HOUSING NEWS REPORT
BY ATTOM DATA SOLUTIONS AT OM DATA
Qualified Opportunity Zones, using tax incentives — a much-welcomed market-driven approach to economic development. These Opportunity Zone investments enjoy compelling capital gains tax benefits that are particularly at- tractive to multifamily and single family rental investors. Opportunity is rising in both the single family rental construction and small-balance multifamily space for in- novative real estate investors and lenders willing to adapt to the rising trends. THE RENTAL MARKET The single family rental market continues to be promising for small and mid-tier investors. A recent ATTOM Data analysis of public record data detailed the growth in market share for these segments in Q1 of 2018. A 21 percent increase for owners of 6 to 10 properties, and a 20 percent increase for owners of 11 to 100 properties. These investors continue to innovate and
venture toward the higher yield markets that have arisen throughout the coun- try. Counties where rent has not been outpaced by rising home prices, like the relatively overlooked “second-tier markets”, those not in the top 20 metro- politan MSAs, remain a prime target for portfolio owners with very innovative mortgage financing available. Median rent has continued on an upward trajectory for the past de- cade-plus. Even when the housing crisis caused median home values to fall, fair market rents continued to steadily gain. This steady return has attracted inves- tors of all levels of experience who are looking for greater return on their real estate investment portfolios. Real estate investors are building secure, cash-flow- ing rental portfolios as complimentary alternatives to more traditional wealth building options. In addition, we are seeing true value-add projects within neighborhoods and communities. Our clients are buying properties needing meaningful structural improvement,
making those improvements, allowing for a nice return to the investor and a renovated home for the ultimate renter or homeowner to enjoy. In addition, for the first time, multi- family and SFR investors can compare return profiles on a true apples-to-ap- ples basis. Now there are attractive and competitive private lending options for SFR portfolios and small balance multifamily properties. Investors can maximize the efficiency of both operations and capital by comparing the return -on-equity between an SFR portfolio and a multifamily project with equivalent financing packages. THE MULTIFAMILYMARKET There is a similar story happening in the small-balance multifamily sector. Rent growth continued in Q2 2018, focused in the aforementioned sec- ondary U.S. markets that can often be overlooked but have rode the economic growth of the previous years. These
Changing Seasons of Opportunity
Q1 2018 SINGLE FAMILY RENTAL GROWTH BY INVESTOR SEGMENT Annual Pct. Change in Number of Single Family Rental Properties
"MY TAKE" ARTICLE FROM HOUSING NEWS REPORT BY ATTOM DATA SOLUTIONS.
OPPORTUNITY IS RISING INBOTH THE SINGLE FAMILYRENTAL CONSTRUCTIONAND SMALL-BALANCE MULTIFAMILYSPACE FOR INNOVATIVE REAL ESTATE INVESTORSAND LENDERSWILLING TOADAPTTOTHE RISINGTRENDS.”
by Jeff Tennyson, CEO, Lima One Capital
20% 21%
I
n the Carolinas, fall is always one of my favorite seasons. We’re
that continues to be a significant part of our national lending platform. However, we continue to see avenues to expand our product mix as our nationwide real estate clients take advantage of new op- portunities within their local markets. We’re seeing exciting new opportunities in new construction for rental proper- ties and in small-balance multifamily financing. We see both types of in- vestment properties emerging in this new season of real estate investing. We
believe the innovative financing options now emerging create a terrific compli- ment to the fix-and-flip market, which continues to show steady growth and good returns. In addition, the new Opportunity Zones section of the recent Tax Cuts and Jobs Act legislation creates additional promising options for real estate inves- tors. The purpose of this new investment vehicle is to help direct resources to low-income communities, known as
19%
recharged from vacations and school breaks and feel some relief from the heat and humidity. The fall promises a change of climate, a change of colors from fall foliage and an optimistic out- look for opportunities ahead. At Lima One Capital we’re seeing exciting new opportunities for real estate investors. We were originally founded as a fix-and-flip lender, and
13%
12%
9%
100+
11 to 100
6 to 10
3 to 5
1 to 2 All SFR
60 | think realty magazine :: november 2018
thinkrealty . com | 61
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