Wednesday, July 18, 2007

Santa Cruz Apartment Building for Sale

This is a very nice, renovated building near the world famous Santa Cruz Beach Boardwalk. Nine units, all one story, on a decent sized lot. $1,395,000 which is a 12.9 GRM! Very good gross rent multiplier for the area and for the relatively low price point. I'm a big fan of one story apartment buildings. Leaks don't disrupt two units, tenants don't bang on their ceilings and railings cannot be fallen over. There tends to be a better chance of a land play in the future too.

San Jose Shopping Center for Sale

This is a very well price strip center in San Jose's North Valley. Fully occupied by local tenants (which I believe provides very good stability) and two name brand tenants plus a cell tower. This is a good deal. $3,950,000 at a 6.6% cap rate!!! The land alone at that price is $110 per foot - not bad for long term development.

Shopping Center Investments

Article I just posted on

I have been helping investors either purchase shopping centers or exchange into them. My client base typically has built equity in a rental house or a small apartment building and are interested to ease management and increase cash flow. Multi tenant shopping centers are the best choice to preserve equity, lessen management and provide cash flow with stability. A fully occupied center in a strong market such as the Phoenix metro will cost $2-5M with an approximate 7% cap rate. This tends to be a fully occupied center with local, regional and national tenants. All tenants on NNN leases so the risk of expense fluctuations is borne by the tenants. Management fees are paid in the NNN charges also. This stable and strong situation is coupled with the cost of financing which may be 6.25% or lower for conduit 10 year money, some of which may have a couple years of interest only payments. Internal rates of return may be as high as 12% after tax. With housing growth continued to grow in that market (and many others), this is a great trade or purchase.

Silicon Valley and Rents

I just spoke to a Tax Accountant who commutes in to Mountain View every week from the Central Valley. He has stayed at the EconoLodge for the past 4 years after he sold his home in Palo Alto and moved east. The room rates he was getting are going from $100 per night to over $200. That is still a deal for a room in Mountain View during the week. Hotels room rates are soaring and empty rooms are very hard to find. Smells of 1999... My girlfriend's comment was, I should be able to rent out my 1 bedroom condo for easily $2,000 per month. Smells of 2000...