Condo rentals will multiply

Regarding your article “Condo Converters Fueling Apartment Recovery,” the author quotes two industry experts, Lloyd Lynford, CEO of Reis Inc., and Mark Obrinsky, chief economist at the National Multifamily Housing Council, as being unsure as to how the condo conversion craze will ultimately impact the apartment market. Specifically, the article points out that under a “worst-case scenario,” condo speculators might eventually rent out their units and compete with apartments.

We don't see a condo rental market as a worst-case scenario and, in fact, believe there will be a growing market of “for-rent-by-owner” condos. In essence, if the seller's market for condos softens, the market will push toward liquidity through the rental of those units.

The supply/demand for condos can be viewed like a P/E ratio, where the price of a condo is compared to its earnings, or rental stream. Historically, that ratio has averaged about 20/1 or less, whereas now it is closer to 40/1 in some cities. If the market reverts closer to its historic norm, a potential owner's yield on a condo investment will drop, meaning that it may make more sense to rent a condo rather than buy one — just like opting to lease a BMW rather than buy. In effect, it may become a renter's market. As such, condo rentals will likely proliferate, adding liquidity to existing condo owner's investments as well as downside protection for them.

James Haft, Chief Financial Officer
The U.S. Condo Exchange

Hurricane victims express heartfelt thanks

The people of the Gulf Coast have suffered the worst devastation in our country's history. Many of our teammates at Stirling Properties have lost their homes and belongings to this terrible storm, and each of ours lives will be forever changed. Fortunately, we know of no loss of life by members of the Stirling family. To that end, we are blessed. To all of you throughout the country, we want to express our deepest gratitude for the unbelievable outpouring of care and concern. The offers of help from so many of you have been a most humbling experience.

As you can imagine, communication with the outside world in the days after the storm was difficult, or in some cases non-existent. Immediately after the storm, we attempted to make contact with all of our people and to assess the damage to all of our company offices. Through the hard work of many, we opted to open our headquarters office in Covington [Louisiana] at full capacity in early September to service our clients' needs and to answer any questions that you may have. We hope to have our downtown New Orleans, Metairie Commercial & Residential and Gulfport, Mississippi offices back in the near future. With the help of our team and support of all of you, we will not only survive, but build an even better Gulf South regional economy and Stirling Properties. Thank you all for your thoughts and prayers.

Martin A. Mayer, President and CEO
James E. Maurin, Chairman, Stirling Properties, Covington, La.