Daily Archives: April 6, 2013

Be Responsible For Your Own Financial Security

by Denis Waitley

There is no job security. You can’t rely on staying with the same company through retirement. Pension plans, when available, are woefully inadequate. Social security benefits won’t come close to covering your living expenses in retirement.

The only way to reach financial security is to plan for it now, regardless of your age. You have to define financial security in your own terms. Have you defined the amount of assets that you need for financial independence?

Financial security is that amount of assets that will give you a specific income, after taxes, to live like you want to, without having to depend on day-to-day employment.

What is that amount for you? I believe it is more than you think. And, I feel that if you define it, you can reach it in ten years or less. Do you have a financial plan and the assistance of a financial planner?  You need both. Always retain a financial planner on a fee-for-service basis. Don’t mix financial planning with an investment broker or insurance agent. What are your financial goals and what is your time line? Because I started late in my quest for financial independence, I have a maximum five-year period remaining for capital accumulation.

Action Idea: Wealth is not only based on income, but also on expenditures. Are you spending or investing?  Are your purchases goal-achieving or tension-relieving? How do you use credit cards? Use your credit cards for services or purchases that retain their value or that build your business. Don’t use credit cards for vacations and personal entertainment, unless you plan to pay the entire balance in one or two months. Try to pay all your balances in full monthly. In this way, you avoid the ridiculously high interest payments. Realize that paying minimum balances, at high interest rates, means that you are paying two or three times what the original purchase was worth.

Most importantly, save at least 6 to 10 percent of your take-home pay each month, by writing a check into a savings account or mutual fund for that amount, as if it were a utility bill or house payment. The secret of most self-made multi-millionaires is compound interest. If parents saved one dollar each day for their newborn infant, by going without a cup of Starbuck’s coffee, or a Big Mac, or a soft drink for that day, by the time the child reached age forty, he or she would have a million dollars cash. No lottery windfall. No brilliant investment strategy. Just compound interest, which Baron von Rothchild labeled “The Eighth Wonder of the World.”

Texas Markets Rank Tops Nationally for Apartment Demand

by  – PropertyManagementInsider.com

Among folks who pay even the slightest bit of attention to what’s happening in local economies across the country, it’s not exactly breaking news that lots of jobs are being added in Texas. The Great Recession that so many spots nationally are still struggling to recover from was barely a blip on the radar screen across much of the Lone Star State, and job growth has been at or even above the past norms for quite a while.

What you might have missed unless you pay really close attention to the stats, however, is that early figures for job production in 2013 show the economies in Texas kicking into even higher gear and breaking further away from the pack.

That’s particularly true in Houston.

Sure, Houston is the country’s growth leader in terms of the absolute number of jobs created, as it has been for the past couple of years. The latest figure from theBureau of Labor Statistics places that number at 118,700 jobs on an annual basis. What’s changed is that Houston is now also in the #1 position for percentage expansion among the 100 largest markets in the U.S. The metro’s 4.5% growth rate is a truly phenomenal performance given the Houston area is more than three times the size of all but one other place registering growth of 3% or better.

No surprise, Dallas/Fort Worth is the big-market bridesmaid at this wedding, though the 3.7% job growth rate in North Texas really isn’t quite in the same category with Houston’s impressive showing.

Jobs translate to new household formation and apartment demand, right?

Thus, it’s no shock to see the two biggest job producers among the nation’s really large metros also at the top of the charts for apartment leasing during the year-ending 1st quarter. Despite adding fewer jobs than Houston, Dallas/Fort Worth actually garnered the most apartment demand – 11,194 units, compared to 8,044 units – mainly because D/FW operators worked especially hard in order to get a meaningfully bigger block of completions through initial lease-up. Dallas/Fort Worth registered additions totaling 8,443 units during the past year, versus the 5,626 units finished in Houston. The Houston crowd probably isn’t complaining about a little less demand compared to the D/FW tally, however, as they did notably better on rent growth – 3.8% in Houston, relative to 2.3% in Dallas/Fort Worth.

Over the next year or so, look for it to continue be a neck-and-neck race between Houston and Dallas/Fort Worth for the lead in apartment absorption nationally. Houston should continue to have the key advantage of a faster-growing economy, but D/FW will continue to add more new product completions that operators will be pushing hard to get through lease-up.



Fannie Mae Marks 25 Years of Multifamily Market Financing Through DUS(r) Program

Brought to us by Multi-HousingNews.com

Washington, D.C.—This month Fannie Mae marks the 25th anniversary of its Delegated Underwriting and Servicing (DUS®) program, a unique risk-sharing model that provides financing to the multifamily housing market. Fannie Mae relies primarily on the DUS network of 24 financial institutions and independent mortgage lenders to execute its multifamily business.  In 2012, 98 percent of the multifamily debt Fannie Mae acquired was delivered through the DUS platform. Since the program was formally announced to participating lenders on April 4, 1988, Fannie Mae and its lender partners have provided more than $270 billion in liquidity to the mortgage market under the DUS program to finance more than 5.8 million units of multifamily housing.

DUS lenders must abide by rigorous credit and underwriting criteria and submit to Fannie Mae’s ongoing credit review and monitoring.  They can underwrite, close, and deliver loans on multifamily properties to Fannie Mae and typically retain one-third of the risk on every loan.

Borrowers also value the liquidity and flexible loan structuring that is available through the DUS program and its lender network.

Fannie Mae’s DUS lenders include:

  • Alliant Capital, LLC
  • AmeriSphere Multifamily, LLC
  • Arbor Commercial Funding, LLC
  • Beech Street Capital, LLC
  • Berkadia Commercial Mortgage, LLC
  • Berkeley Point Capital LLC
  • CBRE Multifamily Capital, Inc.
  • Centerline Capital Group
  • Citibank, N.A.
  • Dougherty Mortgage LLC
  • Grandbridge Real Estate Capital, LLC
  • Greystone Servicing Corporation, Inc.
  • HomeStreet Capital Corporation
  • HSBC Bank USA, N.A.
  • JPMorgan Chase & Co.
  • KeyCorp Real Estate Capital Markets, Inc.
  • M&T Realty Capital Corporation
  • Oak Grove Capital
  • Pillar Multifamily, LLC
  • PNC Real Estate
  • Prudential Mortgage Capital Company
  • Red Mortgage Capital, LLC
  • Walker & Dunlop, LLC
  • Wells Fargo Multifamily Capital

Should You Implement a Sub-metering System in Your Community?

By Jessica Fiur, News Editor- MultiHousingNews.com

New York—Should you use a submetering system in your community to generate revenue? In a recent webinar titled “Submetering to Increase Profits and Resident Satisfaction,” which was hosted by Multi-Housing News and sponsored by NWP Services Corporation,  panelists Howard Behr of NWP, Cynthia Haines of WRH Realty Services and Michael May of Tehama Wireless provided best practice suggestions for implementing and maintaining water submetering systems in multifamily communities.

When considering implementing a submetering system, it is important to read up on the different types of meters, as well as the requirements in your state. “Almost all new construction installs submetering systems,” Behr said. “Submetering is required in many areas, which may limit the type of meters you can use.”

Additionally, according the Behr it is crucial to choose a manufacturer that is committed to working with multifamily communities. If not, the service will not be good and it will be difficult to get replacement parts.

In terms of the technology for the automatic meter reading (AMR), May suggested that property managers seek out devices that are non-proprietary so that they are open to a variety of different billing systems. He said that property managers should pick a meter that uses the current technology, because that will allow the AMR to be flexible and take on new abilities.

May also recommended choosing a meter that is easy to install and maintain. “This minimizes disruption to your residents,” he said.

Maintenance is critical for a successful submetering system. According to Behr, a common issue that comes up is the meter will stop sending a signal. To correct this, replace the battery, replace the transmitter and reposition the meter to avoid interference (from the residents or otherwise). Another issue could be that the meter is showing no usage. If this occurs, Behr suggested replacing the probe (wire), replacing the meter and reinstalling the meter.

“There’s not one fix,” Behr said of maintenance issues. “There’s not one easy answer.”

There are some challenges that might arise with a submetering program. According to Haines, there are different legal requirements in different states. The biggest challenge, however, could be complaints from the residents. If this occurs, Haines suggested reviewing the AMR—was this a one-time occurrence or a repeated event? Often times, a spike in the reading occurs when the resident has guests in the apartment, which leads to more water usage that month.

A way to minimize complaints is to put systems on a regular maintenance service program. “This also eliminates the approval process for unbudgeted repairs,” Haines said.

Property managers should also make sure the community staff is knowledgeable about the submetering system.

“It’s important to train staff so they can answer basic questions,” Behr said. This could eliminate some frustrations residents feel if issues arise and could help build their confidence in the system as a whole.

When submetering systems are added to communities, do the residents respond positively?

According to Haines, residents often consider a submetering system to be a benefit, as opposed to paying a monthly flat rate.

“They’re in charge of their destiny,” Haines said.

Jobs Alone Do Not Explain the Importance of Manufacturing

Scott Andes and Mark Muro – Brookings Institute 

This is something I have been saying for quite some time now, Thank You Scott and Mark.

When it comes to American manufacturing the U.S. media seems a bit confused. Last year, a bunch of stories (example here) argued that manufacturing job losses over the last decade don’t matter because productivity looks so good. Now, stories like this one are suggesting that manufacturing itself doesn’t matter much after all because the sector isn’t creating enough jobs. The current argument in vogue maintains that job growth figures just haven’t been robust enough in manufacturing to warrant policies that support the sector.

What the authors miss is mass employment is not the fundamental reason we need a healthy and vibrant manufacturing sector. Manufacturing—or rather advanced manufacturing—is essential to the U.S. economy because it is the main source of innovation and global competitiveness for the United States. Simply put, advanced manufacturing is the U.S. pipeline for new products and productivity-enhancing processes. While the sector makes up just 11 percent of the economy, manufacturers conduct 68 percent of private sector R&D, asreported by our colleagues Sue Helper and Howard Wial last year. And on average, they noted, 22 percent of manufacturers introduce new processes to increase productivity compared to just 8 percent of non-manufacturers. This is important because innovation that emerges from America’s manufacturing sector also fuels growth within the service sector because intermediary goods—the machines used by services (e.g. automated self check-out kiosks at grocery stores)—drive service sector productivity.

Some ask, meanwhile, why the nation should not simply import the advanced machinery needed for service-sector productivity. The problem with this argument is that services are, and will remain, largely non-traded. Regardless of how productive services become, the sector’s growth will be tethered to domestic demand. No amount of efficiency will allow a domestic grocery store to service international consumers. If the U.S. economy becomes one in which the U.S. imports all of the machinery that makes the service sector productive and no longer export any products of our own then inevitably we will consume more than we produce and incomes in services and manufacturing will decline. This is overwhelmingly clear in recent trade statistics. In 2012 manufacturing represented roughly 60 percent of U.S. exports despite only being 11 percent of the economy. By punching far about its weight class in exports the manufacturing sector is vital to U.S. global competitiveness.

In sum, the number of jobs within manufacturing is important, but taken by themselves employment figures miss the real reason manufacturing is an American imperative. U.S. quality of life, the ultimate benchmark of the direction of the economy, is contingent upon the competiveness of our traded sector and the speed at which innovative products and processes reach the market. On both metrics manufacturing is essential.

Apartment Market Continues to Tighten; Home Prices Rise; ADP Reports Moderate Job Growth

By Dees Stribling, Contributing Editor – CommercialPropertyExecutive.com 

Apartment vacancies nationwide continued to shrink in the first quarter of 2013, according to a report by Reis Inc. released on Wednesday. Vacancies fell by 20 basis points during the first quarter of 2013, dipping to 4.3 percent. Over the last four quarters, national vacancies have declined by 70 basis points, a much faster pace than any other CRE sector.

Reis notes that apartment  vacancies have now fallen by 370 basis points since the cyclical peak of 8 percent, which was recorded back in late 2009. By contrast, office market vacancies have only fallen by a miserly 60 basis points since fundamentals began recovering five quarters ago.

The apartment sector absorbed a net of over 36,000 units in the first quarter. However, Reis adds, apartment owners only have another quarter or two of tight supply before a large raft of new properties come online — some 100,000 units will be added to the market nationwide this year, mostly in the second half of the year.

Home Prices Increasing Briskly, Especially in California

CoreLogic said on Wednesday that home prices nationwide, including distressed sales, increased 10.2 percent in February 2013 compared to February 2012. That’s the largest year-over-year increase since March 2006. On a month-over-month basis, including distressed sales, home prices were up 0.5 percent in February 2013.

Take distressed sales out of the equation, and U.S. home prices increased year over year at nearly the same rate: 10.1 percent in February 2013. Month over month, the increase was 1.5 percent in February. In CoreLogic’s calculations, distressed sales include both short sales and REO transactions.

“The rebound in prices is heavily driven by western states,” Mark Fleming, chief economist for CoreLogic, said in a statement. “Eight of the top ten highest appreciating large markets are in California, with Phoenix and Las Vegas rounding out the list.”

ADP Reports Middling Jobs Growth

Ahead of the official employment numbers on Friday, Automated Data Processing made its usual monthly report on private hiring, finding that 158,000 private-sector jobs were created in March. That compares unfavorably to last month’s revised report, which found that 237,000 private-sector jobs were created.

Also on Wednesday, the Institute for Supply Management reported that its Non-Manufacturing Index came in at 54.4 percent in March, 1.6 percentage points lower than in February. The drop indicates continued growth at a slightly slower rate in the non-manufacturing sector.

Wall Street dropped on Wednesday, perhaps in response to the relatively weak numbers of the day. The Dow Jones Industrial Average lost 111.66 points, or 0.76 percent, while the S&P 500 and the Nasdaq declined 1.05 percent and 1.11 percent, respectively.