Triangle, North Carolina.  A Renter’s Market On The Way?  Some indicators say Yes - some indicators say No.  After looking at the items on both sides of the ledger you can flip a coin and make your choice.  * The Triangle labor force slowed to a plus 1.5 percent during the last 12 months  * Also, during the last 12 months 3,647 new apartment units came on the market  * In the Triangle companies are reducing and delaying expansion  * At the end of March the area had 91,800 apartments.  At the same time 9.2 percent of them were empty  * Units under construction total 3,687 while, at the same time, the number of unsold homes continues to increase  * Tighter lending requirements, people moving out of homes and into apartments and renters staying in apartments longer indicate it should be a good market for landlords.  Place your bets ladies and gentlemen.

John Fish (919) 696-3474   Email: Marvmax@mindspring.com   Website: www.JohnFish.com 

Triangle, North Carolina.  The first quarter sales of apartment complexes in the Triangle totaled $706.7 million.  That is nearly equal to the total volume of sales during all of 2007!  Demand for aparments and increasing rents are the reasons that are driving the demand to acquire them.

WACHOVIA - BAD LOANS COST JOBS.  During the all heat and very little light lending period of making subprime loans Wachovia not only made them BUT they compounded the problem by purchasing Golden West Financial of California who made a truckload of those loans.  It was something they admit they should not have done.  Now, when they are looking for ways to cut expenses, who gets it in the neck?  Their employees.  Wachovia will be cutting some 500 jobs. 

I recently said that the major banks could lose hundreds of billions of dollars in this subprime debacle and still smile “all the way to the bank” because smaller banks and other mortgage lenders would be driven out of the business which they could then take over and control.  In today’s News and Observer there is an article in which Ken Thompson, the bank’s CEO, talked about the bank’s commitment to the mortgage industry.  It is reported that he said, “We see mortgage as a big opportunity for us.  We think it’s a market that’s going to be dominated by a few large banks and we see Wachovia being a part in that.”  I don’t see how he could have stated the situation more clearly than that.  The follow-up is - who cares?  Unfortunately, not very many and certainly not the politicians who are tied to the banking industry. 

John Fish (919) 696-3474   Email: Marvmax@mindspring.com   Website: www.JohnFish.com

Raleigh, North Carolina.  North Carolina State University, The University of North Carolina at Chapel Hill and Duke University are all within 25 miles of one another.  There are a considerable number of other smaller universities within that area as well.  That translates into a tremendous number of students, an ever increasing demand for student housing and lip licking investment possibilities for investors.  Julian LeCraw & Co. of Atlanta just purchased the 262 unit 546 bedroom Ivy Chase student apartment complex in West Raleigh from Ram Realty Services of Palm Beach Gardens, Florida for $23.3 million.  This represents 24% more than Ram Realty paid for the complex in 2001; a very nifty gain.

I have been talking about the “up, up, and away” buying binge of apartments in the Triangle for quite some time now.  The beat goes on and gets ever stronger.  During this year’s first quarter investors dug into their pockets and shelled out $212 million for Triangle apartment complexes.  That is one-fifth of the record $1.1 billion spent on Triangle apartment complexes during all of 2006.  Another sale, just last week, was the 319 unit Harrison Grande apartments in Cary.  DRA investors came to the table with $29.9 million for it. 

Dad, Mom you may not be able to buy an apartment complex but you can join with others in doing so.  If that doesn’t appeal to you, you might want to give serious consideration to doing YOUR homework in whatever area, or areas, your college bound children are going to or may be getting ready to go to.  Look into the purchase of an apartment, condo, small home for your student(s) for their four year (or more) stay.  You should save money by doing so (especially if you do proper planning) and when they move on you should be able to sell the property of a tidy profit and pay for a good part of (if not all) of their tuition and expenses.

John Fish (919) 696-3474   Email: marvmax@mindspring.com   Website: www.JohnFish.com    

Triangle area, North Carolina.  While people continue to flock to the Triangle they are being faced with less available apartment units and increasing rent rates.  Apartments under construction in the Triangle in 2001 numbered 5,247.  Since then they have zig-zagged up and down to last year’s low of 1,675.  By the same token the vacancy rate has declined from 13% in 2002 to a current rate of 7.8%  Since supply usually follows demand the number of units currently under construction has shot back up to 4,429.  However, this positive figure has a negative side as well.

While rental rates are rising, construction costs are rising even faster.  As a result units proposed number only 4,292 which is a nine year low.  Crosland, a Charlotte developer that has some 700 units under constrution or on the drawing board in the Triangle, says that a Triangle apartment complex that cost in the neighborhood of $80,000 per unit to build only three years ago now costs about $120,000 per unit.  The bottom line for renters is that the average monthly rental rate for a Triangle apartment rose $8 to a record $780 during the year ended March 31.

Five years ago a cap rate of 10% was common in the Triangle.  Apartments sold in the year ending March 31 of this year had an average cap rate of 6.2%. 

John Fish (919) 696-3474   Email: marvmax@mindspring.com   Website: www.JohnFish.com

Durham, North Carolina.  The 21 year old Springfield Apartments complex was sold to Triple Net Properties of Santa Ana, California.  Triple Net paid $18.1 million for the 288 units or $62,847 per unit.  This is 46% more than Steven D. Bell & Co. of Greensboro paid for the 32 acre property in 2004.  That is not a bad return on investment.

CB Richard Ellis data reports that $1.06 billion was paid for Triangle apartment projects during 2006 which is three times the ten year annual average.   

John Fish (919) 696-3474   Email: marvmax@mindspring.com   Website: www.JohnFish.com

Cary, North Carolina.  California money continues to move South.  The Weston Lakeside Apartment complex in Cary was sold last week to a group headed by American Realty Advisors of Glendale, California.  They paid $45 million for the 332 unit complex which works out to $135,542 per unit. 

John Fish (919) 696-3474   Email: marvmax@mindspring.com   Website: www.JohnFish.com 

Raleigh, North Carolina.  The 276 unit Windsor Falls apartment complex at Falls of Neuse and Old Wake Forest Roads was sold to Fairfield Properties for $22.8 million.  That is 21% more than the seller, Associated Estates Realty, paid for it in 1998.  The price equals $82,609 per unit. 

John Fish (919) 696-3474   Email: marvmax@mindspring.com   Website: www.JohnFish.com

Morrisville North Carolina - The demand for apartment complexes continues apace.  A 360 unit apartment complex on 32.7 acres at 1100 Cameron Chase Drive was sold to CWS Capital Partners of Newport Beach, California for $30.55 million.  That translates into $84,861 per unit.  The price represents only a 3% increase above what Archstone Communities, the seller, paid for it in 2001.  The apartments are currently 97% occupied. 

John Fish (919) 696-3474   email: Marvmax@mindspring.com   Website: www.JohnFish.com