NJ apartment building in great demand but not readily available

Investment Market by strengthening the foundations Driven by rising prices

Apartment building is the darling of the Northern New Jersey investment community over the past two turbulent years. Today, high occupancy, rental price falls slowing and fewer incentives for landlords, stability of income and continue to make readily available to finance apartment building is a popular destination - but with a few properties on the market, trade slow to date in 2010.

THEBASICS
Apartment rent occupation in Northern New Jersey appear in the center of the pallet to stabilize 90 percent, about 2 percentage points lower than the long-term average. In essence, New Jersey rental basis in sync with the nation moves - and better than the national average. Recent statistics signal continued.

As employment and housing purchases have pressures to a volatile swing on Class A properties in comparison to the class B / C LEDCommunities have seen both casts return to parity. For landlords, this is a positive sign that downward rent adjustments are no longer required. Equilibrium of demand back, and the process of home ownership incentives to further enhance multi-family occupation.

Rents in Class A communities have fallen 10-15 percent since their peak in 2007, but still in line with inflation, when referencing back to levels remain in the early 2000s to hire. A rapid two-tooccurred three years until the rents run from 2003 onwards as the labor market swelled and the new construction pipeline moved for-sale housing. Significant condo conversions, especially along the waterfront markets further strain on the supply-demand imbalance.

The real estate boom came to a standstill and slowed the economy, forcing landlords to offer two and even three months rent free, to stabilize their properties. If their hope that the market would improve in the last 12 monthsafter signing a new tenancy agreement is not reached, ask the landlord had their rent by a percentage equal to the rent charge.

These have little adapted to rent further correction necessary, and free rent is used sparingly. This is a telltale sign that the rental market is tightening and that the licenses would likely give way to rent the growth in the coming year. Economists and government agencies predicted backstop this projection, indicating that the employment is neutralin 2010, following positive trends in 2011. As the economy recovers, is multi-family from the shorter term lease allows the ability to increase the rent benefit more quickly than other property types.

THE INVESTMENT OUTLOOK
In northern New Jersey, it is by no means a sale of an apartment building in more than 10 million U.S. dollars in 2010. The offer is rounded off by a total of five deals in 2009 and an average of 16 deals per year between 2004 and 2007th With this type is still considered an asset"The only game in town," investor and advisor in the placement of money needs to aggressively bid to win some free features to put up for sale.

This lack of offers and an influx of new investment dollars from private investors, institutional money managers have created a rapid price increase for core assets - the primary objective of this type of institutional investors. Value-add investors pursuing class B / C properties, seeking higher returns and an opportunity forUpgrading and repositioning.

The popularity of multi-family as an investment type follows from the stability of income and the availability of financing on attractive terms. Apartment has the advantage of plenty of debt by the government-funded agencies Freddie Mac and Fannie Mae, with loan-to-values as high as 80 percent, commercial real estate mortgages are topping out at 60 to 65 percent loan-to-value service.

Lower interest rates ranging from 4.6 to 5.5 percent on five-10-year loan, even lower prices to support cap. In addition, the ability to be interest only for the first two years gearing allows investors neutral if CAP prices in the low five percent range. You can maintain that position, which begins once depreciation in the third year by a positive outlook in the direction of rental growth.

In particular, the prices of the most sought-after CAP recent multi-family assets along the coastal towns built after moving down from the 7 percentto sub-5 percent in the first quarter of 2010. Washington, DC, Edgewater, NJ, and Boston, Massachusetts, are among the East Coast markets that the price of assets have seen at this level. These low yields are willing investors to buy into the premise is justified to improve the fundamentals. You make purchases on an annual basis, trailing three-month performance in comparison to the actual last 12 months to capture the market softness in the spring and summer of 2009 would be.

In Northern IrelandNew Jersey - especially for luxury communities in Hudson County, coupled with the highest rents in the state - low prices have cap, which can in per unit, the $ 500,000-approach to translate. This has led to a hurdle for some investors because they value the shares should be sold as condominiums approaches.

Such price levels to limit potential gains as well as the flexibility of a condo exit strategy. In addition, Fannie and Freddie a threshold to the maximum value they addagainst. Valuations on the replacement value is not a decisive factor was, because of the limited development opportunities in the state and the irreplaceable nature of most residential communities.

For the balance of 2010 we see the demand for the type of stable, predictable returns of apartment buildings with the scarcity of available product combines offered to drive continued to be very aggressive pricing cap. is by most accounts, to have stabilized bases, and the worst for the economyabout. Since the recovery started to take root and start job growth, it is a significant positive impact on the existing apartment buildings in stock. Therefore, there is a unique opportunity for the seller to the exceptionally low maximum rate environment will benefit, while buyers benefit from future rental growth by buying at the bottom of the cycle.