RealstreetEX news

The US office market moved further into recovery during the first quarter 2005. Absorption helped drive the vacancy rate down by 50 basis points and ended the quarter at 16.3%. Strong investor demand is pushing the leading market forward. This in spite of slower new jobs growth in past recoveries.

Posted by Dan at 05:08 PM | Permalink

From Boston to Los Angeles, developers are busy converting existing hotels to one of the hottest concepts in the lodging and real estate industries today-condominium hotels. These properties typically include mixed uses such as retail, office and even residential units. Why have they become so hot? For starters, the developer is able to pre-sell units and offset the front end costs. This also enables developers to get a higher sales price per square foot which flows back into the cash flow "pot". There are other upsides as well including the positive view from the lender's perspective. Sold units are a much more attractive way to lend and enable to developer to bring less equity to the table. Prestigous brands like Marriott's Ritz-Carlton, Starwoods St. Regis, Hilton and Hyatt are turning up the heat on this already this already hot segment. Buyers are willing to ante up more money for a branded luxury condominium than a similar condo in another building.

"The brand is important because people are buying into a lifestyle, and the brand is an extension of that lifestyle," said Mark Ellert, a partner at Langford Development, LLC.

Here is a short outline of a condo-hotel model. The hotel operator rents units just like a regular hotel. The revenue generated is split (sometimes 50/50) between the owners and the developer. The developer continues to own the common spaces such as restaurants, pools, retail spaces, etc. While these condos may be more expensive than traditional condos there are reasons for this. Buyers don't have to worry about maintenance and they have the opportunity to recoup some of their costs through hotel rentals. The full version of this article was published by Robyn Parets with the National Real Estate Investor.

Posted by Eric at 07:26 AM | Permalink

Commonly held misconceptions regarding the 1031 Tax-deferred exchange transaction include... 1st - You have to find someone to "swap" your property with before you can sell and exchange your property. Actually you are free to sell to anyone and buy from anyone you wish. A second misconception: To exchange a property, you have to buy the same type of property you are selling in order for it to be considered a "like-kind" exchange. Actually, as long as the property to be sold and the property purchased are for productive use in a trade or business or for investment purposes, taxpayers are free to purchase whatever type of property they want. A third misunderstanding is that a taxpayer must complete the 1031 exchange in one completely simultaneous transaction. The law provides for completing an exchange on a delayed basis as long as they purchase replacement property within 180 days of selling their first relinquished property. That taxpayers must use all the proceeds from the sale of the relinquished property to purchase replacement property is another misconception of the exchange law. Some of the exchange requirements for a complete deferral of taxes may be violated if a partial deferred exchange is desired. Good legal counse is critical in this transaction. Another misunderstaning of the exchage code is that you do not need a Qualified Intermediary for the transaction - that you can use your attorney or accountant as qualified intemediary. The IRS disqualifies any person or entity from acting as a qualified intermediary, if that individual has had an existing business relationship with the taxpayer withing the past two years. Good legal and tax counsel are critical for any Tax-deferred exchange. Thanks to T. R. Pajonas, Esquire for these common misconceptions regarding 1031 Tax-deferred exchange transactions.

Posted by Dan at 08:28 AM | Permalink

A recent FDIC report indicates that risky lending practices which have fueled a boom in US housing markets could turn the boom into a bust. The report indicated these lending practices included easy credit, adjustable rate mortgages and interest only mortgages that put both borrowers and lenders at greater risk.

Posted by Dan at 09:08 AM | Permalink