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Archive of Ted Karsch

Ted has written 70 articles for The BiggerPockets Blog.


Commercial Real Estate

Multifamily Investing — Is this the Market Bottom?

by Ted Karsch April 7, 2010

Former Fed Chairman Alan Greenspan said that  he believes a bubble in the commercial real estate market has already popped in a recent interview with ABC Senior White House Correspondent, Jack Tapper.  “Real estate prices are down 50%. With prices already down and adjusted, if we were going to get severe secondary reactions, they would [...]

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Commercial Real Estate

Commercial Loan Modification – Frequent Objections

by Ted Karsch April 1, 2010

The congressional oversight panel for commercial real estate has recently estimated that as many as 50% of all commercial properties in the United States will be underwater over next 12 months.  This leaves half of all commercial real estate owners owing more on their commercial properties than the property is worth.  The dire situation is [...]

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Commercial Real Estate

Hotel Owners in Financial Distress

by Ted Karsch March 24, 2010
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The fallout from the great recession can be seen on almost every Main Street in America in the form of empty storefronts to abandoned and foreclosed homes. One area of the real estate market that has been the hardest hit by the real estate collapse has also received the least amount of attention in the [...]

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Commercial Real Estate

When Your Commercial Loan Comes Due

by Ted Karsch March 10, 2010

Commercial real estate analysts have predicted that approximately 1.5 trillion dollars of commercial loans will be maturing between now and 2013. Most of these loans were initiated during the peak times of real estate valuation, between 2005 and 2007. Since 2007, however, commercial real estate owners have watched as their investments have dropped in value [...]

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Commercial Real Estate

Congressional Oversight Panel on Commercial Real Estate

by Ted Karsch February 17, 2010

The Congressional Oversight Panel released their 189 page, February report entitled “Commercial Real Estate Losses and the Risk to Financial Stability” on February 10th. Typical of government reports of its kind, the authors are long on explanations, coupled with impressive analysis, but short on solutions. At least the report does make one thing clear, they [...]

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Landlord Tenant

How to Increase Occupancy in Apartment Buildings

by Ted Karsch February 3, 2010
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The financial crisis and real estate meltdown has hurt almost every sector of the real estate market, including apartment building owners. Vacancies in many apartment buildings have increased to between 30% and 40% in many areas of the country. Apartment building owners who just a few years ago had occupancy rates as high as 90% [...]

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Real Estate News & Commentary

The Top Five Signs of More Real Estate Pain to Come

by Ted Karsch January 27, 2010

Unemployment – Official unemployment rates are now above 10% for many areas of the country. If you factor in the number of people who are under-employed or who have given up looking for work, the number is closer to 20%. If unemployment levels continue to rise or even stay the same it does not seem [...]

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Commercial Real Estate

Alternative Financing Options for Commercial Real Estate

by Ted Karsch January 13, 2010
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Despite the fact that banks are not lending like they used to on construction projects and commercial real estate there still exist many alternative financing options for the commercial real estate investor who is willing to do some leg work and research. The following are a list of alternative funding sources that are being used [...]

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Commercial Real Estate

Commercial Loan Modifications: Know Your Options.

by Ted Karsch January 6, 2010
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Knowing how to pick a commercial loan modification company can be a difficult task. There are many factors to consider and the most important is to first decide whether you are good candidate for a commercial loan mod. Many commercial real estate owners have seen their property values decline between 30% and 50%, depending on [...]

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Commercial Real Estate

Alternative Financing for Commercial Real Estate

by Ted Karsch December 16, 2009
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As the underwriting guidelines have changed drastically over the past few years, many commercial property owners and investors have been frustrated by attempts to obtain traditional financing for the purchase of commercial real estate. Generally, even buyers of cash-flow positive real estate are finding it extremely difficult to obtain financing. As prices of commercial real [...]

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Commercial Real Estate

IRS Eases Restrictions on Commercial Loan Modifications

by Ted Karsch November 5, 2009
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The IRS has issued a new rule IRS Revenue Procedure 2009-45 IRS Revenue Procedure 2009-45 that eases the restrictions on modifications of commercial mortgages that have been packaged into commercial mortgage backed securities. This action allows borrowers to open discussions with the loan servicer prior to any default in an attempt to work out the [...]

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Commercial Real Estate

Attorneys for Commercial Loan Modification. What You Need to Know.

by Ted Karsch October 14, 2009

Commercial real estate owners who are considering hiring an attorney to handle their commercial loan modification should investigate the background and experience of the person they hiring so that they know in advance what to expect.

In my experience as a commercial loan modification specialist I have found that many attorneys who advertise themselves as commercial loan modification attorneys actually have very little experience performing successful loan workouts. Unfortunately, as many people know, there is an over supply of attorneys in the United States. This forces many lawyers to follow the latest and hottest trends in order to get new business and survive. You may see the same people who used to do accident and injury work now advertising their services as loss mitigation specialists because it has become such a needed service. For this reason the commercial real estate owner should definitely do their homework and research the actual experience of the person they are hiring.

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Commercial Real Estate

How to Choose a Commercial Loan Modification Company

by Ted Karsch September 24, 2009

The vast majority of companies that facilitate loan modifications in the United States are solely dedicated to helping residential homeowners. It can be difficult for the commercial property owner who needs a commercial loan modification to actually find a company that has experience and knowledge in processing successful commercial loan workouts.

The commercial property owner who is facing the prospect of foreclosure has a few different options when he or she is attempting to modify their loan. For an illustrative example I will use a real life situation of a client of mine in Tampa, Florida. We won’t use their real names for privacy purposes and we will use the fictional name of Blue Harbor Apartments for their property.

Commercial Loan Modification: a Hypothetical

They own a 250 unit apartment building that they purchased for 8.3 million dollars in 2006. In the last year they have seen occupancy drop to 65%. This increase in vacancies has severely hurt their net monthly income. Their monthly rental income is now $92,000.00. Their expenses, including the mortgage payments are $118,000.00 a month. They are currently coming out of pocket over $20,000.00 a month just to hold on to the property. The loan they have is held by a major international bank and is amortized over 25 years at an interest rate of 7.5%. They are in a tough situation because the value of their property on today’s market is approximately 6 million dollars. They are unable to refinance with another lender because they don’t have any equity in the property. The only choice they have is to try to modify the commercial loan.

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Foreclosures

Where to Find Apartment Building Foreclosures

by Ted Karsch September 16, 2009

Due to easy, high leverage financing and falling commercial real estate values many apartment building owners are now facing foreclosure. This leaves a lot of opportunity for those apartment building investors who are willing to invest the time and energy into finding a great apartment building investment at a rock bottom price. It can be difficult to find listings of apartment building foreclosures because in many cases they are handed over to commercial Realtors who may not even advertise the apartment building as a foreclosure.

Fortunately, the internet has a large number of websites which feature apartment building foreclosure listings, however, none of these websites is devoted solely to multifamily properties. Therefore it is necessary to visit a number of different websites and do some searching within the websites themselves. Below are some websites where you can begin your search.

Sources for Foreclosed Commercial Real Estate

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Commercial Real Estate

The Top Ten Reasons Why Now is a Great Time to Buy an Apartment Building

by Ted Karsch September 1, 2009
  1. Prices are Falling — Prices for apartment buildings are steadily dropping. Many apartment building owners paid way too much for their properties over the past few years and now their properties are worth less than what they owe. Apartment buildings are starting to show up as foreclosures across the country and it is further pressuring prices to the downside.
  2. Forced Appreciation — You don’t have to wait for real estate prices to go back up to increase the value of your apartment building investment. You can increase the value of you apartment building by increasing the rents, cutting your expenses or by making physical improvements on the property.
  3. Less Competition — Many investors are under the false impression that owning an apartment building is more difficult than owning single family homes, therefore their is less competition for prime properties.
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