Cortex Partners LLP’s Post

[ 29% Lease Trade Out ] Lease trade out is the dollar difference between the newly signed lease vs. the replaced lease. For example, an old lease at $1000/mo replaced by a $1050/mo lease is a +5% lease trade out 💪. The apartment complex we acquired in April 2024 secured 4 new leases on the freshly turned unit and we achieved our underwritten target. The complex has many section 8 tenants so we know there’s low hanging fruits. We showed the local HUD the renovation work we completed and the newly signed leases to request for rent increases within the limits set by the local HUD. The HUD approved and we started renewing section 8 tenants at the approved rates. Our spend on these units are for deferred maintenance only 🛠️. The result? For the 14 units that we renewed and turned since acquisition, we averaged a +29% lease trade out 🚀🚀! The best and worst trade outs were 47% and 10%, and this shows how under monetized the property was before acquisition. On these 14 units alone, we expect to increase the property NOI by about $41,000. At a 7% cap valuation, this is roughly a $600,000 increase in property valuation 📈. With more renewals coming up and more units to turn, We’ll continue to drive the NOI up while tracking our overall CAPEX spend to keep the spend rate in check.

Good vacancy As many investors are discovering with the insolvency of Carpetright, vacancy can be a good thing! The release of a number of units on prime retail parks is creating real competitive tension amongst tenants anxious to gain access to schemes they have been locked out of for years. The majority of prime Retail Parks were let on long leases inside the Act* which limited the ability of landlords to move rents on. Indeed, the only opportunities to let units on prime parks would come when retail markets were weak and finding a new tenant during this time is challenging. Conversely in the boom times these properties were fully let and, with all the letting evidence coming from inferior secondary properties, there was little or no evidence to move on the prime rents on these properties. As a result, these properties have become under rented and undervalued relative to their true worth. The competition we are seeing for these newly vacant units means we expect to generate double digit rent increases vs the valuers ERV's. Good vacancy can also include buildings at the end of their economic lives where they are capable of economic refurbishment or reinvention to another use. The former we have seen across our client’s industrial estate assets -where extensive refurbishment of older assets (retaining the existing frame) - boosting rents and reduced letting times beyond our own expectations and previous experience on the wider estate. This future-proofs the asset for decades and can reduce its carbon footprint, all without the massive cost and carbon budget of knocking down and rebuilding again. *1954 Landlord Tenant Act for those not familiar.

A recent NSW Court of Appeal decision significantly narrows the compensation available to tenants who must relocate following a compulsory acquisition. This summary by Marie Khoury In Sydney Metro v C & P Automotive Engineers Pty Ltd [2024] NSWCA 186, the Court of Appeal held that dispossessed tenants will not be compensated under s 59(1)(c) of the Land Acquisition (Just Terms Compensation) Act 1991 (the ‘Just Terms Act’) for costs associated with either: 1)    the fit out of a new premises, if the fixtures it uses under its current lease were the fixtures of a landlord; or 2)    the difference in the rent at the new premises (whether temporary or permanent), and the rent at the acquired land. It follows that, unless a tenant finds a replacement property with sufficient existing fixtures at the same or lower rent, it is unlikely to be able to recover all costs associated with its relocation following a compulsory acquisition. The Court of Appeal’s decision may create significant difficulties for dispossessed tenants. For example, a tenant may operate a bespoke business for several years, relying on the use of the landlord's fixtures. Unless there is a suitable replacement property which is available for it to rent, the tenant will not be able to recover the costs of replacing the improvements if they are to become the property of the new landlord. Similarly, if a business manages to find a suitable property (ideally with suitable landlord fixtures for it to carry on its business), it cannot be compensated for the difference in rent in the new property. Could the Court of Appeal's decision lead to more businesses being required to "shut up shop" following the acquisition of their leasehold interest? 

Real estate vs Other businesses I’ve ran multiple operating businesses and real estate properties. Real estate is an operating business. It has operations (property management, toilets, paint, landscaping etc.) just like running a liquor store, manufacturing business, e-commerce, retail store or car wash business. It is not passive unless you invest in a REIT, private equity or some other venture where the operating agreement states that you can take a shit 💩 while me manage your property. (Returns) I’ve seen 10%-40% net cash on cash returns in non real estate businesses. I’ve seen 8%-25% net cash on cash returns in real estate. Both strategies can work hand in hand depending on which industries you’re in. You can purchase a mixed use property (retail & multi family) and run your business while earning rent. That’s a win win for you. You enjoy profits from rents and profits from your business.

Does Your Business Have a Commercial Real Estate Strategy? In our blog, we compare buying vs. leasing and provide key insight on which strategy is most effective for aligning your workspace with your goals. Read the article here: https://lnkd.in/gK7kEKBa #tenantrep #cle #cbus

 Investing in Buy-to-Let Property in 2024: Five Compelling Reasons Here are five reasons why investing in buy-to-let property in 2024 could be a smart move. 1)   Property Price Projection: Despite recent price drops, experts project that property prices will rise in the upcoming years. This presents an opportunity for investors to capitalise on potential capital appreciation, especially if they enter the market during a period of discounted prices. 2)   Current Property Price Discounts: With house prices experiencing a recent decline, there are opportunities to purchase properties at a discounted rate. Investors who act now can take advantage of these lower prices and position themselves for future growth in property values. 3)   Improving Interest Rates: Interest rates are showing signs of improvement, making financing options more attractive for buy-to-let investors. Lower interest rates translate to reduced borrowing costs, potentially increasing rental yield and overall profitability for landlords. 4)   Increased Number of Properties for Sale: The market downturn has led to an increased number of properties for sale, providing investors with a broader selection of properties. This abundance of options allows investors to be more selective in their property acquisitions and find opportunities that align with their investment goals. 5)   Growing Rental Demand: Rental demand in the UK continues to grow, with a rising number of tenants seeking rental accommodation, buy-to-let investors can benefit from a steady stream of rental income and high occupancy rates. Here at PJCO we have a specialist property department, and if you need assistance starting your BTL journey, please feel free to book a free discovery call using the link below: https://lnkd.in/ekjjUD-f #BuytoLetProperty #2024

 Investing in Buy-to-Let Property in 2024: Five Compelling Reasons Here are five reasons why investing in buy-to-let property in 2024 could be a smart move. 1)   Property Price Projection: Despite recent price drops, experts project that property prices will rise in the upcoming years. This presents an opportunity for investors to capitalise on potential capital appreciation, especially if they enter the market during a period of discounted prices. 2)   Current Property Price Discounts: With house prices experiencing a recent decline, there are opportunities to purchase properties at a discounted rate. Investors who act now can take advantage of these lower prices and position themselves for future growth in property values. 3)   Improving Interest Rates: Interest rates are showing signs of improvement, making financing options more attractive for buy-to-let investors. Lower interest rates translate to reduced borrowing costs, potentially increasing rental yield and overall profitability for landlords. 4)   Increased Number of Properties for Sale: The market downturn has led to an increased number of properties for sale, providing investors with a broader selection of properties. This abundance of options allows investors to be more selective in their property acquisitions and find opportunities that align with their investment goals. 5)   Growing Rental Demand: Rental demand in the UK continues to grow, with a rising number of tenants seeking rental accommodation, buy-to-let investors can benefit from a steady stream of rental income and high occupancy rates. Here at PJCO we have a specialist property department, and if you need assistance starting your BTL journey, please feel free to book a free discovery call using the link below: https://lnkd.in/ekjjUD-f #BuytoLetProperty #2024

Unlocking the Secrets of Vendor Discounting: A Game-Changer for Property Investors In the dynamic world of property investment, understanding market trends is crucial for making informed decisions. One key trend that savvy investors monitor closely is vendor discounting. But what exactly is vendor discounting, and why is it so important? What is Vendor Discounting? Vendor discounting refers to the difference between a property's initial listing price and its final selling price. Essentially, it's the percentage reduction sellers are willing to accept to close a deal. This metric provides valuable insights into the market, revealing whether it's a buyer’s or seller’s market. Why is Vendor Discounting Crucial for Property Investors? Market Insight Vendor discounting offers a clear snapshot of the current market climate. High discount rates often indicate a buyer’s market, where sellers are more flexible on price to make a sale. Conversely, low discount rates suggest a seller’s market, characterized by high demand and less price flexibility. Negotiation Leverage Armed with knowledge of average vendor discounts, investors can negotiate more effectively. In markets where properties are sold at significant discounts, there's potential to secure deals below the listed prices, maximizing investment value. Shaping Investment Strategies Vendor discounting trends can guide strategic decisions. In high discount markets, focus on undervalued properties ripe for renovation and resale. In low discount markets, long-term capital growth might be the better play, riding the wave of rising property values. Risk Assessment Evaluating vendor discount rates helps in assessing market risk. High discounts might signal falling property values, presenting a risk for short-term investments but potential opportunities for long-term growth. Low discounts typically indicate stability, though with higher entry costs. Enhancing Cash Flow For investors prioritizing cash flow, buying at a discount reduces the initial outlay and financing needs. This can lead to better cash flow and higher returns on investment, a crucial factor for sustainable growth. Stay informed, negotiate wisely, and strategically plan your investments to unlock the full potential of your property portfolio.

The gap between renting vs. buying keeps increasing and more people can afford their rent but the cost of ownership is much higher, per Newmark. #rent #invest #passiveinvesting #multifamily #MF #bepropertyinvestors @massivecapital

Monument Daily Briefing - 28 November 2024 German Real Estate News - 'Achat Hotel and Real Estate operating company files for insolvency under self-administration in Mannheim' - Achat Hotelgesellschaft - 'Adler announces comprehensive leadership change, Thierry Beaudemoulin steps down as CEO' - Adler Group - 'Clarion Partners Europe acquires logistics hall in Bitburg from Panattoni for €35 million' - Clarion Partners Europe - 'Revitalis sells residential project at Winsener Straße in Hamburg-Wilstorf to Saga' - Revitalis - 'Gateway Real Estate to build 220 apartments in Heinrich-Pesch-Siedlung, Ludwigshafen' - Gateway Real Estate - 'CA Immo improves operational profit by 5% in the first three quarters, sells assets for €139 million' - CA Immo - 'UBM triples apartment sales in the first three quarters, sees slight revenue increase' - UBM - 'Financing new business rises to €90 billion, driven by residential real estate loans' - Pfandbriefbanken - 'Quest Development tasked with revitalizing former IHK building in Hardenbergstraße' - Quest Development powered by TV Squared