Commercial Property Wealth Training

San Antonio Value Add Multifamily - Investors Wanted

We are recruiting investors into this Quality,
Off-Market, Value-Add Apartment Project in San
Antonio.

Principals Only Please … no Brokers or Daisy
Chains

Contact Me Directly for full details and
Introduction to the Project Sponsor

Dike Drummond
dikedrummond@gmail.com
360-262-4971 (office)

Here are the bullet points ….

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The Property:

- 140 Units "B" Class Apartments
- Purchase Price $5.279M or $37.7K/door
- Desirable San Antonio Location, listed properties
getting 20+ offers
- Unit Mix: 62, 1BR - 68, 2BR - 8, 3BR
- Total 116,368 sq ft - average unit size 831 sq ft
- Two swimming pools, clubhouse, business & fitness
center, laundry
Very desirable location

The Upside:

- Off Market Property under contract with no new
financing needed
- Loan assumption will take 90 Days
- Going in Cap Rate is 8.43% on current Actuals
- Only $350K in repairs and upgrades needed
- Current economic occupancy is 78%
- Project Sponsor currently owns apartment complex
across the street which is at 97% occupancy
- Sponsor has intimate knowledge about this property
has already conducted thorough due diligence.There
are no surprises.

Good upside opportunities:
Renovation, occupancy,economic losses, expenses,
economies of scale with other assets (property can
share a manager with sister property and reduce
payroll costs), sponsor can achieve lower insurance
premium due to size of portfolio

The Investment:

- $760K purchases an 80% stake in the Project
- Project Sponsor holds a 20% stake
- All proceeds split pro rata
- Two year projected IRR in excess of 70%
- $200K minimum
- Accredited Investors Only Please
- 1031 OK with minimum size $380K
- Self Directed Funds OK

The Project Sponsor:

- Already owns and manages over 1300 units in San
Antonio
- Owns and manages the 232 unit property across the
street
- Owns a total of over 4000 apartment units in six
states
- Has completed due diligence on this property when
it was bundled in a separate purchase earlier this
year. Owner has come back with a lower price,
facilitating this sale.

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Contact Me Directly for full details and
Introduction to the Project Sponsor

Dike Drummond
dikedrummond@gmail.com
360-262-4971 (office)

Get Your Start in Commercial Real Estate

We are launching our Commercial Quick Start Home
Study course AND as a member of the Bigger Pockets
Community ... you get an exclusive, invitation-only,
one hundred fifty dollar discount.

The Quick Start System is our answer to one of the
most common questions we get every week ... this one ...

"How do I get started in Commercial Real Estate" Not by cruising LoopNet, that's for sure!

Our Quick Start System combines 8 trainings in one
to build your Business foundation and Personal Knowledge
Base wide enough to support a portfolio of any size.

Full Details at our Invitation-Only Webpage giving
you an exclusive one hundred fifty dollar savings.

http://tinyurl.com/3xunfw9

Is Multifamily Stabilizing?

We are all waiting for spring … when all things are born anew!

AND before you can get green shoots like these in the commercial real estate markets … the first step is the market fundamentals have to stabilize. At some point rent and occupancy simply must stop falling and enter the category of “No Change” as the analysts in our industry survey the national markets. Only then can the turnaround … and those little shoots … begin to emerge.

Here’s a sign we may be seeing some stabilization sooner than most pundits had predicted.

Most of the national “experts” reported in the press over the last several months have gone on record predicting it will not be until the 3rd quarter (and most then say “at the earliest”) until we see the Commercial Real Estate Markets recover.

Here is a report showing 16 of 28 major markets in the US where multifamily rents are NO CHANGE in the fourth quarter of 2009. See the report at this link …

Could this be the first sign that some “green shoots” are on the way - might they be curled up under the surface yearning to emerge when the sun comes out all the way? Stay tuned …

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Cash Buyer for Deeply Distressed Multifamily Properties

We are a Cash Buyer of appropriately priced “very hairy” deals – or deeply discounted non-performing notes - in primary markets in the following states:

FL AZ NM LA AB MS CA CO UT GA NC SC

Even though we like the half empty underperforming property … we do not buy if the property is actually in a war zone.

Our motto is “when others run away, we pay cash”.

Please Contact Me Directly:

Dike Drummond MD
Wellspring Investment Network
dikedrummond@gmail.com
360-262-4971

24% "Double Secured" Prom Notes

Even though the Commercial Property markets are experiencing the lowest transaction volumes in a lifetime … there are a number of very active niche market segments … areas where developers are seeing a different group of once in a lifetime numbers … this time it is unheard of low prices on land acquisitions.

Here’s were you can profit handsomely providing cash to developers in need … while the traditional commercial lending sources are busy licking their wounds. And not just any developer…

Our partner here has a long track record of Commercial Development in the Chicagoland and TX markets with over 100 completed projects to date … and $100M in projects in the pipeline. Many of these are in partnership with the likes of JPMorganChase, AVS Pharmacy, AutoZone and Walgreens (they have completed 18 Walgreens already!) … where they supply the finished building pads to these rapidly expanding companies and come away with a very profitable long-term land lease.

Here are the bullet points:

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“Double Secure” Prom Notes
24% annual return
Interest Paid – 12% every 180 days

18 month term with potential 6 month extension

Notes are secured in two ways:
- Corporate Guarantee backed by long term Commercial Ground Leases
- Personal Guarantee by the Principals (combined net worth in excess of $10M)

$50K minimum investment – $900K max
Accredited Investors Only Please

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Contact Me Today for full offering documents and an introduction to the Principals

Dike Drummond

360-262-4971 office
360-420-2100 cell
dikedrummond@gmail.com

Gross Rent Multiplier: The Rubber Chicken of Commercial Property Analysis

Now a Rubber Chicken is pretty useless … except as a practical Joke. Let’s take a look at the most useless number in Commercial Real Estate.

The Gross Rent Multiplier - the Rubber Chicken of Commercial Property Value Indicators.

The Gross Red Multiplier (GRM) is a number you will see on every Broker’s pro forma. And it is touted as a measurement of the “Property’s Value”. If anyone out there really sets a property’s value based on GRM … I have to wonder what they are smokin’. I’m not really sure what a Gross Rent Multiplier measures, but it certainly is NOT the Value of the Property.

GRM is calculated by dividing the Property’s sales price or value by the Gross Potential Income.

Example:
A $1M property with a $100K annual Gross Potential Income. This property has a GRM of 10.

Price (Value) / Gross Potential Income = GRM

$1M / $100K = 10

The GRM number can be thought of as similar to a Price Earnings Ratio for a stock.

The Gross Rent Multiplier is the amount of time it would take you to pay for the property if you were actually collecting the Gross Potential Income and putting it towards the property purchase. For our example property: If you were able to collect that hundred thousand dollars a year and you magically devoted all of it to paying for the property … it would take 10 years for you to complete your purchase.

Beware of the Gross Rent Multiplier.

It can help you compare price between different properties, however, it is absolutely and totally useless as an estimate of value to a returns focused investor. You are focused on the Return on your Investment. You are focused on the Bottom Line. And the GRM is about as much help in understanding your ROI as a Rubber Chicken.

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Since the Gross Rent Multiplier only deals with Gross Potential Income, it is flawed for two main reasons.

1) We’re talking about “Potential Income” based on the Broker’s most optomistic projections of attainable rents. The basic number has no basis in reality - especially if you are looking for a property with upside. Think about it for a second … if the Seller could get these rents for this property they wouldn’t be selling!
2) Gross income starts at the top of the financial statement. For any particular property there is absolutely no relationship between the Gross Income, and the Net Operating Income (NOI) down on the bottom line. You have to know the Real Income and the Real Expenses to understand the actual NOI this property can produce.

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It is only when you understand the Net Operating Income that you can calculate your potential Return on Investment.

Our advice…
Whenever you see the term Gross Rent Multiplier … just ignore it.

And if a promising property shows up … ask for the rent rolls and the financials and figure out the Net Operating Income as best you can. With the bottom line Net Operating Income and potential price in hand, you will be able to calculate your Return on Investment.

With this solid, fact based set of numbers you can make an offer based in reality. Doesn’t mean the Seller will accept it… and at least you start the negotiations with your feet on the ground.

To your investing success,

No-Hype Commercial Real Estate Training | Follow me on Twitter for the latest