Commercial Eviction Restrictions Expire
The biggest news was that the restriction protecting Commercial tenants from eviction will expire on January 31, 2022. This means that rent must be paid as usual on February 1, 2022. The moratorium does still require certain procedures for providing notices to commercial tenants. It also allows tenants who owe rent from March 2020 through January 2022 six months to a year to repay the rent (depending on the number of employees the tenant employs and whether the tenant complied with notice requirements). Those tenancies that had expired and are on a month-to-month basis, may now be terminated with a 30-day notice to quit.

Residential No-Fault Evictions
Protections for No-Fault evictions on residential units (evictions where the cause of termination is due to “no fault” of the tenant – i.e., removal from the rental market, selling the property vacant, substantial remodel/demolition, etc…) are set to expire at the end of the year, December 31, 2022.

Owner Move-In
Currently, the moratorium does allow for a landlord to terminate a tenancy for an owner move-in pursuant to the rules adopted by the County’s Rent Stabilization Ordinance, but with two added restrictions: 1) the property must have been purchased prior to June 30, 2021, and 2) the tenants could not have suffered any financial hardship due to CoVID-19. These two added restrictions will expire on May 31, 2022.

Effective June 1, 2022, and running through December 31, 2022, an owner may elect to terminate a month-to-month tenancy to move in provided that:

1) The owner occupies the premises for 36 consecutive months
2) If the Tenant is any one of the following, then the owner (or person moving in) must match these criteria “like for like”:
a. Tenant is elderly (over the age of 62)
b. Tenant is low income
c. Tenant is disabled
d. Tenant is terminally ill
3) Landlord provides relocation assistance pursuant to the County’s RSO (ranges from $7,654 to $21,411 depending on the makeup of tenants and bedroom count)

The owner move-in restrictions listed above will expire along with the other No-Fault restrictions on December 31, 2022.

Residential Non-Payment of Rent Protections
Until March 31, 2022, the protections for tenants regarding non-payment of rent are governed by the State’s moratorium (AB 832). Some municipalities in Los Angeles contend that their own moratoria preempt the State’s, however, the County cedes this protection to the State until March 31, 2022, when it is set to expire. (LA CITY has different rules)

Upon expiration of the State’s moratorium, effective April 1, 2022, and going through December 31, 2022, no tenant shall be evicted for non-payment of rent provided that the tenant has notified the landlord of a COVID related hardship no later than 7 days after the rent is due. This will then allow the tenant up to one year to repay the rent after the protection expires. However, starting June 1, 2022, tenants who are making more than 80% of the Area Median Income (AMI) will not be eligible for these protections.

Residential Nuisance
Protections from eviction for certain violations of a lease agreement, namely unauthorized occupants or pets, or from certain nuisances (where such violations or nuisances are related to the CoVID-19 emergency) shall expire at the end of the year, December 31, 2022.

Denial of Entry
Effective June 1, 2022, tenants shall no longer be protected from eviction if they deny entry to their landlords (unless such entry constitutes harassment).

Rent Freeze
The moratorium on rent increases shall remain in effect throughout the county through December 31, 2022. This only applies to those properties which lie within the unincorporated areas of LA County subject to the existing RSO.

However, the city government offices we spoke with have confirmed they are continuing to follow the original LA County Moratorium (2020) with respect to the increasing of tenant rents.  While incorporated cities certainly have the option to invoke rent increases, the ones we spoke with and listed below have reconfirmed their intent to follow the moratorium restrictions which specifically apply to unincorporated cities and apply them to their own incorporated city. 

CITIES CONTACTED

1. Baldwin Park
2. Covina
3. El Monte
4. Gardena
5. Long Beach
6. Monrovia
7. Pasadena
8. Pomona
9. San Dimas

 
See the below chart from the County of Los Angeles for additional details:

The post Los Angeles County Moratorium Current Update (February 2022) appeared first on Reynolds Realty Advisors.

What is Mixed-Use?

Simply put, mixed-use developments are properties that incorporate two or more types of land use and blend residential, commercial, cultural, institutional, and/or industrial uses. For example, housing + retail, entertainment + offices, restaurants + services, or any combination thereof. For the purposes of this article, we will be focusing on mixed-use properties that include multi-family housing.

Mixed-use properties are also defined by having more than one significant revenue-producing use, following the same set up as above. By nature, multi-use properties allow investors to diversify their holdings by utilizing more than one revenue generating model in a single property.

Mixed-use developments typically follow a vertical or horizontal structure. Vertical spaces combine different uses within the same building. Typically the lower floors include public spaces such as retail shops, restaurants, and/or businesses. Then the upper floors are used for private spaces like multi-family housing, hotel rooms, or office space. Whereas horizontal developments have single-use buildings within a mixed-use zone. This allows for complementary uses to occupy an integrated, walkable area. Because of the close proximity of these uses, mixed-use properties also foster walkable communities and create a pedestrian-friendly environment.

Benefits/Opportunities

Strengthened Community and Culture: From a user perspective, one of the biggest benefits of mixed-use land is it allows people to live, work, shop, and find entertainment in one place. Especially as many communities are becoming less auto-centric and more pedestrian and bicycle-centric, mixed-use developments can provide not only for the physical needs of communities, but cultural needs! Properties that offer open spaces for concerts, fitness classes, performances, and farmers markets have the opportunity to become cultural hubs for neighborhoods and communities.

Lower infrastructure costs: The social benefits of combining living and working space, creating more walkable space, and building convenient, beautiful centers also have powerful impacts on a community’s bottom line. For example, an analysis conducted by Smart Growth America found that on average, municipalities save up to 38 percent on infrastructure costs like sewers and roads when serving compact developments instead of large-lot subdivisions. (Check out the full study from Smart Growth America here.) Other studies have concluded that this number can be as high as 50 percent.

There are also long term financial benefits like reducing the cost of ongoing services including fire, police, and ambulance and increased tax revenues. (Smart Growth America)

Support for local business and increased tax revenue: When retail, restaurants, or services are part of a mixed-use development, residents of the development are more likely to patronize these businesses out of convenience. It also can draw people from other neighborhoods and, thanks to the walkable space, capture traffic from the increased number of pedestrians. This leads to increased economic vitality and tax revenue. According to the above Smart Growth America Study, they found that these types of developments generate 10 times more tax revenue per acre than conventional suburban developments. (Smart Growth America)

Less development risk: Finally, because one plot of land has many uses, the risk is lowered for real estate investors. In times where local retail or restaurant climente may be in a slump, the investor still generates income from the residential spaces, and vice versa.

Mixed-Use Developments in California

Mixed-use developments tend to work best in urban areas, which as California has plenty of. So it is not surprising we are starting to see successful mixed-use developments in our own neighborhoods. For example, in Santa Ana, the Community Development Partners revitalized a former auto-oriented retail center that had not seen significant investment in over five decades and created an “innovative, community oriented, urban hub by providing support for existing retail tenants, updated amenity spaces, and the integration of new affordable housing.” (Community Development Partners)

Called La Placita Cinco, this development is a successful example of integrating much-needed affordable housing into an existing residential neighborhood by leveraging underutilized commercial properties. The new development, completed in spring 2021, includes 21 affordable residential units, along with ground-floor community space, storefronts and community gardens. Renovations to the existing plaza and retail buildings included updating the building’s exterior, widening the walkways accessing the retail shops to create a more walkable space, adding new landscaping, and changing the parking set-up. They even created a new mini-park and band shell, designed to emulate the former 1950’s architecture of the building.

As is clear from the additions detailed above, the goal of this project was not just to build housing, but to build community. They adjusted the “design and details to accommodate the requests of the community (lower density, additional parking, enhanced site amenities), the city (larger, family-oriented housing units, significant street improvements), and financial partners.” (Community Partners) Not only does this space create a stronger community, they are creating a stronger economy by uplifting the long-term retail tenants and increasing the appeal and foot traffic of the area. The new spaces created with the development also allow these businesses to expand their operations outside to include pop-up events and outdoor dining.

Images and data from Community Development Partners.

Data
Number of Units: 51
Lot Size: 2.33 acres
Density: 21.9 units/acre
Unit Size: 800-1,200 SF
Unit Mix:, 20 2BD/1BA, 29 3BD/2BA, 2 4BD/2BA
Parking Spaces: 148
Affordability: 30% / 50% / 60% AMI
Sustainability: LEED
Architect: City Fabrick, TCA
Contractor: Walton Construction
Property Management: FPI
Non-Profit Partner: Mercy House and Integrity Housing

Another benefit of mixed-use properties, particularly noteworthy for California, is that mixed-use properties are already environmentally sustainable. Simply by keeping business and homes closer together, less transportation, fossil fuels, and road maintenance in a city is required. With the reduced need for personal cars, there is a decreased need for parking lots, which when replaced with open green space, helps mitigate heat gain within the microclimate. Many buildings, such as La Placita Cinco, are also taking further sustainability measures, such as becoming LEED certified. Not only are these measures good for the planet, they are also a great selling point for the development!

If you are thinking this Santa Ana development might be a great, but rare opportunity, it is quite the opposite. According to Multi-Housing News, The New York Times and The Wall Street Journal reported there are an estimated 70,000 similar auto-centric strips and neighborhood-serving centers and parcels like this throughout the nation.

Other mixed-use developments in Southern California include a major redevelopment project in Warner City, called the Promenade 2035, a 23-story, 644-unit, high-rise building in Koreatown, and a recently greenlight project for the Southern California Flower Market in Downtown LA. 

Sources:

https://smartgrowthamerica.org/resources/building-better-budgets-a-national-examination-of-the-fiscal-benefits-of-smart-growth-development/
https://www.multihousingnews.com/from-strip-center-to-mixed-use-the-story-of-la-placita-cinco-in-california/
https://www.communitydevpartners.com/la-placita-cinco
https://www.completecommunitiesde.org/planning/landuse/mixed-use-development/

The post The Exciting Opportunities of Mixed-Use Developments appeared first on Reynolds Realty Advisors.

Throughout 2021, we’ve seen our staff, investors, clients, and partners face each day with…

Creativity: If we had to choose just one trait that embodied this year, creativity would be a strong contender. We’ve truly seen “if there’s a will, there’s a way” in action throughout the past 18+ months. While we hope there’s significantly less need for creativity in the new year, we are grateful and amazed by the creative ways we’ve seen investors diversify, our property managers attract tenants, and construction adapt to changing needs. We will be channeling this creativity to always better serve our community in the days, weeks, and years to come.

Kindness: In multi-family and commercial properties, there is an inherent sense of community– after all your tenants are literally neighbors. But the new ways we have seen communities of all kinds (vendor partners, owners, and tenants) pull together and the kindness they’ve shown is nothing short of inspiring. As the world continues to change in the next year, leading with kindness is a lesson, and a practice, we will carry on.

Passion: There is no doubt that over the past year, our industry faced very difficult challenges. In addition to the regular difficult parts of the job, we’ve had to navigate eviction moratoriums and changing legislation. And through all these challenges, we’ve all worked with resilient passion. At the end of the day, passion is what drives us and, here at RRA, we are excited to enter a new year with renewed passion.

And since we are wrapping up the year, let’s take a look at some of the local market insights and opportunities for multifamily and commercial properties. (Numbers and statistics are as of Q3 2021.)

Los Angeles

Overall, the LA market has seen a very strong recovery. There has been a steady increase year over year in rental prices. Current prices are above 2020 and even 2019 numbers. As you will see below, the daily asking rate per square foot has increased 6% since the start of the pandemic. This is a strong recovery but lags behind the 11% we saw in previous years.

Another trend we’ve seen continue to develop is the strength of the affordable housing market. Affordable housing saw less of an impact throughout COVID and has seen a faster recovery than four and five star communities. This tracks with the changes in tenants’ desire for more space between neighbors and an increased need for space as the home became an office, schoolhouse, and gym as well. The village and tower style living became less popular during the pandemic and many people gravitated to older, more spacious buildings. 

With a massive increase in job growth, in both LA and the nation, the future is looking very strong. LA is currently the second largest metropolitan market in the nation. Currently there are 25,000 new units under construction and the sales volumes of apartment properties reached $10.5 billion. In addition, the average market pricing for apartment properties, $390,000/unit as of Q3, is well above the national average of $230,000/unit.

Orange County

Vacancy rates in the OC dropped off significantly during the pandemic and are forecasted to remain lower than pre-pandemic levels in the years to come as the demand and supply gap closes. This, coupled with the prediction that Orange County employment will fully recover by Q3 2022, offers a very positive outlook for the new year.

The industrial market continues to perform well, and showcase that it is a strong and consistent investment in both upward and downward markets. Currently the leasing volume is slightly lower than this time last year but more units are projected to come online soon. Over the next two years, we are expecting very high increases in demand and supply.

2021 has given us many lessons on our outlook and investments. The past two years have clearly demonstrated that when the market is down, apartments are in high demand and industrial units are consistently strong. So as we go forth into the coming years, keep in mind that multi-family and industrial properties are great, low-risk options for your portfolio. However, each investor and each portfolio has its own goals and strategies. If you are seeking guidance on your investment strategy in the new year, we would be honored to speak with you. Please contact us anytime we can be of assistance.

*Data and analysis from this article is courtesy of CoStar. This material should not be relied upon for predictions of future results but to provide you with background, information and education.

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Whether you choose to self-manage or hire a management team, there are several essential tasks that must be taken care of to have a successful and profitable investment. These include: 

• Advertising your property
• Determining rental rates
• Preparing the lease
• Screening applicants
• Collecting rent
• Managing preventative maintenance and regular repairs
• Remodeling and property improvements
• Customer service
• Moderating issues between tenants
• Evicting a tenant when necessary
• Sustaining a high occupancy rate
• Cost reporting
• Maintaining legal compliance 
• Finance management

Unless managing your property(ies) is your full-time job, this can be a lot to manage. Which is one of the many reasons many property investors enlist the help of a property management team. 

It is important to note that having a property management team doesn’t mean you cannot still be a part of the management and decision making process, if you choose. It does mean that you aren’t required to be involved on a daily basis and offers you many other benefits including: 

More Time and Less Stress: Probably the biggest advantage of using a property manager is the time and stress you will save. Being a landlord is a 24/7/365 job. Many of our clients have come to us because they want to spend their energy on their families, careers, travel, or other investments. (And many are simply tired of working nights and weekends!) Having a property management team means you don’t have to be “on the clock” anytime you don’t want to.

Experience and Expertise: Another invaluable advantage you’ll have by working with a property manager is their years of experience. Seasoned teams, like ours, have truly seen it all and know how to handle everything from difficult tenants, to confusing permits, to new market trends. 

The world of multi-family real estate also involves a long list of ever-changing laws, regulations, requirements, and best practices you need to be aware of. When you work with a property management team, it is their job to understand the ins and outs of the rental industry and ensure you are always up to date and in compliance with items such as: lease management and tenant notifications, Fair Housing, ADA, and COVID-19 regulations, employment laws, payroll and tax requirements, city and build codes, as well as overall risk mitigation.

Ease of Filling Vacancies: Even when the rental market is hot, you always want the best tenants at the best price point and achieving this magic balance requires a deep understanding of the industry and the local market. A strong property management company will have the tools to effectively market the property, screen applicants for the best tenants, increase retention, and drive occupancy, and rental rates to their maximum potential.

Cost savings: Property management teams typically oversee the management of multiple properties (we’ve managed over 1,000), which means we have industry knowledge, connections, and teams needed to get the best professionals at the best rates when it comes to maintenance, construction, and any other outsourcing you may need.

For example, here at RRA, we have a team of in-house maintenance specialists and contractors available to you at a discount! Because of our large portfolio, we are able to leverage economies of scale and support multiple complexes with the same team. We then are able to pass on substantial cost savings through our reduced labor rates and corporate negotiated wholesale direct material prices.

Your property manager will also have a working knowledge of existing multi-family property operations and finance modeling, which gives them the ability to identify which options will work best for each particular owner and property. Their experience and expertise will provide you with cost-saving measures and increase your overall NOI. However, when looking for a property manager, it is important to find a team that understands your specific goals and is able and willing to create a customized strategy for you.

In addition to the above benefits, sometimes property management is simply more practical. For example, you might live a good distance away from some, or al,l of your rental properties, you might have significant day-to-day responsibilities that would make emergency calls or last-minute requests complicated or impossible to deal with, or you simply may not have the industry knowledge and experience to get the highest possible return on investment.

Finally, it is important to note that you may change your mind overtime. You may have enjoyed self-managing for many years but don’t want the full time responsibilities anymore. If this is the case, know that property management does not mean you have to give up the parts of the job you do enjoy! Our property management services are all about providing excellence in customer service– which means we understand no two clients are identical and we customize our model to best fit each client’s needs.

Once you decide if a professional property management service is the right choice for you, the key to moving forward with the right property management company is to find a company that will work with you. Click here to read our blog on how to find a property management team that fits your needs.

If you are interested in learning more about our full-service property management, please click here or email elizabeth@reynoldsrealtyadvisors.com to learn more.

The post The Benefits of a Property Management Team for Multi-family Property Owners appeared first on Reynolds Realty Advisors.

If you didn’t get a chance to visit us and have a question about your current or future investments– know that our team is always here for you! Reach out to us anytime at elizabeth@reynoldsrealtyadvisors.com or (866) 613-7772. And be sure to mark your calendars for December 2nd! Our founder, Elizabeth Reynolds, will be hosting a webinar in partnership with the Apartment Association of Greater Los Angeles on How to Increase Your Property Value and Cashflow Through ADUs. Stay tuned for more details.

P.S. Looking to stay up to date on the latest real estate trends and updates? Connect with the RRA team on Facebook and LinkedIn.

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However, it is important that you request feedback in the right way! You want the process to be convenient and hassle-free for the tenant and provide you with quality and actionable information.

Ready to get started? Here’s what you need to know.

How to set up the survey:

A digital survey is going to be the easiest and most appealing option for most tenants. To set up the survey itself you can use a platform like SurveyMonkey or Google Forms. Both will allow you to choose a question type (multiple choice, short answer, dropdowns or checkbox) and will allow you to create a link that you can send out to your tenants. You may also want to set up the survey with anonymous responses so that your tenants are more comfortable giving honest feedback.

When choosing a platform, it is helpful to select one that shows you individual responses as well as summary data in graphic format. (Both SurveyMonkey and Google Forms offer this.) This is very important because you will primarily be looking at trends and aggregate data but may also be helpful to see an individual response or survey to see how one person responded to all of the questions.

What to ask in the survey: 

You have to ask the right questions to get the right information! So make sure that any questions you ask provide you with data that either helps you understand your tenants better or tells you about pressing issues you want to know more about.

Don’t overload your tenants with too many questions or ask them to write an essay. Mix up the question formats and include a mix of yes/no, short answer and scale/rating questions.

Below are some ideas to help you choose topics and write your questions. But remember– these ideas are simply for inspiration. Again, you should only ask questions that provide a useful answer for you and your business. 

1. Ask them to rate areas or aspects of the property on a scale (for example a one-to-ten scale or a “strongly disagree” to “strongly agree” scale.)

A few aspects of the property you may want to ask about include:

• Interior fixtures such as flooring, counters, lighting, etc.
• Exterior walls and roofing
• Safety and security features
• Outdoor spaces such as dog runs, pool, or lawns
• Availability of parking and laundry facilities 

2. Ask about their satisfaction with maintenance requests.

For this question, a yes/no and a short answer to elaborate is helpful.

3. Ask for feedback on your staff and customer service

This is another question that works well as a series of scale or rating questions. Include prompts about availability, friendliness, helpfulness, communication, etc.

You’ll also want to include a short answer space for additional feedback. If you want more responses here, ask a direct question such as “How can our management be improved?” or “What would you like to see more of from our staff?”

At the end of the survey, you can link to your review sites like Yelp and Google and ask them to leave a public review!

How to promote the survey:

The primary way of promoting your survey is likely going to be through email. If your online tenant portal allows announcements or messages, you can also include a note about the survey there. Similarly, if you regularly offer text reminders to your tenants, you can send out a link to the survey via a text blast so tenants can easily fill it out on their phones. (But be sure to space out these messages! You don’t want to bombard your tenants.) Finally, it is also a good idea to have a QR code in the office so when tenants come in, you can remind them to take the survey and they can simply scan the QR code with their phone and complete the survey right away. If you are not familiar with QR codes, check out this step-by-step guide.

To increase the timeliness and the number of responses, make sure you set a deadline for completing the survey– otherwise most people will decide to “do it later” and forget. Also consider offering an incentive or giveaway. This can be something small such as a gift card or movie tickets or something significant like a tablet or smart watch.

How to use the survey results:

You’ve done all of this work, so it is important that you get the most from the results. Once your responses come in, go through the aggregate data and see what your tenants identified as most successful and least successful. Be sure you keep an open mind and take the responses seriously. If you find negative feedback, don’t get discouraged or overwhelmed. Remember that this is an opportunity to improve your tenants’ experience, your property value and retention.

Then, make sure you take action. It is important that your tenants know this is not an empty gesture. If you find someone reported a serious issue (and they provided their name) be sure you follow up with them! If there was an overwhelming request for something, see if you can make it happen or what changes you could make to work towards that request.

And finally, remember you don’t have to do this alone! Our team at Reynolds Realty Advisors is here to help you with a smooth application and leasing process, compliance management, maintenance and more. Click here to learn about our full-service management.

The post The Complete Guide to Tenant Satisfaction Surveys for Multi-Family Properties appeared first on Reynolds Realty Advisors.

Revenue Generating Property Management Strategies

One of the first ways property owners often think of to increase revenue is to increase the rent. And this might be a good strategy! However it is not as simple as deciding how much money you want to make and dividing by the number of units. Instead, you should start by researching the market rent prices and looking at similar (age, amenities, size, etc.) complexes and their rent and vacancies. (Pro tip: this is where a property management company comes in handy! It is our job to know the market trends and identify income generating opportunities for you.)

You want to ensure that the rent increases at minimum, cover your costs and, ideally, create a higher profit margin. But you also want to be wary of increasing rent too much or too quickly and creating a high vacancy for your property. To help avoid this, whenever possible, create some added value when increasing your rent prices.

One of the key strategies for marketing your property at your ideal price point is to determine a property theme and target customer. Are you marketing your property for low-income singles? Professional commuters? Young families? Once you know who you want to market the property to, you can refine your services and offerings for that group. Identifying and understanding your ideal client will help you generate income in two ways.

The first is that your property will become better known in the community you are marketing it to— meaning you will get increased interest and referrals. And if your property is well suited for your target market, you can also decrease turnover and vacancies.

The second way that having an ideal client helps generate income is by being able to offer value added services, where you offer amenities and/or services for an additional fee. And the more tailored your market, the easier it will be to sell! For example, if your complex is primarily multi-room apartments, marketed towards families, additional storage units, housekeeping services, or small gardens might be very good offerings. Or if your property is mostly studio apartments, with young singles, laundry services or live fitness classes could generate additional income.

(This tactic is also a cost saving technique, as one of the biggest mistakes investors make is to over-improve a property without focusing on the ability of the improvement to increase revenue. AKA if you upgrade your units with marble countertops but your ideal tenant isn’t willing to pay a higher rent or stay longer at the property for them, you are wasting your money!)

Finally, you may have the option of adding additional units to your existing property! Under new laws passed in 2020, you can add 2 new ADU units to any multi-family property AND up to 25% more units— all without additional parking, given your property is located within a half a mile of a local bus stop.

For example with a… 

• Duplex: You can add up to 2 units + 25% (convert the garage to a unit), giving you a 5-unit complex
• 4-plex: You can add up to add 2 units + 25% (1 unit), becoming a 7-unit complex
• 20 unit: You are able to add up to add 2 units +25% (5 units), creating a 27-unit complex
• 100 unit: You can add up to add 2 units + 25% (25 units), now a 127-unit complex

As you can see, the larger the complex, the more exponential your growth opportunities. 

Cost Saving Property Management Strategies

The first step in reducing costs is to look at your costs! Go back over the past three years of expense statements and see where the money is going. Often utilities are one of the largest expenses— especially if there have been cost increases that were not passed onto the renter. (AKA the silent profit killer!)

If utilities are currently included in rent, consider making some upgrades to the units, such as installing low-flow shower heads and energy effect light bulbs. You can also switch to Renters Utility Billing Service (RUBS.) This is where you, as the landlord, pay the utilities upfront and bill the tenant their portion. Billing amounts may be derived from sub-metering and/or by allocation. This is a way you can insure you break even or make money. It has been found that water usage is cut by up to 80% when the tenants pay for their usage.

Do keep in mind that some municipalities have laws regarding the methodology permitted for RUBS and could impact the total amount of your rent increases.

Also be sure to take a look at your maintenance costs and see if some preventative maintenance and regular inspections could help you keep costs down. Oftentimes small changes upfront can help you avoid much larger repair bills down the road.

Finally, you might even want to consider refinancing for a lower rate. Even a reduction of 1/2 of a percentage point can make a big impact on your bottom line. However, this is not always the best option for everyone. It will depend on your goals and finances. To see if it is an option for you, calculate the break even point— determine the costs of the refinance and divide that by the monthly savings and see how long it will take to recoup your costs.

In summary, increasing your rental property cash flow will not only help you sleep better at night but in many cases, these strategies also increase the value of the property itself! Giving you a future of good sleep. And should you ever have questions or want a professional on your side, the Reynolds Realty Advisors team would be honored to help you make your property as profitable as possible. Contact us for a free property assessment today.

The post Ways to Increase Cash Flow for Your Multi-Family Property appeared first on Reynolds Realty Advisors.

Save the date! We are hosting a free webinar on Thursday, June 17th at 10am PST.

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As everyone knows, the past year has been filled with plenty of ups and downs. But it’s been over a year since our first shut-down due to COVID-19 and, here at Reynolds Realty Advisors, we are excited to say that when it comes to the real estate market in Orange County, many trends have been steadily and substantially on the rise!

And the good news doesn’t stop with real estate. Before we dive into the specific markets here in the OC, it is important to take note of the general economy. Throughout Q1 2021, Orange County has been ramping up– tourism is on the rise, hotel occupancy is up, and retail sales continue to increase to numbers higher than 2019 and 2020.

Jobs are also coming back, as companies are beginning to hire and expand once again. At the end of March, 2021, unemployment numbers in Orange County were just above 6%, nearly 2% less than the national average. While, similar to life, things are not quite “normal,” everything is trending in the right direction and we are looking forward to an even better Q2.

Now, let’s turn our focus to the real estate market. In this article we will be focusing on four areas of real estate: the office market, the industrial market, the retail market, and the multifamily market.

Office Real Estate in Orange County

Not surprisingly, the office market has had a tough time over the past year. Q1 2021 was the fourth consecutive quarter of negative absorption, this combined with new supply coming to the market has resulted in office vacancies continuing to rise, reaching 12% at the end of this March. Contributing to both the vacancy rates and the higher supply, is the continued trend of many companies continuing to let go of office space, at least for the time being, as more people are working from home.

However, with more companies letting go of space, more subleasing has been occurring and subleasing offers some exciting opportunities. There are companies using the high volume of available space to expand their operations. For example, California Pizza Kitchen is moving from their current 33,000 sqft space in Playa Vista space into Costa Mesa to take up residence in a 37,000 sqft space.

On another positive note, Q1 2021 was the strongest quarter when it comes to leasing since 2019. We started the year off strong when Anduril signed a 450,000 sqft lease in February at The Press in Costa Mesa, which was the largest lease in Orange County since 2016.

With all of that said, annual office rents dropped for the 3rd quarter in a row. This is primarily due to newly built, Class A properties having to compete with the high number of properties on the market, as well as the Class A sublet spaces offering a lower rent price. Class C properties have seen some positive rent growth as they are able to offer a competitive, affordable price. And finally, it is worth noting that while rents did decrease, they are still higher than 2018 numbers.

As the state and country continue the re-opening process, these numbers will likely change and how companies decide to go back will have a significant change on the market. For example, if more companies choose a hybrid approach of in office and virtual employees, they may need smaller private spaces or utilize coworking spaces. But if companies opt to bring everyone back, many may choose to spread out and will need more space for their employees. These next few quarters will be key and should offer more insight.

Industrial Real Estate in Orange County

While the office market has been having a tough year, things are undoubtedly looking up in the industrial space. Q1 2021 was the strongest quarter for growth in the industrial market in Orange County since 2019.

As 2020 was a major year for e-commerce, it is natural that a significant number of companies have been expanding their industrial space over the past year. This trend of course includes Amazon, who has leased a significant amount of space in the area over the past year, including the former Mitsubishi and Boeing campuses. A number of biotech and biomed corp companies are also expanding their industrial footprints in the area.

Overall, we are seeing a lot of positive trends in this sector including increasing demand, low vacancies (just over 3% at the end of Q1, well below the historical and national average) and steady rent growth, even throughout the past year.

Over the past year, some of the strongest submarkets for rent growth have been La Plama, Buena Park, Orange, Anaheim, Garden Grove and other northern parts of the county. These areas in particular offer warehouse space, which has really driven rent growth in those markets.

Some areas with more modest growth include southern communities such as Irvine Spectrum, Laguna Hills and Newport Beach. In general these areas are more expensive but they also have a higher percentage of R&D and flex spaces.

We are excited to conclude the industrial report by saying that the majority of the county is back above its historical average for industrial rent growth.

Retail Real Estate in Orange County

Similar to the office space, retail vacancies continued to expand in Q1 2021, as retail spaces were still closing in the beginning of the year. Although, as we are reopening, these numbers may shift in the other direction as more previously closed businesses reopen and new businesses are created.

Unfortunately, there is still a decrease in the number and size of leases. This trend toward smaller leases is evident when looking at the 5 year average size of retail spaces in Orange county being 3,030 sqft, compared to the average for 2,100 sqft in Q1 2021. It is interesting, though perhaps predictable, to note the larger leases that have been taking place have been signed by more affordable retailers, such as Dollar Tree, Dollar General, and Grocery Outlet.

With more vacant space and reduction in leasing, there has also been a loss in rent asking price. The height of 2020 retail same-store asking rent had around 5% YOY increase and in Q1 2021, this number was less than 4%. This of course is not helped by the increase in competition with e-commerce, which has picked up even more in the past year than before.

On a positive note, there are some new and unique development possibilities for the retail space. We may begin to see more of a blending of retail and multifamily in the same complexes. For example, the Fountain Bowl in Fountain Valley, a 4.88 acre lot, was recently sold for $17.4 million. The new owners have said they are interested in developing this space into multifamily and mixed use space.

There are still a lot of questions and potential changes when it comes to office and retail space but if you have any questions, we encourage you to reach out to us at elizabeth@reynoldsrealtyadvisors.com.

Multifamily Real Estate in Orange County

Apartments got hit hard in the first half of 2020 but since then, we have seen a strong recovery throughout the county. Let’s take a look at demand numbers for example. Last year, demand for apartments dropped well below historical averages in March, April and May. But since then, demand has been very high. In fact, with the exception of March 2021, which was slightly lower than the historical numbers, every month since June 2020 has been above historical averages. The trends we are seeing from early 2021, point to a very strong spring and summer leasing season.

In the first quarter of the year, apartment vacancy has been very low, even lower than pre-pandemic numbers. Alongside the low vacancy, there has been a steady increase in rents both in Orange County and nationally. In Orange County specifically, the data seems to show a trend to 1+ bed units, rather than studios. While studios have returned to similar rent prices of pre-pandemic times, 1, 2 and 3 bedroom apartments have soared above January 2020 numbers. This seems to be a reflection of the stay at home orders and the popularity of working from home.

The other trend worthy of note is where people are moving in Orange County. In the second half of 2020 and beginning of 2021, there has been significant rent growth in South County, Newport Beach and other coastal submarkets, as well as Irvine, which was able to fill many of the new units built in the early part of the year.

Finally, last summer, concession rates increased as managers tried to make up for the low spring leasing season. During that summer, 1 in 4 properties were offering concessions. The end of the year also saw higher concessions but they were much lower value concessions than what was seen in the summer. As we moved into 2021, concession rates have returned to lower numbers of properties offering concessions and the trend of more modest concessions continues.

As for all of the markets, it is clear that Orange County, and the nation as a whole, is undergoing a lot of change. But there is a lot to be hopeful about, as well as some real and exciting growth in particular markets. If you are interested in getting involved in the Orange County commercial market, the Reynolds Realty Advisor team would be honored to answer your questions and assist you in finding and managing the right property. Please reach out to us at (866) 613-7772 or elizabeth@reynoldsrealtyadvisors.com. You can also connect with our team on Facebook or our founder, Elizabeth Reynolds on LinkedIn.

*Data and analysis from this article is courtesy of CoStar. This material should not be relied upon for predictions of future results but to provide you with background, information and education.

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