16 islands you can buy right now
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REPORT: $30 billion worth of condos will be sold in Manhattan in the next 5 years
A new report out on Manhattan real estate confirms what we all know: NYC real estate is expensive.
The New Development Report by real estate listings and insights website CityRealty details trends in one of the world's priciest markets.
According to the report, prices are shooting up — but the number of units selling is falling.
“Compared to the last building boom, buildings are offering bigger apartments and fewer of them," director of research and communications for CityRealty Gabby Warshawer said.
In fact, only five developments will contribute over $10 billion in new sales. This will account for a third of the $30 billion projected sales into 2019, according to the report.
Unfortunately, there's no relief in sight for those seeking more modestly priced New York apartments.
Going hand-in-hand with the former trend is the new trend of the widening gulf between new multi-million dollar apartments and the broader market. CityRealty reports that price per square foot in Manhattan has doubled between 2013 and 2015. In addition, the average price of new-to-the-market apartments is also expected to reach $5.9 million in 2015 – double the citywide average.
"The prices that are coming in for these limited new units are astronomical even for New York, and we don’t expect that to let up in the next five years," Warshawer said.
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A glass-floored West Village penthouse formerly rented by Robert De Niro for $80,000 a month is now on the market
Tucked on the edge of the Manhattan's West Village, hidden along the West Side Highway and Hudson River Greenway is 165 Perry St.
On top of that building, is a ginormous apartment which legendary Realtor Dolly Lenz calls "one of the most magnificent penthouse homes in New York City" in her listing.
It was pretty enough to catch the eye of Robert De Niro, who rented the apartment for two years following a fire in their 2012 Upper West Side home, according to the New York Post.
In 2012, the property was up for rental for $80,000 a month according to Curbed, which is likely close to what De Niro paid.
The five bedroom, four bathroom duplex penthouse is now on the market to buy for nearly $40 million.
Its 11,000 square feet of space is packed with amenities, including glass floors and a 3,000-square-foot, 7-car garage. A fireplace sits in the double-height living room, which opens up to a huge dual-level terrace that's perfect for entertaining.
The master's suite has a fireplace, as well. And windowed walk-in closets. And a steam room in the en-suite bathroom.
But there's more. The listing goes on to mention a library, home office, formal dining room, eat-in chef's kitchen, a full prep kitchen, and walk-in pantry, to round out the luxurious amenities.
SEE ALSO: 13 ingenious real-estate tips from Zillow’s CEO
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Google's plan to build a futuristic domed campus may lose out to LinkedIn as tech real estate race heats up
There's a mad land grab in Mountain View, California, and Google and its neighbor LinkedIn are at the heart of it.
The two tech giants, along with five other parties, all submitted plans to develop 5.8 million square feet in North Bayshore. The problem is that the city of Mountain View only has 2.2 million square feet of new development to allocate.
In a surprise turn last week, it looks like it might be part of Google's campus that is left behind, including the largest building in its new planned campus, which is designed as a series of domes.
In a report to city council, Mountain View city staff recommended two out of the four sites in Google's futuristic campus design should "not move forward" since they are being studied as potential housing sites. The housing report won't be issued until the fall, so it's up to the Mountain View city council to decide tomorrow whether to move ahead with the other projects submitted — which includes the lion's share of the land for LinkedIn — or wait until the housing study comes out.
Cuts have to be made
In December, LinkedIn made a bold play of snatching up a $79 million plot of land in an area of Mountain View known as "North Bayshore." It's been a point of contention, as Google and LinkedIn both want to expand in the neighborhood near their current campuses.
To control the area's growth, the Mountain View City Council initially capped building net new development at a maximum of 3.3 million square feet as part of the North Bayshore Precise Plan. However, 1.1 million of it is already spoken for, leaving 2.2 million square feet of office development up for grabs, and two tech giants vying for it.
Google's proposal alone would have eaten it all up.
The four buildings it filed plans for call for approximately 2.34 million square feet in net new development. But, Google wasn't the only one to apply.
LinkedIn's campus proposal, in development with Sywest Group, includes 1.6 million square feet of office space, a movie theater, and health club. Several other contenders also want in to develop their own office parks or hotels in the coveted North Bayshore.
It's about more than desks
The squeeze isn't just on office space though.
Google has long been an advocate for housing in the North Bayshore area — something that was not included in the city's original plan that was passed in December. A new city council voted in April to evaluate housing, an action Google was in favor of, said city communications coordinator Shonda Ranson.
According to the Silicon Valley Business Journal, LinkedIn claimed the toxicity of its location was not good for housing and advocated against it. (Google did not have a comment for the story. LinkedIn did not respond to request for comment.)
That may end up as LinkedIn's golden ticket to development. Its location was not placed on the housing list and met the rest of the criteria established by the city.
On the other hand, Google had two locations, including its 1 million square foot dome Charleston South, on the housing list. Last week's report included a recommendation that these projects "not move forward" at this time.
The city staff report does not formally rule out those under housing studies, but prioritizes the list for the council since there are too many proposals and not enough space, said Ranson.
LinkedIn may walk away the winner
If the city council follows the report's priorities, LinkedIn will take the bounty of the land with 1.6 million square feet. Google, in comparison, would only net 600,000 square feet for its Landings and Huff sites, a far cry from the 2.3 million it requested.
If approved, the Google Landings building is for a figure-eight shaped dome that is eight stories and features two levels of underground parking. Google's Huff site is the smallest dome at five stories.
LinkedIn would build a Googleplex of its own. The plan calls for a hotel, retail stores, a movie theater and six 8-story office buildings. It's also supposed to be powered by geothermal energy and build a pedestrian/bike bridge for the city.
As cool as geothermal mini towns and domed villages sounded, there was no way both Google and LinkedIn could coexist as-is from when they submitted their plans in February. There's always been too little space to go around. Someone will have to go back to the drawing board, if not both. Tomorrow, we'll know who.
Here's the video presentation of Google's plans:
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LinkedIn wants its Mountain View headquarters to have a movie theater, NBA-sized basketball court and geothermal heat (LNKD)
LinkedIn already has a lease on a 26-story San Francisco high rise, but obviously that hasn't stopped the professional networking service from dreaming of a Googleplex of its own.
In February, LinkedIn submitted a proposal for developing 1.6 million square feet of office space in Mountain View, California at 1500 N. Shoreline Boulevard. LinkedIn and its development partner SyWest have designed a hybrid campus and green space with some perks for the public. Packed with everything from a movie theater to a basketball court, the proposed campus resembles a miniature village.
Here are some of the amenities that LinkedIn's campus will include if all goes according to plan:
- A new bike/pedestrian bridge over Highway 101.
- An 88,500 square foot, two-level Century Theatre with 15 auditoriums.
- A VillaSport Athletic Club and Spa, which has an NBA-sized basketball court, fire pit, bar lounge and outdoor and indoor pools.
- Geothermal heat exchange systems and vegetated roof systems.
- 5 campus buildings with parking that can be used by the public during weekend events.
- A "LinkedIn Opportunity Center" to help Mountain View residents with job seeking skills and "improve access to economic opportunity". It will also be a place for nonprofits to hold classes on site. LinkedIn estimated its operating costs at $400,000 per year.
- 50,000 square feet of retail for local businesses with rent subsidies of $3 million per year.
The city of Mountain View will vote tomorrow on whether LinkedIn will get a shot at developing its campus.
LinkedIn did not respond to a request for comment about its new campus.
Check out some of the renderings LinkedIn's proposed headquarters below:
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More millennials are changing their minds about the suburbs
NEW YORK (Reuters) - Amy Paternite, a real estate agent in Maplewood, New Jersey, is getting used to hearing from clients in their late twenties and early thirties who say they never thought they would leave New York City for the suburbs. Parenthood – or a second baby on the way – has changed their minds.
"They still want good restaurants, but now it's also about space, affordability and being able to send their kids to a good public school," said Paternite, 45, who said that about 70 percent of her business now comes from young families who are making the move from Brooklyn or Manhattan.
Millennials, typically defined as those born between 1981 and 1997, may be turning into their parents after all. A generation that's been stereotyped as urban, single and aghast at the idea of a car-based life in the suburbs is starting to age, prompting fund managers to bet on companies that should benefit if the U.S. birth rate reverses a six-year slump.
With 4.3 million millennials turning 30 this year and the number set to jump to 4.6 million by 2020, there will soon be more adults in their early 30s than at any other time in U.S. history, according to an analysis of U.S. Census data by Wells Fargo.
As a result, fund managers are increasingly buying home builders, mortgage lenders and baby clothes makers that stand to benefit as millennials spend less on themselves and transition to parenthood.
"Look at what a 25-year-old single person spends money on, and look what a 35-year-old with kids spends money on," said Bill Smead, portfolio manager of the $1.1 billion Smead Value fund. "This is a chance to get rich on that transition."
Smead, whose portfolio is about two-thirds invested in companies that he says will benefit as millennials reach parenthood, holds homebuilder NVR Inc, mortgage lenders such as Wells Fargo & Co and Bank of America Corp, and local-advertising plays such as Gannett Co, which owns car-shopping website Cars.com.
In the housing market, meanwhile, millennials made up 32 percent of sales in 2014, up 4 percentage points from two years earlier – making them the largest segment of buyers, according to the National Association of Realtors. Those homes are more likely to be purchased in the close suburbs rather than in urban cores, according to an analysis of U.S. Census data by real-estate listing firm Trulia, which found that millennial growth in big-city suburbs was 1.4 percent in 2013, compared with 1.2 percent growth in dense cities.
The generation once seen as shunning cars accounted for 27 percent of new auto sales in the U.S. last year, up 9 percentage points from 2010, according to a recent study by JD Power and Associates.
"Especially in the older millennials, we're seeing a move towards more traditional patterns, just on a delayed time frame," said Sarah House, an economist at Wells Fargo.
Phil Orlando, chief equity strategist at Federated Investors and head of its Global Allocation fund, said he was not put off by the fact that U.S. home ownership rates hit a 20-year low in the fourth quarter. He has been adding shares of home improvement and other housing-related companies, anticipating a wave of suburbanization now that the financial crisis has passed. Nor is he deterred by the fact that the number of births in the U.S. declined for a sixth consecutive year in 2013, to 3.93 million.
"The fact that you've got these millennials delaying life and not getting married and not having kids is not a function of the fact that they are completely different from every other generation," Orlando said. "It's a reflection that they went to college and ran up debt and couldn't find a job. Now that the economy is starting to improve for these folks, household formations have literally gone vertical."
Household formation rose by 1.7 million in the fourth quarter from the year before, and increased 1.5 million in the first quarter from the same time frame in 2014, according to the Commerce Department.
That, in turn, should lead to a jump in demand for the products that cater to suburban life, Orlando said.
"As individuals get married and buy houses and have kids, you need car seats and cribs. That's the next layer of stuff that's been delayed since '08," he said.
Wall Street focus
It's a surprising turnaround for a generation that Wall Street is desperate to reach.
Over the last decade, the number of mentions of the millennial generation on quarterly corporate earnings calls has jumped from just one in all of 2007 to more than 100 in the most recent earnings season alone, according to Thomson Reuters data.
Greg Creed, the CEO of Yum Brands Inc, owner of Taco Bell, told analysts in March that “the muse of a Taco Bell is a 22-year old."
Stephen Dodson, manager of the $12 million Bretton Fund, is skeptical that there is that much of a millennial mindset. Instead of any generational habits, the term millennial could often be ascribed to any upwardly mobile city-dweller, he said.
Dodson, whose fund performance is in the top third of large-cap funds tracked by Morningstar over the last year, has large positions in baby-clothes retailer Carter's Inc, parent company of OshKosh B'gosh, and Gap Inc, owner of baby Gap stores. Shares of Carter's are up nearly 15 percent for the year to date after the company reported strong first-quarter earnings. Gap, meanwhile, has seen its shares dip 3.5 percent over the same time.
Another company that Dodson is looking at, but hasn't yet invested in, is MEDNAX Inc, which staffs physicians for hospital delivery rooms, including neo-natal care and anesthesiologists. Shares of the company are up almost 9 percent so far this year.
"This company is about as direct investment you can make on the birth rate increasing," Dodson said.
(Editing by Linda Stern and John Pickering.)
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Mountain View mayor asks hotel developer for a 'dollar figure' in advance of building
Well, that was blunt.
At a city council meeting Tuesday, Mountain View Mayor John McAlister asked local hotel developer Shashi Group how much the group would be willing to add in "community benefits" to advance their project.
"Is there a dollar figure? Say, $1.5 million, to move your project along tonight?" McAlister asked the developers.
The Shashi group did not open up their wallets to McAlister or the city of Mountain View, and their five-story hotel project in the coveted North Bayshore neighborhood was ultimately sent back to city staff to evaluate.
Stunning: Mayor McAlister just asked Shashi Group if there was "a dollar figure" they would be willing to offer to move project along.
— Nate DonatoWeinstein (@SVBizNate) May 6, 2015
Very awkward moment in room after Mayor asks hotel developer about community benefit in very direct way.
— Nate DonatoWeinstein (@SVBizNate) May 6, 2015While other applicants like LinkedIn promised a movie theater and pledged money to re-facilitate the city's library remodel, Shashi Group didn't incorporate such flashy benefits into their proposal. Council members debated the hotel's availability of meeting space as an actual enhancement to the community and whether two electric vehicle chargers was enough to constitute a benefit.
Even though the mayor was fishing for funds, other council members were pushing really hard for other tangible benefits like an art installment — although you can bet its price tag will probably be below the $1.5 million Shashi Group refused to cough up for council Tuesday.
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Google lost a fight to build its glass-domed HQ as LinkedIn's plans advance
Google's dome project lost out in a city council vote in Mountain View, California, crippling the company's plans to start building its domed campus of the future.
In a 4-3 vote, Mountain View's city council signed off on proposals from LinkedIn, Rees Properties and Broadreach Group to move forward with the process for their proposed office spaces. Google only received a green light for its parking-heavy project, Google Landings.
The move was disappointing for the internet search giant, which is both the largest employer and the largest landowner in the North Bayshore area.
"I'm not sure how I can make any of this economically viable with just one building," said Google VP of Real Estate David Radcliffe.
The problem came down to math, although the council is still trying to do its best to make magic with it.
The city had 2.2 million square feet of office space to give permits for, as part of the North Bayshore Precise Plan in an effort to control development while keeping environmental and traffic impact in check. In total, companies and developers submitted plans to transform 5.8 million square feet of the neighborhood into offices, and applicants knew going into the meeting that some would walk away empty-handed.
LinkedIn's office plan had to slim down a bit, bumping from 1.6 million square feet to just north of 1.4 million. Google, though, applied for 2.3 million square feet and walked away with 515,325 for one dome.
In the end, it may have been Google's own support for housing in its home base that might have undone its plans.
"Maybe this wasn’t clear when we submitted a letter supporting housing study, but we do not support the effective moratorium on our sites during the study while other development goes forward," Radcliffe said in his opening remarks.
The council that signed off on that plan in December 2014 wasn't the same city council voting tonight. In the interim, the new city council has added another qualification to the list: housing.
Last week, the city staff recommended that the council "not move forward" with two out of the four Google dome locations because they were in an area to be studied for residential use. The council chopped another site off the list, the already vacant Huff lot, to afford space to other projects like the Broadreach Capital Partners and Rees Properties. (Broadreach did reveal though that its main tenant is, in fact, Google).
Tuesday's late night vote doesn't mean that Google's other three domes are done and over.
"We know the City Council had a tough decision to make last night and thank them and our community for more than six hours of debate," Radcliffe said to Business Insider in a statement after the vote. "We’re pleased Council has decided to advance our Landings site and will continue to work with the City on Google’s future in Mountain View."
The council still wants to try to find some extra office space to develop and may be able to do so if the developer's projects are "self-mitigating," said Randy Tsuda, director of community development, during the meeting. Meaning if Google or another applicant could prove that the company-built housing would offset the office space with no additional environmental cost, the numbers could line up.
Google, though, did not take the suggestion to tear down its own office buildings to build housing kindly.
"I certainly can’t take office offline for housing when I don’t have enough space for my people," Radcliffe said.
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Carlos Slim is asking for $80 million for his Fifth Avenue mansion, which would make it the most expensive townhouse ever sold in New York City
Billionaire business magnate Carlos Slim put his Manhattan townhouse up for sale on Tuesday, and he's asking for a hefty $80 million.
Slim bought the Fifth Avenue mansion, which faces Central Park at East 82nd Street, for $44 million back in 2010.
If he gets his $80 million, that would make it the most expensive mansion ever sold in the city, the New York Daily News reports.
The eight-story, 20,000-square-foot Beaux-Arts building is one of those landmark mansions that has its own name – or, in this case, names.
Known as the Benjamin N. and Sarah Duke House, the Duke–Semans Mansion, or the Benjamin N. and Sarah Duke House, it's one of the last private mansions on Fifth Avenue, according to the Sotheby's listing.
Built from 1899-1901, the townhouse has a French Renaissance interior and was originally owned by an American Tobacco Company tycoon, according to the New York City Landmarks Preservation Commission.
It features high ceilings, hand-carved wood paneling, and gold-leaf trimmed fixtures, and plaster friezes, as well as a "sweeping" staircase, according to the listing.
SEE ALSO: Bill Ackman bought an apartment for $90 million, and he's pretty sure it's a steal
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Forbes thinks Bill Ackman might be the next Warren Buffett
Legendary activist investor Bill Ackman is trying to change his image from the "corporate raider everyone loves to hate" to something much friendlier, according to this month's Forbes cover story.
And that something might look like Warren Buffett.
Forbes' Antoine Gara reports that Ackman is remodeling himself after the Oracle of Omaha, who, after acquiring the textile company Berkshire Hathaway, "began swallowing businesses and stashing them under it."
Gara says Ackman's own personal Berkshire Hathaway is his Nevada real estate firm, Howard Hughes, of which he is the chair and owns 26%. The theory is that Ackman will use Howard Hughes as a holding company with which to build his empire.
Activist investors like Ackman have seen a bit of pushback recently: everyone from Senator Elizabeth Warren to BlackRock's Larry Fink have pointed fingers at shareholder activists who pressure companies into potentially unhealthy corporate actions like boosting stock buybacks and raising dividend payouts.
Ackman defended activist investing in an interview with Bloomberg TV's Stephanie Ruhle on Monday, saying "the kinds of changes that we propose, the kind of changes that an excellent activist proposes, are not short-term changes to derive short-term value. They're changes to fundamentally improve a business over many, many years."
He said activism is "critically important" – but, according to Forbes, Ackman's first success was in real estate, and it sounds like he's now looking to return to his roots.
Howard Hughes is currently planning a 35-square mile residential community in Summerlin, Nevada, according to the story. They own nearly 6,000 acres in the surround area and have plans to build 4,000 residential units and 1.4 million square feet of office space there.
And that's just the beginning. The corporation also owns a minor league baseball team in Las Vegas and air rights above a mall on The Strip near the Wynn hotel, Gara reported. He hinted that Ackman and Howard Hughes CEO David Weinreb may be planning a casino next.
Too bad Warren Buffett finds gambling "socially revolting." Maybe they're not that similar after all.
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More defaults are coming to China
A few mainland developers are expected to follow in the footsteps of Kaisa Group Holdings and default on their offshore debts in the next 12 months, analysts say, despite strong recent surges in their share prices on signs of a turnaround in the property market.
High on the list is Glorious Property Holdings, with US$300 million of 13 per cent senior notes due on October 25. Other weak players, such as Hopson Development Holdings and China SCE Property Holdings, have offshore debts due early next year.
"The key is to look at their access to funding channels," said Matthew Kong at global ratings agency Standard & Poor's. "It is good news that regulators have removed refinancing restrictions to widen options for developers.
"But only those big names with strong sales performance will be able to issue onshore bonds as investors are turning more sophisticated after a few recent defaults."
S&P cut its rating for Glorious Property to CCC-minus with a negative outlook last month on weakening sales and a depleting cash balance. Moody's Investors Service flagged similar concerns.
Glorious Property said on Monday its controlling shareholder was actively pursuing financial institutions to obtain approval of finance for the implementation of a possible privatisation, after a failed attempt last year.
Kaisa became the first mainland developer to default on offshore debts last month when it was unable to pay US$52 million of interest on two notes.
But it is not the only mainland defaulter this year. State-owned power equipment maker Baoding Tianwei Baobian Electric missed an 85.5 million yuan (HK$108.3 million) interest payment last month but secured a last-minute bailout loan from state-owned China Construction Bank. Also last month, Cloud Live Technology said it was short 240 million yuan needed to repay a 402 million yuan bond.
Other worrying signs in the onshore market include the unexpected withdrawals of bond offerings by Jiangsu and Anhui provinces after they failed to attract sufficient buyer interest last month. That happened after the Finance Ministry announced in March a 1 trillion yuan debt-for-bond swap programme as part of efforts to rescue the slowing economy.
The upside is a housing market downturn that began in February last year seems to be bottoming out, with transactions rising in recent weeks after Beijing issued a slew of measures, including tax cuts and lower down payment requirements, to stimulate demand.
Expectations of further supportive measures, including interest rate cuts, have fuelled a strong rally in property shares, which have outperformed the benchmark indices in Shanghai and Hong Kong.
However, the recovery is uneven, with small cities still struggling with oversupply. Moody's said yesterday policy easing last week in Foshan, Guangdong province, and in Henan province would boost sales of developers including China Overseas Land and Investment, Agile Property Holdings and Central China Real Estate.
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This is the Upper East Side penthouse where Sinatra used to host wild ragers with his Rat Pack
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Actually, here's what everybody in San Francisco is REALLY talking about
Real estate.
This morning, Josh Brown, CEO of Ritholtz Wealth Management and ubiquitous financial-media personality (Twitter handle @ReformedBroker), wrote up his impressions of San Francisco. They're very good, he's mostly right, and you should read them.
But when he says everybody's talking about their startup or some aspect of the tech industry, he's not exactly right.
Yes, there are plenty of people who use this chatter about funding rounds and term sheets as a way to indicate social status.
But the much more common conversation among people who live here, which can be used in a similar way, is about real estate.
Just in the last seven days, I've had conversations about:
- The guy who bought a house in a marginal area of San Francisco 2008 for $390,000, fixed it up, and just listed it for $600,000, expecting to get $800,000.
- The couple who just bought a four-unit building in what used to be a pretty scary block in the Mission — the kind of block where you wouldn't have wanted to walk around alone at night unless you had your wits about you — and is now renting the two-bedroom units out for $6,000 a month. The owners got the money for the place by selling their successful startup. Nearly all of the tenants work for startups or big tech companies.
- A former colleague who rented a house in Marin County, a suburban area north of town, a year ago, and is worried that he'll never get rid of his 70-minute commute because he and his wife cannot afford to buy anything in Marin or closer to San Francisco. The last house they bid on, they bid $100,000 over the asking price. They were not in the top six bidders.
- Another person in the media industry who has been shopping for a house for the last three months and was gratified that he was "only" outbid by $50,000 on the last house he and his girlfriend bid on.
- Two separate couples griping about how their landlords didn't fix anything, but at least they hadn't raised the rent to market rates, so they were going to stay quiet. (In San Francisco, rent control only applies to multi-unit buildings; these are standalone houses.) One lamented that the family would never be able to move off the busy street they're now on.
The tech industry boom is one big reason why housing has gotten so ridiculous in San Francisco, but there's also a lot of foreign money coming in — people tell stories of Chinese nationals who are diversifying by buying property in California, paying cash — and the fact that San Francisco is a tiny city (only 46 square miles) with very little new housing stock.
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How I went from being homeless to making real estate deals worth millions
I'm mixed race, from a single parent family in London, England that polite company like to call "of modest means" (I call it broke — think using tape as a vacuum!).
According to statistics I should at best, be in jail, and at worst, be dead.
But I was the first person in my family to go to college and graduated with honors. I graduated in 2007 as a physical therapist and I was really good — it just so happened that it came naturally to me.
Quickly, I was traveling internationally and working with top sports teams. I had made a commitment to making a difference and helping people so I set up a private health care practice in 2010, after three years in the field. I wanted to reduce wait times for the public accessing affordable health care.
In the first year or so it was awesome: hundreds of happy clients, cash was flowing and my shoe collection was growing. I thought I was on top of the world, and complacency came knocking.
I was young and naive. Things were good, so I assumed they would always be good. Rather than save up and create financial walls around my family for security and stability, I spent and reinvested every penny I made, which left me vulnerable when things began to slide.
What happened next hit me so hard.
Businesses need leaders, strategic thinkers, and great planning. In the middle of a global economic crisis they need this more than ever, and back then, I didn't have any of that.
A lot of our revenue came from insurance companies dealing with work injuries or car accidents. As the recession took hold these companies went under, not only taking large portion of our turnover with them, but also owing us tens of thousands of pounds.
Quickly, patients dried up. In a recession, who needs a back massage, right?
It spiraled out of control and before I could blink I was selling cars, shoes, books, CD's, everything I had to pay my rent, bills, tax, and put food on the table. It got so bad that, because of personal guarantees, to close the business would have cost around $25,000. I felt like the only person in the world too broke to fail!
Eventually there was nothing left to sell and I was forced to move into the office in August 2011 with the one bag of clothes I had left and a blow up bed that always went down in the middle of the night.
The next few months were ugly. I cried constantly, ate garbage comfort food, and drank too much alcohol.
About four months into my meltdown, the next light bulb moment happened. I realized that right then in that very moment there were successful people in the world making money, creating wealth, and having a great lifestyle. Recession or not, people were making money and I was going to figure out how.
Over the next few months I read hundreds of books, listened to hundreds of audio programs, went on seminars and conferences and spent thousands on credit cards I couldn't afford to pay educating myself.
Quickly I noticed a trend: A whole lot of people had made a whole heap of cash investing in real estate. I had no interest in reinventing the wheel, so that's what I decided to do.
Having no money or experience wasn't about to stop me, so I went networking as often as I could to real estate and investing meetings, which is where I learned my first lesson: Build your network before you need it.
I started building relationships and adding value where I could, expecting nothing in return.
Before long I had offers of investment and joint ventures. In December 2011, my first investor gave me $200,000. I'll never forget the feeling of pride, when I realized of all the places he could choose to invest, he chose me.
Lesson No. 2: People buy from people. The investment opportunities I'd found were good, but not amazing. However, that didn't matter. The investor had bought into and believed in me. I was educated, smart, hard working, and worthy of investment.
From there, my investments and portfolio snowballed. Within 12 months I'd raised $1 million in investments and bought a real estate portfolio of $2 million. Along the way I also paid off the majority of my credit card debt I spent educating myself (I could have paid the rest but was too busy reinvesting every penny) and moved into a stunning flat in central London.
At the time I wasn't sure what it was that made investors believe in me, realtors want to work with me, and vendors sell their houses to me, but now I get it, because I now get to see it in others.
I was hungry for success and security, I had educated myself and taken action, but most importantly I was authentic and acted with integrity.
Whatever situation you are in, the chances are you are better off than I was. I had no money, no confidence and no clue. Of course there have been challenges and it wasn't all smooth sailing, but if you are willing to work for it, financial freedom and security is possible.
Kemi Egan is co-founder of Freedom Academies, Freedom Investments & Freedom Homes. She is a real estate investor, mentor, wealth strategist, and author of the #1 bestseller "The Power of Real Estate Investing."
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The mansion from 'Scarface' just got its price cut in half to $18 million after being on the market for a year
The mansion prominently featured in the 1983 film classic "Scarface" is not actually in Miami. Instead, it's in Montecito, California, which lies about 90 miles west of Los Angeles.
However, the mansion is still just as beautiful as you remember from the movie. It's also been renovated recently — so it's possibly even more beautiful.
The mansion is still on the market after sitting unsold for an asking price of $35 million. Its price has now been cut in half to $17.8 million, according to the Wall Street Journal.
The 10,000-square-foot mansion's four bedrooms and nine bathrooms are completely surrounded by Persian gardens and an insane number of fountains.
Emily Kellenberger of Village Properties has the listing.
Surprise! Tony Montana's Miami mansion isn't actually in Miami.
Instead, it's a sprawling, 10-acre edifice in Montecito, California (about 90 miles west of Los Angeles).
The mansion, named El Fureidis, was originally built in 1906.
See the rest of the story at Business Insider
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Fund managers are betting big on high-end shopping malls
NEW YORK (Reuters) - Even as the rise of online retailers such as Amazon.com Inc leads analysts to predict the eventual death of the American shopping mall, real estate fund managers are betting some will prosper – if they can lure the right kind of consumer.
Simon Property Group Inc, the largest high-end mall operator in the country with properties including Palo Alto, California's Stanford Shopping Center and suburban Philadelphia's King of Prussia Mall is the top holding in 53 of the 71 U.S. real estate funds tracked by Lipper. The average real estate fund devotes 8.8 percent of its portfolio to Simon, a bigger average bet than the 7.6 percent that tech funds invest in Apple Inc and almost one percentage point more than the weight of Simon in the benchmark S&P U.S. REIT index.
Still a symbol of a car-based, middle-class suburban America, malls are increasingly seen as viable only if they attract the affluent. Fund managers are bullish on so-called Class A malls, anchored by department stores like Bloomingdale’s and featuring retailers like Apple, reflecting how better-off consumers have thrived since the end of the financial crisis while middle and lower income consumers have struggled.
"Class A malls are repositioning themselves to be destinations, with more restaurants, which is making them more resilient to what's going on with the Internet," said Rick Romano, a portfolio manager of the $3.8 billion Prudential Global Real Estate fund, who holds 4.5 percent of his portfolio in Simon, his top holding.
Class A malls are also the only shopping centers able to attract an Apple store, which can post annual sales of more than $5,000 a square foot — the highest of any U.S. retailer — and boost sales growth for other retailers throughout the mall, Romano said. As a result, Simon has been able to post rent increases of 18.9 percent for new leases over the last 12 months, according to Paul Morgan, an analyst at MLV & Co.
Simon's average rent per square foot — which includes ongoing and new leases — rose 4.5 percent in the first quarter compared with the year before, or about six times the 0.8 percent pace of inflation in the U.S. Bloomingdale's is the most frequent anchor store at the highest-rated malls in the country, followed by Nordstrom.
Those Americans in the top 20 percent of income — or Class A mall shoppers — have seen their household assets jump from about $15 trillion in 2010 to $25 trillion in 2014, according to Green Street Advisors. Household assets for Class B and lower mall customers rose from about $7 trillion in 2010 to a little over $10 trillion in 2014.
Class B malls are often saddled with struggling department stores such as Sears or J.C. Penney as anchors, making them less attractive to prospective tenants. Some 24 such malls have closed since 2010, and an additional 60 are on the brink of closure, according to Green Street Advisors.
No REIT fund hold Class B or lower mall operators as their largest holding, according to Lipper. J.C Penney and Sears are the most frequent anchor stores at Class C and lower malls, according to Green Street.
There are about 1,000 enclosed shopping malls in the U.S. Foot traffic at malls during the November and December holiday shopping season fell from approximately 35 billion visits in 2010 to 17.6 billion in 2013, according to an October Cushman and Wakefield report. Online commerce now accounts for 15 percent of retail sales - just 5 percentage points less than the percentage of retail sales that come from malls and gaining, according to a report from Green Street Advisors.
DEMAND FOR HIGH-END RISING
Investor demand for high-end malls will rise even if consumer spending overall flattens or starts to slow, said Jason Ko, a co-portfolio manager of the $2.1 billion J.P. Morgan Realty Income fund who has 7.8 percent of his portfolio in Simon, his largest position.
Macerich Co, the third-largest mall owner in the U.S., rejected a $16.8 billion takeover offer from Simon Property on April 1, a merger that would give Simon an even larger hold of the high-end mall market. Simon is not expected to come back with a higher offer, analysts and fund managers said.
"What that attempt signifies is that high quality malls are irreplaceable: difficult to build and difficult to buy," Ko said.
Shares of Simon Property are down 5.5 percent since Macerich rejected its takeover offer, while shares of Macerich have fallen 2.2 percent over the same time. Over the last 12 months, shares of Simon are up 5.7 percent, or about 2 percentage points less than the 7.9 percent gain in the benchmark index.
Simon shares closed Wednesday at $181.31, compared with the average target price of $217.05 among analysts tracked by Thomson Reuters. At that price, Simon is selling at 39 times trailing 12 month earnings, slightly below the average 45 times earnings among its peers, according to Thomson Reuters data.
Class B malls, meanwhile, will not only feel the effects of sales declines at J.C. Penney and Sears, but will see increased competition from so-called power centers — suburban developments that are often next to a major highway and include a Home Depot or Best Buy alongside a traditional strip mall, said Ian Goltra, who helps oversee $2 billion in real estate investments at San Francisco-based Forward Funds.
Goltra has several short positions for Class B mall operators in his funds, yet expects shares of Simon to rise, even with its high percentage of fund ownership. He has been adding shares of Simon as it has traded in the $180s, down from a high of $205.31 on Jan 28th.
"They have the largest portfolio of blue-chip tenants, and that's something their competitors have not been able to replicate," he said.
(Reporting by David Randall; editing by Linda Stern and John Pickering)
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THE HOUSE THAT BUTTER BUILT: Paula Deen lists Savannah estate for $12.5 million
With a spate of new restaurant and media projects, ousted Food Network chef Paula Deen is reinventing herself.
First order of business: unload the custom-designed Savannah home where she filmed her cancelled cooking show.
Featuring a gourmet kitchen, more refrigerators than you can count on one hand, a chicken coop, and a dish pantry, it's the house that butter built.
The 6-year-old, French-Caribbean style mansion was built to be Deen's dream home. Christie's International Real Estate has the $12.5 million listing.
Her youngest son, Bobby, was married in the living room.
Deen is a great collector of antique dishware, so naturally there is a dish room with plenty of cabinetry.
See the rest of the story at Business Insider
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Bill Ackman is buying a badass office building far away from the rest of hedge-fund land
Hedge-fund titan Bill Ackman is buying a historic 464,000-square-foot car dealership building located on Manhattan's far West Side for Pershing Square Capital's new headquarters, the New York Post reports.
The deal, which hasn't been finalized, is being led by The Georgetown Company, a commercial real-estate firm that developed the IAC Building. Ackman is a partner in the deal, Business Insider has learned.
The building is far away from where most hedge funds are headquartered in the heart of Midtown Manhattan.
The former Ford Motor Company building, located at 787 11th Ave. between 54th and 55th streets, was was expected to sell for more than $230 million. It's unclear how much is being paid.
Ackman's $20 billion Pershing Square Capital Management currently occupies the 42nd floor of 888 Seventh Ave., which offers stunning views of Central Park. The lease will be expiring soon.
We expect that Ackman probably has big plans for Pershing's new digs.
The old Manhattan Ford Lincoln Mercury dealership is an eight-story building with ground retail space and rooftop access.
It's just across the West Side Highway from Piers 92/94. It's also located directly across the street from De Witt Clinton Park, which features basketball and handball courts as well as baseball and soccer fields.
The only drawback is that there are no major subway lines nearby, so Pershing employees may want to make a habit of riding bikes along the West Side Highway Bike Path.
Pershing employees are a pretty active crowd as it is. (There's a gym in Pershing's current office and Ackman has held the record on the treadmill and the rowing machine.)
Then again, there could also be a shuttle.
The building itself was finished in 1929. It was originally the Packard Motor Car Company Service Building, according to a report in the New York Times. It was renovated by Ford in 1997. By the way, we noticed that the building is adorned with some gargoyles (see photos here).
Pershing Square employs about 70 people, and they currently occupy about 31,000 square feet in New York, so it's likely that other tenants would rent space in the massive West Side building.
Ackman has an estimated networth of $2.5 billion. In 2014, he was the best-performing big hedge-fund manager, netting his investors 40% in a year when most funds struggled. He's been making headlines lately for his real-estate investments. Ackman famously dropped $91.5 million on a luxury apartment at One57— the second-most expensive NYC apartment sale ever — with a group of investors.
Here's a map of where the new office will be located:
Here's a Google Street View version:
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Being a landlord runs in my family, but I’m convinced it’s not for me
Being a landlord seems to run in my family.
My mom has managed several rental properties for my whole life, and her mother did the same thing.
My other grandmother, on my father's side, was also a landlord for many years.
But I can't say that I plan to follow in their footsteps.
I've seen firsthand how much work goes into it, and I'm convinced that this "passive source of income" is much more active than it sounds.
Here's why:
You're always on call.
It was great having my mom around to pick me up from school every day — having an additional source of income made it possible for her to freelance, rather than working full time.
But there were plenty of times that I went down for breakfast only to find that she'd been up for hours, making emergency calls to plumbers because the hot water wasn't working in one of the houses.
Being a landlord means that if something goes wrong, it's up to you to fix it, and you're the one who gets the panicked phone call in the middle of the night.
Of course, you could always hire a property management company to handle problems that come up. But that cuts into your profits, which are tight as it is, because...
There are lots of costs that people don't think about.
It seems like an easy equation: If your renters pay more than your mortgage costs each month, you'll make money. But chances are, there will be a lawn to mow, snow to plow, and gutters to clean ... not to mention the occasional unexpected expenses that pop up when a dishwasher stops working or the roof needs repair.
If you have the time and the interest, you can save money by doing repairs and yard work yourself, but eventually you'll run into a situation that requires calling a professional.
On top of that, your property taxes may go up unexpectedly if other houses in the area start selling for higher prices, or if the city decides to reevaluate how much they're taxing homeowners.
Over the past ten years, my mom has repeatedly faced the same dilemma: wanting to keep great tenants who can't afford to pay more, but needing to raise the rent in order to break even.
Finding the right tenants isn't always easy.
Depending on where you're located, finding stable long-term renters can be difficult. In my mom's area of Newport, Rhode Island, there's a huge demand for summer rentals, which can be very lucrative but mean that no rental income is coming in for nine months out of the year. There are also plenty of college students looking for off-campus housing, but that means potentially dealing with damage to the house and calls from angry neighbors if they decide to have a party.
Even if you're in an area where there's a huge supply of working professionals, sifting through the calls and emails from prospective tenants and arranging time for the showings is still a lot of work. Yes, you can outsource it to a realtor, but that cuts even further into your profit margin.
And chances are, you'll want to be involved in choosing a renter, even if that means picking between two pre-screened candidates. After all, you're about to hand over the keys to what is probably one of the most expensive things that you own. Finding someone who is going to be reliable, trustworthy, and pay rent on time is crucial.
Knowing all of this, I've come to a sad (but true) conclusion: I'm too lazy to be a landlord. Although there's no question that I'd love to have an additional source of income every month, owning a rental property doesn't mean that money will just magically appear in your bank account every month. With the work that's involved, it's more like having a second job. And if I'm going to do that, I'd rather find an easier one.
SEE ALSO: This Map Shows The Most And Least Expensive Apartment Rental Markets In The US
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We're now in the 'everything bubble'
Everything is overvalued. Stocks are extremely overvalued. An incredible amount of bonds have negative yields; how much more overvalued can they get? Investment-grade and high-yield credit spreads are near all-time lows on top of some of the lowest rates we’ve ever seen! Prices for high-end real estate, art and other collectibles are off the chart. I’ve thought of calling this the “everything bubble,” because looking at each one on its own (outside of small cap stocks which are largely obscured from view) there’s no obvious bubble similar to the dotcom or real estate bubbles. But taken together we’ve never seen anything like this ever before.
I believe the real problem lies in the growth of “price-insensitive buyers,” as GMO recently labeled them. I’ve also called them “value agnostic.” Ultimately, there’s a growing class of investors (though I believe they don’t deserve that term) who are buying assets like stocks and bonds regardless of their valuations. They will buy stocks to the moon simply because their methodology dictates they do so. I’m referring mainly to so-called “passive” investors here.
Then we also have investors who will buy bonds no matter how negative they get because their methodology dictates it. Just look at pension funds, insurers and central banks. Their policies ensure they continue buying bonds even when that means locking in deeply negative returns over long periods of time.
The incredible growth in this class of price-insensitive buyers is responsible for the everything bubble. Just think about the growth of passive investing over the course of just the past five years or so. Buy and hold has gone from being mocked and disparaged only five years ago to the most popular investment style there is. Witness the growth of robo-advisors as evidence. And how long have central banks been buying assets? It’s only been over the past five or six years. This is a wholly new phenomenon in the markets and it’s now become a huge segment.
Make no mistake. The incredible growth of “value agnostic” investors is just another form of mania pushing asset prices to extremes. These investors use their returns over the past five years as proof that their methodology has merit when simple common sense shows that you can’t possibly be an investor while denying the definition of an “investment,” as Ben Graham defined it:
An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative.
Buying stocks or bonds today provide neither “safety of principal” nor “adequate return.” In fact, these “price-insensitive buyers” don’t even attempt to begin any sort of “thorough analysis.” For this reason they are nothing more than speculators. That they believe themselves to be otherwise despite the obvious fact that they are just the opposite may be the surest sign there is that this is indeed another mania. Sadly, it will only be evident to them in hindsight.
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