All Forum Posts by: Joel Owens

I agree CAP rates can be manipulated. This is why you ask for tax returns and everything else under the sun to dig for accurate numbers.

I NEVER list a property until I impress upon the seller that they will give all numbers accurately and not hide anything.

80 percent of the crap on Loopnet is puffed up junk that won't sell.Eventually it will go commercial short sale or sell OREO for realistic numbers.

With this being the best buying time in 25 years for commercial real estate you do not want to put what little liquid cash you have into a marginal to good deal.

Instead you want GREAT deals.As another investor friend of mine puts it that has millions in cash. I don't buy even if the numbers can show a true 10 cap because if anything happens to the property now my returns are at an 8 CAP.If I buy at a 12 and it goes down some I still am at my goal of a 10 percent return.

Of course the CAP never takes into effect your debt service because everybody's is different.

The beauty of the commercial sector as there are many finance models and deal structures without the regulation BS on the residential side.

Class A property is mainly for institutional investors.They are dealing with retirement accounts of differing sectors etc. and are looking for SAFE returns that keep up with inflation and grow a little.

A regular investor trying to do WEALTH ACCUMULATION instead of WEALTH PRESERVATION can't grow enough on marginal returns.

This is why most investors focus on B,C,D property.

You have the quality of the building A,B,C,D and the quality of the location A,B,C,D.

Most of the investors like the value add deals where they can create huge returns once stabilized.

Typically in this scenario you will get a group of small investors with 75k such as yourself and pool funds together to buy for cash and rehab. There are commercial hard money lenders out there but the points and fees are ridiculous and will eat up potential profit.

Some investors try to get the bank to hold or provide some financing on the foreclosure.Depending on regulatory guidelines and what type of loan defaulted they can provide financing and will or they can't provide financing period.

The other item the bank will want to know is your track record of rehabbing this asset class property type successfully before they agree to hold finance.

Otherwise they will just wait on another cash party to get the loan totally off of their books.

On regular loans the banks want 20 to 25% down on properties that have been performing for years at 90% occupancy or higher and sometimes will let you put 10 to 15 down and let the seller carry back the rest.

Many investors do not like the regular loans as there is no upside and the cost of liquid capital to put into the loan is too much.

Many feel apartment rents will stay flat to slightly appreciating in the next few years which is why they are going after value add instead.

For institutional investors they are looking for caps in the 7 range and or mismanaged properties or where they were new builds expecting a certain rent and the markets corrected.

They buy from the bank based on the new market rents model.

I absolutely love commercial real estate and nothing gets me more excited.

Any questions just ask.We all can help and learn something new everyday.

Congratulations you have rented to a PROFESSIONAL TENANT. (scammer)

At the first sight of anything you should have filed for eviction.They would have either came in line or you would have gotten them out much sooner than now.

I hope you didn't use an Office Max type lease with holes you can drive a Hummer through.

Welcome to land lording ! No legal advice.

Is the auction reserve or no reserve??

If a reserve even if you are the winning bid the bank can still counter your winning bid or just decline it.

Okay let me back up.When you mean auction do you mean an auction house like REDC,Williams and Williams or are you talking about the bank foreclosing on the courthouse steps to sell for cash??

People use the auction word loosely but it has different meanings.

Is the seller of the home an owner occupied or an investor?? The type of loans will determine how hard the short sale will be.

If it's foreclosing I would just bid at the steps rather than going through a big mess on the short sale.The first will bid principal balance plus attorneys fees,late mortgage payments,etc.

If that amount is higher than you want to pay then nobody will most likely bid and the bank will take back REO.You can call the attorney and ask what the starting bid will be before even wasting time going to the courthouse steps.

good luck

Wamu got bought out by Chase a long time ago so you will be dealing with Chase or their servicing company.

Indy Mac isn't too bad to deal with.

I see your in California where short sales can take over a year to happen !

Be cautious of not locking yourself into a short sale contract for too long.The key will be if your are is trending down in value or is starting to go up.If you submit a short sale offer and it takes 5 months to close and values have fallen 8% percent since then your deal isn't as great anymore.

This is why I like REO better. How do you know there is just a 2nd and a 3rd??

Often times the sellers do not even know what is attached to their titles.So I would do a pre-lim title search at the courthouse to see all the junk you will have to negotiate before taking it on.

Just depends on what type of loan it is.

Each bank holds different percentages of types of loans and assets on their books.

I talk to the Presidents and Vice Presidents of local banks usually when I am working on commercial short sales for my clients.

Certain loans they consider SAFE they are more than happy to do.Other loans that they already have too much off on the books or are non-performing they have no interest in whether it makes sense or not.

Instead they will simply take the deposits and buy distressed notes from other banks or distressed assets that will offset their own write downs.Making loans at teeny,tiny interest rate returns isn't going to shore up their books and let them dump bad loans quicker to get healthy.

A sure way to get fired is to go before the local banking committee with a loan you know they don't want to consider.

On apartment loans Fannie and Freddie are taking 3 to 4 months to close sometimes and the HUD loans can take up to a year with all the governmental BS involved.

I like private lending funded by investors because the rates are almost as good with quick funding.

If you are buying a well performing property at a strong CAP loans are easier to get.If you want distressed purchase funding at great rates most lenders want to see a proven track record of turning properties to feel comfortable making the loan.

They also want to know you have enough liquid capital reserves to overcome any unseen problems proceeding to turn and stabilize a property.

So it sounds like you took a contingency based on your buyer selling their house whom they said they had a cash buyer correct??

Was your broker/agent a listing broker/agent on your buyers house or just your property??

If they weren't involved with the other property they were going off of information provided by the buyer and that other listing broker/agent.

In this climate I would have never accepted such a contingency.Many times sellers or investors will talk themselves into taking a HIGHER offer and will put up with contingencies for it.

What's that saying in the investing world?? Pigs get fat and hogs get slaughtered...................

These types of cash to financing was a trick investors were using a few years back.They would submit an all cash offer to the bank with a quick close to get a low offer accepted.

Than they would magically "have to get financing now". It's smart on the investors part as instead of paying 100k for that property cash they can now put down 20k on 5 properties saying they will pay cash.

In my neck of the woods this strategy is dead.The banks require a high earnest money deposit on cash offers.Then they have an addendum that states that if the buyer converts a cash offer to financing the earnest money becomes NON-REFUNDABLE and the bank reserves the right to terminate the agreement and go with another offer.

Here is a person I know that has run thousands of tests with the ugly yellow signs.

http://www.uglyyellowsignmastery.com/blog/

I don't get any money for this at all you just seemed interested in signs and this guy lives and breathes that strategy.

I did try the signs a year ago.Many will use an 800-number on the signs so you can screen calls.

You definitely need to FIRST get a map of your county.The map will show where the city limits are relative to where you want to place your signs.

Then you need to find out fines from city and county.

If city fines are really hefty then place signs outside of the city limits.

Most will place signs on Friday and take down on Sunday as the county and city inspectors do not work the weekends

It has been my experience that in most cases if a property just needs carpet and paint you will get outbid by owner occupants most of the time.True you might be paying cash with a fast close but an asset manager would much rather take a chance on a higher owner occupant offer to see if it pans out. Now if you both were close then the AM might take the cash offer from you for a little less.

Your numbers for equity and an owner occupants numbers for acceptable equity will be night and day different.

The real dogs that need cash purchases is where the real gold is at.

The issue I run into on my listed properties as a broker for my clientsis middleman investors who have no money and are facilitators.

They don't want to put any skin in the game and a paultry earnest money.My REO sellers usually WILL NOT allow assigning.

Basically the buyer investor wants no liability and if they can sell to another buyer for a fee the deal will happen.If not the bank just wasted months of time because the bank won't know the capability of the C buyer when found to close a deal.

I have no problem with investors who want to purchase and close and then resell as long as it's not predicated on finding a C buyer.

There are plenty of direct cash buyers out there or investors buying directly to not have to tie up a property for a bank.

Investing and returns will vary by individual.

It depends on what part of the investing cycle you are in.

Someone who is trying to grow money at an accelerated pace is in the (wealth creation) stage.

Someone who already has size able assets from an inheritance or years of investing in more risky ventures for a higher yield is in the (wealth preservation) mode.

These investors want a strong asset with low risk for good yield maybe 7 to 8 percent.They want tax benefits,make more than yearly inflation and cost of living,and live off the interest.

In this way it's about preserving a lifestyle and way of life. So when I work with investors the first question is where they are at in the investing cycle.

In my area pharmacies offer great stability.