Bye Bye 2010... Hello 2011!

Have a Safe and Happy New Year's celebration!

I got a better feeling this year than last!

HAPPY NEW YEAR!!!


Anyone Sorry To See 2010 Go? Hell No!

Commercial Real Estate Stats Fluctuating

Check out this article from CoStar:

Latest-CRE-Price-Analysis-Reverses-Positive-Direction-in-October


Sales Volumes and Future Pricing



Investment grade sales volume, while lower for the month of October, has increased 14% during the last three months and is nearly 70% higher than one year ago. General real estate volumes have declined 6% during the last three months and increased a mere 7% from a year ago.
"We expect the current see-saw pattern in pricing to continue as a result of the relative 'trickle' of properties that are being allowed to come to market," said Dr. Norm Miller, vice president, analytics for CoStar Group.


"Additionally," Miller added, "CoStar has reported increases in average asking rents and positive net absorption for several commercial property markets. However, net operating incomes are expected to continue to deteriorate for a time as rents on existing leases roll to lower market rents. At the same time, the lack of new supply could lead to strong rent growth in the future. Lastly, if interest rates begin to increase, we believe it will be a race between the rate of increase in net operating incomes and the rate of increase in interest rates."

Vacancies Falling but so are Rents on Single Family

Denver-area renters snap-up homes | Inside Real Estate News
 
Vacancy rates on Denver-Metro single family rentals are now below 3%. With such demand, we normally have increasing rental rates. Not so right now!
I am hearing the same story from my clients as is being told in the comments of this story at INSIDE REAL ESTATE. I cannot tell you how many times in the last year I have heard; "this is the worst market ever for quality tenants".
I know there is some truth to it because many of the prospective buyers of low priced homes are having the some of the same credit problem issues.
Home owners who develop bad credit and lose their home become prospective tenants with poor credit!

Short Sales make up a big portion of the Metro-Denver residential and small income property markets.

They are sometimes frustrating and confusing.

Below is a link from LAND Title that explains the basics.

Feel free to contact me at anytime with any questions!

http://ltgc.com/files/technicalbulletins_customers/shortsales_jul06_web.pdf

Electronic Pickpocket

Shoppers Beware!!

Colorado Foreclosure Timeline

I hope you never need this but here is how it works!

http://ltgc.com/files/technicalbulletins_customers/foreclosuretimetable_jan08_web.pdf

Sorry for the absence, I hope to get back on a regular posting schedule soon.

Glass Half Full?

An email from Bill Colangelo, A Downtown Denver Commercial Broker who I respect.

Dear Keith,
I recently ran across this article about the current state of the Commercial Real Estate Market and found it very interesting. I want to share it with you and hope you enjoy it as well.
Please feel free to call me if you have any questions. I would love to talk with you.
Best Wishes,
Bill Colangelo

The State of the Commercial Real Estate Industry
Jay Spivey, CoStar Director of Analytics, teamed with CoStar Director of Advisory Services, Hans Nordby to present findings and forecasts to CoStar clients. Overall, "we think the outlook is better than it has been in a few years", says Spivey.
The U.S. industrial real estate market now appears to be headed into recovery after several quarters of negative absorption. With the economy sending out mixed signals but generally gaining strength, absorption of industrial buildings turned positive in the second quarter following six consecutive quarters of net loss.
Leasing: Activity is Up
The national industrial vacancy rate declined for the first time in two years, according to the company's most recent analysis of industrial property markets.
Little New Supply in Sight
New industrial deliveries as a percentage of total inventory continued to decline in the second quarter.
More properties are being taken out of inventory due to obsolescence and other factors than are being added in new construction.
Lending constraints will continue to keep a clamp on the new construction and the lack of new supply will allow the market to recover more speedily.
Vacancy: Steady Gains Ahead
Given the positive absorption and low levels of construction, the national vacancy rate edged down in the quarter from 10.1% to 10%, the first drop in two years.
Availability (space being marketed even though it may not yet be vacant) also edged down from 14.8% to 14.7%.
As they have since 2008, rental rates continue to fall in the second quarter but at a less rapid rate.
Despite positive news on vacancies and absorption, positive rent growth is still probably a year or two away.
Investments Sales: A Market in Transition
On the down side, sales transaction volume remains low by historical standards.
Liquidity has not returned to the industrial market and the time that properties sit on the market before being sold - and the number of properties withdrawn from the market without being sold - continues to rise.
The second quarter saw a slight narrowing of the gap between asking and actual sales prices, possibly an indication that buyers and sellers are starting to agree on pricing.
(Source: CoStar Group State of the Commercial Real Estate Industry Mid-year 2010 Industrial Review & Outlook.)



Oh, by the way® ...

whenever you come across people who are thinking about buying or selling a home or an investment property and would appreciate the exceptional service I provide, please forward their name and telephone number to me. I will gladly follow up and offer them the same high quality service that I give my current clients!

Major challenges for commercial real estate

Vacancies – While office space is slowly recovering it is estimated that a full recovery will take years. According to Moody's Dismal Scientist more than 2.5 million office-using jobs were lost during the recent recession with only 200,000 regained since the fall of 2009. The lost demand is equal to nearly 300 empire State Buildings, according to their report.
Credit – Commercial mortgage-backed securities (CMBS) have been on a 2 year slide and are at a 20-year low. Due to low demand, increase of poor quality loans, and fewer lenders, only the most credit worthy borrowers can obtain new financing.
The FDIC stats show that commercial bank loan delinquency is peaking. But the situation is worse for securitized commercial real estate loans which show 60-day delinquency growing from 1% to 8% over the past 2 years. The worst delinquencies are in hotel and multifamily residential properties (apartment building prices fell nearly 40% from peak to trough).
Short-Term Calls – Most commercial loans have a long-term amortization with a rather short-term call. Considerable destabilization in a market when a properties income (high vacancies) and value have slid, as they have; borrowers’ credit has deteriorated, as it has; and fewer lenders and dollars are in the market.
According to Moody's Dismal Scientist it will take years for the commercial sector to recover.

Milwuakee Views

The life of a stand-by flier needs to be flexible. Only half of my plan for 2 weekends in Milwaukee worked out. I did get to Milwaukee last weekend but I could not get a seat out of Denver on this past Friday. I was to go to my cousin’s daughters wedding on Saturday the 18th and spend Sunday with my wife’s brother’s family on their boat on Lake Michigan near Chicago.

During my 1st weekend, on the 11th I got to go the Harley-Davidson museum, it’s like a trip to Mecca for an old Harley rider like me. Also, I did get to check out some of the Milwaukee real estate market in relation to our Denver market.

The cities are of similar size with populations at around 600,000. Denver ranked as the 24th largest city with Milwaukee at 26th. Denver’s metro area population is about 1,000,000 larger and raked at #21 while Milwaukee is at #37.

The sales info I received and reviewed for the last month in the City of Milwaukee was interesting. A full 85% of the sales were between $6,000 and $150,000, with only 3 sales between $200,000 and $240,000 and one at $310,000. Many neighborhoods looked much like Phoenix and Denver with For Sale signs everywhere. The local sentiment was that the market was going to stay “as-is” for a while.

The people here seem to take the market ups and downs more matter of fact-ly than in Phoenix, where the anxiety from the bust was prevalent. After years of losing jobs in the industrial and brewing biz, they seem to be more resigned to market cycles.

The local buzz regarding the possibility of Harley pulling the manufacturing plant from Milwaukee was a big topic. After I left, the company and the unions agreed on a plan to keep the jobs in town.

In comparing Denver to Milwaukee and Phoenix, I think Phoenix is still in a down trend and waiting to buy there will probably get you a better deal. Milwaukee will probably offer more deals in the future but probably not at a much lower rate than now.

Denver has been in the top percentile nationally of holding prices or slight increases and may be closer to the road out of this recent bubble explosion.

Go Denver!

We Suck Less?

I have in been in Phoenix three times in the past month and a half or so.

Although we are experiencing a less than exuberant real estate market, Phoenix really sucks.

Local buzz there is they are about to experience a double dip in real estate prices. After the median price hit a low of $119,000 in April of 2009, recently it has slowly risen to just above $130,000.

Pending sales show that the median is heading down and could get near the April 2009 low in Sept.
They have 43,000 on the market, up from 41,500 in June and up from 37,000 a year ago.

We have 33,000 homes and 8,400 condos on the market and our median sales price was $217,740 in June. This is up from $213,000 in May but still well below the June 2006 median of $247,569.

Over the next 2 weekends I am going to Milwaukee WI. I am curious to see how there market is compares to ours.

After the reviews of the Phoenix market, we may look beat up but you should see the other guys!!!

Looking for ANY good news!

"Existing home sales plunged 27.2% in July to an annual rate of 3.83 million units. This was the lowest level of sales since 1995 and the third and by far the largest decline since expiration of the homebuyer tax credit at the end of April. With the July decline, existing home sales are now 25.5% below their year ago level and off a stunning 47.2% from their September 2005 peak. With the tax credit pulling sales forward it seems like the housing market has to find a new bottom all over again. Home sales need to be revived again, not by government programs and tax incentives but by the sound fundamentals of job and income growth and economic expansion."

Commercial Real Estate in Distress

From CNBC Squawk Box, Citigroup global head of real estate Thomas Flexner discussing the state of commercial real estate.

2nd Quarter 2010 Sales Disappoint

As most of you know, I have been keeping track of the 2-4 unit sales for many years. Last quarter I said “Don’t pop the champagne corks just yet, but the numbers seem to be stabilizing”. Well, store the bubbly for a little longer and buy more PBR, because the 2nd quarter sales figures went in the wrong direction.

For the list of all the 2nd quarter 2-4 unit sales, go to my old website at: http://www.keithabees.com/2010_comps.htm

2nd Quarter Summary

Total Sales were down from both last quarter (13%) and from the 2nd Quarter of 2009 (21%).
Volume shrank 15% from last quarter and 12% from the 2nd Quarter of 2009.
Average price per sale was up year over year but down from last quarter.
Average $/SF has stayed roughly the same at $78/SF
Days on Market went down again to about 83 days. DOM is a bright spot for individual owners trying to sell or thinking of selling.
Bank owned sales are about 47% of all sales in the 2nd quarter. Still a major influence on the market.

This has been an excellent opportunity for new investors to get into the business and for seasoned Investors to add their portfolios.
If you own a 2-4 unit and are unhappy with it for any reason (location, size, etc.) but want to stay in the business, take a look a today’s deals. You may have to take a hit on the current property but you can probably find a replacement that has the superior qualities that you are looking for.
Great prices and low interest rates generally show great cash flow. What’s the catch?
The days of the 5-10% down payment for investors of 2-4 units are history. Loans are available for buyers with good credit but require 25% down. Single family investments can be had with 20% down.
From the Sellers stand point, prices have fallen but we are seeing better qualified buyers than in the past. You have more of a chance to have an inspection or an appraisal issue on a deal than with a buyer that can’t qualify at the last minute.

Contact me if you have any real estate related questions or are interested in buying, selling or a 1031 tax-deferred exchange.

Keith A. Hurtubise
RE/MAX 100 Inc.
Certified Distressed Property Expert
Broker Associate
Real Estate Appraiser (Inactive)
710 Kipling St., Suite
110 Lakewood, CO 80215
303-232-4444 office
303-202-2221 direct
303-232-6919 fax office
303-942-3451 e-fax
303-808-8202 mobile
keithabees@aol.com
www.keithabees.com

Breaking into a Garage

The internet is like an on-line college for criminals.

Learning to break into homes, garages and cars is easy with a click of the mouse. Instructional videos on lock picking and pick pocketing are at anyones finger tips.

We all need to be aware and use the info to our advantage to thwart the bad guys.

A quick fix for the garage door in the video is to remove the cord and replace the spring with a zip tie. This will allow only you to use the emergency release from the inside.

BE AWARE!

Interest Rates Staying Low as Bonds Rise –Gold Continues Up - REIT’s Outperform Market

Interest rates have a huge effect on Small Income Property. When bonds rise, interest rates stay low.
Liquid investors are still betting heavily on the safe harbor investments.
Tired of cleaning toilets and waiting for your equity to grow? Consider Real Estate Investment Trust ETF’s.

The following info is from Thursdays Investors Business Daily:

BONDS

Treasuries climbed Thursday, with benchmark yields hitting their lowest level in a week after a rise in jobless claims and weaker-than-forecast manufacturing data pointed to only a tentative economic recovery. Consumer prices notched their largest decline in nearly 1 1/2 years, suggesting that inflation poses little threat to bond holdings, while weekly claims for jobless benefits rose for the week and the Labor Department revised higher the previous week’s claims number.
“All the reports . . . are constructive for the Treasuries market,” said Tom Porcelli, senior economist at RBC Capital Markets. “The market is buying into the idea that the economy is softer than earlier this year. We are in a disinflationary mode.”
Bond investors watch inflation data carefully for signs that prices— and therefore interest rates—could begin to rise, thus devaluing government debt. Thursday’s data showed falling prices, while the drop in factory activity and jump in initial jobless claims heralded more choppiness in the recovery.
“We have been complaining about a lack of economic data, and today we got what we were looking for,” said Carley Garner, senior analyst at DeCarley Trading. “The morning was filled with news, albeit disappointing. As a result, investors seemed to be looking to ‘safer’ assets.”

GOLD

Gold neared a record high.
Analysts cited data showing new jobless claims rose last week while consumer prices notched their largest decline in nearly 1 1/2 years in May, suggesting that interest rates will remain ultralow to nurse the fragile economic recovery. Analysts had expected recovery from the deepest recession since the 1930s to moderate in the second half, but commodities investors took Thursday’s weak data as a sign that gold was the only safe market.

REITS

Real estate investment trust ETF's have outperformed the market the past year, even as property values and rents continued south. Many REITs have boosted their balance sheets by raising money through secondary offerings and IPOs in 2009 and this year. Fitch Ratings lifted its outlook on REITs overall, from negative to stable, Wednesday. In a teleconference Wednesday, it cited easier access to money and a “strengthening macroeconomic backdrop, albeit with a lagging recovery in employment.”
Industrial REITs were the only subsector to remain negative.

Commercial Real Estate: Lagging the Economic Recovery by George Ratiu, NAR Economist

Check out this article - Commercial Real Estate: Lagging the Economic Recovery by George Ratiu, NAR Economist. http://www.realtor.org/research/reinsights/marketintelligence

We should not expect any great positive changes for the rest of this year. We will revisit at the end of this year but I am betting we will not see much change in early 2011 either.

Colorado ranks as the worst or near the worst Commercial Real Estate Sales Volume, Business Opportunities in Commercial Real Estate and New Construction in Commercial Real Estate in the last quarterly survey.

Multi-Family is looking better than the other sectors but there are still many factors holding back any real improvement.

Foreclosures will continue in the single family market until the final ARM’s are taken out of play in 2012. This will continue to affect our small income property market as well.

From the above mentioned article: “Taking the long view, the remaining three quarters of 2010 will likely see continued increases in vacancies and declining rents. However, with multifamily posting signs of improvement, the other core property types should record gradual improvements as employment improves and creates additional demand for space. Based on current the current scenario of economic recovery, a broader improvement in commercial real estate is expected in 2011.”

Call me anytime with any Real Estate related questions, 303-808-8202.

Denver Police Urge Caution

DENVER POLICE DEPARTMENT

The mission of the Denver Police Department is to deliver high quality public
safety services so all people may share a safe and healthy environment.

PRESS RELEASE

(Denver) Denver Police are warning the community about individuals using fictitious professions as a way to case homes for potential criminal activity.

A recent incident in West Denver where several suspects posed as government employees to gather information from a home owner, only to return later to commit a crime, has prompted Denver Police to issue this warning.

During the early morning hours on Friday, June 4, 2010, two suspects knocked at a victim’s front door. The victim recognized one of the suspects as the person that had been at her residence previously representing himself as being from a company conducting inspections for Denver Wastewater Management. The victim allowed both parties into the home where they robbed the homeowner at gunpoint.

Please report to police any suspicious person(s) that may be in your neighborhood claiming to be conducting legitimate business. To confirm the authenticity of the person, you are urged to ask for proper identification, credentials, and/or contact information for the company. Do not allow these individuals inside your home. If you believe they may be misrepresenting themselves contact police immediately.

Erin Toll Resigns

Is the Erin Toll saga coming to an end? Could be!

After a tumultuous career as a government regulator, Erin Toll Glover (Glover is her married name) is resigning to become a real estate broker, one of the same people she used to regulate. Is the Principal becoming a Student?

Most are in the ‘love her’ or ‘hate her' camp. If she focused on you, regardless of the severity of the charge, she generally stomped on you right to the end.

I do believe she was good at weeding out some of the problems in our business and I do thank for that.

That being said, I usually questioned her sincerity. She loved to go to the media. She seemed to love the publicity as much as any job accomplishments. Not knowing her personally, I could not be sure of that but it seemed to me that the positions at the Division of Insurance and head of the Dept. of Real Estate were just stepping stones. I think the resignation/settlement will put any future government or political plans on hold for the moment.

As a new Real Estate Broker and competitor, I wish her Good Luck and a little advice. Keep your nose clean!

The DENVER POST has followed the story, http://www.denverpost.com/ci_15230723
but John Rebchook has been on top of it through out. If you want the complete story, check out his blog. http://www.insiderealestatenews.com/2010/06/erin-toll-resigns/

Call for Action:

Small Income Property Owners, Contact your Representatives Today!
Prevent New Tax Burdens on Real Estate

Congress is considering changes to the tax code in order to pay for a number of tax provisions expiring in 2010. Two of these provisions would impact real estate. The first would require all owners of rental properties to file IRS 1099 forms for all contractors they do business with if they pay that contractor $600 or more in any given year. This onerous provision would apply to even the smallest landlord.
In addition, Congress is considering taxing "carried interest" at ordinary income rates instead of capital gains. Carried interest rules govern how general partners in real estate investments pay taxes when the investment is sold.
These new tax burdens will further delay the real estate market recovery. These proposals are ill-advised, inopportune and potentially destructive. Please tell Congress to oppose them today.

Denver Metro Small Income Property 2- 4 units 1st Qrt Sales

1st Quarter 2010 SOLD figures up a little over 2009 1st Quarter

Don’t pop the champagne corks just yet, but the numbers seem to be stabilizing.

Check the 1st quarter list of 2-4 unit sales on my website at:
http://keithabees.com/2010%20SmallIncomeProperty%20COMPS%201st%20QRT%202-4units.pdf

1st Quarter Summary
Sales were up 10% over 2009,
Volume was up 20%
Average price per sale was up 9.5%
$/SF is up $10
Days on Market went down to under a 100.
Bank owned sales were about the same but up to over 40% of all sales vs 33% for all of 2009.

The increases are good news but because 2009 numbers were so poor, we need to keep the enthusiasm in check for a while. Improvement in prices, volume and days on the market must be tempered by the rising bank owned sales.

Increasing bank owned sales do not expand the market for the current owner but do offer some good entry points for new investments. Bank owned properties tend to be priced more realistically than privately owned properties and lenders negotiate aggressively to get the properties off of their books.

The 1st quarter generally is the slowest quarter. We need to watch the 2nd quarter to see if the trends continue and the 3rd quarter to see if volume and sales will up enough to beat out 2009’s dismal numbers.

Stay Tuned!

FRIENDS- THE END IS HERE / NEAR!

No, I haven't joined a cult!

I built my web site http://www.keithabees.com in 1997 on the MS FrontPage platform. FrontPage is no longer supported by Microsoft. With it its functionality dwindling, the time has come to retire the ole girl and the equally neglected www.keithabeeshomes companion site. One of the reasons to get this blog going was to help in the transition to a new website platform and a move to using more social media.

If you have any experience converting a FrontPage site, I would love to hear from you. My host has suggested I go with MS Expressions.

I hope to have a new and much more usable site up by June 2010. The intension is to continue with an independent site where I can still keep the Small Income Property Investor up to date with local sales, market trends and useful information. I will also have a companion site for single family homes to replace www.keithabeeshomes. If you have any ideas or thoughts on what to include on the new sites, I would greatly appreciate hearing from you.

As always, feel free to contact me directly.
1-800-573-0002 toll free / 303-202-2221direct / 303-808-8202 cell or text / invest@keithabees.com

2009 Review Summary and Numbers are Complete!

Click here: www.keithabees.com for Review, Summary, 2-4 Sold Lists and more!

2009 Summary Review

Not a Pretty Market for Small Income Property!

The total number of small income property sales fell again from 408 in 2008 to 349 in 2009. Down from a high of over 600 in both 2004 and 2005!

Total sales volume dropped to the lowest total since I started keeping track in 2003. At close to only $83 million, the total sales volume is at less than half of its 2005 high of over $200,000,000.

The average sales price followed the downward trend, with the 4 county figure at less $240,000. The same four county average was above $350,000 only 3 years ago! Adams and Arapahoe counties are now down to about 50% of their recent highs!

Days on Market (DOM) is the amount of time a property is available For Sale before selling. The average DOM in 2009 for all 4 counties is now over 4 months!

Is there any good news in the numbers?

Foreclosure sales of 2-4 unit properties in 2009 are down from 2008!

In 2007, we had only 70 lender owned sales or about 18% of the market. In 2008, in the 2-4 unit market, the number rose to 154 bank owned sales out of the 347 total sales which equaled 44%.

In 2009 one of every 3 sales was a bank owned deal. 34% of all 2-4 unit sales were lender owned sales versus the 44% in 2008. 99 out of the total 298 sales were from lending institutions.

Adams county was highest at 39% but down from 47% last year. Arapahoe which was at 57% in 2008 dropped to ‘only’ 33% in 2009. Denver and Jefferson County were at 33% in 2008 and came in at 30% and 35% respectively in 2009.

It is possible that foreclosures may trend higher in 2010. Lenders may have held back on starting some foreclosures. Also, the many adjustable rate mortgages made in 2005 will adjust too much higher payments this year.

Sales Concessions are down again in 2009.
Only 23% of sales included any sales concessions. Nearly all the under handed practices that were so prevalent in 2006 have been stopped. Some of the nefarious operators were hoping for concessions at their sentencing hearings, but sadly, many are long gone with their ill gotten profits.

Rents and Vacancies - Mixed
The vacancy rate fell in the 3rd quarter of 2009 to 7.4%. That was the 1st drop in 7 quarters. A slight drop in unemployment and small population increases were stated as the likely contributors. Denver and Arapahoe counties were at 8.5%, Adams at 6.7% and Jefferson at 6.3%. The average rent was up from the previous quarter but still down from the previous year.

1031 Tax Deferred Exchanges
The bankruptcies and closing of several 1031 accommodators in 2008 have helped culled the herd. Several stronger companies have survived and are thriving even in the slow sales market. I am thankful that none of my clients lost any money during this debacle.

Complete Info and more at:
Click here: keithabees2010

Lets get started!

Lets get started!

Any and all suggestions will be welcomed and considered.

2009 Comparable Sales Info from my website.

http://www.keithabees.com/2009.htm

Click on the County to see where your property slots in with the 2009 Solds.