Puerto Rico Wants to Use Federal Aid to Juice Opportunity Zone Projects

A recent report by Bloomberg says that Puerto Rico wants to shift $400 million of its federal aid toward Opportunity Zone projects.  According to the report, PR’s Governor, Ricardo Rossello, is currently seeking federal approval to create a fund to invest community development block grant funds into such projects.  In addition, the governor signed a bill earlier this month to create a regulatory framework for opportunity zone investments in Puerto Rico.  Indeed…

“The opportunity zone program was created as part of the 2017 Tax Cuts and Jobs Act to bring development dollars to areas of need, and nearly the entire island of Puerto Rico qualified.”

Click here to read the full story at Bloomberg.

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HUD Offering Incentives to Multifamily Owners to Invest in Opportunity Zones

The U.S. Department of Housing and Urban Development recently announced a package of incentives to encourage multi-family property owners to invest in thousands of neighborhoods located in Opportunity Zones across the nation.  According to the release (reprinted below) the FHA is introducing reduced application fees paid by property owners applying for certain multifamily mortgage insurance programs for the development or rehabilitation of apartment units located, or proposed to be located, in Opportunity Zones.  We will continue to closely cover this issue and post news and updates.

WASHINGTON – The Federal Housing Administration (FHA) today announced a package of incentives to encourage multi-family property owners to invest in thousands of neighborhoods located in Opportunity Zones across the nation. Read today’s Housing Notice.

FHA is introducing reduced application fees paid by property owners applying for certain multifamily mortgage insurance programs for the development or rehabilitation of apartment units located, or proposed to be located, in Opportunity Zones. In addition, FHA is designating teams of senior underwriters to review these applications to ensure the most attentive and timely processing.

When more investors can apply for benefits in Opportunity Zones, more investors can supply benefits in Opportunity Zones. And that’s exactly the intention of today’s Notice,” said Secretary Carson. “These FHA incentives, combined with the preference points HUD already offers grantees for activities in Opportunity Zones, show how this Administration is maximizing the power of public-private partnerships to never forget – and always lift up – our nation’s “the forgotten men and women.”

Reduced Application Fees

Applicants to FHA’s New Construction and Substantial Rehabilitation (Section 221(d)(4)), Urban Renewal and Concentrated Development (Section 220), and Purchase or Refinance of Existing Multifamily Property (Section 223(f)) multifamily mortgage insurance programs will be eligible for significantly lower application fees provided the property is located within qualified Opportunity Zones. For transactions that are defined as ‘broadly affordable,’ FHA’s application fee will be reduced from the current $3 per thousand dollars of the requested mortgage amount to $1 per thousand dollars of the requested mortgage amount, resulting in an average cost saving to applicants of approximately $28,000. ‘Broadly affordable’ is defined as developments in which at least 90 percent of the units are Section 8-eligible or deemed affordable under the Low-Income Housing Tax Credit (LIHTC) program.

“When more investors can apply for benefits in Opportunity Zones, more investors can supply benefits in Opportunity Zones. And that’s exactly the intention of today’s Notice,” said Secretary Ben Carson. “These FHA incentives, combined with the preference points HUD already offers grantees for activities in Opportunity Zones, show how this Administration is maximizing the power of public-private partnerships to never forget – and always lift up – our nation’s “forgotten men and women.”

For ‘market rate’ and ‘affordable’ transactions, FHA will reduce application fees from $3 to $2 per thousand dollars of the requested mortgage amount, resulting in an estimated average cost savings of $14,000. Read more about the definitions of broadly affordable and affordable in the Federal Register.

Designated Senior Underwriters

FHA will designate seasoned underwriters to process applications located in Opportunity Zones to ensure expert and expedient reviews. Applications must meet the following criteria to qualify for reduced fees and designated underwriting:

  • The application is submitted under FHA’s Section 221(d)(4), Section 220, or Section 223(f) program for a property located in, or proposed to be located in, a qualified Opportunity Zone, and/or:
  • The application involves an investment from a Qualified Opportunity Fund (QOF).

The new incentives offered by FHA are available immediately for applicants of market-rate properties that have not yet submitted a pre-application, and for applicants for affordable properties that have not yet applied. Opportunity Zones Created under the 2017 Tax Cuts and Jobs Act, Opportunity Zones are intended to stimulate economic development and job creation in distressed low-income communities by incentivizing long-term capital investment. The program offers capital gains tax relief to those who invest in these targeted distressed areas. This program is anticipated to spur approximately $100 billion of private capital investment in Opportunity Zones. There are more than 8,700 census tracts designated as Opportunity Zones in all 50 States and in the U.S. territories. Read more about the Opportunity Zones program.

Click here to read the full release at HUD.gov.

Click here to learn more about Opportunity Zones.

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Top Home Technology Features that Buyers Want

What home technology features are buyers looking for? According to data from the latest issue of the NAHB’s, What Home Buyers Really Want, 46% said security camera was at the top of their list, followed closely by a video doorbell.  The study is based on a survey that asked recent and prospective home buyers about the features that they would like in a home and a community.

“…three of the four most wanted features are security-related: along with a security camera, a video doorbell and a wireless home security system are wanted by at least 40 percent of home buyers. However, at most 21 percent of home buyer currently have any one of these technology features installed, indicating that there is market growth potential for these items.”

Click here to read the full story at the NAHB’s Eye on Housing.

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The Power of the Vacation Rental Marketing Machine

Brian Hamrick

Short-term vacation rentals like Airbnb have become very lucrative for real estate investors.  On a recent Rental Property Owner & Real Estate Investor podcast, Brian Hamrick interviews Beth Carson, a well-known expert on the subject of of Short-Term & Vacation Rentals.  She has been in the hospitality industry for 18 years working with mini-resorts and high-end homes, and has helped investors go from losing millions a year to being profitable in one month.  During the interview she explains in detail about how she discovered the “the power of the vacation rental marketing machine.”  Her advice is spot-on for anyone looking to get into short-term rentals.

 

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Cost of Renting vs. Owning in Every State 2019

We see a lot of these “is it better to rent or buy” stories from time to time and we have covered them.However, the bottom line is that it’s all about the local market conditions.   To that end, the folks over at howmuch.net crunched the numbers to provide an intuitive look at the geography of renting vs. owning.  They looked at factors such as student loan debt, financial insecurity, and high housing prices which they say disincentivizes some would-be homeowners.  In fact, howmuch.net concludes it is cheaper to rent than to buy in most states.  Indeed…be sure to look at all their data.

 

 

Click here to read the full report at howmuch.net.

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Fannie & Freddie’s “Uncertain Future” Explained

A recent Wall Street Journal article (posted on Realtor.com) discussed the Trump administration’s plans to overhaul Fannie and Freddie – the two giants that back almost half of all U.S. mortgages. They report that the administration wants to put them on the road toward returning them to private hands.  Currently there is intense debate in Washington about the future of these two behemoths.  Indeed…

“Fannie and Freddie make mortgages more readily available and more affordable. The 30-year, fixed-rate mortgage essentially owes its existence to them. But some argue that the private market could fill this role more efficiently. Right now, there isn’t much agreement on either side of the aisle on how to change the government’s involvement in mortgages or what the market would look like without the two companies.”

Click here to read the full story at Realtor.com

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5 Trends Real Estate Investors Should Watch in ’19

A recent essay in Forbes by Roofstock CEO & Co-Founder, Gary Beasley, outlines what he sees as the five trends real estate investors should be watching.

“…The increased interest I’ve observed in the single-family rental sector can be attributed in part to the recent volatility in the equity markets and the growing uncertainty around when the economic expansion will finally lose steam.”

The five real estate industry trends that Beasley says savvy investors should be watching are:

  1. Build-To-Rent Properties In Secondary And Tertiary Markets
  2. Large Capital Partners Entering Joint Ventures
  3. Retail Investor Interest In Single-Family Rental Homes
  4. Renting As A Lifestyle Choice
  5. Getting Creative To Satisfy Demand

Click here to read the full story on Forbes.com.

 

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Zumper’s National Rent Report for May

Rental information site Zumper recently released their National Rent Report for May showing that the median national rent for 1-bedroom apartment was $1,215 and the median two-bedroom rent was $1,463.  Year to date, one bedroom prices are down 2.5% and two bedroom prices are up 2.9%.  Zumper analyzes rental data from over 1 million active listings across the United States. Data is aggregated on a monthly basis to calculate median asking rents for the top 100 metro areas by population, providing a comprehensive view of the current state of the market. The report is based on all data available in the month prior to publication…..be sure to check out their entire list of 100 cities.

Click here to read the full report at Zumper.com.

 

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America’s Highest Rent Neighborhoods

Where are the neighborhoods in America where the typical renter is throwing down $10k, $15k, or even $30k a month?  While that does sound like quite a bit of coin, there are neighborhoods across the county where landlords are fetching those amounts.  After all, nearly one third of Americans are renters and not owners.  Leave it to Realtor.com to zero-in and locate these neighborhoods and then rank the top 10.  To come up with their list, they pulled every two-bedroom rental on realtor.com (as of March 2019) and then calculated the median rent price for every ZIP code.  To keep it even, they excluded ZIP codes with fewer than 12 listings and limited the ranking to no more than two neighborhoods per state (or else CA and NY would dominate).

“The math between renting versus buying is starting to lean toward renting,” says Dolly Lenz, a New York–based luxury real estate broker. “They can’t deduct as much on their taxes anymore—so it makes less sense to buy.

Click here to read the full story on Realtor.com.

 

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Improving Neighborhoods, One Home at a Time

Improving Neighborhoods, One Home at a Time

By Rebecca McLean
Executive Director, National Real Estate Investors Association

There is no doubt about the critical need for affordable housing in America today.  Affordable housing allows families to have a stable home, offering countless benefits to children by helping families stay connected to the communities they choose where they have found medical care, churches and schools.  Stability helps keep families together.  However, there is another benefit of providing affordable housing; it becomes a pathway to homeownership, a way to build financial security.

Members of the National Real Estate Investors Association work every day to improve neighborhoods, one home at a time, doing our part to provide safe, affordable housing to Americans at all income levels.  Whether it is rehabbing an older distressed home or providing rental housing, our members are on the front lines of this important issue.

However, there are some concerns about housing in general that need addressed.  Well-intended regulations often drive up the costs of rehabbing older housing and building new housing.  In some areas the opportunity for developing affordable housing is so diminished it is non-existent.  What little housing that gets built tends to be higher-end where the profit-margins are greater and the costs more easily recouped.  Often this creates a disincentive to develop affordable housing.

With the best of intentions, lawmakers often respond to the lack of affordable housing by passing more laws and regulations.  Each new law starts the cycle of unintended consequences.  It makes for good press conference soundbites, but it’s not that simple.

In reality, America actually has a huge supply of affordable housing, though much of it is in rough shape.  That’s where our members play a vital role.  In many communities across the country, deferred property maintenance has taken a heavy toll – especially on older homes.  Whether it was because of neglect or a lack of resources from the owner, a lot of homes are in dire need of rehabilitation.  This causes legislative knee-jerking in the form of punitive property maintenance codes and regulations.

We like to say neighborhoods can be improved one home at a time and it is certainly true.  National REIA members often seek out and identify distressed properties in neighborhoods that no one wants to touch.  They rehab those properties and add value not only to the community (removing blight, abandonment, etc.) but strengthening the local tax-base as well through increased property values.  Families looking for starter homes (to buy or rent, depending on their situation) are then able to find quality, affordable housing in a neighborhood that meets their needs in a location of their choosing.

This is a big deal for those in lower income communities especially when it comes to accessing good paying jobs and quality schools.  Many families also want to put down permanent roots.  Buying a home allows them to build financial security while providing stability for their family.  It is a win-win.

Finally, there is one item on the horizon that will potentially have an incredible impact on the supply of affordable housing – Opportunity Zones.  As part of the Tax Cut & Jobs Act of 2017 (now law), these zones have the power to have profoundly impact distressed communities across the nation.  We believe the tax incentives provided by this new law will spur a wave of redevelopment that will not only provide a steady supply of affordable housing, but embody the old axiom of a rising tide lifting all boats.

After all, a diverse housing stock providing affordability at all levels of income is key to helping Americans attain the American Dream – whether it is homeownership or a comfortable rental home, National REIA members are helping families make that possible….one home at a time.

 

Rebecca McClean is the Executive Director of the National Real Estate Investors Association.  National REIA is federation of local associations or investment clubs throughout the United States that represents local investor associations, property-owner associations, apartment associations, and landlord associations on a national scale. Representing the interests of approximately 40,000 members across America, they are the largest broad-based organization dedicated to the individual investor.

Click here to learn more about National REIA or to find an affiliated group near you.

This essay was also published on Media Planet in March, 2019 as part of expose on Affordable Housing.

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