Kirby Pointe

Kirby Pointe Apartments, Horizon Companies New 116-unit Multi-Family Development in Memphis, Tennessee

MEMPHIS, TN / September 20, 2021 / Today, Horizon Companies announced their newest development project, Kirby Pointe Apartments, a 116-unit multi-family development in Memphis, Tennessee featuring four different unit sizes consisting of 1 to 4 bedrooms providing options for individuals and families of varying sizes. Positive growth trends have returned to Memphis over the past several months, slowly shifting the area into a high-tech healthcare hub for the mid-South region. This has been helped along by sizeable expansions at the UT Medical Center and a burgeoning high-tech medical device manufacturing sector. Preston Byrd, Managing Partner at Horizon Companies, is overseeing this $18M project that will provide needed residences for the rapidly growing community. Byrd states, “this has been a long-time coming and we are excited to finally see this project come together.”

Kirby Pointe, will sit on roughly 7.91 acres and is designed as a townhouse-style development giving its residents the opportunity to pull right up to their front door. The property will include a State-of-the-Art Fitness Center, Business Center, BBQ/Picnic Facilities, Children’s Playground and Free Wi-Fi for its residents. Construction is currently scheduled to start late Fall of 2021 and is expected to be completed by the end of 2022.

Interested in investing in some of our developments, Get Started today!

Real Estate Investing

Benefits of Real Estate Investing

Investing in real estate has become a buzz word. Many understand the idea of what investing in real estate means but are often unsure of how to get started. There are many benefits in the world of Real Estate Investing. These range from creating short-term cash infusions from flipping properties to building long-term wealth by establishing a source for passive income. Building a Real Estate portfolio is however one sure way of ensuring you and your family will experience a life of financial freedom.

Let’s take a look at the most basic and fundamental approach of real estate investment, buying a single-family home. The great accomplishment of homeownership has several benefits for a family or an individual. The home will likely increase in value thus building equity and becoming a source of cash for you. There are also different tax advantages for homeownership that include mortgage interest deductions, property tax deductions, or even getting tax deductions for home improvements that you make. And of course, there’s the benefit of providing long-term stability for your family and for some, passing down the home or estate to their children.

Once you began to view real estate from the eyes of an investor, it becomes a game changer! Three of the most popular ways to invest in real estate is flipping houses, buying a house to use it as a rental property and investing in multi-tenant real estate. The greatest benefit of these three approaches are the ones that create passive income, long-term cash flow! Flipping houses and purchasing houses to use as rental properties require investors to properly assess their liabilities by understanding the market.  Excessive renovation cost, property management fees and continued maintenance and repairs could cause you to take serious losses.

The new way of looking at real estate investing is through the lenses of the top 1%, investing in multiple pieces of real estate all at once. Horizon Companies has created an investment platform that allows you access to an asset class that was once only made available to institutional investors or the very wealthy. Now, our investors can start with as little as $25,000 and invest in multi-family developments that can yield quick returns and long-term cash flow. For many, the idea of investing in 100 or more units at once has been out of reach. Not anymore! We spend hours researching markets so you don’t have to, giving you the benefit of knowing what we know. Our platform streamlines your investing experience by giving you access to robust reporting and research that ultimately leads to us making cash distributions directly into your bank account as you continue to monitor the performance of your investment.

Investing in a multi-million-dollar project is no longer out of reach and can offer you the opportunity to start creating generational wealthy for you and your family. Get started today and begin the journey of building your real estate portfolio with multi-tenant assets.

 

***Investing involves risk, including loss of principal. Past performance does not guarantee or indicate future results. Any historical returns, expected returns, or probability projections may not reflect actual future performance. Neither Horizon Companies nor any of its affiliates provide tax advice and do not represent in any manner that the outcomes described herein will result in any particular tax consequence. Offers to sell, or solicitations of offers to buy, any security can only be made through official offering documents that contain important information about investment objectives, risks, fees and expenses. Prospective investors should consult with a tax or legal adviser before making any investment decision.

 

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Multifamily Construction Costs

Where Do We Go From Here?

Many if not all multifamily developers would agree the most unstable issue in the industry is a shortage of construction materials. Steele, asphalt and lumber to be specific. The shortages have caused development costs to rise to unprecedented levels. It was inevitable. The closing of mills and factories early in the pandemic brought production of materials to a halt. This decreased overall supply while consumer demand rapidly increased.

Consumers were quarantined and anxious. Unsure the direction Covid-19 would go and having millions working from home concerns for comfort became a big issue. Bigger homes became important to families and renovations became a major coping mechanism. Lumber quickly disappeared from shelves, and factories have not been able to keep up with demand since. Construction firms quoted six weeks delivery times earlier in 2021 are now being quoted 18 weeks to arrive.

The closing of factories, mills and high demand have caused a volatile domino effect. The combination of these challenges created the “perfect” storm. The backlog in the production of materials have Builders seeking answers on how to offset these inflated costs. Who will absorb the additional expenses? Will the investors have to take a lower yield? Will the renters have to pay higher rental rates? The National Association of Home Builders did a study and found higher cost of lumber could increase the market value of a unit by $13,000k. Construction costs has always been a huge part of multifamily developments and inflation upwards of 140% is catastrophic to a project.

Pre-pandemic conversations on lumber in the media was far and few, plus boring.  Today the conversation is a hot topic, memes flood social media but it’s definitely a serious matter.  Knowing how to connect with contractors to order materials sooner or even secure the cost of labor will be key for developers. Especially since the labor market is still struggling to fill jobs amidst the significant unemployment but that is another article.  Today, our world is a lot different than 18 months ago and predictions of going back to how it was, is no where in sight.

 

By: Quinn Newton

The Reserves at Green Meadows

Horizon Companies Announces The Reserves at Green Meadows, a 200-Unit Multi-Family Development in Huntsville, Alabama

HUNTSVILLE, AL / June 30, 2021 / Today, Horizon Companies announced their newest development project, The Reserves at Green Meadows, a 216-unit multi-family development in Huntsville, Alabama featuring four different unit sizes consisting of 1 to 4 bedrooms providing options for individuals and families of varying sizes. Huntsville’s market has shown years of strong economic and population growth supporting the demand for this multifamily development Managing Partner of Horizon Companies. Preston Byrd is proud to oversee this $32M project that has also caught the attention of several city officials. Raj Valluri, Vice President of Development at Horizon Companies says that it’s been well documented through permit activity that multifamily construction had indeed slowed down in the years prior to 2019 however, this combined with the post-pandemic surge in demand has now created the conditions to accelerate the development of multifamily housing in Huntsville.

Valluri added, clearly, the continued growth in jobs in the space exploration and auto industries have catapulted population growth in Huntsville and its surrounding suburbs and led to projections that it will become Alabama’s biggest city in 2021.

The development will include a Recreation/Deck Area, State-of-the-Art Fitness Center, Business Center, Two Tennis Courts, Swimming Pool, Children’s Playground, Water Features, Dog Park, and On-site Walking and Trail, Hiking Trails. The 22-acre property boasts a highly sought-after location Ideal for new Huntsville residents attracted to the area thanks to the encouraging job opportunities. Additionally, Alabama University Students and Faculty will find the Reserves at Green Meadow an attractive option with convenient access to major retailers and a straight shot to Huntsville International Airport.

Construction is currently scheduled to start in the Fall of 2021 and is expected to be completed by Fall of 2022.

Interested in investing in some of our developments, Get Started today!

Madison Place

Strong Quarter leads to Rent Jump for Multifamily in March

According to Yardi Matrix, the average multifamily rents rose by $6 to $1,407 on a year-over-year (YOY) basis in March. This development lead to multifamily rents having one of the strongest first quarters in a few years, with the 0.6% YOY and 0.8% quarter-over-quarter jump. Further, with rents posting a 0.4% month-over-month growth in March, an increase of 20 basis points over February was achieved.

During this period, 134 markets were surveyed with 114 showing flat or positive YOY rent growth. Additionally, 19 of the top 30 metros had flat or positive YOY rent growth in March.

Many of the western locations showed higher growth followed by markets in the southeast. This includes the Inland Empire (8.3%), Sacramento (7.3%) and Phoenix (6.9%), which posted the largest YOY growth. Tampa (5.0%) and Atlanta (4.7%) also posted strong YOY rent growth, benefiting from strong migration and limited new supply. For instance, completions in Tampa and Atlanta over the last 12 months totaled only 2.3% and 2.5% of inventory, respectively.

Yardi also reported that expensive coastal metros are beginning to bounce back, with New York (-13.6% YOY) and San Jose (-12.0% YOY) bottoming out. In fact, San Jose (0.9%) joined Sacramento (1.0%) in having the highest short-term rent growth in first quarter.

Twenty-six of the top 30 markets had flat or positive month-over-month rent growth in March. It was noted in Yardi that Raleigh, which dropped 0.9%, was an outlier among the strong Southeastern markets. The reason could be that 3.9% of stock has been completed in Raleigh during the last 12 months. Raleigh was second only to Austin, with the second most deliveries over the last 12 months.

While lifestyle rents have been hit the hardest during the pandemic, they rose 0.5% month-over-month during first quarter. Rents in renter-by-necessity apartments, which had been performing better during the pandemic, only increased 0.3%. Twenty-seven of the top 30 metros had flat or positive month-over-month lifestyle rent growth. Half of the top 30 metros also saw positive lifestyle rent growth.

Yardi reported that it expects things will continue to improve with the $50 billion of emergency rental assistance and other support to the housing industry that was included in the most recent federal aid package. “This funding is bound to have a positive effect on occupancy and rent growth throughout 2021,” a Yardi’s analyst’s state.

A recent report from Apartment List echoes Yardi’s sentiment about an improving rental market. In March, Apartment List’s national index jumped by 1.1%, which was its largest monthly increase going back to the beginning of 2017. That doubled historical growth in the month. In the previous three years, March’s year-over-year rent growth was 0.6%.

Recently, Apartment List’s index started growing ahead of seasonal trends. It saw improvement in both pricey coastal markets and smaller cities that have grown popular through the pandemic. The markets that saw the fastest declines in 2020 are starting to experience the most significant jumps in 2021.

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Affordable Housing Market in 2021

The affordable housing crisis in the U.S. continued to deepen in 2020 even though there has been tremendous efforts made to change that. Currently, there is a national shortage of more than 7 million affordable homes for the country’s more than 11 million extremely low-income families, according to the National Low-Income Housing Coalition.

Providing access to safe and affordable housing is essential to reducing economic inequalities, yet no state has adequate affordable housing supply for low-income renters, per the NLIHC report.

The simplest solution to America’s housing crisis is delivering more supply. However, beyond obstacles—such as rising land costs, labor shortages and burdensome regulations—that make affordable housing development difficult, there are other, more fundamental issues standing in the way of a more affordable housing market. A major issue is that most of the available homes are in places where there are no jobs that provide opportunities for growth and stability. Instead, workplaces are located in a few areas where housing has become highly unaffordable. Additionally, the available supply doesn’t fit the needs of today’s generation.

Another major challenge for developers is putting together the funding stack and finalizing the closing. The year-end bill submitted last month and passed by congress sets the Low-Income Housing Tax Credit floor at 4 percent, which is set to help developers assemble the funding stacks more easily. These changes would allow for up to 25 percent additional capital to the stacks and help fund budget gaps on current deals, which would allow for larger deals, effectively increasing unit counts, and ultimately increasing the amount of capital that can be allocated by municipalities to projects.

President Joe Biden’s campaign platform called for spending $640 billion on housing programs in the next few years, including establishing a $100 billion Affordable Housing Fund to construct and upgrade affordable housing, increasing funding for the Housing Trust Fund Program by $20 billion and expanding the Low-Income Housing Tax Credit Program by $10 billion. It is still too soon to tell if and how all these plans will materialize but the affordable housing market remain eyes opened.

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Happy Holidays 2020

Horizon Companies would like to wish you and your family a holiday season filled with peace and happiness. This year has been challenging for mostly everyone. Social distancing, mask mandates, and quarantines have become the norm. Sadly, these measures were not enough and many around the world succumbed to Covid-19. The coronavirus delivered many devastating consequences to families, society and businesses however, we still have an opportunity to overcome these challenges if we continue to work together.

Horizon Companies continues to strive toward unity by working together with our apartment communities, families, leasing offices, vendors, and partners to overcome these uncertain times. Facing the pandemic as a world issue, united across the globe would surely help end the crisis. Sure, global unity is not realistic but we can look at our own lives and see how we can unite with our families and neighbors.

The election process of 2020 showed the world that Americans are deeply divided on just about everything. During this season of reflection and thankfulness let us agree on these basic human rights; the right to life and liberty, freedom from slavery and torture, freedom of opinion and expression, the right to work and education and the right to choice to name a few. We are each entitled to these rights, without discrimination.

We at Horizon Companies respect and value all, may this year end with positive reflection and great gratitude!

 

By: Quinn Newton

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Understanding The Eviction Moratorium

SARS-COV-2 caused devastating disruption worldwide in mostly every financial market. Millions of workers experienced some sort of financial loss. Reduced hours, furloughs and complete job loss challenged many families. It’s understandable how meeting financial obligations including rent could become a challenge. Back in March, Congress stepped in passing the CARES Act Eviction Moratorium.

CARES Act Section 4024(b) prohibited landlords from starting eviction proceeding or charging late fees or penalties against a tenant for nonpayment of rent. These protections extended for 120 days from March 27, 2020 until August 24, 2020. The moratorium did not absolve tenants from legal responsibilities. The moratorium mostly allowed individuals a chance to work through current challenges under a grace period. The 120 days provided many with peace of mind that an immediate eviction would not occur if unable to pay their rent.

The initial moratorium expired on August 24, 2020 assuming the US would have a better grasp on coronavirus spread. Unfortunately, the virus is still spreading without any signs of slowing down. The Centers for Disease Control Director, Dr. Robert Redfield, used executive power attempting to slow the spread by signing a new declaration. Signed on September 4, 2020, the new declaration focuses on mass evictions. The CDC’s concern is how mass evictions could be detrimental to public health control measures currently in place to slow spread.

The declaration requires Renter’s or Homeowner’s to provide a signed copy of the Declaration under penalty of perjury. Individuals must exhaust all efforts to obtain all available government assistance for rent or housing. Individuals must meet an annual income of no more than $99,000. Individuals are unable to pay rent due to substantial loss of household income. Individuals are attempting to make timely partial payments as close to the full payment as possible. Individuals would likely be homeless if evicted. If these requirements are not fully executed persons signing the declaration could be prosecuted.

Many landlords are fighting the declaration as unconstitutional. They are suing the Trump administration and CDC over the executive. Certainly, this is a tough position for many and coming together is key. Landlords, tenants, and financial institutions must work together. Everyone has a role to ensure the most favorable outcome.

Here at Horizon we truly value our tenants and staff. We believe in working together. These are without question unprecedented times. Communication is key now more than ever. How we respond during these times show who we are and what we value.  If you find yourself challenged with maintaining your rental responsibilities, please contact your leasing office. We are in this together!

By: Quinn Newton

QCT & DDA

2021 QCTs and DDAs

The Department of Housing and Urban Development (HUD), published a notice designating 2021 QCTs and DDAs on September 24, 2020 in the Federal Register. Designations are made annually for all 50 states including the District of Columbia, Guam, Puerto Rica and the US Virgin Islands. The Qualified Census Tracts (QCTs) and Difficult Development Areas (DDAs) are qualified for 30% basis boost in LIHTC properties under Internal Revenue Code Section 42.

DDAs, defined as “areas with high land, construction and utility costs relative to the area median income and are based on Fair Market Rents, income limits, the 2010 census, and 5 year American Community Survey (ACS) data” (HUD). QCTs, are “areas where either 50 percent or more of the households have an income less than 60 percent of the AMGI for such year or have poverty rate of a least 25 percent” (HUD).

The American Community Survey (ACS) is not widely known as the census. The census collects data from every household every 10 years. However, the ACS gathers data every year from random addresses. The ACS like the census is required by law under Title 13, US Code. The ACS data focuses annually on housing, jobs, and education along with social and economic needs of communities. Struggling communities experienced another devastating blow this year, a pandemic.

Since SARS-Cov-2 has greatly devastated communities across the world, it is no surprise that communities with lower Area Median Gross Income levels and high poverty rates have been hit the hardest.

The challenges Developer’s face with Low-Income Housing Tax Credits (LIHTC) projects are certainly compounded as the SARS-Cov-2 pandemic continues to rage. The pandemic has resurfaced the disparities around housing, a basic need, suggesting that creative and new initiatives to support Affordable Housing are needed in the foreseeable future just like they have been in the past.

By: Quinn Newton

Apartment Construction

Apartment Market Post Covid19

New reports show that rental units accounted for 96% of multifamily construction starts during the second quarter of 2020, which took additional market share from the condo market.

According to The National Association of Home Builders, quarterly data from the Census Bureau, noted that 76,000 rental multifamily started and with only 3,000 condo starts.

By comparison, apartment starts have been about 90% or higher since late 2014. Apartment starts hit the bottom in Q3 2005, when condo construction was booming. During that time, apartment construction hit 47%.

Rental multifamily starts traditionally have held more market share over condos. From 1980-2002, the average market share for apartments was 80%, according to NAHB.

While more apartments are going up, their square footage is staying down, according to NAHB. The average square footage of rental units during the second quarter of this year was 1,126, well below the pre-Great Recession peak of about 1,300. In early 2015, square footage reached a post-recession peak of 1,247 square feet.

Depressed dwelling sizes may not last long, according to NAHB, particularly in light of the new work from home trend.

Though apartments took more market share from condos, new construction has been reduced by 12% this year due to Covid19, according to RentCafe Blog. “The downtrend is mainly due to the slower pace of construction, as a result of a shortage of available construction crews, funding and permits, along with some temporary bans on construction projects in certain states,” the report said.

However, housing construction overall has been driving up lumber prices according to NAHB.  The price of lumber has shot up 110% since mid-April. It is estimates that these recent gains have boosted typical new single-family home prices and apartment prices by approximately $14,000 and $5,000, respectively.

Pricing of multifamily has so far, not been too affected by COVID-19. At least it hasn’t caught up to it yet.