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Report Says Trump’s Daughter,Son-In-Law Could Benefit From Real Estate Tax Break

Ivanka Trump and her husband Jared Kushner,are likely to benefit from President Donald Trump’s new real estate investment program, which offers massive tax breaks to developers who invest in downtrodden American communities.

The Opportunity Zone program promoted by Ivanka Trump and her husband Jared Kushner, both senior White House advisers,could also benefit financially,an investigation found out.Government watchdogs say the case underscores the ethical minefield they created two years ago when they became two of the closest advisers to the president without divesting from their extensive real estate investments.

Six of the Kushner Cos. buildings are in New York City’s Brooklyn Heights area, with views of the Brooklyn Bridge and Manhattan skyline, where a five-bedroom apartment recently listed for $8 million. Two more are in the beach town of Long Branch, N.J., where some oceanfront condos within steps of a white-tablecloth Italian restaurant and a Lululemon yoga shop list for as much as $2.7 million.

There’s no evidence the couple had a hand in selecting any of the nation’s 8,700 Opportunity Zones, and the company has not indicated it plans to seek tax breaks under the new program. But the Kushners could profit even if they don’t do anything — by potentially benefiting from a recent surge in Opportunity Zone property values amid a gold rush of interest from developers and investors.

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Ivanka Trump’s advocacy for the Opportunity Zone program “creates a direct conflict of interest with her spouse’s investment in Cadre,” said Virginia Canter, chief ethics counsel for the nonprofit Citizens for Responsibility and Ethics in Washington. “Jared Kushner’s interests are Ivanka Trump’s interests and vice versa.”

The couple’s financial disclosures show their jointly held financial empire is worth between $200 million and $800 million, with much of it in real estate, including a stake of between $25 million and $50 million in Cadre. Those documents state they must recuse themselves from dealing with policy matters that touch on real estate and “would have a direct and predictable effect on Cadre.” Ivanka Trump also has interests in Trump Organization properties which are not located inside Opportunity Zones.

“Ms. Trump has divested assets, set up trusts, removed herself from businesses and decisions about her investments,” Abbe Lowell, ethics counsel for the couple, said in a statement. “In addition, she adheres to the ethics advice she has received from counsel about what issues she can work on and those to which she is recused.”

President Trump was scheduled to attend an Opportunity Zone event in Washington last Wednesday that would depict the program as a boon to distressed communities. White House spokesman Hogan Gidley disclosed that ”individual state governors of both parties nominate communities for Opportunity Zone designation “based on what underserved areas would benefit most. The White House has nothing to do with those decisions.”

The Investing in Opportunity Act, which became law last year, as part of the Republican-sponsored tax overhaul, never gained traction when it was first proposed during the Obama administration, but it quickly found favor in a White House headed and dominated by real estate developers and investors.

A significant moment came when the law’s key GOP sponsor, South Carolina U.S. Sen.Tim Scott, met President Trump after the violence-plagued white supremacist rally in Charlottesville, Virginia, in August of 2017.

Trump promised Scott his support for Opportunity Zones as a way to show his administration’s outreach to minority communities. But Scott had already found a supporter weeks earlier in Trump’s daughter, in conversations that grew out of previous meetings about passing a child care tax credit.

Political sponsors and lobbyists said, Ivanka Trump played an important role in promoting the legislation, while Kushner was also quietly supportive behind the scenes.

“Ivanka was on board with it,” said Sean Smith, Scott’s communications director. After their first conversation, Smith said Scott and Ivanka Trump talked by phone and in person nearly a dozen times. He added that Scott also spoke to Kushner about the program, but noted, “It was much more Ivanka than Jared.”

A team from Economic Innovation Group, or EIG, a Washington think tank that pioneered the Opportunity Zones concept, met with top Kushner aides Reed Cordish and Chris Liddell two weeks before the tax reform bill was passed.

Funded by Napster founder and early Facebook investor Sean Parker, EIG spent more than $1.4 million on lobbying over the past two years, both before and after the Investing in Opportunity Act passed. The group met with White House officials every quarter since the start of the Trump administration, and also met frequently with officials from Treasury and other White House agencies, records show.

“Creating the incentive to bring capital into communities that are currently being overlooked is just a tremendous opportunity,” Ivanka Trump said as her father and a crowd of supporters nodded during a White House session.

Last month, at a dinner in Washington put on by the conservative Kemp Foundation, Scott singled out Ivanka Trump as his point person on the initiative. “When we were looking for help to get the tax bill across the finish line,” he said, “I kept looking to the same person for help in the White House.”

There is no indication the couple directly intervened in the shaping of the Opportunity Zone program specifically to advance their financial interests. And public officials say there is no evidence that any actions were taken to influence the selection of Opportunity Zone boundaries.

But backers of the program acknowledge that Ivanka Trump’s out-front role drummed up interest from public officials and financial stakeholders.

Along with the Kushner-tied Cadre Opportunity Zone funds, more than 50 real estate and private equity interests have made plans in recent weeks to create investment funds under the program, including several with ties to the couple and the Trump administration.

Last month, former White House Communications Director Anthony Scaramucci launched an opportunity zone fund tied to his Skybridge Capital investment firm, aiming to build projects worth more than $3 billion. Opportunity Zone funds have also been set up recently by New York-based Normandy Real Estate Partners and Heritage Equity Partners, two firms that have worked with Kushner Cos. on real estate ventures.

They are flocking to what financial analysts say are some of the most generous tax benefits they have ever seen. Investors who plow capital gains from previous investments into Opportunity Zone projects can defer taxes on those gains up to 2026. If they decide not to cash out their investment for seven years, they get to exclude up to 15 percent of those gains from taxes. And they can permanently avoid paying taxes on any new gains from investment in the zones if they hold onto the investment for a decade. With capital gains taxes as high as 23.8 percent, the savings can easily add up.

Government officials have estimated the program would cost $1.5 billion in lost tax revenue over 10 years, but Treasury Secretary Steve Mnuchin has estimated the zones would attract up to $100 billion in renewal efforts.

While the Opportunity Zone program mostly targets census tracts of high poverty and unemployment, it also allows “contiguous” tracts that might not be low-income, but are close enough to deprived communities to be eligible.

Critics say that could allow developers to cash in by targeting zones already teeming with investment and gentrified neighborhoods. Amazon’s recent decision to locate a new headquarters in the bustling New York City neighborhood of Long Island City, for example, drew rebukes following reports it was in an Opportunity Zone.

A study by the Urban Institute in Washington found that nearly a third of the more than 8,700 Opportunity Zones nationwide — and all 13 of the ones containing Kushner properties — were showing signs of heavy investment and gentrification, based on such factors as rent increases and the percentage of college-educated residents.

The Kushners’ most immediate advantage could come from their investment in Cadre. CEO Ryan Williams announced late last month that Cadre was starting up an Opportunity Zone fund that would aim to build major development projects in designated areas of Los Angeles, San Francisco, Seattle, Portland, Phoenix, Houston, Atlanta, Philadelphia and Miami.

The company said the program “fits with Cadre’s commitment to identifying opportunities in less-advantaged areas that are primed for growth.”

5 Reasons Why You Should Invest In Real Estate Instead Of Stocks

You might be considering investing in real estate, but you are not sure if investing in property really makes sense in the current economic situation. You may be also wondering if you should be investing your money in the stock market instead.

Well, we can tell you that in China, there is no confusion over this issue, which is why Chinese are the biggest buyers of overseas properties in the world – they buy properties across Europe, North America and Australia, and they are pretty clear headed about this. In 2015 there was a crash in the stock market in China which had, as a result, trillions of dollars’ worth stock market wealth wiped out.

Really, real estate investment is much safer than investment in the stock market – history bears this out. Here are the top 5 reasons to invest in real estate instead of stocks.

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 Real estate investment generates cash flow straight away

If you have checked stocks that pay the highest dividend, they pay 4% or less annually. This is not a bad return, especially when you consider that banks give you a return of just 1% or less, but this is only a little over inflation. So, you won’t really make much money till you actually sell the stock. With real estate, you can rent out your property and earn an excellent cash flow from it, of anything from 5% to 10% of the price of the property. Also, you can earn a substantial profit over the sale of the property.

 You can be an expert on real estate and will have access to special information

One significant drawback about stock market investment is that nothing can remain hidden. Any company listed on the stock market should make all information on its finances available to anyone who seeks it. So it is impossible to have any special knowledge of a stock which nobody else knows, and even harder to profit from it.

On the contrary, with real estate, you will have access to special information about the property market in your area that nobody else does. For example, if you own a property in Victoria Island, you will know specific details about this Island’s property market, which will be known only to a few people, of whom only a few of them would be active investors. This allows you to set the right price and market to the right buyers. As a result, you will have to reckon with much less competition.


Real estate investments are easier to value

It is very easy to value a property. If you have seen a luxury property and don’t know if the price being asked for it is fair or not, you can always ask a trusted estate agent to value it for you. As a result, you will get an accurate estimate from them, since they have special knowledge of the area. However, when it comes to stock markets, the prices change every day and every minute. There’s no way to tell if you are paying too much for a stock. After all, it is not easy to evaluate a stock belonging to a company worth billions of dollars, unless you are Warren Buffet.

 You can inspect your real estate investment closely

You can conduct a thorough inspection of the property, talk to the owner, discuss with your real estate agent, examine the neighbourhood and evaluate it before buying it. It is more difficult for an ordinary shareholder to inspect a company, talk to its representatives and evaluate the corporation.

 You can always negotiate to buy the real estate below the market value

Typically, during negotiations, the property owner may agree to cut down the asking price of the property. Of course, this does not happen every time, and it depends on exactly how desperate the owner is to sell – he may not agree to sell it below market price if there is a lot of demand for the property. But, you can always try your luck. With investment in the stock market, on the other hand, there is no room for negotiation. You have to pay whatever the market price is at the time you buy the stock.


Whether you invest in real estate or in the stock market, what matters is your appetite for risk and personal knowledge. If you are an expert stock-picker, then investing in the stock market makes a lot of sense. But then not everybody can be like Warren Buffett. That’s the reason most people find it easier to make money from real estate than from the stock market.


Expert calls for restructuring in the Real Estate industry

An expert in real estate has said that for the industry to grow and contribute more to national development there is an urgent need for restructuring, not by the government but by practitioners themselves.

He added that the industry was plagued with a structural problem that stakeholders could deal with, without the government.

This was the view of the Group Managing Director and Chief Executive Officer, Global Property & Facilities International Limited, Dr MKO Balogun, who equally noted that stakeholders must take the lead in revolutionizing the real estate industry, before engaging the government on infrastructure.

“Those of us in the industry need to think beyond just building. We need to allow the economy grow normally. Developing places without people to take them up is like forcing the economy to grow. Our sector has not grown in the last three years, it has been negative but with the money that has been invested, we expect it to contribute more to the economy but we are not seeing that,” he said.

Balogun explained that for a long time, developers had placed emphasis on supply-led housing development which had continued to cripple the economy by tying down investments in the industry while the country’s housing deficit continued to rise.


Stakeholders had constantly decried the glut in the property market while the number of those who really need accommodation continues to rise.

According to Balogun, in the last two years, there has been an oversupply of properties in major cities of the country, especially luxury development without a commensurate disposable income to take them up.

He stated that according to findings, more than 60 per cent of those who need housing, do not need luxury homes but require compact and functional homes such as one and two bedroom apartments.

He said, “We have more houses in Lagos than is required, there are more offices than people need. We have had an oversupply of three and four bedrooms. One thing we have not learnt as a people is that we need to create a pipeline, create one and two bedroom apartments so that these will graduate to two and three bedrooms and another set will move into the one and two.


“For instance, a young person who has just got a job can move into one, when he gets married he moves into two and when his family begins to grow, he goes to three. We have 90 per cent of residential as three and four bedroom houses, whereas the demand on residential for one and two bedrooms is more than 60 per cent. If we don’t address that, we will just continue to invest in property that will lie fallow.”

He said developers were also not tying real estate development to infrastructure, adding that most people develop without consideration for potential growth of the area.

“We are all complaining about gridlock in Lagos. One of the things I have noticed around the Lekki/Epe Express way is that all the major developments are around the traffic point, because developers are not paying attention to growing population and government plans. When you develop a place, you think of projected users but that was not factored in on the Lekki/Epe corridor so we have a lot of residential developments creating traffic bottleneck in the area which impacts the economy because of lost man hour,” he said.

On the retail side, Balogun said there had been massive development but with less focus on functionality.

“The retail market started aggressively but what we are doing is copy and paste, unfortunately most of the people we copy from do community malls. You can’t build big malls in the middle of nowhere and expect to have full occupancy. The challenge with the industry is there are a lot of vacant properties and funds are being tied down, so there is no way the economy can feel the impact,” he said.

He added that office development had also not fared as high grade office buildings in major cities had remained vacant while others had low occupancy.

He said, “We have not learnt our lessons, we continue to do the same thing and continue to get the same results. What we need to do is to have a rethink, we should build to fulfil demand not just build because the money is available, the economy will not reflect the investment in the real estate industry if we don’t change these things.

Experts offer insights as real estate lags, economy moves without sector in 2018

Unlike other sectors of the economy, real estate remained in negative growth territory in 2018 long after the wider economy exited recession.  Figures from the Nigerian Bureau of Statistics (NBS) however showed incremental   improvement in the sector, but that improvement could not, in real terms, change the sector’s narrative. At the end of Q3 2018, the sector reported growth of -2.68 percent as against the -3.88 percent growth rate recorded for Q2 and -9.40 percent in Q1 2018.

Experts say the impact of the improvements in the wider economy was not much on the real estate sector which was challenged by oversupply, high vacancy rates and rent default in the high end residential, commercial office and retail segments of the market. Demand softened and prices alongside rents went down considerably at this end.

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“The economy really improved but real estate lagged behind. But this is understandable. Not much progress can be made in this sector with a large portion of Nigeria’s population outside the housing market and mortgage still remains too expensive for many people to access and afford”, explained Adeniyi Akinlusi, CEO, Trustbond Mortgage in an interview.

He explained that the informal sector which is the largest segment of the Nigerian population is still outside the housing market and this population accounts for over 60 percent of the country’s GDP.

MKO Balogun, MD/CEO, Global Property and Facilities International, agrees, adding however that “a lot of things are not being done properly in the real estate sector and the players  are to blame; not the government. The solution to the sector’s problems must come from the players and until these problems are solved, the sector will never grow”.

Balogun is of the view that the high vacancy rate at the high end market is caused by investors and developers who have refused to listen to expert advice or to follow the trend in the market. According to him, market demand has shifted significantly from three and four-bedroom stand alone houses and apartments to studio, one-bedroom and two-bedroom apartments.

“For me there is no oversupply in the market because a lot of people are looking for homes to buy or rent. Anybody who dimensions the market very well will sell off before completion. Statistics shows that 60 percent of home seekers are those looking for one and two-bedroom apartments”, he said.

Due to job losses and shrinking personal/household income, many people could not buy or rent houses and even pay house rents by those who already have accommodation. In effect, during the period under review, there were movements out of expensive areas to relatively affordable locations.

In Abuja, there was significant urban-rural movement occasioned by tenants’ inability to pay rents in the city centre.  An estate surveyor and valuer,   Alomaja Olajide , confirmed to BusinessDay that people were relocating from places like Garki, Wuse and other highbrow locations where they could no longer afford N1.3 million to N1.5 million rent  to  satellite towns like Kubwa where rent was more affordable at N700, 000 per annum for a three-bedroom apartment.

Similarly in Lagos, the mid-low end market has witnessed tenants’ movement. Areas like Maryland, Omole  Phase 1, Magodo Estate, Ikeja GRA, Surulere, Ilupeju, Ajao Estate, among others, saw  vacancy rates that were unusual in such locations which are sought after by young executives that work in banks and other blue chip industries.

But many of these young executives lost their jobs and could no longer afford their rents. Some of those who were still at work were not sure of their salaries, leading to high rent default rate. Some of them moved from the mid-income locations where rents ranged from N2 million to N3 million per annum for a duplex, and N800,000 to N1.5 million per annum for a three-bedroom apartment to areas like Ketu, Aguda, Ejigbo, Okota, Egbeda, Iyana-Ipaja, Oke Afa, etc where rents were relatively lower at N1million to N1.5 million per annum for a duplex and N500,000 to N750,000 per annum for a three-bedroom apartment.

On the island, people who occupied the N3 million to N3.5 million property in Lekki Phase 1 moved down to the Chevron axis to pay N2 million rent. Some people moved from Ikoyi or Victoria Island where rent was as high as $70,000 per annum to Lekki Phase 1 where a flat went for just N6 million per annum.

As bad as the situation was, some positive developments happened. In the course of the year also, in order to sustain their businesses, investors and developers became, increasingly, creative and innovative, leading to increased investment in student housing, co-work office space, short-let apartments, rent-to-own initiatives, among others.

Observably, many big ticket investors including   African Capital Alliance, Elalan, Grenadines Himes, etc, scaled down their developments to respond to market demand with small-size housing units developments in the expensive areas. This explains the development of the Blue Water Lagos in Lekki, The Oceania in Victoria Island and 4Bourdilon in Ikoyi, each offering mostly one and two bedroom apartments.

The real estate market, at the moment, is buyers and tenants market and, according to analysts, the market slowdown will persist into the second quarter of next year, more so as it is an election year. Next year, the analysts insist, looks set to be another challenging one for landlords.

In the UK, as it was in Nigeria, the lettings market was flat in 2018 with not much prospect of growth next year with policy changes relating to fees and costs due to kick in. PropertyWire, an online residential real estate platform, notes that this is certainly to be the case in London with the latest reports suggesting a slow outlook.

Source: Chuka Uroko

Real Estate:Why it is more profitable to sell during the Christmas Season

It is not uncommon for the real estate market to slow down during the festive season which includes Christmas and New Year’s. This is how it used to be in the past, which meant that many shoppers looking to buy or those wishing to sell would take advantage of the summer months. The trend is changing however, where Christmas property shopping is becoming more popular.

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The indicators are that there are more homes available for sale in the mid part of January right through to the early part of February then there has ever been before. This means that the stopping of the real estate activity during the Christmas season is not near as long as it once used to be.

There are some great advantages to the buyers who are in the market for a home around this period of time, as the sellers that are selling it during the Christmas season are most anxious to get the property sold. This may be stimulated by them not having any success with their selling efforts in the latter part of November. Also they want to get this matter straightened out by Christmas so they can get settled. The end result is that an offer that may have been presented prior to this and rejected may be one that is considered during the Christmas season.

What makes this season so viable for selling and buying particularly is that there hasn’t been a lot of properties on the market to create more choices. So by the time February comes around there is a large gambit of buyers waiting to find the ideal property for them.

Many Real Estate Consultants are now encouraging their clients to put the property on the market during the Christmas week,the reason for this is that there is lower competition.

The suggestion is that if you are in the mode of shopping for a home at Christmas that you make a strong offer. While these properties may be scheduled for sale in February, if they like the offer that is being presented to them they may take advantage of this.

One thing to keep in mind is that this is the season were many of the professionals in the real estate industry may be taking their Christmas break. So you will not be able to rely on their services as readily as you would be able to at other times in the season.

Top 10 Cities For Real Estate Investment In Nigeria

Investing in real estate is more than just finding a place to call home. Investing in the real estate sector in Nigeria has become increasingly popular over the last couple of years and has become a common investment thread.In this article,we present the top 10 cities for real estate investment in Nigeria.

(10) IBADAN; This city was once the capital of the old Western region and pioneered a lot of things in Nigeria like the first television station, the first university etc. Returns on property investment in this city is fairly high, especially in high brow areas like Iyaganku and Agodi GRA’s. The city has universities and research institutes and also a number of multinational corporations which attracts a lot of expatriates and middle class Nigerians that are willing to pay for decent estates. Land and labour are both cheap.

(9) BENIN; Despite being an ancient city that survived a British onslaught which led to the destruction of medieval monuments and plundering of centuries old artifacts. Benin has been able to reinvent itself as a modern city that attracts a lot of Nigerians and others as well.Its a nodal town, situated at a strategic intersection between the East and West. It is a state capital and also has a number of universities and research institutes.Land is relatively cheap.

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(8)WARRI; This city is famous for producing a lot of comedians and musicians in Nigeria. It also prides itself as the unofficial capital of oil rich Delta state. There are lots of expatriates and Nigerians working in the oil industry in this town. It also has a refinery and oil servicing firms, by virtue of these and others, decent accommodation is in high demand and people are willing to pay premium rates.

(7) Kaduna; This is an emerging city in terms of real estate development,especially because of its proximity to Abuja.The city is connected to Abuja,by a functional and modern train service.As the first state to adopt the mortgage and foreclosure law, Kaduna  is turning out to be a gold mine to some courageous estate developers.

(6)Asaba; Aside enjoying the status of being the capital of oil rich Delta state, its close proximity to the commercial city of Onitsha has become a great advantage to Asaba. A lot of people now live in Asaba while working or doing business in Onitsha. Nollywood has also made the city its base for shooting films.Influx of people from Onitsha has shot-up demand for real estates in Asaba.It is also a gateway to the East,and the city is relatively serene and peaceful.

(5) OWERRI;This city is fast assuming the toga of a tourist rendezvous. With the highest number of hotels, clubs and eateries per square mile in Nigeria. There are also many higher institutions domiciled in the city. A fairly decent infrastructure, very peaceful and serene environment with night life. The city is also strategically located between the oil hub of the Niger delta and commercial cities of the East.It has a very good return on rent.

(4) ENUGU;This city has a lot going for it, Enugu was once the capital of the Eastern region, the defunct Biafra republic and currently the capital of Enugu state.It has an international airport, several higher institutions and companies. Decent infrastructure like good roads, street lights, shopping malls, exclusive estates and a very high IGR,has led credence to a huge productive middle class.

(3) PORT HARCOURT; Port Harcourt is unarguably Nigeria 3rd most important city, with seaports, airports, refineries, petrochemical plants, oil servicing firms etc.
A self contained apartment can go for as high as 350,000 per annum, while a bedroom flat can be over a million naira per annum depending on the location.
The populace has a very high purchasing power, and has very good returns on property/estates.

(2) LAGOS;Nigeria’s economic and financial hub. The city is reputed to be Africa’s 5th largest economy. With a huge population, there is bound to be a perennial housing deficit. There are several seaports, airports, companies, factories, world class hotels, embassies, telecoms and banks.It is the nation’s number one investment destination.The city state dwarfs every other state in Nigeria, in terms of IGR.

(1) ABUJA; As expected, Abuja, the nations capital takes the number one spot. This beautiful and custom made city can compare with any in the world. The infrastructure is top notch and being the seat of power, there is government presence and attention.Security is also tight. What the city lacks in industry and commerce, it made up through political activities and government spending. There are very exclusive estates were properties are expensive either for rent, lease or sale. Accommodation/housing will remain in hot demand even in the distant future, based on the rate of influx of people from various parts of Nigeria.

Affa Dickson Acho

2019 Real Estate Investment Preview

2019 will be much like 2018 – but with a bit more anxiety.

The fundamental forces that have driven rents and home prices higher – more demand for housing than supply – will continue unabated. There just hasn’t been enough construction over the last years to keep up with the demand that is increasingly concentrated in big cities (but not all of them). And – good news – in these big cities the demand is mainly for rentals.

The anxiety comes from two possibilities – that a slower economy will erode the demand for more housing – and that prices are already so high that investors won’t get enough of a return to justify new investments. In short, maybe all the good deals are gone?

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My own view is that investors do indeed have to approach some markets with more caution in the new year, but that there are still plenty of opportunities available.  It is important in 2019 to pay closer attention to the stats in local markets.

Are prices too high? See how much home prices are above the ‘income’ price, a calculated value. And look at the ‘target rent range’ – if the monthly rent you’ll need to charge is well above that range, you’ll find fewer renters who can afford it.

The Markets

Las Vegas – Not only is job growth high, it’s better than it was six months ago. But this is still a one-industry town and it was hit hard during the last recession, so caution is already in order. Furthermore, the 18 percent jump in home prices in the last year is too high for comfort. Although prices are only 13 percent above the ‘income’ price, at this rate they’ll soon be above the 25 percent level where a market becomes over-priced. Then we could easily see a bubble. For that reason, investors should stick with apartments – which are not as volatile – or properties with rents not much higher than the ‘target rent range’ – if prices eventually do bust, you want to be sure you’ll find renters.

San Francisco – The situation is similar in the Bay Area, except that prices are already off the charts – 38 percent above the ‘income’ price. And the economy is bigger but growing at a slower pace. I doubt that investors can rent out single-family properties anywhere near the ‘target rent range’. Apartments are a better idea, as is splitting homes into multiple rental units. The high concentration of tech workers is a liability if the national economy sours.

Atlanta – The local economy is growing well, demand for housing is up, and home prices are just about at the ‘income’ level. A good opportunity for investors. Apartments, single-family rentals, and splits into multiple units are all good options.

Seattle – As in San Francisco, the large number of tech workers is a liability if a recession happens; they’ll move elsewhere. Right now the local economy is very strong, demand for housing is high, and home prices are already very high. Apartments are the best bet, or single-family splits.

Orlando – The strongest local economy in this group. Most new jobs go to workers who rent (because their pay is modest). The tourism industry in this area had a quick recovery from the last recession. Demand for housing is strong but home prices are still moderate. This is a good opportunity for all types of investments.

Denver – Very similar to Seattle, with a large number of tech workers and home prices that are already high. The local economy is still strong but could be slowing this year. Single-family rentals are probably not a good option, their rents to far above the ‘target rent range’. Single-family splits are a possibility, but they could hit the market just as it peaks, so I think apartments are a better option.

Nashville – The local economy is growing at a slower pace, but demand for housing is still strong and home prices very reasonable. Single-family rentals are a better choice than splits because of the flexibility if the economy slows.

Phoenix – A very strong local economy, good demand for housing, but the market is slightly over-priced. Apartments and single-family splits are the best bets, but some single-family rentals could work if the price is right.

Miami – The local economy is strong right now, but can be volatile, so I’m not sure the strength will continue. Demand for housing is good but home prices have been driven too high by foreign investors, creating an unstable market. Apartments are the best choice; upgrades of low-cost homes are also a possibility but difficult to manage unless you live there.

Detroit – The long bust and recovery seem to be nearing a balance point, with demand for housing now good but the economy growing at a slow pace. In this type of uncertain situation, single-family rentals give the most flexibility and apartments are a good option if rents can fall within the ‘target rent range’.

Los Angeles – Uncertainty is also the situation in LA, with a slower local economy but housing demand still strong. With prices high, apartments or single-family splits are the best bet.

Charlotte – Even though the local economy is still very good, the concentration of jobs in banking is a liability in a recession. Single-family rentals are a good option because of the flexibility. Apartments are also a good bet.

Dallas – The local economy is strong, demand for housing is good, but home prices are getting on the high side. Single-family splits or apartments are therefore the best bets, but other options are also good for the long term. With a mixture of finance, tech, and business jobs, the local economy has very shallow recessions.

Minneapolis – The local economy has been running at a modest level but demand for housing has been good. With home prices close to the income price, all investment options are open.

Philadelphia – The same is true in Philly, where the local economy is a bit more volatile. In markets like this, where job growth is running parallel to the national average and is now on the slower side, investors should be careful to find investments with rents in the ‘target rent range’. These markets will easily be pulled down if a recession happens and high-rent properties will be especially vulnerable.

New York and Washington – In these large markets, demand for housing is moderate and recovery from recession is always prompt, so they’re good long-term bets for investment – but returns will also be moderate. Apartments are probably the best investment option because of the large workforce with moderate income.

Cleveland, St. Louis and Chicago – With moderate demand for housing and slow or volatile job growth, these markets have still not recovered from the last recession and home prices are well below the ‘income’ price. This means that single-family rentals are a good bet but the short-term returns will be modest. Downtown apartments are the safest investment.

Summing it Up

A recession is not on the horizon yet, but investors have to prepare for an economic slowdown in the next few years. That means avoiding properties with rents well above what we determined as the ‘target rent range’ and – in the over-priced markets – to either favor apartments or properties that can most easily be resold. I expect home prices to keep rising this year, but at a slower rate after that.

All of these markets still provide good investment opportunities – although Las Vegas is best left to speculators with a strong stomach – but investors have to pay greater attention to the risks than they did in 2018.



These real estate markets are projected to dominate in 2019

Miami is predicted to rule all in home price deals

In 2018, 62% of all homes sold in top U.S. metropolitan markets sold below their original list price, according to EasyKnock.

As the year comes to an end, the home equity company is looking ahead to next year, predicting that 77% of current on-market listings will sell below original list prices in the first quarter of 2019.

“While there’s no denying that home prices have been steadily on the rise, list prices are clearly increasing above realistic levels, corroborated by the study’s findings that over 60% of homes sold well below their original list prices in 2018,” EasyKnock Economic Advisor Paul Habibi said.

According to EasyKnock’s analysis, half of the top 10 markets in the South, and Miami are projected to have the highest rate of deals, coming in at a whopping  89%. That being said, Miami, Houston and Chicago are projected to have the best home price deals next year.

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Notably, Jacksonville, Florida; New Orleans; Hartford, Connecticut; St. Louis; Pittsburgh; Tampa; and Cincinnati are also predicted to dominate the market in home price deals. In these metros, discounts are expected to average more than 4.5%, which is higher than the national average of 4.01%.

“Average savings are on the rise in these markets. Given that the slowdown of home price increases is just beginning to take hold, we can expect home sellers to continue to set their original list prices on the higher end, which has the potential to result in greater deals for home buyers,” EasyKnock writes. “Particularly as we head into January, which has historically been one of the best months for deals, the combination of seasonality and the slowing market make the perfect recipe for the increased rate of deals predicted by the Knock Deals Forecast.”

The image below highlights the top 10 markets for deals heading into 2019:

EaskyKnock 2019 projections

Source: Alcynna Lloyd

What joint venture means to real estate consumers

Though joint venture (JV) agreements may not be new in the Nigerian real estate market, in the last couple of years, the market has seen growing interest and confidence in JVs now sweeping across private and public sectors of the economy.

While JVs means shared risk, guaranteed capital inflow, increased volume of production and increased expertise based on experience, to the products and services consumers, JVs mean quality assurance and timely delivery of products and services, all things being equal.

This, exactly, is what the new JV involving CEBRE and Excellerate promises to offer. Following the end of its JV agreement with Broll Property Group CBRE Group, Inc. (CBRE) formed a joint venture with Excellerate Property Services (Excellerate) to meet the growing demand for high-quality real estate services in Africa and the Middle East.

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Broll, a leading African commercial property services firm, has been in an affiliate agreement with CBRE since 2004 to serve their global clients in key countries such as Nigeria, Ghana and South Africa among others.  Since coming into Nigeria, Broll has been offering top notch services in the country’s real estate market.

In most cases in Nigeria, investors or developers collaborate or go into JVs for reasons of capital inadequacy, inaccessibility or unaffordability. Udo Okonjo, Fine & Country’s CEO/Vice Chair, underscored this at a recent real estate forum in Lagos where she stressed the need for collaboration in environment where credit is dry and risk is high.

“The case for collaborating in real estate cannot be stronger than now with a sluggishly recovering economy, where there’s not only massive infrastructure and protracted housing deficit, but also huge amount of underutilised and idle asset,” she said.

But for CBRE Excellerate JV, it is a case of shared expertise which is why, according to an Estate intel report, the JV will merge CBRE’s facilities management operations in Africa and the Middle East with several of Excellerate’s businesses, including corporate real estate services, facilities management, valuation and project management services.

“Our partnership with CBRE aligns with our core values and by structuring our relationship as a joint venture, rather than an alliance, we will pool our respective skills and expertise and foster intense collaboration, which will drive superior client outcomes,” Gordon Hulley, CEO, Excellerate Holdings, assured in his comment on the new JV.

The new JV will find the Nigerian market an interesting destination which is confirmed by Andrei Ugarov, partner at PricewaterhouseCoopers (PwC) who said, “Nigeria is still a viable market. Capital is a challenge but deals are happening. It means funds are available. Players in the industry are making use of other financing options to fund real estate development project ts”.

Meanwhile, Broll Group has moved on and is currently pursuing a Black Economic Empowerment (BEE) acquisition deal. The BEE programme was launched by the South African government to redress the inequalities of Apartheid by giving black  South African citizens economic privileges not available to Whites.

Explaining the circumstances that led to their over a decade agreement with CEBRE, Jonathan Broll,  chair of the Broll Group, said, “as South African society changed, we realised we have a responsibility to ourselves, our shareholders and the public to conclude a BEE deal as soon as possible. After a protracted period of negotiations to be acquired by CBRE, it became apparent that an agreement satisfying this condition would not be reached. I believe that events have therefore unfolded to the advantage of all parties”.

Malcolm Horne, Broll’s Group CEO, also explained, “we maintain a diversified portfolio of clients and services across 16 countries in Sub-Saharan Africa…Our success is built on relationships, high performance and service excellence, and we continue to actively seek out new business opportunities.”

It should be noted, however, that the formation of CBRE Excellerate is subject to customary closing conditions, including government approvals, and is expected to be completed in the first half of 2019.

Excellerate’s property management operations in South Africa and its soft-services business, which provides cleaning, security, and catering services across Africa, will not be part of the joint venture and CBRE will continue to operate a wholly-owned advisory services business in the Middle East and North Africa.



How To Tell If An Investment Property Is A Good Buy

The question on every new investor’s mind is simple: how do you know if an investment property will be profitable? Luckily, there are two easy formulas you can use to determine if an investment property is a good buy, financially. We’ve laid them out below. Read them over and take them to heart so that you have them at your disposal when you’re ready to make a move.

The One-Percent Rule

When you start looking at investment properties, you’ll likely have plenty of options to choose from. Rather than being a complicated equation, the one-percent rule is simply a rule of thumb that investors use to help them narrow down their options quickly and efficiently. It’s a tool that you can use to determine if a property deserves a closer look.

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All the one-percent rule says is that a property should rent for one-percent or more of its total upfront cost.

For example:

  • A property that costs $100,000 should rent for at least $1,000 per month
  • A property that costs $200,000 should rent for at least $2,000 per month
  • A property that costs $300,000 should rent for at least $3,000 per month

Keep in mind that this rule looks at a property’s total upfront cost, meaning that you’ll have to add together the purchase price, plus closing costs, and an estimate of the total repair costs necessary to make it rentable.

If a property passes the one-percent rule, it’s worth considering. If not, move on. At this point, it’s worth setting up showings for the properties that meet this rule’s criteria. From there, you can narrow down your options further, according to your likes and dislikes.

The Cap Rate

Once you’ve narrowed down your options to a handful of potential properties, it’s time to look at the capitalization rate, or “cap rate” for short. This helps you calculate property’s potential for return on investment.

The cap rate is found by dividing the property’s net operating expenses by its purchase price. You can find the cap rate by doing the following:

  • Find your gross income by taking the average monthly rent for your property and multiplying it by 11.5. This will show the maximum amount you can make from the property, allowing for a two-week per year vacancy.
  • Then, subtract your monthly operating expenses ( utilities, taxes, maintenance) from your gross income to get your net income.
  • Divide your net income by the purchase price to find your cap rate.
  • Multiply the cap rate by 100 to find the percentage of your potential returns on the property.

Make sure not to include a mortgage payment, if you have one, in your list of monthly operating expenses. Since every investor will use a different combination of downpayment and financing, the cap rate assumes you’ve bought the property in cash. This allows you to easily compare one property’s ROI to another.

Each investor has his or her own yardstick for determining an acceptable cap rate. However, generally speaking, you want this number to be as high as possible.


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