Sarah Humbargar’s Post

During my career, one of the most common questions I receive is the performance of real estate versus stock and bond markets. This article is a good discussion of these returns on real estate. Of note, the annual returns from real estate in the 2020's has been unusually high, but it is helpful to understand average returns from the past 100 years. I normally use a return rate of 4.0% (consistent with long-term returns) when preparing financial plans.

Cap rate, a key indicator for property valuation, shows pre-debt service return on investment. Calculated by dividing net operating income by purchase price, it's influenced by various factors. Understanding these factors aids in evaluating investment properties. Wanna beat the recession? Now is the time to invest, take our five-question survey to see if you're a good fit: lvpefund.com/questionnaire https://lnkd.in/e2VnDMFe Read more here 👆 #RealestateMarket #RealestateInvestment #CommercialRealestate #MultiFamilyRealEstate #AccredictedInvestors

Cap rate, a key indicator for property valuation, shows pre-debt service return on investment. Calculated by dividing net operating income by purchase price, it's influenced by various factors. Understanding these factors aids in evaluating investment properties. Wanna beat the recession? Now is the time to invest, take our five-question survey to see if you're a good fit: lvpefund.com/questionnaire https://lnkd.in/eTXCg2kc Read more here 👆 #RealestateMarket #RealestateInvestment #CommercialRealestate #MultiFamilyRealEstate #AccredictedInvestors

If you’re an investor, your ROI could be decreased due to this 1 decision! Recently, the Federal Reserve decided not to lower the interest rates. In commercial real estate, when the rates are not cut, the cost to borrow money stays high. This leads to more expensive loans, making it costly to start new projects. Because of these higher costs, you might make less money and your investments might grow more slowly. Here's what you should know as an investor: → Shift in investment: When borrowing costs are high, investors might look elsewhere, like bonds or other assets, rather than real estate. This shift can reduce the flow of capital into commercial properties, affecting prices and demand. → Difficult to negotiate: Higher borrowing costs also impact tenants. Businesses facing higher financing costs may become more conservative with their leasing decisions. They might negotiate harder for lower rents or shorter lease terms, making negotiations tougher for landlords. → Not all bad news: It's not all doom and gloom. High interest rates can also weed out weaker players, leaving opportunities for well-capitalized investors. It can be a chance for you to make strategic acquisitions and smart investments. In commercial real estate, adapting to financial shifts is crucial. You can tackle these changes and find opportunities even in challenging times if you stay informed and agile. P.S. What are your thoughts on this? Let me know in the comments! #commercialrealestate #realestate #fedrate

Cap rate, a key indicator for property valuation, shows pre-debt service return on investment. Calculated by dividing net operating income by purchase price, it's influenced by various factors. Understanding these factors aids in evaluating investment properties. Wanna beat the recession? Now is the time to invest, take our five-question survey to see if you're a good fit: lvpefund.com/questionnaire https://lnkd.in/dejDWUTb Read more here 👆 #RealestateMarket #RealestateInvestment #CommercialRealestate #MultiFamilyRealEstate #AccredictedInvestors

𝐊𝐞𝐲 𝐌𝐞𝐭𝐫𝐢𝐜𝐬 𝐄𝐯𝐞𝐫𝐲 𝐌𝐮𝐥𝐭𝐢𝐟𝐚𝐦𝐢𝐥𝐲 𝐈𝐧𝐯𝐞𝐬𝐭𝐨𝐫 𝐍𝐞𝐞𝐝𝐬 𝐭𝐨 𝐊𝐧𝐨𝐰 📊🎯 Understanding the right metrics is pivotal for investment success. From Gross Rent Multiplier (GRM) to Capitalization Rate (Cap Rate), these metrics offer valuable insights into a property’s financial health, potential ROI, and overall viability. 𝐖𝐡𝐚𝐭 𝐢𝐧𝐯𝐞𝐬𝐭𝐨𝐫𝐬 𝐬𝐡𝐨𝐮𝐥𝐝 𝐤𝐧𝐨𝐰: 🔹 Gross Rent Multiplier (GRM): Evaluating a property's value by comparing the purchase price to the gross rental income. 🔹 Capitalization Rate (Cap Rate): Measuring the property’s potential ROI by dividing the Net Operating Income (NOI) by its value. 🔹 Vacancy Rate: Assessing demand and potential rental stability. 🔹 Average Rent Per Unit: Gauging income potential and room for rental growth. 🔹 Expense Ratio: Evaluating cost management and profitability. 🔹 Debt Service Coverage Ratio (DSCR): Measuring the property’s ability to cover its debt obligations. Investors, these metrics shouldn't be viewed in isolation but as part of a comprehensive evaluation strategy. Equip yourself with these insights to make informed decisions and maximize your multifamily investment success. Dive deeper into each metric and understand their significance. Read the full blog through the link below! #multifamilyinvesting #realestatemetrics #investmentstrategy #financialhealth #CPICapital #PassiveIncome

Investors focus too much on future rent growth and while important, its only half the story. What they also need to be focusing on are expenses and expense growth (inflation) or NOI growth when combined with income. Not all rent growth is created the same. Case in point, consider the two hypothetical scenarios below: Scenario #1 - Illustrates that when inflation is greater than rent growth, a high expense ratio market requires more rent growth to maintain the same NOI growth of that of a low expense ration market. Scenario #2 - A simplistic illustration of 2022/2023 which saw flat rents and high inflation. With both markets having 0% rent growth and 6% expense growth, the NOI (thus also value) of a property in a low expense ratio market declined 3.23% while the NOI/Value of a property in the high expense ratio market declined 6%. ---------- Observation #1: High expense ratio markets have an added risk factor and more price volatility. High expense ratio markets have a bigger bust but keep in mind, the reverse is also true that when rent growth exceeds expense growth, NOI/values increase faster in high expense growth markets. Because of this price volatility, high expense ratio markets typically aren't attractive from a cashflow perspective but rather value appreciation. Observation #2: Most of the multifamily distress we have seen over the past 18 months has been in high expense ratio markets, likely due to the reasons above. Phoenix (a low expense ratio market) will soon be an outlier but for different reasons (supply & aggressive 2020-2022 capital).

Collier Capital Markets team conducted an analysis of CMBS new issuances for the first quarter of 2024, with the below findings: Office: The average interest rate for office properties was at 7.5%. Cap rates averaged 7.1%. Debt yields and DSCRs averaged 13.3% and 1.54, respectively. The average LTV ratio was 54.2%. Industrial: The industrial sector saw average interest rates of 7.3%. Cap rates averaged 6.5%. Average debt yields and DSCRs were 12.9% and 1.17, respectively. The average LTV ratio was 58.0%. Multifamily: Interest rates in the multifamily sector averaged 6.9%. Cap rates averaged 6.0%. Average debt yields and DSCRs were at 9.6% and 1.49, respectively. Multifamily properties also had the highest average LTV ratio at 59.5%. Retail: Retail properties interest rates averaged 7.2%. Cap rates averaged 6.7%. The sector boasted the highest average DSCR at 2.06 and the lowest average LTV ratio at 45.5% Source: Please checkout Collier Capital Markets full article link in the comments ——— RE Dealmakers Connect is brought to you by the team at Lindsay Capital Partners, LLC. Lindsay Capital Partners is a real estate investment firm that targets the acquisition and development of Multifamily properties in the Southeast. 🤝 Want to discuss further - If you’re interested in discussing the latest in #commercialrealestate #commercialrealestateinvestor #multifamily #familyoffice #familyoffices #privateequityrealestate #privateequity #highnetworth #brokers #mortgagebroker #realestatedevelopment, feel free to DM Lindsay Capital Partners, LLC or reach out at Donald@Lindsaycapitalpartners.com 👍 Like, 💬 comment, and 🔁 share this post if you found it helpful or if you know someone who would benefit from it!

𝐊𝐞𝐲 𝐌𝐞𝐭𝐫𝐢𝐜𝐬 𝐄𝐯𝐞𝐫𝐲 𝐌𝐮𝐥𝐭𝐢𝐟𝐚𝐦𝐢𝐥𝐲 𝐈𝐧𝐯𝐞𝐬𝐭𝐨𝐫 𝐍𝐞𝐞𝐝𝐬 𝐭𝐨 𝐊𝐧𝐨𝐰 📊🎯 Understanding the right metrics is pivotal for investment success. From Gross Rent Multiplier (GRM) to Capitalization Rate (Cap Rate), these metrics offer valuable insights into a property’s financial health, potential ROI, and overall viability. 𝐖𝐡𝐚𝐭 𝐢𝐧𝐯𝐞𝐬𝐭𝐨𝐫𝐬 𝐬𝐡𝐨𝐮𝐥𝐝 𝐤𝐧𝐨𝐰: 🔹 Gross Rent Multiplier (GRM): Evaluating a property's value by comparing the purchase price to the gross rental income. 🔹 Capitalization Rate (Cap Rate): Measuring the property’s potential ROI by dividing the Net Operating Income (NOI) by its value. 🔹 Vacancy Rate: Assessing demand and potential rental stability. 🔹 Average Rent Per Unit: Gauging income potential and room for rental growth. 🔹 Expense Ratio: Evaluating cost management and profitability. 🔹 Debt Service Coverage Ratio (DSCR): Measuring the property’s ability to cover its debt obligations. Investors, these metrics shouldn't be viewed in isolation but as part of a comprehensive evaluation strategy. Equip yourself with these insights to make informed decisions and maximize your multifamily investment success. Dive deeper into each metric and understand their significance. Read the full blog through the link below! #multifamilyinvesting #realestatemetrics #investmentstrategy #financialhealth #CPICapital #PassiveIncome

In my previous analysis covering True North Commercial Real Estate Investment Trust (TSX:TSX:TNT.UN:CA, OTC:TUERF) ("True North"), I discussed why the market overreacted significantly to True North's situation in terms of its complete cut of distributions, the decline in revenue and net operating income, the decline in FFO and AFFO amid the general weak outlook on office real estate. After reviewing 2024 Q1's financial results for True North, I continue recommending True North with a "Buy" rating to capitalize on this market overreaction. Although I am still optimistic about True North's outlook and business fundamentals, caution is certainly warranted given some risk factors at an elevated level. https://lnkd.in/g-9GbcyR #officerealestate #realestate #investing #canada #economy #truenorth #reit #stockmarket #tsx