing Demographics
� Market Elasticity
� Opportunities to Add Value
Apartment Investor Academy | Ventura County Apartment MarketMarch 14, 2012
Questions?
Dawn DyerDyer Sheehan Group, Inc.
March 14, 2012Apartment Investor Academy | Ventura
County Apartment Market