Every dog has its' day: Multi-family tips and trends in today's market

The multi-family market seems to be a hot topic in commercial real estate these days.  Why do you think this is?

Because of the difficulty associated with the purchase of single family homes, many cannot buy, and this creates opportunity for multi-family investors, and those generally interested in acquiring income producing real-estate..

Tell us about your experience in the multi-family market.

Many years ago, in another lifetime, I was in the business of syndicating limited partnerships where we acquired t apartment buildings.  At that time I had a property management company that  physically managed the apartments, and I in the capacity of the general partner fiscally managed the properties’ finances.  I did this for ten years.

What would you say is the greatest opportunity for current multi-family managers or owners in today’s market?

For those who own multi-family properties, opportunity exist because of the single family housing market decline.  It is an opportunity in two different ways:

1)    It is an opportunity to raise the level of rents which will allow for improved maintenance, better curb appeal, therefore creating a higher value for the asset

2)  It is an opportunity to sell.  The proceeds resulting from the sale can be used  as leverage to purchase real estate  in maybe a different, sector  or to purchase multi-family real estate from owners who are still experiencing  a high level of stress.

What would you say to those looking to invest or purchase in the multi-family sector?

If you want to  acquire , ,because of the single family housing market situation, it is a good time.  With low interest rates, where they are today, and with prices being depressed, it is the first time in a long time that this sector has the potential to be a very lucrative opportunity.  

Conversely and on  the other hand if you are a seller, it can be a very good time to sell because a legitimate  case can be made to a new purchaser that lease rates and occupancy will in all probability rise.  The sale proceeds can create a new purchasing opportunity.

What trends are you seeing in multi-family housing?

Rents are starting to rise.  Multi-family is the only sector overall, across the board in commercial real estate with very few exceptions, that seems to be experiencing higher occupancy and higher rents, and that is probably going to be the case for an extended period of time.  You can predict that there probably are not going to be many new properties on the market - who can get financing?  Even if they wanted to, how will people build them?  With a static supply and an increased demand that is an opportunity for those investors who are targeted at looking at this sector. 

Every dog has its’ day, and this day may be coming for the multi-family market.  It has been in the doldrums for a long long time.  

What is the best advice you could give to someone who owns multi-family properties?  Keep or sell?

That is a difficult question, because that decision should not be made solely on what they hold and what they don’t hold.  It should be made on their bigger picture:  What other opportunities are out there for them?  What is there financial situation?  What is there age?  What’s their health like?  What is  their life like?  All those things have a bearing on what  and where you purchase and  where and what you sell.

I did talk to an apartment owner recently about his multi-family portfolio.  I presented the  case to him in regard to selling, and what opportunities that might bring, and  he said “you made a great case, but I am ready to retire and my building is almost paid off.  I don’t want to sell because I just want to collect the rents and live.”

So, he put that in context of his life, and I understand that.  That is exactly what I would do.  It is the same with any purchase or sell you make with real estate.  When you buy house, you don’t just buy it because you love the house.  You have to take all of these things into consideration:  How your job outlook is?  How your relationship status is?  How your financial status is?  The list goes on, but it is always part of a much bigger picture.

Suggestions or Take-Aways

I would say to maximize your value, and this is so fundamental, but it is amazing how it’s difficult to do for those owners who do not have professional management companies, but if you want to sell or just maximize your value: 

-          keep good records of your tenants, of when their lease is up, when it starts, what they are paying per foot, watching your leases when they expire

-          keep up with your buildings – keep them clean, keep the parking lots clean, pay for landscaping, keep the curb appeal

-          Respond to your tenants when they have problems – and if someone has an air conditioner go out – fix it!  Otherwise, you are going to have a tenant move out, and then you are going to have to pay to clean it, paint it, carpet it, advertise it, and pay a commission.

These little nuts and bolts seem so silly, but they are what make ALL the difference when you are creating added value.   

ALPFA - Northwest Arkansas Non-profit Makes Waves

This week we wanted to take a moment to share about a non-profit that is making waves in business development here in Northwest Arkansas.  We, at Steve Fineberg & Associates, have had an opportunity to recently become members in ALPFA.  Please take a moment to read the below article, written by Ida Fineberg, Principal Broker at our office.  We are encouraged by their work, and look forward to become more and more involved with their initiatives.

Northwest Arkansas can now add another trophy to its case as it was recently announced that the Sam Walton School of Business will be the home of the ALPFA Institute.  Why is this important?  And wait – what is ALPFA, anyways?  Why is it important?  Well, anything having to do with the School of Business brings bigger and better educational opportunities to the area by developing a better educated and more capable workforce.  Local companies know that they have the people that they need here in order to grow and prosper and that, my friends, means that real estate can grow and prosper.  Now read on about ALPFA and organization that we, at Steve Fineberg & Associates are proud to call ourselves a member.

The value of any area can be measured in many ways – business opportunities and growth, educational institutions, industries, natural resources, real estate, entertainment and sports – are among some that can be factored into the equation.  One of the most important components adding to the value of any area is its people and their investments of their time and effort to have a better community.  

Evidence of this in the Bentonville/Rogers area is the Northwest Arkansas ALPFA Chapter.  For those not familiar with ALPFA – Association of Latino Professional in Finance and Accounting, is a professional organization established in 1972 and currently boasts a membership of about 15,000 nationwide.  The Northwest Arkansas ALPFA chapter was established a mere three years ago and like its counterparts throughout the nation its mission is to provide access to its members via educational opportunities and relationships with mentors who can impact their careers.  The Northwest Arkansas ALPFA group is one hot ticket and has taken off like wildfire.  This group has been so active, so involved and so committed to its membership and the ALPFA goals that at the last national ALPFA convention in Anaheim, California in August of 2011, they were named the top chapter IN THE NATION!!  Quite the honor considering they are only getting started.  It is a testament to the quality of the people here who are part of this group.  

This local ALPFA group seems to be in constant motion working closely with the many professional and educational resources found in the Northwest Arkansas area such as Walmart, Tyson Foods, J.B. Hunt Trucking, Northwest Arkansas Community College, and the University of Arkansas and its renown Sam Walton School of Business where the just named ALPFA Institute will be housed just to name a few.  By the way, this new ALPFA Institute will be teaching leadership to candidates from the high school level to the CEO level.  Additionally these meetings avail themselves of the resources provided by the numerous people, from many other companies and varied professions, and self made entrepreneurs, who come to the meetings to learn and/or offer their expertise to the many students just starting their careers or seeking networking opportunities and business advice.  Attending and ALPFA meeting is a nonstop event, with opportunity to network, socialize, meet a new mentor or two, or become a mentor, hear a tremendous speaker with pertinent information, and, above all, learn something new.  Whether a seasoned professional or a student just starting out on a new career path, it may be worth a moment or two to check out ALPFA, because something will be gained from the experience, meet terrific people, learn something new  and probably offer some knowledge to others – ultimately it’s all good.

Link to ALPFA's site:  http://nwarkansas.alpfa.org/

Then & Now... A snapshot look at the growth of Northwest Arkansas

If you are familiar with Northwest Arkansas at all, you have probably heard it said that this area has grown... a LOT.  But you may not know why or how exactly.  Our team decided to take a deeper look at this growth over the past two decades, and wanted to share a few of our findings.  It's easy to see that this little corner of the state has really bloomed into a national hub for economic growth and development.

Ethnic Trends from 1990-2010:

2010 Census	Population	White	Latino	Asian	African American	Other
MSA	463,204	353,302	69,087	10,884	8,629	21,302
Rogers	55,964	34,718	17,619	1,400	716	1,511
Lowell	7,327	5,035	1,808	193	59	212
Springdale	69,797	36,798	24,692	1,336	1,160	5,811
Fayetteville	73,580	59,398	4,725	2,255	4,301	2,901
Bentonville	35,301	27,193	3,074	2,919	850	1,265
Bella Vista	26,461	24,881	688	122	169	601
2000 Census	Population	White	Latino	Asian	African American	Other
MSA	311121	266462	26401	4094	4168	9,996
Rogers	38829	33296	3660	556	184	1,133
Lowell	5013	4445	205	136	39	188
Springdale	45798	37380	5079	772	377	2,190
Fayetteville	58047	50212	2639	1484	2969	743
Bentonville	19730	17939	528	473	174	616
Bella Vista	16441	16050	168	45	30	148
1990 Census	Population	White	Latino	Asian	African American	Other
MSA	113409	107724	1526	1027	1656	1476
Rogers	24692	23811	460	190	15	216
Lowell	1224	1164	37	6	0	17
Springdale	29941	28853	446	277	28	337
Fayetteville	42099	38798	603	651	1566	481
Bentonville	11257	10872	161	98	27	99
Bella Vista	9083	9009	25	8	7	34

One of the most important trends that we see with ethnic growth is the increase of the Latino population over the past twenty years, growing from just 460 in Rogers in 1990 to over 17,000 in Rogers today.  35.3% of all Latino residents in Arkansas live in Benton or Washington County. 

This growth is remarkable, and has opened up our area to become a diverse marketplace in both small and large scale businesses for minority business leaders.  It has also allowed the rest of the growth to become international hub as we continue to grow our diverse population.

Household & Gender Trends from 1990-2010: 

2010 Census	Male	Female	Households
MSA	230,152	233052	173054
Rogers	27,437	28,527	19,675
Lowell	3,622	3,705	2,677
Springdale	34693	35104	22805
Fayetteville	36,993	36,587	30726
Bentonville	17282	18,019	13253
Bella Vista	12,706	13,755	11729
2000 Census	Male	Female	Households
MSA	154697	156424	118363
Rogers	18,947	19,882	14,061
Lowell	2,404	2,444	1,790
Springdale	22635	23425	16287
Fayetteville	29,376	28,407	23691
Bentonville	9533	10219	7468
Bella Vista	7,934	8,507	7854
1990 Census	Male	Female	Households
MSA	56060	57349	43372
Rogers	11,872	12,865	9,705
Lowell	614	610	477
Springdale	14353	15588	11432
Fayetteville	21,029	21,070	16894
Bentonville	5368	5889	4266
Bella Vista	4,332	4,751	4369

From 2000-2010, the U.S. census shows that we had rapid growth in the amount of individuals and families moving to Northwest Arkansas averaging 944 new residents per month transplanting here to live.  Benton County alone grew 44.3% with an increase of 67,933 people since 2000.

The population for Benton and Washington Counties has more than doubled since 1990.  The growth rate for the two county area was 101.2% for a total population growth of 213,496 since 1990.  Northwest Arkansas has four of the top ten largest cities in Arkansas. 

Nearly half of the entire growth of the state of Arkansas since 2000 has occurred in Benton and Washington County.

There is no question that corporations such as Walmart, Tyson, and JB Hunt that are headquartered in Northwest Arkansas have had a major impact. 

People from all over the United States and worldwide are moving to Northwest Arkansas to engage in business which is fostering a creative and economic movement that has propelled the Northwest Arkansas region to be one of the nation's best.

The quality of life found in Northwest Arkansas is what one expects from a major metropolis, to have things like world-class health care, fine dining, boutique shops, sports complexes, parks and trails, and the upcoming Crystal Bridges Museum of American Art.  Not only do new residents find this to be a capitol for business, but there are several things to do for leisure as well.

I-540 & Pleasant Grove Road in 1990

I-540 & Pleasant Grove in 2010

The Nation Has Noticed:

Northwest Arkansas and its cities have recently been recognized by national organizations:

- In 2010 & 2011 CNN-MONEY ranked Rogers 10th on its "Best Places to Live" for Small Cities

- In 2011, Forbes ranked Northwest Arkansas 5th in the Nation for Mid-Sized Cities for Job-Growth

- The Milken Institute ranked Northwest Arkansas 43rd on its "Best Performing Cities" List for Large-Metros

- U.S. News and World Report ranked the Sam M. Walton College of Business 25th among public institutions on its annual "America's Best Graduate Schools List."  The part-time program was ranked 29th in the nation, and the UA Law School was listed in the Top 50.

- 2010 CNN-MONEY listed the top 25 counties in the United States that have experienced the most job growth since 2000.  Benton County ranked 15th, and Washington County came in at 22nd.

- Forbes.com ranked Northwest Arkansas #2 for its list "Best Place in the United States for Recession Recovery"

What Next: 

This is a vibrant economic area that is still growing.  Improvements such as the near opening of Crystal Bridges Museum of American Art, the recent expansion of XNA Airport, the groundwork beginning for the Bella Vista Bypass, the announcement of Cabela's, and the continuing expansion of St. Mary's/Mercy Hospital show that we're not done.

This area will continue to be a driving force for the nation and great things will continue to come to Northwest Arkansas in the next few years and beyond.