Multifamily Ownership and Covid – by Donna Coquilla
Overall, apartment buildings are performing very well in recovery in all of Florida’s key markets. After reviewing the MLS data for South Florida, it appears that most fundamentals for the region’s long-term growth potential remain intact. Encouragingly, the South Miami Beach and Miami-Dade County markets provide excellent fundamentals that position this region ideally for long-term growth. As market and demographic forces converge, multifamily markets like South Fla. are gaining strength, if not speed.
South Florida, especially Miami, is not as affordable as other key markets in the region. Most condos in South Fla. are for high-quality real estate that only a small percentage of the population can afford. We also visited the Palm Beach Gardens submarket, where a number of new condominiums are under construction, ranging in size from 40,000 to 70,000 sf.
RCLCO’s research suggests opportunistic investors will consider South Florida one of the best places to invest in the coming months. Many investors feel they can get a better return by buying real estate in central and north Florida. After all, companies that own lots of real estate across Florida want to capitalize on the South Florida market.
Broward County, as part of the South Florida Metropolitan Area, has a population of nearly two million people. In 2019, it recorded an average annual growth rate of 3.5% and a median household income of $60,000. Santa Rosa County is home to most of the apartment buildings in the state. The expanded search begins with a map search and then a search for the county with the highest median home price in 2019.
This year, there has been an average annual growth rate of 3.5%, and a median household income of $60,000. This year’s median home price in Broward County ($1.2 million) was more than $2 million above the national average for the same period. It includes 1,500 square feet of office space, 2,200 square feet of living space and is capable of spending $4.4 million more per square foot than Florida’s average home prices.
Household education in South Florida is expected to grow by 45,000 annually over the next five years, and an average annual growth rate of 3.5% is expected over the same period. Over the past three decades, median household income in Broward and Miami-Dade counties has increased by an average of 2.7%. Over the next three years, South Florida will see a 4.2% annual increase in median home prices and a 1.4% increase in median family income.
Assuming that these projections materialize, 60% of South Florida will move into homes by 2020, which translates into an average annual growth rate of 3.5% over the next five years. A significant number of homes are already planned to be built in various locations in Florida, including South Florida, but COVID-19 is now speeding up the process and could stimulate even more in the coming years. This is partly because buyers are moving out of the New York subway area, many of whom are considering moving to South Florida to save on taxes.
In 2017 South Florida developers in Broward and Palm Beach counties have completed construction of more than 1,000 rental apartments.
But vacancy rates are expected to rise 3.5 percent and 4.1 percent in Broward and Palm Beach counties, respectively. The firm also estimates that vacancy rates will rise to 6.3 percent in Miami-Dade County and 5.2 percent in Palm Beach County this year, and will rise to 4 to 2 percent next year.
In 2019, 7,359 units were completed, leading to vacancy rates of 5.5 percent in Broward County and 4.1 percent in Palm Beach County. Ten years ago, there were 2,843 units in Miami – Dade and 1,743 in Palm Beach.
In addition, the number of new entries have fallen dramatically in recent years. At the end of September 2012, there were 2,843 units for sale in South Florida in the MLS, and 1,743 in Palm Beach County. In Broward County, 3,564 units were available and 2.5 million units were to be delivered in the county.
Today, construction is at a five year low led by Miami with a projected 53% annual drop.
COVID has been the new normal now for 7-8 months. Property managers and landlords can consult the CDC’s website for advice on how to establish written protocols and procedures, including how to manage outbreaks, how to prevent the spread of viruses in the building, and how to recommend communication. Property managers should also encourage property owners to talk to their own health care providers and the Department of Health and Human Services about issues related to COVID 19. The following guidelines were developed to help owners of community housing (also called communities) and their tenants prevent the spread during COID 19 and their neighbors. This page is the starting point for all questions about the health and safety of your property and will be updated as new and better information becomes available.
For example, in Boston homeowners can help at www.bostonhouse.org / helpfamilies, where landlords can list units for needy families.
Homeowners can contact the relevant federal agency or entity that supports their mortgage and seek legal assistance. If they need help, they can approach their mortgage lenders if their loan is government-backed. Rental property owners can also contact their mortgage servicers at 1-888-743-5555 if they are unsure whether their loans are government-backed and what can be done. If you have any questions about a notarial transfer or about the control of a property, please contact the tax department using this e-mail contact form.
Groups that are tenants, homeowners, homeless people or home buyers can be advised by HUD – approved or sponsored housing counselors. Housing consultants can advise on housing issues such as rent control, property management and property taxes, as well as housing assistance.
The training is aimed at the management of rented apartments and is free of charge for the participating apartment owners. Tenants in the building are not obliged to pay the rent in full, but they still have to pay an amount to express their commitment to the property. Tenants who have difficulty paying their rent can benefit from protection depending on the type of apartment they live in and whether the owner of a property has received additional mortgage leniency assistance during the crisis. For our higher end properties we don’t seem to have any issues as tenants have more flexibility in working from home as they tend to be professionals. Some counties in California have longer rent forgiveness programs for tenants. Hopefully some of our other tenants won’t need to ask for that. Whereas in other parts of the country eviction moratoriums are ending soon so we will have to utilize that. As far as rents, I always tend to push the rents higher and I currently feel that we always have demand.
There are options for homeowners, including single parents, single parents and tenants of apartment buildings depending on the agency that supports them. for more information on the benefits of co-ownership in the US. There are programs available for renters and if tenants don’t want to complete rent negotiations paperwork then just wait for the eviction moratoriums to expire.
The local government is prepared to be the long-term owner or administrator, and the aim is to transfer ownership to the owner of the property, not just to a single parent or family member.
The eviction ban applies to tenants whose employment is affected by COVID 19 and the national emergency. How can we help tenants who are experiencing a prolonged decline in income due to CO VID 19?
Worst case scenario things will still be ok as the reserve is there. For folks/companies without reserves, these are the questions. Hopefully you’re not overleveraged which may be a problem for some reits at the moment. What steps can borrowers and landlords take to ensure that they can access SBA funds quickly during this time? What can homeowners with government-sponsored loans do if they have difficulty making payments during the pandemic?
Can property owners use property reserve funds to alleviate financial hardship caused by residents experiencing problems during COVID-19? Do you have a form ready for tenants to help them to agree to a payment plan when they have difficulty paying rent or COVID-19?
This addition could also address the issue of what happens to the deposits if the parties ultimately agree to terminate the agreement. How can owners and administrators help tenants who are losing income due to COVID-19? What is the protection for tenants of apartment buildings under Section 4023 of the CARES Act?
It is better if you can keep lines of communication open with tenants. Consultants are available to clarify the legal rights and obligations of tenants and landlords under Section 4023 of the CARES Act and other laws and regulations.
If there is a lien or other charge on the property, the transfer may involve broker fees. The firm should remind residents that there are no fees for bank transfers unless they have read otherwise and may be reluctant to take online payments. Staff at the fee collection center would ask to inspect these documents and file them with the residents registration office. Any transfer of property over a 99-year lease period must be treated on merit and on certain terms.
The lease, which the current owner knows and will see, is intended to prevent tenants from making false statements. You can reduce the risk by instructing the tenant (be it the seller or the current landlord) to complete the contract for the refund of the deposit. If your current tenant is a monthly or monthly tenant, you may have the right to amend the lease or lease as long as they comply with state and local laws. Ask the new tenant to sign a new lease or increase the rent if he or she is terminated in accordance with federal or local law.
Donna Jean Coquilla
August 28, 2020