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MAX NOI - How the Pros Buy & Manage Rental Property
- 1. 1
- 2. MAX NOI: San Diego Apartment Overview Presented by: Joshua Ohl
- 3. FUNDAMENTALS
- 4. San Diego Historical NonFarm Employment Growth 3/31/2000 6/30/2000 9/30/2000 12/31/2000 3/31/2001 6/30/2001 9/30/2001 12/31/2001 3/31/2002 6/30/2002 9/30/2002 12/31/2002 3/31/2003 6/30/2003 9/30/2003 12/31/2003 3/31/2004 6/30/2004 9/30/2004 12/31/2004 3/31/2005 6/30/2005 9/30/2005 12/31/2005 3/31/2006 6/30/2006 9/30/2006 12/31/2006 3/31/2007 6/30/2007 Source: US Census Bureau End of 18Q4 0% 2% 4% 6% 8% 10% 12% (8%) (6%) (4%) (2%) 0% 2% 4% 06 07 08 09 10 11 12 13 14 15 16 17 18 San Diego United States San Diego Unemployment Employment Growth (Y/Y) Unemployment Rate
- 5. San Diego Annual Housing Permits Source: Construction Industry Research Board As of Oct 2018 *Through October 0 2000 4000 6000 8000 10000 12000 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018* Single-Family Multifamily
- 6. San Diego Apartment Fundamentals Source: CoStar End of 18Q4 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% -1.0 0.0 1.0 2.0 3.0 4.0 5.0 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 Supply Change Demand Change Vacancy National Vacancy Demand & Supply (000s Units) Vacancy
- 7. RENTS
- 8. San Diego Rent Level & Growth Source: CoStar End of 18Q4 (4%) (2%) 0% 2% 4% 6% 8% 10% $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 Rent Growth Rent Level Rent Level/Month Rent Growth (Y/Y)
- 10. A Noticeable Slowdown at the End of 2018 Source: CoStar End of 18Q4 -3.0% -2.0% -1.0% 0.0% 1.0% 2.0% 3.0% 4.0% 17Q1 17Q2 17Q3 17Q4 18Q1 18Q2 18Q3 18Q4 QuarterlyRent Growth 1&2 Star 3 Star 4&5 Star
- 11. 5 Year Average Rent Growth
- 12. San Diego Cumulative Rent vs Income Growth 82 82 82 82 83 83 83 83 84 84 84 84 85 85 85 85 86 86 86 86 87 87 87 87 88 88 88 88 89 89 89 Sources: Moody's Analytics; CoStar End of 18Q4 (5%) 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 10 11 12 13 14 15 16 17 18 19 20 Cumulative Income Growth Cumulative Rent Growth Rent/Household Income Growth
- 13. INVESTMENT
- 14. Quarterly Sales Volume Source: CoStar End of 18Q4 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 06 07 08 09 10 11 12 13 14 15 16 17 18 Transaction Volume (Millions) 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
- 15. San Diego Apartment Market Pricing and Index Source: CoStar As of February 2019 *Indexed to end of 2008 0 50 100 150 200 250 $100,000 $125,000 $150,000 $175,000 $200,000 $225,000 $250,000 $275,000 $300,000 $325,000 08 09 10 11 12 13 14 15 16 17 18 19 20 21 Pricing Price Index Price Per Unit Index*
- 16. San Diego Average Cap Rates vs Market Rates Source: CoStar As of February 2019 4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 7.0% 08 09 10 11 12 13 14 15 16 17 18 19 20 21 Market Cap Rate Transactional Cap Rate Cap Rate
- 17. San Diego Apartment Update Joshua Ohl – Senior Market Analyst PRESENTED BY: JOSHUA OHL MANAGING ANALYST johl@costar.com 877.385.3718 These CoStar Market Analytics materials contain financial and other information from a variety of public and proprietary sources. CoStar Group, Inc. and its affiliates (collectively, “CoStar”) have assumed and relied upon, without independent verification, the accuracy and completeness of such third party information in preparing these materials. The modeling, calculations, forecasts, projections, evaluations, analyses, simulations, or other forward-looking information prepared by CoStar and presented herein (the “Materials”) are based on various assumptions concerning future events and circumstances, which are speculative, uncertain and subject to change without notice. You should not rely upon the Materials as predictions of future results or events, as actual results and events may differ materially. All Materials speak only as of the date referenced with respect to such data and may have materially changed since such date. CoStar has no obligation to update any of the Materials included in this document. You should not construe any of the data provided herein as investment, tax, accounting or legal advice. CoStar does not represent, warrant or guaranty the accuracy or completeness of the information provided herein and shall not be held responsible for any errors in such information. Any user of the information provided herein accepts the information “AS IS” without any warranties whatsoever. To the maximum extent permitted by law, CoStar disclaims any and all liability in the event any information provided herein proves to be inaccurate, incomplete or unreliable. © 2019 CoStar Realty Information, Inc. No reproduction or distribution without permission.
- 18. 18
- 19. 21st-Century Real Estate Investing Doug Brien, CEO & Co-Founder
- 20. 20 Doug Brien
- 21. 21 A Tsunami of Change Is Headed Our Way
- 22. “Skate to where the puck is going and not where it is.” - Wayne Gretzky Anticipate Your Next Move
- 23. 23 3 Tips to Leverage Tech and Boost Income 1. Make data your friend 2. Use tech to improve leasing 3. Improve customer service with tech
- 24. 1. Make Data your Friend “Data is the new oil.”
- 25. 25 I want DATA!
- 26. Access to Data Gives Investors a Competitive Advantage
- 27. 27 Now Imagine This…. 4. ROI estimates 1. Real-Time Dashboards & Benchmarking 2. Revenue Management 3. Rent Predictions 5. Predictive Analytics
- 28. 28 Best Sources of Real Estate Data
- 29. 29 2. Use Tech to Improve Leasing ● Marketing Syndication Services ● 3D Tours ● Mobile-enabled Leasing Process ● Self-showings ● Attract higher-quality residents
- 30. 30 Transunion ResidentScore: The Industry vs. Mynd
- 32. 32 3. Improve Customer Service with Tech
- 33. 33 Clutter: Revolutionizing Self-Storage with Tech
- 34. 34 Tech-Enabled Customer Service Tools • Customer Satisfaction Scores • Automated Key Updates • Sentiment Analysis • Omni Channel & Chatbots
- 35. 35 How to Make Sure You Are Surfing! 1. Be clear on your goals 2. Build a 21st century team 3. Research & experiment with new tools 4. Monitor & Improve 5. Always be studying the market - educate yourself and stay ahead!
- 36. Owning and renting real estate, simplified. mynd.co The Mynd Mission
- 37. 37
Editor's Notes
- But first, my background. Started my real estate career in the NFL, with the goal of buying one building each year. Since the NFL is such a volatile profession, I wasn’t sure how long it would last. While playing I football, I learned that I love real estate, and wanted to make a career out of it. Founded WayPoint Homes (now Invitation Homes) in 2009. By 2016, the publicly traded REIT had 17,000 SFRs in 13 markets with AUM of $3B. Along the way, I was fortunate to pick up one of these rings.
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- But first, my background. Started my real estate career in the NFL, with the goal of buying one building each year. Since the NFL is such a volatile profession, I wasn’t sure how long it would last. While playing I football, I learned that I love real estate, and wanted to make a career out of it. Founded WayPoint Homes (now Invitation Homes) in 2009. By 2016, the publicly traded REIT had 17,000 SFRs in 13 markets with AUM of $3B. Along the way, I was fortunate to pick up one of these rings.
- Today, I would like to talk to all of you about the change I see impacting the real estate sector. The second part of my presentation will how you can be successful surfing that huge wave.
- But first, my background. Started my real estate career in the NFL, with the goal of buying one building each year. Since the NFL is such a volatile profession, I wasn’t sure how long it would last. While playing I football, I learned that I love real estate, and wanted to make a career out of it. Founded WayPoint Homes (now Invitation Homes) in 2009. By 2016, the publicly traded REIT had 17,000 SFRs in 13 markets with AUM of $3B. Along the way, I was fortunate to pick up one of these rings.
- There is a tsunami of change coming to real estate. Real estate tech investing has grown 7x since 2015, from $1.8B to about $13B. Recently, it increased $1.4B in just one week! Not all of these ventures will be successful, but many of the concepts will. This infusion of money will drive change and transform the industry. This preso is about what it will take to be a successful RE investor in the 21st century. Success is about evolving. Reality is some will surf, while others will get washed away. My goal is to help you surf!
- This is what this presentation is really about. One of my favorite quotes in business and life. Especially important as tech continues to disrupt every industry. Will share my thoughts on where I believe the puck is headed. Will also share my six strategies on how to start investing in real estate in the 21st century.
- This presentation will provide specific ways technology and automation are modernizing real estate investing and management. Adopt these strategies to optimize your real estate investments, and boost your monthly rental income.
- Question: What percent data collected in last two years? 90%! It’s hard to imagine: Google searches, photo sharing, Facebook and real estate data All of this data is potentially very valuable. New saying: Data is the new oil. Those that own and use data will be the winners in the next century
- One interesting trend I have seen: The smartest and most successful investors all have one thing in common. They have mastered using real-time data Enables better decisions & faster decisions
- In most industries, real-time data is commonplace. Real estate has been slower to adopt real-time data, but Mynd and other proptech firms are changing that.
- When it comes to your real estate assets, you should be informed about their performance at all times. New platforms are emerging, so this will change how you invest in real estate. Imagine how powerful this tool can be for investors, and the entire industry. Understand how you can get in front of this.
- Here are some companies to check out They have data that can help you make better decisions If you aren’t leveraging the increasing availability of data you will get left behind *Verbally mention CRAIGSLIST
- The way you lease vacant units can and should evolve. What’s the goal of leasing? Optimize Highest rent Fastest time Highest-quality tenants There are new tools to help you do this better. Syndicates Cast a wider net, and get your listings on more eyeballs in a fraction of the time it typically takes. 3D tours/great photos: Provide as much transparency and info online as possible. Self-showings: Reduce vacancies by scheduling more appointments with the least friction possible, and allow prospects to schedule them online or from their mobile device. Resident screening: Use data to help select better residents with lower delinquency rates and higher ResidentScores.
- ResidentScores: Data collected by leading multifamily credit bureau TransUnion analyzes the quality of residents and helps you attract higher-quality tenants with lower eviction and delinquency rates. Seek out tech-savvy tenants because they optimize the leasing process: Mynd residents are also more tech-savvy than the average resident, and are drawn to our tech-enabled features like digital resident applications, chatbots, etc.
- Lots out there, challenge is integrating
- I feel passionate about this final property management tip: Last year, I wrote an article in Forbes because I feel like many people in the industry are wrong about what technology can do for customer service. In the past, customer service has not been something that the traditional real estate industry has focused on. However, startups are popping up all over with a deep focus on the customer experience, and disrupting the industry. We Work Clutter The same thing will happen with property management and the owner and resident experience. Many equate automation and tech to bad or impersonal customer service: This is wrong. Customer service is at the core of what we do as PMs, and I believe those that embrace tech will provide far-superior customer service. Here’s how.
- Revolutionary case management with proprietary PM software: Otto Measures key statistics to maximize your investments: first response, open to close Provides an immediate feedback loop for customer satisfaction and service with NPS and CSAT surveys.
- The rate of change and adoption is going faster and faster Get ahead of the wave and make sure you are surfing - not drowning. Tip #1 - assess how you make decisions and your data sources Work smarter, not harder Tip #2 - assess the tools you or your PM are using to attract residents Know all your leasing metrics: time to lease, rent vs. market, tenant caliber The way you lease will have a big impact on the kinds of tenants you get, I believe today in many locations a more tech-forward approach yields better results Tip #3 - look at how you or your PM provide service Are you measuring customer satisfaction? Where are you strong or weak? Is there a plan to improve?
- If you have any questions about loal San Diego market conditions, please talk to Heather Jones, our expert in San Diego For any questions on real estate investing for building long-term wealth, best property management practices to maximize your NOI or more about my personal experience, talk to me afterward.
- But first, my background. Started my real estate career in the NFL, with the goal of buying one building each year. Since the NFL is such a volatile profession, I wasn’t sure how long it would last. While playing I football, I learned that I love real estate, and wanted to make a career out of it. Founded WayPoint Homes (now Invitation Homes) in 2009. By 2016, the publicly traded REIT had 17,000 SFRs in 13 markets with AUM of $3B. Along the way, I was fortunate to pick up one of these rings.