October 9, 2017

Puerto Rico Seeks Critical Hurricane Relief

Posted in Integrale Advisors LLC, Keith Knutsson tagged , at 2:39 am by Keith Knutsson

According to Raúl Maldonado-Gautier, the Treasury Secretary of Puerto Rico, the U.S. territory will need billions of dollars in aid from Washington as it struggles to regain stability in the wake of Hurricane Maria. The Treasury Secretary called upon members of the U.S. Congress to approve additional funding. This would provide necessary relief to jump start reconstruction efforts and bring a dying economy back to life. Hurricane Maria destroyed Puerto Rico’s electric grid, knocked out its communication network, and left as many as 3.4 million residents without clean drinking water.

With an estimated $74 billion in bond debts, the island filed to start a bankruptcy-like process this year in an attempt to cut its liabilities. Mr. Maldonado-Gautier stated that the devastation has interrupted the government’s ability to collect taxes, once again raising questions about the island’s financial future.

The Treasury Secretary also said it was too soon to know the full financial cost from Maria, a category four hurricane that was the strongest to make landfall in the Caribbean in nearly a century. The size and shape of a long-term aid package from Capitol Hill could help determine whether the island’s economy can be salvaged.

Earlier this week, Rick Scott, the governor of Florida, declared a state of emergency to unlock funds to help with an expected influx of Puerto Rican evacuees. The state of Florida has a goal to make sure that any families from Puerto Rico displaced by natural disaster that come to Florida are welcomed and offered every available resource. Political attention in Washington, where Puerto Rico has a non-voting representative in Congress, has so far been focused on the immediate relief effort, whom many believed should have been passed long ago.

Puerto Rican governor Ricardo Rosselló, said on Monday that some progress had been made to restore water and sewerage and to improve distribution of fuel across the island. Federal and local authorities were working to keep 50 hospitals operational and a US Navy hospital ship “Comfort” is scheduled to arrive next week.

“Puerto Rico’s tax relationship with the US could complicate things for Congress. However, a relief bill should be passed with no hesitation as it is crucial to get help to those individuals and families who need it the most” said Keith Knutsson of Integrale Advisors.

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June 29, 2017

The Capital Continues to Flow

Posted in Integrale Advisors LLC, Keith Knutsson, Real Estate tagged , , at 1:42 am by Keith Knutsson

The world economy has been surprising many macro investors in the real estate market. First quarter reports begin to reveal political drama is impacting markets closely resembled in Q3 and Q4 of 2016. The outcomes of the Dutch and United States elections were surprises that have positively impacted global capital markets with renewed animal spirits to start of the fiscal year.

Real estate has continued to thrive with transactional volumes of $136 billion in the first quarter, 16% better than the Q1 2007 average. However, these numbers are slightly down from the performance of the Q1 of 2016. A decline in activity in the Americas has been offset by increases in Asia-Pacific and Europe, Middle-East, and Africa (EMEA).

Unpredictability still surrounds the long-term effects of BREXIT, nevertheless investors have been opportunistic enough bringing the United Kingdom’s transactional volumes to similar levels seen in 2015, in British Pounds. Despite early conclusions drawn about BREXIT, London has regained its rank as the most traded city, reclaiming its number one spot from two years ago. Foreign investors sought opportunity in British capital, recording the biggest cross-border transaction of the first quarter to date. The prominent ‘Cheesegrater’ building in London was a $1.3 billion office deal, ranking among the top ten transactions ever recorded. Steady demand for German portfolios also contributed to record high activity. Other notable performers in the European Union (EU) were the Czech Republic, Spain, Netherlands, and France all contributing to surpassing last year’s level. These countries contributed to a year-over-year (y-o-y) growth in volume at $53 billion. Keith Knutsson expounds upon this growth, claiming “the effects of the decade-old financial crises have finally settled and the European Central Bank’s loose monetary policy is taking effect, encouraging households and companies to borrow money and spend more.”

In the Asia-Pacific realm, Singapore and China proved to be superior in activity compared to the declines observed in Hong Kong, South Korea, and Australia. Japan, after being surpassed last year as the top market performer for its region, achieved its best quarter since 2015. Japan attained quarter-over-quarter 38% above its Q1 2016. This has been attributed to a large influx in its logistic and office sectors and is expected to continue into 2018, as the office sector continues to dominate for its 17th consecutive quarter.

The Americas suffered a 12% decline in transactional volumes, being the biggest shock to macro investors. Mexico’s volumes reached nearly $1 billion in volume while Brazil experienced its busiest quarter in two years. Vancouver, Canada set the pace in Canadian markets with major transactions doubling its national volume.

To help quantify the market share for transactional volumes of Q1 2017 locations, there are ten major players considered around the world:

USA – 46% UK – 14% Germany – 10% Japan – 10% Canada – 5%
China – 4% France – 3% Spain – 3% Sweden – 3% Hong Kong – 3%

Demand for real estate is set to stay strong throughout the rest of this fiscal year. According to Jones Lang LaSalle (JLL), an investment management company specializing in real estate, claims “sustained compression of prime yields may be coming to an end.” In most major markets these yields remain unchanged, despite double digit drops in Sydney, Milan, and Frankfurt. Their recommendation to investors is to stay focused on income growth over capital appreciation, rather than the anticipation of rising interest rates.

The largest portfolios to date are industrial and hotel, each with 11% growth. Industrial looks promising in growth with a large European portfolio planned to close in Q3 or Q4 of this year. Looking forward, political agendas that shape public policy will be more predictable as new-elects settle into their positions.

May 23, 2017

The Gig Economy is Changing the Corporate Landscape

Posted in Integrale Advisors LLC, Keith Knutsson, Real Estate tagged , , , , at 2:14 am by Keith Knutsson

According to a survey, 85% of people are dissatisfied with their jobs (Cushman and Wakefield, 2017). “Flexibility is the driving force today for choosing a dream workplace” said Keith Knutsson of Integrale Advisors. Free communication channels and globalized networks, have allowed for the fast growing “Gig Economy,” which consists of 20-30% of the working population worldwide.

The term “Gig workers” refers to consultants, contractors, or temp workers. The following professions are changing the corporate landscape. Nowadays, companies can easily hire non-permanent employees (temps) on an as needed basis. These “independent workers” are enjoying a balance of freedom, flexibility, and work life. However, there are some consequences. Gig workers lack healthcare benefits and job security.  Nevertheless, it is predicted that 40% of the global workforce will be independent contractors and ‘solopreneurs’ by 2020.

The impact of the gig economy will have a direct effect on workplace of the future. Globalization of work, global trade, and technology shifts have contributed to the rising gig economy.

Reasons for workers to choose independent work:

  • Ability to turn down projects if uninterested.
  • Freedom to choose type of work.
  • Flexibility; when and where to work.
  • Versatility; working on multiple projects for different clients.

Reasons for companies to hire independent workers:

  • Lower office space costs.
  • Reduced cost of healthcare and benefits.
  • Ability to bring in skilled workers/expertise when needed.
  • Scalability; ability to hire workers when necessary.

Analyzing the effect on the corporate environment: 

Firms are redesigning their offices to provide fewer private offices and cubicles, and more open and collaborative space. There are two goals: 1) provide workplaces that facilitate collaboration and 2) decrease the firm’s overall rent expenses by providing less physical space per worker.

Companies have leased several million square feet of space in the past few years and that trend is expected to continue with the growth of the “gig” economy. This economy also impacts traditional corporate culture and the engagement of employees. When all employees are engaged, they are more likely to commit themselves to company goals and achieve higher levels of productions.

According to analysis by Cushman and Wakefield, “65% of today’s school students will be doing jobs that don’t exist yet.” In addition to millennials rejecting traditional employment and choosing to work independently, artificial intelligence and robotics will also be more prevalent in the future. Businesses that will be successful in the future will be those who encourage adapt well to change.

May 22, 2017

US retreat from global financial system

Posted in Integrale Advisors LLC, Keith Knutsson, Real Estate tagged , , , , at 3:47 am by Keith Knutsson

Borrowers now have access to the savings of the entire world if they can show lenders that they can make effective use of their money. It should also mean that lenders can search, on a global level for the opportunities that give them the best return for the risk with which they are most comfortable. The following should benefit both lenders and borrowers.

For borrowers, the cost of a capital loan should be lower than that on offer in smaller domestic markets. On the other hand, creditors’ returns should be far more attractive since they have more options for where to put their money to work. Since the global financial crises, there has been some negativity in the air. This negativity has greatly increased in recent months. Some regulators and financiers moved away from embracing globalization, further claiming that it led to the crisis. However, there is potential for a turnaround; especially if less developed nations and financial markets can improve the way they allocate capital.

Leading up to the crisis, capital inflows and outflows moved in obstructive ways. It transitioned from higher growth emerging markets to slower growth developed markets. Much of these flows went into US Treasuries to strengthen reserves in the aftermath of the 1997-1998 crises. Those capital flows to the US and to the dollar, the world’s reserve currency, meant that Americans could pay for larger properties with money that was cheaper than it once was. European banks continued to borrow those dollars in wholesale markets rather than relying on deposits to fund their own activities. This resulted in what international bankers are calling “the transatlantic banking glut”.

Globalization, all in all, meant poor capital allocation of debt and a huge accumulation of unsustainable debt. This resulted in a rolling crises as investors sought high returns in short-term securities, whether in emerging markets, the US, or Europe.

Central banks in developed nations responded to the crises by implementing easy monetary policies. Thus, triggering an artificial rise of asset prices, which led to an increase in capital outflows into emerging markets as yields were driven down at home. “The Fed should remember that when it makes monetary policy it should take into consideration the impact on the rest of the world,” stated Gao Xiqing, the former head of the Chinese sovereign wealth fund. A decline in globalization would result in a retreat from the dollar and from the US-centralized global financial system. The U.S. had advocated for policies regarding this that would in effect extend US control beyond its shores, especially as the new administration is attempting to limit terror financing and money laundering. The rules have become so burdensome for foreign banks that some have closed their US branches.

There is no better depiction of US policies putting a strain on the global economy than in recent Federal Reserve Board actions regarding “swap lines.” A swap line is another term for a temporary reciprocal currency arrangement between central banks. The central banks of two nations agree to keep a supply of each country’s currency available to trade to the other central bank at the going exchange rate. The Fed maintains lines with Japan, the Eurozone, the UK, Switzerland and Canada.

As the US steps back, we see an emergence of other developed nations are filling the role. China, the economic powerhouse, is taking a greater role on the global financial stage. The rest of the world is trying to circumvent the uncertainty of central bankers, US regulators, and politicians.

Although large companies will always have access to global markets, cross-border investment has become increasingly more difficult due to protectionist measures. As a result, this is expected to produce a smaller demand for capital intensive goods and services. If companies are forced to look domestically for funding, that could be a good thing if governments are more effective in making sure capital is properly allocated. However, there is currently little evidence this will be the case.

Submitted by Keith Knutsson

December 13, 2016

Should You Invest in Commercial or Residential Properties?

Posted in Integrale Advisors LLC, Keith Knutsson, Real Estate tagged , , , , , , , , , , , , , , , , at 12:12 am by Keith Knutsson

Real estate is a great place to invest. One of the first questions I, Keith Knutsson, get asked by potential investors is commercial or residential real estate? There are pros and cons to both ventures, so here are some tips to help you decide which one suits your personality, talents, and goals.

Commercial Real Estate

When most people think about investing in real estate, their minds immediately jump to residential. Commercial real estate has additional benefits however, that can really increase your net worth. The biggest benefits to discuss are more financing options, less competition, and a more favorable valuation.

  • More financing options. While there are plenty of traditional, hard-money lenders to get a mortgage payment from for residential loans, there aren’t a lot of other options for financing. With commercial real estate, there are plenty of other sources, like small private equity firms, joint venture partners, and even other commercial real estate investors you can partner with to raise the amount of capital needed. Access to more money means that you can get a higher rate of return. It’s the adage “spend more to make more”.
  • Not as much competition. For some reason, most people try to make a name for themselves in real estate through the residential route. That means that commercial real estate is an area of real estate with less competition from other investors. This is especially true if you are shopping for smaller commercial opportunities. Most big time commercial investors are going after properties worth more than $5 million, and anything less than that is out of reach for most residential investors. This is a great niche for someone with the work ethic to make a name for themselves.
  • A More Favorable Valuation. The main way that residential real estate is valued is by basing it off square footage, rooms, bathrooms, upgrades, lot size, etc. compared to other homes in the area. This method makes sense for this sector, but it can hurt your bottom line when the market isn’t performing well. With commercial buildings, the valuation is based off current leasing/renting income. In simple terms, the amount of money being generated from the property is how much it is worth. Small improvements and great marketing can increase the value of commercial property easily, unlike in the residential realm. Therefore, it’s easier to make more money from commercial properties.

This isn’t to say that commercial real estate is an easy, definite way to make millions of dollars. If it were that easy, everyone would do it. The main downfalls to investing in commercial real estate are more risks, high costs, and zoning laws.

  • More Risk. Commercial properties see a lot more traffic from customers or residents, parking lots, and possibly multiple businesses running out of one location. Insurance costs are much higher because of all the risks involved with safeguarding against accidents and injuries to any of these people or the property.
  • Higher Costs. While most investors know that the money upfront is going to be higher in commercial real estate than residential, the maintenance bills are also larger. It costs more to maintain professional looking businesses, and repairs have a higher price tag. Just a few examples could include a new roof, multiple furnaces break, one accident causes various damage in more than one apartment in the building. There are all kinds of costs that arise during commercial that are different and require a lot of money as the investor. All repairs must be done professionally too, so there aren’t quick do-it-yourself fixes for these problems. It also costs more to hold on to a vacant office space than a vacant house.
  • Zoning Laws. The government is very interested in maintaining zoning and regulations for commercial areas. Buying a building in the manufacturing area or an apartment building, all the uses you intend the building for is already decided. If you intend to lease the space out to another business, your pool of possible renters is limited. Depending on the city, it is possible to change some of the requirements in zoning, but it requires a lot of work and usually a legal team.

Residential Real Estate

Residential real estate is not a bad way to make money as an investor. There are definitely still benefits to going this route over the commercial arena. The biggest three benefits to going the residential path are more availability, the option to flip, and less money required to get started.

  • More Availability. There are more homes to choose from when you start looking for an investment property. Commercial real estate properties and buildings are not always available, especially if you’re looking in a certain part of town. Even when new residential neighborhoods start popping up, the homes in older neighborhoods are still desired. The turn-around time for houses are much faster, so if you’re looking to find a home in a certain area, one will show up if you wait long enough.
  • Option to Flip. If you want to make money flipping houses rather than holding and renting, you still have that option. You can flip a house, sell it, and be done with it much faster than other real estate ventures. While the money required to do repairs is an issue for some investors, it is usually recouped at selling time, plus a little more.
  • Less money required. A down payment is really all you need to start. While there are more financing options for commercial real estate, to start can be difficult. To buy the first residential investment, you need to qualify for the amount and have a down payment. The qualification process is usually easier because having a renter pay the mortgage payment each month isn’t too hard to find.

There are three fairly well known hardships to owning residential properties as an investor; dealing with bad renters, a variable market, and bringing in property managers.

  • Bad renters. While most people renting a home are going to treat it well, the fact is it isn’t their house. Some people see this as an opportunity to not have to take care of it, and in some cases, trash it. The costs can really add up to fix problems that bad renters can cause. If neighbors start getting bothered by renters, that causes an entire other set of problems.
  • Variable market. Ideally, most investors want to buy when the housing prices are down and then sell when they are highest. This is harder to do though since home prices change slower and less consistently. As a Real estate investor, and CEO of Integrale Advisors LLC, I, Keith Knutsson, see how there are predictable cycles for real estate, but times always vary on how long each cycle lasts. This makes investing trickier because it’s always changing.
  • Bringing in property managers. Managing multiple properties is hard for one person to do. It’s also difficult to be a great real estate investor when you don’t live around the properties and cann’t check on them often. The best way to handle both of these scenarios is to hire a property manager. While this makes life easier for you, it cuts into your profits and requires trusting a lot in someone else.

As you can see, investing in real estate is a great option whether you choose commercial or residential. Knowing your end goals and ability to handle different situations, you have two very different paths to take if you decide real estate investing is right for you.

October 23, 2016

Real Estate Terms Every Investor Should Know

Posted in Integrale Advisors LLC, Keith Knutsson, Real Estate tagged , , , , , , , at 11:38 pm by Keith Knutsson

realEstateTerms.png

If you are interested in investing in real estate, there are several-key terms that you should have a complete knowledge of. These are necessary terms if you want to understand the ins and outs of the property you are looking at to purchase. Both real estate and investing are industries that come with their own specialized jargon. In order to make lucrative purchases, it is crucial to understand the basics related to the industry.

Keith Knutsson explains the key terms to help you make a successful transaction. This is a basic list that will help you get started and understand the bigger picture: Read the rest of this entry »

September 23, 2016

Keith Knutsson Discusses the Latest Effects of Brexit on the UK Real Estate Market

Posted in Integrale Advisors LLC, Keith Knutsson, Real Estate tagged , , , , at 12:30 pm by Keith Knutsson

Keith Knutsson

Keith Knutsson Brexit Vote

The world has been paying close attention to the effect that the Brexit vote is having on the European Union. The vote to leave has thrown the EU into economic uncertainty, and the financial service industry is starting to see a decline, which is the largest, according to data that has been collected and reviewed since 2009. Read the rest of this entry »

September 15, 2016

Keith Knutsson Discusses the Benefits of Investing in Real Estate

Posted in Integrale Advisors LLC, Keith Knutsson, Real Estate tagged , , , , at 2:05 am by Keith Knutsson

Keith Knutsson Real Estate Investments

There are a number of people out there who would like to put their hard-earned money into an investment, but are unsure what the best way to invest their money may be. Ask any savvy entrepreneur and they’ll tell you that there are several advantages in investing in real estate. Although being a real estate investor isn’t always glamorous, it is one of the best ways to build your wealth in the long run. Read the rest of this entry »

September 3, 2016

Keith Knutsson on Sweden’s Real Estate Market

Posted in Integrale Advisors LLC, Keith Knutsson, Real Estate tagged , , , , , , at 12:00 pm by Keith Knutsson

Stockholm Scene Keith Knutsson

Looking to diversify your investment portfolio? Want to get more financial security through international real estate investments? Investing in foreign real estate markets offer investors potential benefits. Read the rest of this entry »

August 22, 2016

Keith Knutsson Explains How the Brexit Vote Will Affect European Investments

Posted in Integrale Advisors LLC, Keith Knutsson, Real Estate tagged , , , , , at 12:00 pm by Keith Knutsson

Keith Knutsson on Brexit

What is “Brexit” and how will it affect European Investments?

To put it lightly, that’s a very complex question that needs to be considered from every angle. It’s important to look at the factors that led up to the current situation as well as the predictions and forecasts for the future.

It is the merging of the words “Britain” and “exit” to get Brexit, in the same way that Greece’s potential exit from the EU was dubbed Grexit in the past. Read the rest of this entry »

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