A report from the Florida Times Union. “Alex Sifakis, president of JWB Real Estate Capital in Jacksonville, said his company now manages 4,300 single-family rental properties in the city and owns another 400 of them. From the investment side, he said he simply can’t keep up with investors wanting to sink money into single-family rental properties. ‘It seems like it’s almost insatiable at this point,’ Sifakis said. ‘Ten years ago people didn’t think single-family properties could be something that was in the institutional asset class. Those people were proven wrong. We’re seeing it grow by the minute,’ he said. ‘I probably get two calls a week from institutions that have raised money or are trying to deploy money and want to do that in single-family rental properties.’”
The San Antonio Report in Texas. “As investment companies from Austin and elsewhere trade apartment complexes in San Antonio at a blistering pace, efforts to boost profit margins have created what residents say are problems and even dangers. The buyer expanding the fastest in the city, according to real estate data, is an Austin-based investor-landlord company called Shippy Properties. The stated strategy of David Shippy, the company’s founder and CEO who wrote a 2019 book detailing his wealth-building formula, involves buying up working-class apartment complexes, slashing maintenance costs and charging tenants new fees.”
“‘I like to think of each apartment complex as a cash machine,’ wrote Shippy in his book Money Matters for Financial Freedom: The Fast Path to Abundance in Life and Business. David Shippy writes that Class B and C property deals for him have always delivered ‘well over double-digit returns.’ It’s not just because of the cheaper purchase price but also because of the tenant base — ‘households that are living in Class B and C properties typically can’t afford to own a house or to live in a Class A property. So, you have a captive audience.’”
“One way to cut expenses, he wrote, is to try to do all maintenance in-house rather than hire contractors and ‘to shop around and find the lowest prices for big-ticket items like appliances, lighting fixates, plumbing fixtures, and paint.’ The approach appears to have paid off for Shippy. ‘Apartment investing had changed our lives,’ he wrote. ‘We now lived in a multimillion-dollar house, had an additional new house on the beach, drove brand new Mercedes and Porsche cars, and took exotic vacations with our family several times a year.’”
From My Central Jersey. “A petition opposing a plan to build apartments at the former Kmart in Rutgers Plaza has gathered more than 1,000 signatures. ‘There is no need for additional homes in Franklin as there have been many new developments on nearby Hamilton Street … many of which barely have any tenants,’ the petition continues. ‘It makes no sense to create a logistical nightmare for those of us who already live here.’”
The Desert Sun in California. “Local Realtors say heated competition for a dwindling number of homes drove up prices and, in many cases, eliminated typical must-haves and basic due-diligence processes such as pre-purchase home inspections and appraisals. Yet many local Realtors see those trends slowing in the year ahead, leading to a more stable 2022 for the Coachella Valley real estate market. Some even see potential lawsuits and signs of a ‘hangover’ from last year’s buying frenzy on the horizon.”
“In the heat of the moment, some buyers offered terms they later weren’t able or willing to fulfill. Most local Realtors reported seeing a significant increase in the number of homes falling out of contract last year as buyers reneged on key terms they had advanced to lock down a deal. ‘There’s definitely going to be a hangover (in the market)’ said Jim Franklin, a local Realtor and president of Greater Palm Springs Realtors.”
“He said some buyers who rushed into deals — especially those who waived typical due-diligence processes such as pre-sale home inspections — may discover issues with their new properties months after the sales. ‘The buyer who is pissed off is then going to get a hold of his agent who will say, ‘I didn’t know anything,’ Franklin said. ‘And then they’re going to go to the other agent who represented the seller and they’re going to sue them too. They’re going to go after them for not disclosing. And now you have a disclosure problem.’”
From Reuters. “Chinese construction and decoration companies are writing off assets or issuing profit warnings as debt woes at China Evergrande Group and other property developers debilitate their suppliers. Guangzhou Holike Creative Home Co, a furniture maker, became the latest company to disclose losses linked to Evergrande, which has racked up over $300 billion in debt, including 200 billion yuan ($31.44 billion) owed to suppliers via commercial paper.”
“And despite some easing measures taken by the government to ease developers’ liquidity stress and support the cooling economy, recent data suggests the problem will get worse. Units of Shimao Group Holdings, Kaisa Group Holdings and Greenland Group were named and shamed this month in a list of Chinese companies ‘consistently overdue’ on commercial paper payments.”
From Stuff New Zealand. “Internationally, the story is the same. Inflation is on the rise due to monetary policies introduced to soften the economic blow of Covid, and supply chain issues are restricting the production and flow of goods. ‘The inflation dragon is well and truly awake,’ said ANZ. Economists said such conditions hadn’t been seen in New Zealand since the 1970s and early 1980s – when Robert Muldoon was prime minister and inflation was out of control.”
“‘Recently we’ve had such a period of low inflation that people thought inflation would always be low,’ said University of Auckland economist Susan St John. ‘We thought it was here to stay, but maybe it’s a golden age that’s come to an end.’”
“For those with mortgages, interest rate hikes could be the final financial straw. In its forecast, ANZ gave the example of a hypothetical $800,000 mortgage undergoing an increase from 2.21 per cent to 3.49 per cent. Their payments would increase by roughly $115 a week, assuming a 25-year term. ‘That’s going to hurt. And when you multiply across hundreds of thousands of borrowers, it’s a lot of disposable income suddenly taken up with increased mortgage payments.’”
“‘I have been struggling to even think about it, the when, the where of the mortgage going up,” said Rose Kavapalu, a cleaner from Māngere. ‘I don’t want to think about it because it’s so mentally draining. The fear, it’s tiring.’”
“Her hours have been cut and cut, to just five a day. On minimum wage, it’s not enough. But her second job disappeared when Auckland went into the red light Covid-19 setting, and she’s been unable to find another one despite looking every day since. ‘I have been looking everywhere, but it is really hard at the moment. There is nothing. I just pray that there’s a miracle, and we have enough, we pay the mortgage and there is enough left for hopefully a piece of bread for me.’”