Over the past few days, we’ve been discussing the rising interest rate environment and how it is changing the real estate market. We spent a bunch of time on a strategy investors should avoid. Today, we’re going to focus on strategies that make sense in an environment where: The economy is improving; and Interest rates are … Continue reading “How to act in a rising interest rate environment”
Category: Debt
How not to act in a rising interest rate environment
We’re living in a world of rising interest rates, which are already fundamentally changing the real estate market. As discussed yesterday, as interest rates rise, prices should fall, all other things being equal. That’s because more expensive debt means reduced cashflow and lower returns at a given price. But, all things are not equal. In … Continue reading “How not to act in a rising interest rate environment”
In the midst of a market disjunction
Had breakfast with a really experienced broker this morning, a guy who I think of as kind of a mentor. He started in real estate in the early 1980s and has bought and sold an unbelievable number of properties in the Echo Park area since then. I complained to him that the market feels pretty weird … Continue reading “In the midst of a market disjunction”
Whole lotta building going on…
In our areas (Silver Lake / Echo Park / etc.), there are tons of small lot subdivision projects in the works. Off the top of my head, I can think of at least four projects going in right now, and there are definitely more that I’m forgetting. So, the question for all of us apartment people, is: … Continue reading “Whole lotta building going on…”
How increasing interest rates are changing the market
Had an amazing thing happen a few days ago: One of my agents was representing a buyer in a deal. When the buyer saw how much interest rates had moved in the last week or so, he changed his mind about the deal. In an effort to try to keep the deal together, my agent … Continue reading “How increasing interest rates are changing the market”
Whither interest rates?
Literally every day, I ponder the following questions: When will the Fed stop buying bonds and allow interest rates to rise?, and When rates rise, how much will they rise by? If you believe that the Fed is going to keep stimulating the economy for several years and/or that, when it stops, rates won’t rise … Continue reading “Whither interest rates?”
FHA deals are still possible (I think)
A very good agent who works with me, Marcus, got a client of ours into an FHA deal on a fourplex last week. Does the property need work? Yes. Is it in the best location in the world? No. Is the buyer going to make a lot of money on the deal? Almost certainly, yes. … Continue reading “FHA deals are still possible (I think)”
Where’s the single family home market going?
Hadn’t really considered this question in a while, until a client asked me yesterday. Let me start out by saying that anyone who is 100% certain of the direction of any market ought to be at a hedge fund betting on their ideas. In the case of the residential housing market, I think you could … Continue reading “Where’s the single family home market going?”
Banks and rents in LA
Right now, one of the biggest problems I see across multiple deals is the total lack of understanding of LA rent control among bank underwriters. Underwriters are the guys (and gals) who review the property and the borrower to help the bank decide whether- and how much- to loan on a given deal. Because they … Continue reading “Banks and rents in LA”
More on demands
We briefly discussed demands (the documentation provided by the lender of what the borrower still owes on a loan that’s about to be paid off) a few days ago, because I was dealing with a particularly irritating lender who was taking forever to issue a demand. You’re not going to believe this, but the lender … Continue reading “More on demands”