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Commercial Real Estate Pro Network

Commercial Real Estate Professionals who work with Investors, Buyers and Sellers of Commercial Real Estate. We discuss todays opportunities, problems & solutions in Commercial Real Estate.
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Now displaying: October, 2017
Oct 26, 2017

A good Lender Relationship is critical to an effective real estate investment strategy.

Jimmy Moncrief of Real Estate Finance HQ, is an accidental real estate investor.  He had a solid income from his analyst/ partner position at a hedge fund, yet he struggled to get a loan for an investment property.   

Jimmy did not even need the loan.  He could have paid cash for the property, but he recognized the benefit of leverage.  So, where is the most likely place to get leverage?  The traditional place to get leverage is from a bank.

But, if you don’t understand the rules to financing, your ability to get a loan will be limited.

First, decide what is important to you.  

  •  Do you want a 30 yr mortgage?  
  •  Do you want to invest as an individual or create an entity for your investments?

These are critical to determining the path you want to travel.

If you chose to just dip your toe into the real estate investment world, you might purchase a single family property, near your home.  You can purchase it in your own name and get conventional financing; put 20% down to get a 30 yr mortgage.  Most of this can be done online or through email with little or no relationships necessary.

To Grow, You Need to Create a Lender Relationship

If you really want to grow your portfolio, you are going to need a solid lender relationship.  That’s right, get to know a banker.  Infact, if you can develop multiple relationships, that’s even better.  

When should you get to know a Lender?

Don’t wait to start.  The sooner you can create a lender relationship, the better your chances of success will be.  Get to know how a lender looks at a deal and what they need from you in order to approve a loan.  This knowledge will give you the ability to work with your real estate broker to negotiate a number that will works for you and the bank.

Too many would be investors spend all their time chasing a deal.  Then they try to find financing.  While this may work for the networked investor, it likely spells failure for the novice investor.

For more, go to:

RealEstateFinanceHQ

Oct 19, 2017

Insurance Coverage Moratoriums happen daily during late summer and early fall across the US.  If there is a natural disaster in action, the insurance companies will close the casino and refuse to take any new bets.

2017 has been particularly significant.  Think about it.  There have been:

  • Hurricanes in the Gulf of Mexico and the Atlantic Ocean
  • Wildfires in the West from hot, dry summer
  • And Earthquakes don’t care what the season is.

Insurance companies take premium from policyholders in exchange for a promise to rebuild if certain disasters happen.  The company underwrites your risk to do all they can to stay away from risk they do not want.  And they collect what they hope is an appropriate amount of money to pay claims when they do happen.

Companies compete for more premium.  Investors look for positive return on their money.  Policyholders look for ways to save on insurance and increase the return on their real estate investment.  The greater the distance between disasters, the cheaper insurance gets.

After several years of infrequent disasters, the cost to policyholders is low, but the risk rises.  For every year there is not a significant disaster, statistically, disaster is more likely to happen.

So what can you do?

Don’t wait to purchase your coverage.  Purchase your coverage before disaster is eminent, and be prepared.

For Hurricanes you can safeguard your property and make certain you have insurance.  

Flood falls into two categories.  

  • In low lying areas that are expected to flood, you will be required to purchase flood insurance if you are borrowing from a lender.  
  • If your area is not recognized as a potential flood area, most property owners elect to go without.  However, if your property is unlikely to suffer damage from a flood, your coverage will cost significantly less.

Wind is mostly a problem around the Gulf of Mexico and the Eastern shore from Florida north.  Insurance is available, but the deductible is a percentage of the limit.  This is unlike a standard property deductible which is a flat dollar amount.

Earthquake insurance is directly related to the soil beneath the property and the proximity to a fault line.  Like Wind insurance, the deductible is a percentage.

Insurance is never fun to pay for, but don’t let your real estate investment strategy go without it.  Build the cost into your operating budget.  Don’t bet against yourself.  Buy the coverage before there is a moratorium and you cannot purchase coverage.

Prior Episodes for reference:

Seismic Retrofitting http://bit.ly/2yd9PRZCREPN22dl

Earthquake Preparedness: http://bit.ly/2yGmPmaCREPN17dl

How to Save on Flood Insurance: http://bit.ly/2i3suvnCREPN35dl

If you need help on any of your insurance needs, please reach out and I will do all I can to help.

For more, go to:

JDarrinGross.com

Oct 12, 2017

Good Bookkeeping is a must for Real Estate Investors for many reasons.

Dave Rice with Key Bookkeepers provides multiple reasons and benefits for real estate investors to set up systems and keep accurate records.  Together, they can help you accelerate your real estate investment strategy.

FREE: Five Key Bookkeeping Mistakes Made By Real Estate Entrepreneurs  http://bit.ly/2y02fwv5MistakesREIMake

If you want to be viewed as a business by the IRS, you need to act like one.  The IRS counts on good bookkeeping to substantiate your business.

Good Bookkeeping gives you the actual numbers you need to determine if you are making money or if there is room for improvement.  Are you collecting all the rent?  Are you properly categorizing expenses?

When filing your taxes, these numbers are the keys to lowering your taxable income.  This alone can boost your actual returns.

Value of Good Bookkeeping

When you are looking for money from a lender, your best bet is to make it easy for a lender.  They want to see how good your bookkeeping is.  If your records only consist of a tax return, you will not make a strong impression.  But, if you can easily produce multiple complete years of records and year to date records, you make it hard for the lender to say no.

Don’t forget the value of your commercial real estate.  The Net Operating Income is simple to determine: Annual Income minus Annual Expenses.  This result divided by the local market cap rate is an indication of what your property is worth.  

Poor bookkeeping can result in one of two things when you are trying to sell your property.  

Low Ball Offer

If the buyer is experienced and looking for a deal, they will only accept records that you can substantiate.  Poor bookkeeping will lower your NOI and ultimately lower a potential buyer’s offer that reflects your actual numbers.

No Offers

If a buyer is looking for a property that has good bookkeeping, and you don not, they will dismiss your property.  

Ask any experienced commercial real estate broker.  If you want to maximize the number you can get for your property, it starts with good bookkeeping.  Keep your rents at the market rate and take good care of your property.

For more go to:

www.keybookkeepers.com

Keybookkeepers@gmail.com

Oct 5, 2017

Lease Lock is working to change the Rent Payments & Security Deposits hassle that have been a part of renting apartments forever.  

Reichen Kuhl, the founder of Lease Lock, had plenty of money in the bank, but not enough income to qualify for a rental.  Frustrated, he set out to create a solution for people in his situation.

His idea was to cosign for strangers who could not qualify based on their credit to rent an apartment.  Were there other people like him who needed a cosigner to rent an apartment?  Were Landlord’s willing to change their real estate investment strategy that required deposits?

He put up a website and tested his idea.  On day one received 200 applicants.  In three months, none of his clients defaulted and he proved there was a market for Lease Lock.

What is Lease Lock?

Lease lock provides a FREE insurance policy to landlords of 100 units and more.  The landlord requires that the tenant to put up a deposit, usually equal to one month of rent.  Or, the tenant can pay a non refundable fee to Lease Lock.  The fee is usually less than half of the required deposit.

When the tenant is approved by Lease Lock, the tenant pays the fee to Lease Lock.  The Landlord is provided an endorsement on their Lease Lock policy to protect them from loss caused by the resident.  There is NO COST to the Landlord for this.

Challenge with Deposits:

  1. You have to Collect the deposit.
  2. Keep the deposit in a trust account for the tenant.
  3. When the tenant moves out, the landlord has to inspect the unit, account for the damage caused by the tenant, provide a full accounting to the resident and then return the unearned portion of the deposit.

With Lease Lock

  1. Lease Lock provides a FREE insurance policy to the landlord.
  2. When the tenant moves out, there is no refunds nor accounting to the tenant.
  3. The Landlord can collect from Lease Lock for unpaid rent & damages up to half a month of rent.  

For more go to:

http://leaselock.com/

For investment opportunities

reichen@leaselock.com

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