Inner SPARK November 2023
Spark Multifamily Investment Group
I help you achieve financial freedom and create the life of your dreams through passive real estate investments.
Hi Everyone,
Laura and I hope you all had a very Happy Thanksgiving - enjoying family, friends, good food and maybe some football.
Holiday season is underway and the end of another year is near.
It’s the perfect time to reflect on 2023 and start to plan for 2024. But more than that, it is a time to be thankful and feel gratitude for all the blessings we have in our lives. It’s also a time of personal and family traditions.
One of our traditions is to get our Christmas Tree up before Thanksgiving. I love how cozy Laura makes our home all year round but especially during the holiday season. Our home is a sanctuary from the often frenetic pace of contemporary life. We appreciate our home and all that it provides.
From our home to yours, Laura and I wish you a fabulous Holiday season. We are thankful for your friendship, trust, and support.
THE LATEST NEWS FROM SPARK
Greenville New Build Portfolio 1: new build duplexes - Easley and Lyman
We have CLOSED on all 10 duplexes - 20 units in total - in this portfolio.
Progressive Properties of Greenville is in full lease up mode on the Lyman duplexes. We have already leased 7 of the 12 Lyman units and the Easley duplexes are already fully leased and occupied.
We are very happy to secure these new build duplexes at a low cost basis. We have low leverage fixed rate debt on both assets and therefore are set up nicely for a long term hold which we feel is most appropriate for new build projects like this.
We will perform a cost segregation analysis and our vendor estimates, investors will receive year one (2023) depreciation equal to 30% of their investment amount.
This Month’s Newsletter
Once again, we’re delighted to offer educational content about multifamily investing to you through Inner Spark. Much of this content deals with the ever evolving multifamily market. After several boom years, we are entering a new phase of the economic cycle. In this edition, you’ll find:
Understanding Cash Distributions and Accrued Income in Real Estate Syndications
Passive real estate investing through syndications presents an opportunity for consistent income, but understanding cash distributions, accrued income, and other dynamics is crucial for informed decisions. Cash distributions are periodic payments from property cash flow, while accrued income accumulates for later disbursement. A year-by-year example illustrates distribution scenarios, showing how accrued income builds over time.
Upon property sale, accrued amounts are paid first, followed by the return of capital and profit distribution. Maintaining cash reserves is a priority to ensure distributions are paid from property cash flow. Differentiating between preferred return and cash distributions is key, as the former is fixed, while the latter depends on actual cash flow. Cash-on-cash returns measure investment performance, focusing on cash in investors' pockets.
Distribution frequency varies, with quarterly distributions common. Understanding these dynamics empowers investors to navigate passive investing risks. To delve deeper into real estate syndications and investing, click the button below.
The Intricacies of Supply, Demand, & Rising Costs For Multifamily Investors in Today’s Economy
The U.S. multifamily real estate sector is currently undergoing an intricate interaction of supply and demand factors, along with rising operational costs. A crucial determinant in this scenario is consumer confidence which significantly influences occupancy rates. Moreover, the trends within the regional markets play a substantial role in shaping property demand and their corresponding costs.
However, the rise in operational costs presents its own set of challenges. Proactive maintenance, energy efficiency, and tenant retention emerge as effective strategies to counter these challenges. By understanding these dynamics, investors in the multifamily sector can navigate the market successfully.
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10 Questions to Ask a Potential Partner Before Starting a Real Estate Investment Business
Starting a real estate investment business, particularly in multifamily properties, requires careful selection of a partner. It's essential to ask a prospective partner key questions about their investment goals, experience, financial situation, preferred investment strategy, time commitment, risk tolerance, exit strategy, communication style and dispute resolution method. Understanding these aspects can ensure compatibility and effective conflict resolution.
Multifamily properties can offer steady rental income, economies of scale, and flexibility in financing and investment strategies. However, the right partner is as crucial as the right property for aligning with your business goals. Partnerships in multifamily investing can provide more capital, shared responsibilities, and the chance to leverage each other’s strengths and expertise, thus mitigating risk.
Click the link below to read the whole guide.
Wall Street and money moved into South Florida, driving up prices. Now some residents want to move out.
The influx of wealthy individuals and businesses into South Florida has significantly altered the housing market, causing a significant increase in housing costs. These individuals are seeking affordability and simplicity by moving to southern cities like Greenville and Knoxville.
The appeal of Florida's lifestyle has diminished for some due to these changes. Many transplants are growing disillusioned with the local lifestyle, citing housing prices, low wages, and weather among their grievances. Individuals have started moving to states like North and South Carolina, where housing costs are more affordable and offer more value for money. The high cost of living and increasing weather catastrophes have led many to leave Florida permanently. Even locals in cities like Fort Myers are feeling forced out due to the rising home prices, which have increased almost 60% since January.
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Multifamily project completions forecast to slow starting 2026
According to a Q4 2023 report by Yardi Matrix, there is a noticeable slowdown in the commencement of multifamily housing construction. This trend has been observed across multiple regions and is expected to continue into the coming months. The reasons behind this slowdown could be varied, ranging from economic factors to changes in the housing market dynamics.
However, despite the slowdown in starts, project completions are expected to see an increase in 2024 and 2025. But this surge is anticipated to be short-lived. Experts predict a slowdown in project completions starting from 2026. This future trend could potentially affect the availability and pricing of multifamily units.
For more detailed insights, click the button below to read the full text.