THE BEST ADVICE OF ALL
THE PURPOSE OF THIS COLUMN IS HOPEFULLY TO BE NEWSWORTHY. TO TIE INTO WHATS CURRENTLY happening. Discuss the current market conditions, pharmacy expert forecasts, and different trends, address the new terminology, buzz words, market projections, consensus and various industry analysis. I’ve avoided detailing the outlook from the industry conferences and seminars because it’s just more of the same. For the most part so much has already been ad¬dressed in a previous column. Of course, there are always new trends in real estate however the seasons typically repeat themselves pertinent to the entire economic cycle.
One of the current themes surrounding us is “mixed use.” My grandparents who were Ashkenazi Jews (European Jews) arrived at Ellis Island along with lots of other immigrants and eventually settled in Chicago, saved their shekels (coins) to buy a building where the first floor was their business operating a market (kosher, of course) and they lived in one of the apartment units upstairs. Hence today we call that “mixed use” and of course that use has been around for centuries throughout Europe.
Personally, I can truly trace my love, understanding and “sixth sense” for real estate right back to my heritage, it’s in my blood. When I say I can just “sense” a deal, I know a lot of you know exactly what I’m talking about. In fact, that’s what I’m going to dedicate this article to, it’s about all of you, who over the years have given the best advice of all simply (or not so simply) from your direct expertise of being owners and operators of apartment buildings and your personal history tied to those experiences.
Now I can certainly go back and just adjust numbers and the specifics of previous articles to correlate with today’s times but I’d like to be more informative. Needless to say, the basics may not be basic to someone who’s not familiar with this industry but for the most part this readership is very well versed. I can write about the same old stuff (SOS). Despite the media that may be surrounding you, the market is still moving, prices are not really dropping dramatically, there is just a lot less inventory thus there are just fewer sales and as I’ve stressed previously, prices that have been reduced were usually because the properties were just priced too high to begin with. Interest rates continued to climb up but that’s still not big news. The barometers for evaluating a good deal (or should I say a reasonable deal) are pretty much the same; cost per unit (CPU) still averaging around $200 per unit and naturally considerable more or less depending on location and unit mix. The Cross Rent Multiplier (CRM) has not made sense whatsoever for a long time, however it’s still used as a comparable and can fluctuate if the rents are low. CAP rates like CRMs also have not made any sense for a long time and are still used for comparison purposes. Those seeking Low GRMs, high CAP rates and even lower CPUs are probably not finding them in prime Westside areas. Secondary markets (considered C and lower rated areas) and of course out of State, are where buyers have been going to achieve these variables that “make sense.” Overall, I reflect mostly on the Westside because that is where our expertise has been, yet with over 30 plus years as apartment brokers and managers we certainly have experience outside of the Westside. It’s clearly advantageous to be doing business in our own backyard, to have sold some of these same buildings several times and to clearly understand all the nuances and politics (yuck) of what’s going on. We’re continuing to see all the upgrades still going on throughout the city and surrounding areas and needless to say, this has been a long time coming.
Now what about the most valuable and trusted real estate source of all? Experience, our history, the generations that came before us, and our most precious resource: all of you! Just knowing so many of you and sharing your stories! That’s where I continually learn about real estate. Instead of looking for that expert opinion, consensus, projection, analysis and even a crystal ball, what I know comes from doing what I do and having the privilege of working with you. Instead of updating you on what you probably already know or are going to read, I can share some of the most meaningful and true statements that come from the true experts: you. You’ve taught me “to take care of your real estate when you’re young and it will take care of you when you’re old.” You’ve taught me to “trust my gut.” Joe Gold who became my surrogate father after my own father passed showed me that it wasn’t about being “academically educated in real estate” it was about “buying it, owning it and sell¬ing it” and “being organic” (being real), I learned that you make your money in real estate when you “buy” which ties into today’s new buzz phrase “plan your exit strategy.” My long time business partner, friend, broker (and, oh yes, my husband) Carl Lambert, reminded me “to trust what I know.” I was not sure about buying some¬thing and wanted his opinion; he looked around and asked me “do you like it?” I said “yes” he said “then buy it; you know what you’re doing.” When it was time to sell, I didn’t need to ask Carl; I knew what I knew. One of my favorite stories is about a man who wrote his name along with his wife’s name carved inside a heart on all his buildings; very sweet and sometimes I joke that he did that in place of putting her name on the title – “but I put your name on the buildings honey!” So now I can share another example of how our history and cycles just repeat themselves. No matter how you say it, it’s still the same, drawing back on my Yiddish heritage “aynkoyfn niderik” (buy low), “farkoyfn hoykh” (sell high). skskskskskskskskskskskssksksksksksksk
