We What? Office space giant loses $2 billion in one quarter; homebuying frenzy in the Lehigh Valley; Fannie/Freddie sweeten their multifamily lending deal; making CRE investing more accessible; and why Simon says so.
In Today's News
WeWork Lost $2.1 Billion on Closings, Neumann Deal
WeWork lost $2.06 billion in the first quarter, overwhelmed by effects of the coronavirus pandemic and a settlement with the ousted co-founder Adam Neumann, Bloomberg reports [subscription required].
The Millionacres takeaway: That's four times the red ink the company posted in the first quarter of 2020, although the new leadership says that customer demand now exceeds pre-pandemic levels. The new boss also plans to try again to take it public too, this time through a SPAC.
Real Estate Frenzy Overwhelms Small-Town America
This Wall Street Journal piece [subscription required] describes how hometown buyers far from big cities are losing out to investors and deep-pocketed rivals in places where properties until a year ago offered affordable entry to the middle class.
The Millionacres takeaway: This inside look at what's happening in the Lehigh Valley town of Bethlehem, Pennsylvania, does note that some of those buyers are immediately turning these homes into rentals, too. And now rents there are getting as high as mortgage payments. This is an old steel town, the kind that used to be emblematic of places where houses would sit on the market for months. We live in interesting times.
Freddie, Fannie Offer Lower Interest Rates to Spur Workforce Housing Development
Federal officials have ordered Freddie Mac and Fannie Mae to purchase more loans to apartment communities that are affordable to moderate-income renters -- and to buy fewer loans to luxury apartment properties -- as a share of their total business, WealthManagement.com reports.
The Millionacres takeaway: This response to growing concerns about housing affordability is welcome news to investment funds and other players, the article says, since these loans carry interest rates that can often be 20 to 30 basis points lower than usually offered by Fannie Mae lenders. They also aren't government affordable-housing programs, making the rental pricing more flexible and entry more doable, perhaps, for smaller investors.
Today on Millionacres
Barriers to Enter Commercial Real Estate Investing: Too High?
There's a reason most real estate investors get their start in residential real estate: Its lower price point, ease of financing, and relatively simple management means it's far more accessible for the everyday investor. There's bigger money in commercial real estate (CRE), though, but the barriers can be high to the individual investor. However…
The Millionacres takeaway: Investors no longer have to wait years to decades to build up a sizable-enough portfolio to trade up. Instead, there are a number of ways everyday investors can participate in commercial real estate for far less time, money, and effort. Our Liz Brumer tells you how.
This Mall REIT Would Rather Sit on Empty Space Than Take a Bad Deal
Our Reuben Gregg Brewer dissects a strategy by Simon Property Group (NYSE: SPG) that includes playing hardball with tenants and not rushing to fill empty space left behind by pandemic-pummeled retailers. He finds it promising.
The Millionacres takeaway: And, our Laura Agadoni shares her insight on another tack Simon is taking: buying its own tenants: "Simon Property Group Snaps Up Another Retailer: What It Means for Investors." When it comes to deciding whether to invest in the nation's largest mall owner, we've got you covered.