For lunch, the day, the 13th of march, 2019. Location In New York City.
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RBR: How long ago did you move to NYC? Like this?
MF: There are about 7 years old. As of now, I do not have any intention to go back to Brazil to visit family and friends. It's all here, transport, safety and security, all kinds of restaurants you can think of, the culture, the fun, etc. In the course of business, things are happening very fast, if you blink, it's gone. The american is a practical one, and a good performer. They know how to make a business, and it's no coincidence that they are the largest economic power in the world.
RBR: I heard that you are looking to invest in real estate in NYC. You can share?
MF: Truth is, I'm [invested] yes. For me it is a “no brainer” to buy real estate here. NYC is the city's most resilient in the world, and have the liquidity to the same (at around USD 60 billion, is the busiest in the industry for a year, and even at the worst point of the crisis of 2008, the real estate market has suffered a little bit, he spent two years, from the fall in prices, and then took it. As a reference, the value of the NYC and it represents nothing more or less than 80% of Brazil's GDP. In fact, I have a difficult time understanding why the majority of investors, the brazilian who you have enough assets to purchase a 5, 10, or more real estate properties in Brazil, and did not choose to buy 1 or 2 in NYC. Quite simply, the return on that is compatible with the one obtained in the Brazil, but the risk is much lower!
RBR: Well, we agree! It is a reflection on the simple objective of the investor is a brazilian who loves to immovable property, the diversification of assets in hard currency, in the city more resilient in the world, and with an attractive return – on this day, with Interest at 6.5%, it may make even more sense. Just to give you an idea, it is possible to buy an asset that performed (ready), with cost expected return on the 10% per annum for a period of 5 years, and the leverage of 60% through strategy the value-add – on retrofit, renovation, repositioning.
This conversation lasted for 2 hours, within the context of investments in real estate in new york”. VC is an acronym created by an outside professional in the real estate market in the u.s., which has the same vision as the RBR to the investment in the real estate in the city of new york.
The purpose of this article is to begin to explore the theme of investment in real estate in the us, which is, in our view, it makes perfect sense from the perspective of resource allocation, risk, return, and diversification, in my opinion.
It's no coincidence that the RBR has begun a study of the market out there at the end of 2016. From then on, there were dozens of trips were made, and some of the hundreds of meetings with developers, lenders, brokers,investors, consultants, etc., in order to understand the market and find good investment opportunities.
After the immersion, the conclusion was to make investments in the sector of this multi-family (home equity), as we understand, has a good combination of risk/return.
In a study carried out by the NMHC (National Multifamily Housing Council, shows that the REITs (real estate investment funds) for this multi-family had the best risk/return ratio, based on the Sharpe index. Between 1986-2016, the sector had an average annual return of 9 percent, a. b. (over a period of 7 years), with the level of risk (standard deviation) of the 2,81%, a. a., and generating an index, the Sharpe 1,21. For the purposes of comparison, the next segment was a retail (retail stores) with an average return of eur 8.68% and the risk of 3.54%, a. a., (Sharpe index 0.85) – quite possibly, this is an indicator, it should be worse in these past 2 years, given the growth of e - commerce.
Under the terms of the drivers thread this multi-familythe main one is the growth of the population, and the NYC stands out in this regard. The city has grown, on average, 2% of the a. a. in the course of the last 30 years (4% in a. a. during the last 100 years, and with a view to grow by 1%
a. in the course of the next five to 10 years. In other words, the demand of the system is guaranteed, for all in need of a home, ceiling light, this would need to be matched up with an offer to be balanced so that there is a pressure/compression rates.
Other factors also have an impact on the segment's...
When to buy an apartment and/or for rent, inevitably, it is related to the ratio of the cost of the purchase in relation to the cost of the rental. As the price of real estate goes up, more people are looking for in the lease. From the point of view of the population pyramid, the great strength of the work is concentrated between 20 to 50 years (up to 40% of the population), the unemployment rate is down 4.5%. Of this amount, two-thirds of which represent the share rent a property.
Many of the young people moved to NYC in search of work (technology, media, financial services, retail, etc.). The vast majority of it takes time to get married and have children and, increasingly, the search for greater flexibility, mobility increases. In addition, the generation of “millenia” you have habits are different from those of the previous generations, and they are less likely to have the housing is fixed.
Buy an apartment in the U.S., it's something that's restricted, basically, for the cost of the monthly interest + repayment of the loans, the real estate is much more than a rental, and that the gap has been increasing year-on-year, making it impractical for the purchase of the property itself, for the most part, from young men. The homeownershipthe term is used, to the owners of the property, has been declining rapidly. As the parameter is below the age of 35, only 37% of the population own a home, compared with 43% in 2007, and in NYC, that number is even lower.
And even with the cost of rent is less than your mortgage, it is very much relevant even on a budget people. Each time more and more the concept of the co-living (co-residence) is also present, mainly due to a reduction in the cost of the renter is not uncommon in the NYC apartment of 3, 4 and 5 rooms to be shared by students and/or staff. Here, it's worth pointing out a spot for those interested in the subject, the more you used it as a reference to the amount of rent you pay is for the room not per-square-meter area.
Today, it is one of the major concerns for the market is whether or not we are entering a late cycle that of the developed economies, and if so would it make sense to buy a property in the united states. The answer is not know, though, even though we arrived late, this does not mean that it will be reflected in the same magnitude as in the whole of the real estate market.
As a parameter, the property prices have been climbing steadily since the economic crisis of 2008 and a large part of the capital cities of america. However, in markets such as NYC, the prices have started to yield in 2016, and it is only to stabilize in 2019. That is why it is so important to look at each market (in the region), and the real estate sector on its own to understand at what point in the cycle in real estate it is.
And, in the case of the investment this multi-familyfor most investors to get on top of it, you have the option of loading the assets for a 2 or 3-year term, has been shown to be sufficient for, at least, to preserve the invested capital.
In the end, it is a reflection on how the exposure of a portfolio of investments in the real estate market, and the shapes of the search for diversification. This article is an introduction to the topic offshorewe will bring more reviews and discussions, and other opportunities.
The information of the curious, he follows in the next page is a picture of a development in this multi-family we acquired it in NYC last year, and it is at this moment passing by retrofits and repositioning.
