Don't Believe the Hype

Don’t Believe the Hype
By: Nicholas A. Dunlap, CPM


For as much speculation as there has been on the looming Commercial Real Estate bust, the opportunities to acquire distressed assets in the Southern California area are minimal at best. What’s more, the fundamentals are now comprised of flat rents (somewhat stable in comparison to 2008 & 2009), (even) lower interest rates and increasing capitalization rates that suggest this should be a great time to buy. Of course, that is, if there were any quality product available. An article in today’s Dow Jones Newswire suggested that many opportunity funds seeking to acquire distressed assets have been disappointed in their efforts. Lenders are not forcing borrowers into foreclosure and as a result, efforts are being made to either restructure debt or unload individual assets through what is known as a 363 sale as opposed to a good old Chapter 11 Bankruptcy filing where assets and portfolios are unloaded.

This is right in line with what we see on a daily basis. Typically, distressed assets of various product types appear by way of Broker or Receiver and then there are a procession of offers and the investment opportunity disappears. We see these opportunities in the Inland Empire, various markets in Arizona and Texas and across the mid-west on a frequent basis, though rarely in prime Southern California markets such as Los Angeles or Orange County. When true value appears in areas such as Orange or Los Angeles counties, it is almost as though there is a clash of the titans amongst the real estate elite and yet similarly, the opportunity quickly disappears. By no means are there an abundance of opportunities for investors. Right now, it takes personal relationships, perfect timing and cash-in-hand to make it happen.

Three Steps to Successful Advertising

Three Steps to Successful Advertising
By: Nicholas A. Dunlap, CPM

Last month I was featured as a panelist at the Apartment Association of Orange County’s informational luncheon covering a topic I am quite familiar with: internet advertising. While advertising on the internet is a relatively simple task, it is difficult to do correctly. In fact, many people feel they have the knack to creating effective ads and yet they have nothing to show for their efforts. When creating your advertising, envision your customer-base or clientele. In the housing industry, this is either the renter of an apartment home or the buyer of a home. Have you created advertising that directly appeals to and encourages the prospect to click, look and call? If your phone is not ringing, the chances are you have not.

The three most important steps to successful advertising include: consistency, clarity and quality. Thus, create informative marketing pieces that present information clearly and concisely and continue to market your product on a consistent basis. Remember, content is key. Be sure that your narrative is on point and that the featured photos showcase the most visually appealing aspects of your property. You will know you have succeeded when the phone proceeds to ring.

Defeated! Proposed Moratorium on Rental Increases in the City of Los Angeles Goes Down!

Defeated! Proposed Moratorium on Rental Increases in the City of Los Angeles Goes Down!
By: Nicholas A. Dunlap, CPM


Let freedom ring! In a battle of principles, apartment owners in the City of Los Angeles won big last week. In a battle of hard number financials, the victory remains dismal. The allowable 3% increase in rents of existing residents at apartment communities covered under the Los Angeles Rent Stabilization Ordinance at least allows owners an attempt to recover a portion of the ever-increasing utility and wage expenses associated with owning and managing apartments. Rent control is a nightmare and truly something that apartment owners in other areas must remain cognizant of and be willing to fight, along with other issues such as eminent domain. Congratulations to the Apartment Association of Greater Los Angeles who worked hard to defeat the moratorium proposed by Councilman Richard Alarcon.

Business Practices That Amaze (and not in a good way), Part I

Business Practices That Amaze (and not in a good way), Part I
By: Nicholas A. Dunlap, CPM


This week’s “it amazes me that people like this are in business” thought came to me while reading an article published in Realtor Magazine. The article referred to or suggested that in the years 2002-2008, otherwise known as an economic upturn, commercial property owners became more interested in the rapidly increasing revenue streams associated to their properties than the actual management and maintenance of their properties. More important than the focus of the article is what went unmentioned.

The flipside to this equation is that we have now reached a plateau following a downturn. Owners are not seeing rent growth and thus are cutting key operational expenses to improve their income. It’s all around you: shopping centers, commercial centers and especially the “mom and pop” owned apartment houses. From dirty windows to busted stucco, from potholes and faded striping in a parking lot to broken, half-lit luminescent signage, you are reminded of just how tightly some owners are choosing to operate, failing to realize the cosmetic appeal of adages such as “like attracts like”.

Mind your operating expenses, but be more mindful of the curb appeal associated with your property. Vendors and service persons are eager to bid for your business and you can likely find yourself new quality vendors, thus improving your property and saving money at the same time. Succeeding in a downturn is about maintaining and creating, not cutting back and retracting.