Military Series: Real Estate Syndication (Session Two)

In this second session with Meritorious, JID founder and COO, John Rubino provides a deep dive into real estate syndication. He discusses how to evaluate individual sponsors, their deals, and the importance of conducting thorough due diligence. And finally, he brings it all together with an in-depth case study from one of JID’s successful investments. Check out the full webinar here: https://member.meritorious.us/events/11849

Real Estate Markets: Why We Love Washington, DC

Real Estate Markets:  Why We Love Washington, DC

It is well known that in the real estate investment world, location is everything and can impact just about every aspect of a project. Choose to invest in a location that is trending downward, and you may not hit your targeted returns.  However, choose to invest in a location that has a proven track record of continuous growth, not only in terms of population, but with factors such as increasing per capita incomes, rents meeting or exceeding the economic growth in the area, reduced or declining occupancy rates, and residents are not afraid to pursue the “American Dream” of home ownership, and you could really be in for great success. At JID Investments (JIDI), we are confident that Washington DC is one market that is full of opportunities for real estate investors.  Here’s why:

A Strong Economy and Access to Everything

As our nation’s capital, Washington DC sits at the epicenter of our government. With a population of  approximately 5.4 million in the greater metropolitan area, the district hosts scores of state and federal agencies employing hundreds of thousands of people. There are three major airports (BWI, Reagan National, and Dulles) within 45 minutes of downtown.  Due to the city’s long and storied history, rich social and cultural heritage, and a wide array of museums, monuments, and public sites, DC hosts millions of domestic and international tourists annually.  In short, Washington DC offers tremendous upside and shows no sign of slowing down anytime soon. So, let’s look at how this translates into real estate investment opportunities.

Apartment Rents and Occupancy Rates

In Washington DC, the average apartment rent for a one-bedroom is $2,223 and a two-bedroom is $3,329. Although the COVID-19 pandemic took a toll on the city’s rental market, prior to the pandemic, the one year rise in rent was just shy of 4% while the three-year increase was a little more than 11%. Additionally, the average occupancy rate in the district was 95%, meaning only 5% of available apartments were vacant. This makes Washington DC a very strong market for multi-family residential apartment complex development.

Condominium Pricings and Availability

            For some people, apartment life is good. There’s little-to-no maintenance with which to concern yourself and depending on the terms of the lease, you may not want to be tied to a long-term living situation.  But what about those who want the pride of home ownership?  There are plenty of those people in Washington DC. So, let’s take a look at the Washington DC condo market through the lens of a residential real estate investor. First, the average price for a condo in the district is approximately $345,000 and based on condo sales from the past two years, consumers are purchasing them as quickly as they are built. Some estimates put the average increase in condo sales across the district from September 2019 – September 2020 at more than 170%. Simply put, people in Washington DC are not afraid to purchase, even in the difficult social and economic times of the COVID-19 pandemic. And once again, this bodes very well for multi-family residential construction and development.

            So, what does all of this mean for JIDI and our family of investors?  It means we trust Washington DC from a multifamily residential investment standpoint.  The city is a vibrant one with a generally well-paid workforce, stable economy, rich social and cultural diversity, and a living history that tells the story of our great nation.  And for these (and many other) reasons, JID Investments will continue to look for opportunities in the Washington DC area for many years to come!

David A. Rutherford

Director of Investor Relations

JID Investments, LLC

drutherford@jidinvestments.com

www.jidinvestments.com

Where is this Market Headed?

The last twelve months have arguably been the most difficult for our nation in quite some time.  Almost every American was impacted personally, financially, spiritually and emotionally.  Not since 2008 and the “Great Recession” have we experienced such a sudden impact to our quality of life and way of living.

As we start trying to get “back to normal” and look to define what the new normal really is, we are seeing something pretty incredible happening in the real estate housing market.  An almost “perfect storm” has created a housing boom the likes we haven’t seen since we recovered from the 2008 crash.  One could argue we never really had a crash this time around when COVID-19 spread like wildfire across the nation.  There was a drop for a short period on the residential side with heavier impacts being felt in the commercial office, hospitality and retail sectors.  However, once people knew they wouldn’t be going into the office for a long while, many became instant buyers in resale and new property.

So, why was it easier to not only rebound from the pandemic, but actually exceed growth from pre-COVID levels?  Well let’s start with the obvious, and good news.  Mortgage interest rates dipped below (and are still hovering around) 3% and people continue buying and refinancing at near record levels.  This was the first part of the storm and is showing no signs of changing any time soon.  Next, people have cash and are putting 30%, 50%, and even 70% down payments or even paying cash for the entire purchase.  Significant equity in existing homes is allowing people to sell their existing home for more and buy bigger and better. With bigger homes, buyers can live, work, eat, and play all without leaving the comfort of their home.  As a seller life is good… but for a buyer, well not as much.  Yes rates are down, but prices are at an all-time high and supply is extremely scarce.  Homes are flying off the plate and buyers are bidding 10%, 20% and even 30% above asking price with escalation clauses, waiving of appraisals and inspections, and basically doing whatever it takes to get that property.  In my local area of Fairfax County Virginia, buyers have 200+ showings in a two day period with 2-3 dozen offers.

So, will the bubble burst again?

From what I am reading and experts are saying… maybe?  There is a significant froth to the current residential market.  Builders and contractors are also seeing unbelievable price escalations on materials (lumber, steel, etc.) along with significant supply chain challenges.  The good news is that you don’t have to shiver after thinking of the Big Short movie/book again.  Banks are being very disciplined and not leveraging like they did in 2004-2008.  My guess is “sub-prime loans” are probably the dirtiest of words in the banking world right now.  COVID-19 has and is creating a pent up demand which is also causing extremely high prices and low supply.

So, what happens when the music stops?  My best guess is things will come back to “normal”.  The key is discipline, especially if you are a real estate investor.  The golden rule still applies “buy low” and “sell high”.  Don’t get caught up in the hoopla and please don’t buy thinking this is going to last 3, 5, or 10 years.  History proves that doesn’t happen. I think we have a good run for about two more years and then the high will wear off.  Have fun while it lasts but be careful.  All the best.

John Rubino

COO and Founder, JID Investments LLC

www.jidinvestments.com

JIDI 2020 End-of-Year Newsletter

Happy New Year and welcome to the JID Investments LLC (JIDI) 2020 Annual Newsletter. It’s been a challenging year given the impacts of COVID-19 and economic recession, but JIDI continues to thrive. Some highlights from 2020 include:

  • 40 new investors joined our company (170 total)
  • We have six current projects and total assets under management exceed $25M
  • Construction completed on Peninsula 88 in June and investors began receiving distributions in November. Project close-out in 3rd QTR 2021.
  • Construction of Rialto continues to go well and should be complete in early 2021
  • Completion and exit of Deerbrook and Chimneys
  • New investments in residential and industrial projects
  • JIDI launched its first Opportunity Zone fund

If you’d like a copy of our newsletter and would like to be added to our mailing list for news, updates and more information about JIDI please email us at drutherford@jidinvestments.com or go to our “Contact” tab and complete the requested information.