Monday 22 August 2016

Keith Knutsson on Where to Invest in Real Estate


Keith Knutsson Investment Advice

Investing in property is a major decision that should be looked at from all angles. If you are considering a new real estate investment, either domestically or internationally, there are many great cities and locations where you could find some great opportunities for 2016.

Here is a look at the U.S. cities that Americans and foreigners should be paying attention to, and why:



Bonds? Forget about it. Global bond funds are gearing up for a major drought. So, what does that mean for the U.S. market? It has been seven years since the global financial crisis and countries across the Americas are moving on to the next stage. Investors, such as Keith Knutsson, have a positive outlook on the continuing environment for property investment within the United States.


Even though housing prices have been rising, wages are at a standstill, this makes buying property difficult for many. First time buyers should be looking where the market favors the homeowner, such as these cities in Florida:

 

Orlando

Fort Lauderdale

Cape Coral

Palm Beach

Tampa


Homes around these areas all have a price range from $193,000 to $285,000, which is low for living in the Sunshine State. However, the rate has been rising by 10% - 15% within the past few years.


The reason Florida has such an amazing market is because it attracts retirees and second-home owners. These type of homeowners also have a positive impact on the economy. Those who are in the market for a new home are also in need of services, which means there are steady and reliable jobs available.


San Antonio, Dallas, and Austin, Texas also offer a range of investment opportunities.


Homes in Texas average between $201,000 and $281,000. Texas managed to stay on its feet throughout the recession due to their diversified economy, and Texas metros are doing quite well overall. Texas has seen job growth over the past few years, especially in careers such as construction, leisure, hospitality, technical firms, and data centers. This is a positive thing for the real estate market. Only people who have steady and long term careers will invest in property, and Texas is booming with career opportunities.


However, perhaps you want to try the market in a foreign country or to expand your business internationally. Keith Knutsson has done extensive research on international cities and found some of the best (in 2016) for property investments.
 

Here are some of the overseas cities that are booming in the real estate market:


Algarve and Portugal. With beautiful oceanfront property you can’t go wrong, However, that property comes with a price. A seven-bedroom home with a beautiful view can cost up to $8 million dollars. But, you can find property close to the water, and close to the incredible beaches, for around $250,000.


Ambergris Caye and Belize. With breathtaking-tropical landscapes, you can find opportunities in Belize (beachfront) for as low as $150,000 or less. The recreational opportunities make it a highly sought-after place for those looking to invest in property.

SamanĂ¡ Peninsula and the Dominican Republic. Along with immaculate beaches and whale watching, the real estate prices in SamanĂ¡ Peninsula are hard to beat. Starting with one-bedroom apartments at $100,000 and moving into high-end developments, with luxury amenities, for just over $200,000.

The Abruzzo region of Italy. When looking to invest in overseas property, Italy has some of the best real estate prices in Europe. The culture is rich, the landscape is beautiful, and the food can’t be beat. With renovation homes starting at just $45,000, the charm of Italy cannot be compared to any other place.

Even though there are great international opportunities, the United States is still the frontrunner when it comes to emerging market countries, economic regions, and financial and human capital dimensions.

Since 2009, U.S. equities have grown by 240%. Whether you are looking for new investment opportunities within the U.S. or for ways to branch out into the international market with help from the research of Keith Knutsson, there are many great locations that are ripe for smart and lucrative property investments.

Tuesday 5 July 2016

Brexit vote could heat up Canadian real estate market

Realtors in Toronto and Vancouver are pitching Canadian cities as relatively safe property havens now that London, for years one of the world’s leading targets of foreign capital, suddenly looks a lot riskier. Blame it on Brexit.
“Brexit’s good for us, not for them,” said Anita Springate-Renaud, owner of Engel & Volkers’ brokerage in Toronto, who expects to field calls from clients seeking to redirect their investments. “We are a safe bet.”
If Ms. Springate-Renaud is right, there may be heightened demand from moneyed clients for homes and condos as well as office towers in two of Canada’s hottest real estate markets, which already have seen prices soar from an influx of foreign money. There’s a record $443-billion (U.S.) in global capital allocated to commercial property that wealthy investors haven’t deployed, according to figures from Cushman & Wakefield Inc.
Within hours of the stunning Brexit outcome, Brian Kriter, an executive managing director of valuation and advisory at Cushman & Wakefield, was on a 6:30 a.m. call from his home in Toronto to discuss the potential ramifications of the referendum with colleagues in London and New York.
In the days since, Mr. Kriter has met with one Asian commercial real estate lender who decided to freeze plans for a multimillion-dollar financing deal in London and is considering channelling that money to North America instead. Cushman & Wakefield is organizing a client day in July, potentially in New York, to discuss the early implications of Brexit’s fallout.
“You have this phenomenal amount of capital that’s looking to be placed in commercial real estate, and it’s very fluid,” Mr. Kriter said. “Foreign investors view Canada as an island of certainty.”
In the past decade, central London saw the biggest increase in residential property prices of any major city as the favoured destination for global capital seeking a stable sanctuary. Nearly three out of every four newly built homes in 2013 were bought by foreign buyers, half of them from Asia, according to Knight Frank LLP. Similarly on the commercial side, 70 per cent of central London purchases were by foreigners in 2015.
Britain’s decision to leave the European Union may not necessarily change that overnight. The pound’s record plunge could attract buyers seeking a bargain, said Brad Henderson, chief executive officer of Sotheby’s International Realty in Canada. The vote may ironically bring more predictability to Britain, but export uncertainty to the rest of Europe, Mr. Kriter said.
But with China among Asia’s most vulnerable economies to Brexit risk, there could be an even greater appetite from mainland buyers for North American assets, such as Anbang Insurance Group Co., which has snapped up multimillion-dollar assets in New York, Toronto and Vancouver.
A record $18.3-billion flowed out of China globally in 2014 and nearly half of that went to just three markets: London, Manhattan and Sydney, according to a March report from Colliers International Group Inc., the Toronto-based real estate firm. That flow has since diversified to other markets with Canada increasingly a beneficiary.
In the six months to February, foreign investment into Canadian commercial real estate surged to $1.4-billion, more than double a year earlier, the brokerage said in a separate March report. Of that, 42 per cent came from China, compared with just 5 per cent in the previous period.
Royal LePage is advising clients that Brexit is likely to cause the Bank of Canada to hold interest rates lower for longer, which will stoke demand in the residential market, said Adil Dinani, a Vancouver agent for the unit of Brookfield Real Estate Services Inc.
Any additional trickle of demand into Vancouver and Toronto could prove a headache for Canadian policy makers seeking to damp record high home prices. In recent weeks, the International Monetary Fund, Organization of Economic Co-operation and Development and Bank of Canada have all flagged the increasing risk of a potential correction.
“It’s something we’re going to have to talk about because there are concerns about overheating,” Royal LePage’s Mr. Dinani said. “We’ll likely see more capital inflows into these cities, so what is that going to look like? Are there going to be policy tools put in place to protect the market from further increases?”
In Vancouver, the price of a detached home rose 37 per cent in the past year to $1.5-million (Canadian). In Toronto, the average price of a detached property rose 19 per cent.
“We’re in early days – it’s hard to sift through how the variables are going to play out,” Sotheby’s Mr. Henderson said. “But capital will look for more attractive, stable markets. And Canada is still very much a bargain.”
Know more about the real estate advisor - Keith Knutsson:

Monday 4 July 2016

What are the Positives & Negatives of Investing in Real Estate?

Real estate investor and philanthropist Louis Glickman is famously known for saying “the best investment on earth is earth.” As a man who made his fortune in real estate, it’s safe to assume that he knew what he was talking about. But, does his wisdom carry over to the general population? Let’s take a look at some of the positives and negatives of investing in real estate, and then you can decide for yourself.

POSITIVE – Real estate is a tangible asset
You can touch and see your investment. It’s a physical property, not a display on a computer screen or on a TV-news ticker as with stock market investments. If you’re a hands-on type of person, you’ll likely feel much more in control when investing in real estate.
NEGATIVE – Homes can be a hassle
Your real estate investment will likely require emergency repairs, as well as regular maintenance and upkeep. This can require some serious time investment, depending on the property, as well as additional financial investment, especially if you rely on subcontractors to handle the work for you.

POSITIVE – Source of steady income
Keeping your real estate investment properties filled with good tenants guarantees a steady and consistent monthly income. Those regular checks can be a real boost.

NEGATIVE – Not a liquid asset
Money kept in a back can be withdrawn at any time. The stock market is a quick, buy-and-sell environment. Real estate investing, however, is a very time-intensive process. Even if you are lucky enough to find a buyer for a home you’re planning to flip on the same day you purchase, you’ll have to first go through the entire paperwork process, which frequently takes several weeks. In order to get cash out of your investment property, you’ll need steady renters, or you’ll need to borrow against the equity.

POSITIVE – True value, regardless of economic climate
There is always value in real estate. It fulfills a basic need. Even when the economy is at its lowest of lows, people will always need a place to life. It is certainly possible to lose money in real estate, but any property that you own free and clear is an asset with true value.

NEGATIVE – Your liabilities are high
When you own stock in a company, you are not directly liable for any illegal or underhanded business that company may conduct. But when you own real estate, you are liable for the actions of your tenants, regardless of how they occur. If someone slips and falls on the steps of your investment home, you are the one who will be sued. Additionally, you, as the owner, bear the burden of maintaining proper insurance for the property. As real estate investing involves a hard asset,the risk profile is an inherently different form of investment than early stage investing.

There is also one other side of real estate investing that has emerged in recent years and opened up this form of investment to a much larger pool of potential investors – online real estate investing via crowdfunding. Let’s take a quick look at some of the benefits provided by this mode of investing.

More readily available transparency
The technology of online real estate crowdfunding platforms has changed the expectations of today’s investors. They’ve come to expect a certain level of readily-available information and disclosures. According to Investment Management Services, “Investors want their real estate holdings and relationships to be as accessible and transparent as their online banking and brokerage accounts. They want all the available information at their fingertips, not just the required minimum mailed periodically in a legal document.”

Depth of property and opportunity detail
Online real estate crowdfunding platforms afford potential investors the opportunity to research and explore their potential investment opportunities in much more detail than traditional methods.

Increased communication
Today’s always-connected, 24/7 world has changed the way we communicate and our expectations of communication. In the world of real estate investing, “customers now expect and demand real-time updates on their mobile phones. Transactions are documented instantaneously. Legal disclosures and investment details should be available from almost anywhere with a user-name and password.” (source)

Ability to create a highly diversified portfolio of real estate assets
Investing in real estate through online venues opens an investor up to a worldwide array of possibilities that would otherwise be inaccessible.

Ultimately, deciding whether or not you want to get started down the path of real estate investing is a personal decision that requires much thought, research, and consideration of your current and future financial situation. The highs of real estate investing can be very high indeed, and there is certainly ample opportunity to turn your investments into serious money makers.

Waleed Esbaitah is CEO and founder of the Dubai-based real estate crowdfunding platform, Durise. Waleed has spent the last eight years receiving an education in various countries around the world. After attending Institute Le Rosey in Switzerland for three years, Waleed went on to complete a Bachelor’s Degree in Business and Administration with a focus in Finance from the George Washington University in Washington DC. Waleed has always had a passion for entrepreneurship, venture capital investments, and the tech industry as a whole.

Sourcehttp://www.crowdfundinsider.com/2016/07/87495-positives-negatives-investing-real-estate/
Know more about the real estate advisor - Keith Knutsson:

Thursday 30 June 2016

Growth in income lags very far behind rises in rent

If you haven’t heard, it’s not easy for renters these days. But the complaints are not an exaggeration.
Examining census data from 1960 to present day, a new report has illustrated the drastic — but very real — drop in housing affordability nationwide.
Though median rents have increased by 64 percent between 1960 and 2014, median household incomes grew by only 18 percent in the same time, according to an analysis by rental listing website Apartment List cited by the Wall Street Journal.
And unless something major happens, the trajectory will continue.
Renters had the worst of it between 2000 and 2010, according to the Journal — thanks in part to a recession and then a housing bust, inflation-adjusted household incomes fell by 9 percent while rents increased by 18 percent during that period.
Economic crises notwithstanding, reasons for today’s challenging housing situation include land-use restrictions, rising construction costs and disproportional migration trends, in which more people are moving to already-expensive cities like New York and San Francisco. Whereas globalization has driven down the cost of other products, housing still relies on domestic resources, according to the Journal.
Predictably, Apartment List cites the worst cities for renters as San Francisco, New York City, Boston and Washington D.C. There are, however, cost-effective options. For instance, in Austin, income growth has matched that of rent in recent years. And not all renters are flailing.
A report by property management software maker RealPage found that the trend of rising rents and diminishing housing supply has little negative impact on mid- and high-earning renters. It’s low-income households that suffer the most from the affordable housing crisis. [WSJ] — Cathaleen Chen
Know more about the real estate advisor - Keith Knutsson:

Tuesday 28 June 2016

How the UK's exit benefits US REITs

They are considered safe, and they offer yield. No wonder the stocks of real estate investment trusts ran in the opposite direction of the Brexit-bashed U.S. stock market Friday.
Last fall, interest in REITs had begun to wane, as expectations of higher interest rates outweighed solid fundamentals in the real estate market. Now REITs, and the real estate underlying them, are the power play for the anxious investor.
"Anything that is going to drive the 10 year lower is a positive for REITs. Three-and-a-half percent dividend yield with 6 to 7 percent earnings growth is pretty darned attractive in this environment," said Alexander Goldfarb, senior REIT analyst at Sandler O'Neill.
REITs will also benefit from rising commercial real estate values, as foreign investors continue to pour money into the U.S. office, retail and even apartment space. They had been doing that already, but Brexit will only accelerate the pace, especially of Chinese and Middle Eastern money entering the U.S. brick-and-mortar markets.
The continued flight to the safe harbor of American properties in gateway markets like New York and San Francisco reflects persistent economic and political instability in other parts of the world," said Sam Chandan, founder and chief economist of Chandan Economics. "The U.K.'s decision to exit the European Union underscores the U.S. investment thesis and could trigger a new wave of foreign capital inflows to high-quality, well-located assets."
New York City office space is already a favorite among foreign investors. Witness the high-profile sale of Manhattan's former Sony Building to Saudi Arabia's Olayan Group. The "Chippendale" towerreportedly sold for more than $1.4 billion, netting seller Joseph Chetrit a $300 million profit. New York hotels are also favored in foreign deals.
"Large institutional investors pay for New York, as they look at it more as a store of value. Growth is gravy," said Goldfarb. "They're looking to park capital. Foreigners, high net worth, really look to New York. If any sector is going to be the biggest beneficiary, it's that."
The kind of commercial real estate international buyers purchase really depends on where they're coming from. 
"The Chinese buyers tend to be very focused on office buildings in high-profile markets like New York and San Francisco," said Rick Sharga, chief marketing officer of Ten-X, a real estate auction platform. "We do see a lot of multifamily and retail purchase activity by certain foreign buyers, and there are other parts of Asia where the buyers really specialize in hotels."
As for U.S. REIT exposure overseas, there is not a lot. Prologis, a warehouse REIT, does have exposure in the U.K. and Europe, but, on the flip side, could benefit from a potential increase in imports into the U.S. Simon Property owns stakes in malls in Europe and outlets in Asia, but people are going to continue to go shopping, and the underlying fundamentals in most sectors appear solid.
"Broadly speaking, European logistics is in a good spot. There is a lot of demand. Office or retail, there is a very strong fundamental underlying dynamic. They are not negatively impacted by the U.K. Vacancy rates are significantly below long-term averages," said Tom Mundy, director of research, EMEA at JLL.
REIT stocks did fall in early trading Monday, but not nearly as far as the S&P and Nasdaq. They continue to outperform broader markets.
Know more about the real estate advisor - Keith Knutsson:

Sunday 26 June 2016

After the ‘Brexit’ vote, potential winners and loser in real estate


Even before news of a Brexit made its way around the world, high-end brokerages and developers throughout London were already getting inquiries on behalf of foreign buyers hoping to take advantage of the tumbling pound.
The significance of the British exit from the European Union was not lost on anyone. There was an immediate financial impact, as markets took a dive, and there will certainly be many more implications in the days and weeks to come.
Here is a look at some of the predicted winners and losers in the real-estate arena.
WINNERS:
Foreign buyers of London real estate will get increased value in purchasing properties as a result of a depreciating sterling. “This will now create a short-term buying opportunity for U.S. dollar- and euro- based property investors,” said Peter Wetherell, chief executive of Wetherell, a Mayfair-based broker. “For overseas buyers, this big and dramatic drop in the value of sterling will effectively offset the Stamp Duty and tax adjustments and it will make prime London property a lucrative investment for overseas investors bold enough to take a punt despite the market uncertainty.”
LOSERS:
London-based property buyers will face competition from foreign purchasers in addition to dealing with the uncertainty of their own local economy. “A fall in London house prices caused by a Brexit in the long [run] will not benefit many domestic buyers, for example, if a Brexit causes -- as predicted by many -- wide-ranging job losses and a general slowdown in the economy,” said Martin Bikhit, Managing Director of Marylebone estate agent Kay & Co.
Know more about the real estate advisor - Keith Knutsson:

Tuesday 21 June 2016

Einstein’s lesson on Real Estate!

The debate of its veracity aside, Albert Einstein reportedly said, in some variation or another, that “the most powerful force in the universe is compound interest.” It is unimportant whether he actually said it. What is important is that we believe that the most important figure in physics and mathematics who ever lived actually believed it. It is also important because it is an obvious truth, and like gravity, we take it for granted.
Real estate developers and investors, the financiers who leverage them, or your pension fund that invests in real estate, all live by this fundamental rule. It is far better to earn a consistent 3 percent per year with no reversals against the principal than to have a volatile real estate investment return pattern gaining 10 percent in years one to three, and then losing 5 percent per year for the next three years. A single dollar invested in 2016 that returns 3 percent for six years results in a return of and on your money of $1.19. The same dollar growing 10 percent for three years and losing 4 percent for three years returns $1.17. These spreads on volatility get much wider in 20- and 30-year periods.
Anthony M. Graziano is senior managing director for Integra Realty Resources — Miami/Palm Beach, based in Coral Gables.
So when we look at the increasing purchase prices of rental apartment buildings, we see that they’re expensive — particularly because there are many that are being built. This could lead to declines in rent and higher vacancies, both affecting the net amount an investor receives in net operating income. And yet the major multifamily complexes around South Florida continue to be acquired at ever-higher prices.
The market is thinking about Einstein:
The investment market in commercial real estate assets, whether they are multifamily rental complexes, hotels, office buildings or shopping centers, are investing to generate net income after expenses. Their overall investment returns (yields) are derived from the net income they receive annually (from tenant rents) plus the price for which they ultimately sell the building.
But when the economic outlook is weakening, hotel revenues from leisure and business travel, and retail rental income, all driven by discretionary spending, become more suspect. When the investment market senses economic weakness or desires a flight to safety, investors flock to multifamily assets.
In many ways, this investment strategy is rooted in the cultural and social changes of the past 50 years. Our habits and changes in the workplace affect office utilization; our changing spending patterns and acceptance of online marketplaces are changing retail habits; and our worldwide logistics systems are changing industrial utilization patterns. What has not changed fundamentally is where and how we live — as my grandpa’s old friend Myron Cohen used to say, “Everybody has to be somewhere” — except that in the decades ahead, more people will live in urbanized areas.
In looking forward into 2017, there remains a fair degree of concern regarding the level of multifamily rental supply under construction in South Florida. The supply pipeline is a reaction to the growth in rents, coupled with a period of pent-up demand when almost no construction was present (2009-11). The federal government spurred multifamily investment and housing construction with U.S. Department of Housing and Urban Development financing programs offering longer loan terms and fixed interest rate financing. To compete, the banks have been more aggressive in multifamily lending, particularly on new construction. All of these factors are focusing cheap capital toward new multifamily construction.
But this upcoming pipeline of multifamily rental complexes is part of the key to the stability of multifamily generally. In Miami-Dade, Class A multifamily (the newest, most luxurious rental complexes) has experienced rent growth over 4 percent for three years running. Vacancies in the Class B product are below 4 percent, so Class B prices (second-tier rental products that are 10-20 years old) will continue to rise, lifting demand for new Class A product. While new supply may force Class A vacancy higher (which in fact it did in 2015 and 2016), slowing rent growth to 2 percent to 3 percent has been the success and stability of the multifamily investment class for decades. The new product tends to match better the tastes and lifestyles of the new generation of renters, and over a 10- to 20-year investment cycle, the sector outperforms with steady 2 percent to 3 percent average annual investment growth.
I’ve been through four major investment cycles in my career, including the one that saw the U.S.-owned Resolution Trust Corp. liquidate real estate assets in the early 1990s, and the only people I ever knew who ever lost money in multifamily investments were those who over-leveraged themselves with too much bank debt or who unsuccessfully tried to convert their 1970s apartment complex into condominiums only to get 30 percent sold out and lose the property to their debtors.
On the whole, multifamily investment that is not over-leveraged compounds geometrically. This applies to four- and eight-unit apartment complexes as easily as 300-unit complexes. The only difference is the amount of the initial investment that compounds.
So let’s not lament the multifamily pipeline as an evil harbinger of doom and destruction. This is not to say that every developer should take their condominium plan and convert to rentals next week. But under current economic conditions, watch the multifamily landscape in the coming 12 months. It speaks volumes about where the market sees the economy heading.
Whether he said it or not, my money is on Einstein and low-debt multifamily investments heading into 2017.
ANTHONY M. GRAZIANO IS SENIOR MANAGING DIRECTOR FOR INTEGRA REALTY RESOURCES — MIAMI/PALM BEACH, BASED IN CORAL GABLES. HE HAS BEEN INVOLVED IN THE REAL ESTATE FIELD SINCE 1986. HE CAN BE REACHED AT AMGRAZIANO@IRR.COM AND WWW.IRR.COM.
S. FLORIDA MULTIFAMILY RENT GROWTH, BY PROPERTY CLASS.
The percentages represent year-over-year average rent growth in Class A (the newest, most luxurious rental complexes) and Class B (second-tier rental products that are 10-20 years old) in Miami-Dade and Broward counties.
Year
Class A
Class B
2005
4.00%
5.45%
2006
6.15%
7.05%
2007
1.65%
1.75%
2008
-0.65%
-0.55%
2009
-2.90%
-2.00%
2010
2.50%
1.50%
2011
0.25%
1.30%
2012
3.45%
2.45%
2013
3.50%
2.95%
2014
3.80%
3.65%
2015
4.45%
3.35%
2016 (first quarter)
0.85%
0.45%
Average
2.38%
2.45


Know more about the real estate advisor - Keith Knutsson: