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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: Category: real estate
Jan 18, 2018

Social Media is where prospects go to find you and learn more about you and your offer.  In fact they are more likely to form an opinion about you based on your Social Media presence or lack of than your first face to face interaction.

Mark Leidlen and Rob Wellman work with real estate investors and professionals to establish a social media presence.  This marketing strategy helps create credibility and builds trust through regular informative posts to keep your network informed.

The Power of Social Media

It took radio 38 yrs, television 13 years, internet 4 years to reach 50 million users.  Social media behemoth Facebook took only 9 months to get 100 million users.  People go online to shop and share with their friends what they are doing.  And with each click, they leave a digital breadcrumb clue for advertisers and others to recognize their likes and interest.  These breadcrumbs allow people like you to put a very focused message in front of your ideal client for pennies.  

Social Media for Commercial Real Estate

Whether you are a Broker, Leder, Property Manager or Investor, your prospective clients are interacting on social media and looking online for who to call when they need help.  So where are you?

There is a plethora of options to choose from when choosing a social media platform to engage.  The most important for commercial real estate professionals are:

  • Facebook
  • LinkedIn
  • Twitter

And don’t forget to create and maintain a blog and an active email campaign.

The good news is that you can repurpose your material across the different platforms.  However, you still have to create new material to remain relevant.  Unless you are a gifted writer and have lots of free time to accomplish this, your options are don’t create a presence, or hire help.

Social Cuda has professional writers that work with its clients to tailor a content strategy to reach your intended audience.  They can create post with written text, pictures, video, or drone footage content that can help grow your presence and capture email along the way to build your email list.  The cost to create and maintain your professional presence is minimal when you consider the alternatives.

For more go to:

SocialCuda.com

Text: Cuda5 to 88588 to receive Mark’s business card.

Jan 11, 2018

Financial Freedom is a common goal of real estate investors.  Most start with a single family property, thinking that over time, they will grow their portfolio to provide enough income to give them freedom from working for others.

Michael Blank is an engineer turned real estate investor.  His experience from single flips and analysis on what it would take to reach his goal led him to the advantages of multifamily investing.  

Most new investors feel they are unable to pursue multifamily as a real estate investment strategy due to their lack of experience and lack of money.

How to Overcome Your Lack of Experience

  1. Get some education:  Some simple education will prepare you to speak intelligently with brokers and lenders.  You can do this for free, or take a course.  Without this, you are likely to be identified quickly as a newbie that will not get the help you need from commercial real estate brokers.
  2. Create a team:  Find the most experienced property manager in the market, a respected real estate attorney, etc, and get them on your team.  This will provide you instant credibility with local brokers and lenders when you are identified as working with locally known experts.

How to Find Money

You need money to acquire a large real estate investment.  The good news is there are lots of people with money to invest who are looking for opportunities to invest.  High networth individuals are not finding a consistent return on their money and they are paying too much taxes.

Real estate can help these investors looking for opportunities.  For this reason, it is important that you are not shy about what you are doing.   Let others know that you are doing multifamily investing.  Depending on how well you know them, ask if they might be interested in learning more about your opportunity.   

If you don’t have the network, but have a deal, there are those who are experienced at raising capital, ie mentors and other experienced investors and can help you.  This is an excellent opportunity to be an active participant in a large deal and get experience that you will need to find your next deal.

Financial Freedom

Financial freedom is available is available to you through Multifamily investing.  Michael’s experience shows that from the time an investor makes the decision to become an investor, the “law of the first deal” takes hold.  The first deal leads to multiple other deals, literally making the investor financially free as little as 3 - 5 years.  

For more go to:

http://www.themichaelblank.com/

Jan 4, 2018

Real Estate Investing is a continuum.  The market goes up and down.  In order to stay profitable, your real estate investment strategy must adjust to reflect the market.

Mark Ferguson is an experienced real estate investor.  He has gone from flipping to buying single rentals to flipping to most recently acquiring commercial real estate properties.  His success is directly related to his ability to make changes as the market changes.

He started as a realtor focused on working with short sales and foreclosures that provided multiple flipping opportunities.

Residential Real Estate Investing

Mark’s original real estate investing plan was to buy 100 single family rentals.  As the market improved, retail sale prices outpaced market rents.  When he realized that rentals could no longer cash flow, he changed back to single family flips.

At the time of our interview, he had 22 flips underway.  In order to manage this many projects, Mark has systems and a trusted team that helps him find, acquire and renovate each project.  Mark’s Investfourmore.com blog, podcast and Facebook group provide the details each of his deals.   

Commercial Real Estate

Recently, he acquired four commercial properties.  The first is one that he found on the Multiple Listing Service.  It had IRS tax liens and took eleven months to close.  The property is a single tenant, 3,000 square feet building he purchased for $110,000.   The seller will remain as a tenant for 6 months paying $1,500 / month rent.

The second is a small warehouse a friend wanted to sell.  Mark needed a place to store the materials for his multiple flips and his growing car collection.  

The third is a 7,500 sq foot office building that was previously a medical office.  It was listed on the MLS for $500,000 with several price reductions.  He purchased it for $292,000.  This is currently vacant.  

The 4th is a 1600 sq foot single story cinder block building he found on Facebook marketplace for $101,000.  This is currently vacant with expected rents $1300 - $1500 per month.

Keeping with his “as they come” strategy, he has a $2.1M, 70,000 square foot retail strip mall with a grocery store anchor under contract due to close in January 2018.  The numbers reflect a 9 cap with 8000 sq ft of vacant space!  

Residential and Commercial differences

The two markets, residential and commercial are very different.  One thing that Mark has recognized that is different between residential and commercial is the amount of effort spent to make a property appealing to a buyer or potential tenant.  

Most residential properties need to be spruced up to attract potential buyers or tenants.  However, most commercial properties are left just as the last tenant left it; water stains on the ceiling from past roof leaks, stained carpet, etc.  He has taken his residential experience to the commercial and done minor things that can take away the negatives and leave the space clean and inviting.  

For more go to:

www.investfourmore.com

makr@investfourmore.com

Dec 28, 2017

A Mobile Home Park may not be your first thought for an investment in real estate.  However, you would be wrong to dismiss it.

Andrew Lanoie, with Four Peaks Capital Partners, real estate investment strategy focuses on the Mobile Home asset class.  They identify parks that meet the underwriting requirements, make offers, acquire and manage parks across the USA.

Why Invest in a Mobile Home Park?

The mobile home park marketplace is fractured, and unorganized.  There is a limited supply of mobile home parks and new ones are not being built.  The sellers are many times legacy owners, or have owned and managed the park for decades.  Management is rarely professional, and consequently, there are opportunities to increase efficiencies and improve the net operating income.

The asset class of Mobile Home parks are essentially affordable housing.  Yet, it provides the opportunity for ownership and the expression of pride of ownership.  

The Mobile Home Park Opportunity

The fractured marketplace allows buyers to engage directly with owners and sellers.  Banks are not always excited about lending on a park.  The owners who have owned the parks for years often have no debt, which makes seller financing an option to sellers not wanting to give up the monthly income.

The lack of professional management provides multiple opportunities for improvement.  The tired owners likely have some vacancies and are likely charging lot rent that is far below market rent.  

Transitions always provide a shock to the existing residents, but raising the rent is easy.  Filling the vacancies is easy when you partner with a company that specializes in mobile home financing.  This will all you the opportunity to market and attract potential residents that would otherwise be renting a two bedroom apartment to own a home of their own.

Mobile home park residents rarely have resources significant enough to pay for moving their mobile home from your park to somewhere else.  This creates long term residents.

When residents fall into financial hardships, this often provides opportunities for park owners to acquire the home left by the resident for very little.  This can be sold as is, renovated and held as a rental.  Most park owners prefer to sell the home and just rent the space.  

Four Peaks Capital Partners is an investment firm focused on acquiring mobile home parks.  

For more go to:

www.fourpeakspartners.com

Dec 21, 2017

Knowledge and Numbers are key to Commercial Real Estate Investing.  Yishai Breslauer was a school teacher with a thirst to learn more about real estate investing.  

He started by learning the local building codes and laws and applied these to his residence to create additional needed space for his family.  Soon the neighbors were following his lead, and a neighborhood was transformed.  

Yishai continued to learn about real estate.  He found there were opportunities if you knew what was allowable and applied this knowledge to an existing property.  This was an opportunity to increase the value of the property.  

Start with Knowledge and Numbers

The more Yishai learned, the more he got excited at the possibilities.  His pursuit of knowledge led him to learn more about laws, statutes, finance and real estate development.  When he applied the numbers to his knowledge he could tell if he had a real opportunity.

Quickly, he learned there was a hierarchy to real estate from Residential to Commercial.

There are multiple asset classes to chose from in commercial real estate.  Residential / Multifamily is simple because a home is familiar to everyone.  Everyone needs a place to live, and the components of a multifamily property are very similar to single family.  The questions you need to know the answers to are:

  • What are the needs of a family?
  • How good is the school district?
  • Is grocery and shopping nearby?
  • Are there churches nearby for families to worship at?

Commercial Real Estate Investing is different

His interest in real estate took him to a position with a major real estate developer as the head of investment banking for real estate.  

He learned that the highest level of real estate investing, commercial, the level of information that is combed through and analyzed on larger deals by professionals, is incredible.  

Office and Retail is more complex.  While everyone needs a place to work, the fundamentals for each class are different than residential.  The questions you need to know the answers to include:

  • Who is your tenant?
  • What is needed by the tenants?
  • What is available in the area?
  • Traffic count needs?
  • What is a good tenant mix?
  • What the bank will need?

The big boys play the game differently than the mom & pop investors. 

To be a pro, knowledge and numbers are key.

To connect with Yishai Breslauer go to:

Linkedin:https://www.linkedin.com/in/yishai-breslauer-61841a24/

Email: ybreslauer@gmail.com

Dec 14, 2017

Tax Planning can save you thousands when you have a working relationship with your CPA.

Craig Cody spent 17 years with NYPD chasing bad guys on the streets of New York City.  Today, he chases tax savings for real estate investors and small business owners.

FREE Book: 10 Biggest Mistakes That Cost Business Owners Thousands

Craig recommends that real estate investors stay in regular contact with your accountant.  If you act before consulting your accountant, it can cost you dearly.  

Tax Planning can Save You

Tax planning with your accountant can help you reduce the taxes you owe and propel your real estate investment strategy.

For instance, if you sell a building and expect to buy a new building with the proceeds, you may be shocked when your accountant informs you that you owe taxes on the sale of the building.  

Regular communication with your your accountant and tax planning could have provided the proper structure to keep you from having “constructive receipt” and owing the tax.

Depreciation is Tax Free Cash

Proper tax planning provides constructive ways to keep more for you.  For instance, depreciation is tax free cash that real estate investors recognize when they file their income taxes. Unlike an operating expense that reduces cash flow and Net Operating Income, depreciation is an accounting tool that reduces the taxable income.

If you are a W2 employee, depreciation is something negative you associate with, ie: the declining value of your new car after you leave the dealership.  

Unlike a car, real estate is an appreciating asset.   When you invest in real estate, depreciation is an asset.  You get the benefit of both appreciation and depreciation.

How can Depreciation be a benefit?

Depreciation is an allowable expense that recognizes the declining life expectancy of a business asset.  In real estate, it can be applied in one of two ways; Straight line, or Accelerated.  Tax planning will determine which option is available to you.

Straight line depreciation is used most often by passive real estate investors. If the property is a residential asset, ie single family or multifamily, the depreciation schedule is 27.5 years.  If the property is a commercial asset, the depreciation schedule is 39 years.

If you are a real estate professional, you are can take advantage of a cost segregation study, and accelerate the depreciation of you property.  Cost Segregation breaks the building into components  and assigns life expectancy of 5, 10 or 15 years to the components depreciation schedule.  

The depreciation is deducted from the the taxable income to reduce the taxes owed.  

So, if you are making positive cash flow, the depreciation can lower the recognized income and reduce the tax owed.  

For more go to:

http://craigcodyandcompany.com

Email: craig@ccodycpa.com

Phone: (516)869-4051

Dec 7, 2017

Use your Self Directed IRA to invest in real estate and turbo charge your tax deferred returns.  

Podcast Format Survey: https://goo.gl/forms/hUF2OAxTu2WHsMQg2

The following are the most common questions asked from investors looking to use their 401k to invest in real estate. The questions were presented to Travis Watts from Direct Source Wealth for answers.

Q:  What are the benefits of opening a self-directed IRA?

A:  Freedom & Choice to invest in the things you want to invest in, ie: large scale real estate.

Q:  Why invest in real estate using a self-directed IRA?

A:  Opportunity for larger return in a real estate investment that regularly produce higher rates of return.

Q:  Can I use a Self Directed IRA to purchase a property I buy for investment?

A:  Yes, subject to many rules; ie you cannot personally manage the property.

Q:  Can I use a Self Directed IRA to invest in a Syndication?

A:  Yes, the most common use of Self Directed IRA funds is investment in syndicated  real estate deals.  A syndication is a group of investors pooling their funds for investment.  The investment is typically larger than one the investor could accomplish on their own.  These real estate investments are professionally managed and require that you do nothing.

Tax Implications ?

Q:  Is there any tax or penalty to move my current Retirement Funds to a Self Directed IRA?

A:   A Self Directed IRA retains the same tax implications as your traditional IRA.  You are only changing the custodian from your current provider to another that will allow you to direct the investment.  

If you elect to convert your traditional IRA to a Roth IRA, you will be responsible for the tax.

Q:  Can I take the distributions?

A:  Any distributions from the Self Directed IRA are subject to tax and penalties for early withdraw.  A Roth IRA is not subject to tax when funds are withdrawn.

Setting up Your Self Directed IRA

Q:  How long does it take to set up a Self Directed IRA?

A:   It can take as few as 3 or 4 days if you are currently in cash or it can take a couple of months to liquidate your current positions.   Consult with your current custodian and tax professional for your specific timeline.

Q:  What documents are required to open a Self Directed IRA?

A:  Standard documents; driver license, photo id and social security card, etc.

Q:  What documents are required to fund a deal?

A:  Standard documents include:

  • Operating Agreement
  • Private Placement Memorandum
  • Syndication Agreement
  • Pro-forma

Every deal is different.  Check with your syndicator or investment for specifics.

Q:  What happens to the investment returns &  distributions?  

A:  Distributions are returned to the Self Directed IRA as cash.

Q: Can distributions be invested in the next deal?

A:  Accumulated cash distributions can be invested in another investment.

Summary: Look into a self directed IRA and learn what the possibilities are and remember, learning is earning.

For more go to:

http://www.directsourcewealth.com

Travis Watts

travis@directsourcewealth.com

Nov 30, 2017

Cost Segregation can turbo charge your commercial real estate investments financial results by accelerating the depreciation schedule.

Paul Caputo with Segregation Holding LLC provides an explanation of how it works and what the benefit is to commercial real estate investors.

Depreciation is an accounting tool that recognizes each year, a percentage of your building’s life expectancy is used up.  This loss can be recognized for tax purposes as an expense against the income generated.  

When you purchase a building, regardless of the age of the building, the depreciation clock starts.  The standard building depreciation schedule is 27.5 years for residential and 39 years for commercial.  

If you purchase a residential property, ie an apartment building, and the building is valued at $2,750,000 at acquisition, the straight line depreciation would be $100,000 each year.  This amount will be deducted from your income to determine the taxable income.  

A cost segregation study breaks the building into its component parts.  Depending on the estimated life expectancy of each building part determines the ability to accelerate the depreciation.  

How Does a Cost Segregation Work?

When a property owner hires a cost segregation firm to do a study, the firm takes an engineering assessment of building.  This process itemizes each component used to construct the building.

Instead of using straight line depreciation the building components are assigned a new depreciation schedule of 5, 7 or 27.5 years.  This significantly compresses the time to depreciate the building.  

For instance, if 15 percent of the building, $412,500 of the $2,750,000, is now assigned to 5 yr depreciation schedule.  The difference in allowable depreciation between straight line and the accelerated schedule for these items assigned to the 5 yr schedule is:

Straight line over 27.5 years: $30,000

Accelerated over 5 years: $82,500

Additionally, when you have a cost segregation study, you can also capture the unused life of a component if you have to replace it prior to its scheduled life expectancy.  So, if you have to replace a roof 5 years after you buy the building, you can recapture the 22.5 years left on the cost segregation schedule in the year you replace the roof.  The new roof is capitalized at the replacement cost with the new life expectancy updated on the schedule.

For more go to:

www.SegregationHolding.com

pcaputo@segregationholding.com

LinkedIn: https://www.linkedin.com/in/paul-caputo-23440229/

ph: (720)744-2007

Nov 22, 2017

Real Estate Investor Todd Dexheimer quit teaching once his real estate investing side hustle provided more than his teacher paycheck.

His original real estate investment strategy was to own 1000 units.  He jumped in fast.  He bought rentals until he ran out of money.  When he needed more money, he started flipping single family homes.  This gave him more money needed to buy more rentals.

The flipping business grew fast.  There are only so many hours in the day, and the flips consumed most of his time.  In order to make money flipping, you have to sell.  If he was going to grow his portfolio, he had to answer a question: was he a Flipper or a Real Estate Investor?

Real Estate Investment Strategy

He had lost focus on his real estate investment strategy of 1000 units.  When he looked at the return on investment comparing the flips to the rentals, there was no question on which way he needed to go.  The rentals “destroyed” the flips.

This “aha” made him question how was he going to grow his portfolio.  

When he looked closer, he recognized that single family rentals were difficult to scale.  He realized that if he wanted to achieve his goal of 1000 units, multifamily was the answer.

Real Estate Investor Question

The question he needed to answer was “where” to invest?

The local market Todd lives in is extremely competitive and CAP rates are compressed making it tough to find opportunities locally.

Todd took the next 18 months analyzing markets.  He looked at:

  • What is the Population?  He looked for an MSA of 500,000 minimum  with positive prospects for growth.
  • What is the Employment forecast?  Are there any new employers coming to town?  
  • What are the Value add opportunities in the market?  Are there multifamily properties available in the market?  How affordable is rent for tenants?  What is the cost to buy a home?

Once he identified potential markets, he took action.  He bought a plane ticket and toured each market.  He met brokers, lenders and property managers.  This helped set Todd apart from all the other out of town real estate investors.  

Market, team and property.  

Todd has identified the markets that fit his investment criteria, and assembled his team.  

Today, he is actively adding new multifamily units through syndication.  

For more go to:

Linkedin: https://www.linkedin.com/in/dexproperties/

Webpage: http://www.venturedproperties.com/

Email: todd@venturedproperties.com

Listen: Pillars of Wealth

 

Nov 16, 2017

If you want to grow your wealth, grow your network.

Vinney Chopra came to America from India with $7 as an MBA student.

He worked as a full time fundraiser and he built his network over the years.  His wife and he invested in some single family properties along the way.  The real estate provided cash flow and appreciated significantly.

Vinney recognized that multifamily real estate was a powerful investment opportunity.  More people were renting and the banks were agreeable to lend for multifamily.   

Then he made the decision to get his commercial brokers license and share what he learned about real estate with his network.  His network wanted to invest with him.  

To date, Vinney has completed twenty-six syndications in ten years.  His investors have been rewarded handsomely.  Some deals have earned annual returns in excess forty percent.

Vinney recognizes that his success is due to his network.  

Build Your Network

If your real estate investment strategy includes growth, you need to grow your network.

Don’t wait, START now.  Talk with everyone and let them know what you are doing.  The more you share, the more practice you will get, and the enthusiasm will build as you find like minded people.  

Investor base

You have to have investors if you want to go after larger properties.  In the beginning, you want to focus on sharing your goals.  You will be surprised who is interested and who has money to invest.  

Regularly call, send emails, meet and educate your network to warm them up for eventual investment with you.  Plan to spend at least four months working and meeting with prospective investors.  You have to get a sense of the number of potential investors and level of commitment they can invest.

Go to free REI groups & Meetups.  If there is not one near you consider starting one.  Don’t forget social media, join groups, ask questions and offer input to discussions.

Build your team

Real estate is a team sport.  You need to have many experts to put together a successful transaction.  

Commercial Real Estate Brokers are critical to your success.  Get to know some.  Let them know what you are looking for.  It will take some time to develop the relationship, but this is important.  When you have a relationship with a broker, that knows exactly what you are looking for, they will share off market deals with you before making available to the public.

When you have identified a market to invest in get to know the local professionals.  A property management firm is key.  Interview several to make certain they are a good fit.  They can also introduce you to other off market opportunities from properties they manage.

You will also need an attorney and CPA to navigate your investment.  Depending on the size of property, investment and number of investors (partnership to syndication) will determine the level of professional services you will need.

An experienced mortgage broker will help you navigate financing the balance.  Depending on the property, the team you have in place and size of the mortgage, will determine the loan programs available to you.

START

As Vinney says, build your network and “Jump into multifamily now” to get the long term rewards available to you.

For more go to:

http://www.vinneychopra.com/

https://vinney-chopra.mykajabi.com/

 

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