All Forum Posts by: Joel Owens

I am a commercial real estate broker and owner of my company.

I can tell you from my perspective there are many buyers that are clowns out there for sure. Every get rich quick hair brained scheme out there.

When you become a commercial broker or investor one thing will be perfectly clear.

TIME IS MONEY

When working with investors I look at how out there the plan is.The more imaginative the plan the more things can go wrong and the more chances for failure.

So when you only get paid when you close you look at probability and percentages like a hawk.

I have many listings mainly in the Multifamily and Retail sectors.I do work with a small group of investors.Since most of my time is spent marketing my clients listings I only work with the most qualified investors.

If you have money provided by proof of funds valid within the last 30 days AND you are realistic to the market then a broker might work with you.

If you have NO to LITTLE money relative to what you want to buy and NO experience then you don't bring much value to the table. People like my state because of the CAP's you can achieve versus other parts of the country.

I would have a brief phone conversation explaining your goals to a broker to set a plan in motion.

Only 44 properties in Texas currently total including new to market from FDIC.

Click on a property for a detailed report.

Properties Found

Single Family Residence (1-4)
Property City State Market Price
1301 CHARLES STREET PAMPA TX $ 104,895
2114 HOLLY STREET AUSTIN TX $ 242,500
2619 TUDOR MANOR HOUSTON TX $ 0
2906 EDGEFIELD CT LAREDO TX $ 234,150
2918 BEACHTREE LANE BEDFORD TX $ 126,000
29910 LAKE COMMONS WAY HUFFMAN TX $ 350,000
354352 1426 CARROLLSBURG DALLAS TX $ 0
3809 WILBARGER ST FORT WORTH TX $ 21,000
51099 LUKE LANE NOVI TX $ 223,667
6821 COUNTY ROAD ATHENS TX $ 36,000

Condominium (1 unit only)
Property City State Market Price
2318 MARKET STREET #11 GALVESTON TX $ 178,400

Bank Premises - Land or Ground Lease
Property City State Market Price
1130 FIRST STREET LA MARQUE TX $ 250,000
1300 S MOPAC AUSTIN TX $ 0
201 W CARTWRIGHT MESQUITE TX $ 215,000
2500 GESSNER RD HOUSTON TX $ 345,000
2706 S TEXAS AVENUE BRYAN TX $ 625,000
3831 N FRY ROAD AT CLAY RD KATY TX $ 455,000
4160 FAIRMONT PARKWAY PASADENA TX $ 415,000
434 SW MILITARY DR SAN ANTONIO TX $ 975,000
6011 GARTH ROAD BAYTOWN TX $ 1,350,000

Bank Premises Owned
Property City State Market Price
10852 CULEBRA ROAD SAN ANTONIO TX $ 0
CENTRAL EXPRESSWAY N & W STACY ALLEN TX $ 0
LAKE FOREST DRIVE & TX-121 MCKINNEY TX $ 0
NEC OF HWY 80 & PINSON RD FORNEY TX $ 0
NORTH LOOP 1604 W SAN ANTONIO TX $ 0
US HWY 281 SAN ANTONIO TX $ 0

Office Building
Property City State Market Price
301 West Heritage Drive-ORE Tyler TX $ 1,150,000

Land - Residential Lots
Property City State Market Price
11 LOTS ELLIS COUNTY RED OAK TX $ 459,800
11 LOTS ROCKWALL COUNTY ROCKWALL TX $ 918,500
12 LOTS TARRANT COUNTY FORT WORTH TX $ 458,700
28 LOTS DALLAS COUNTY DESOTO TX $ 616,000
3 LOTS ATHENS TX $ 0
3 LOTS DENTON COUNTY FRISCO TX $ 0

Raw Land
Property City State Market Price
352985 LOT 1321 BLOCK 46 Houston TX $ 0
357071 999 SHADOW MIST Leon Valley TX $ 0
357319 SUB 18 759 ACRES 20 JV I EL PASO TX $ 0
7 SHELL KEY HITCHCOCK TX $ 90,000
HWY 105 & WESTFORK BLVD CONROE TX $ 2,700,000
LOT 20 STONEY CREEK PHASE 5A SUNNYVALE TX $ 126,000
LOT 39 TROPHY OAKS GARDEN RIDGE TX $ 85,000
SOUTH PADRE ISLAND SOUTH PADRE ISLAND TX $ 0
TRACT 327 PHASE CORSICANA TX $ 147,000

Improved Vacant Land
Property City State Market Price
2 LOTS, CHAMPION RANCH DRIVE LARUE TX $ 14,700
830 NEYLA DRIVE EL PASO TX $ 0

People are confused about the FDIC.

The FDIC mainly has 2 asset companies to dispose of it's assets.I am signed up with them as a commercial broker. In GA we have many failed banks but you do not in Texas.I just checked and their were only 8 properties showing for Texas.

You would do better to call local banks directly in your state for defaulted properties on their books.Get a signed NDNC from your buyer to protect yourself legally.

Many of the nice properties the banks would rather do a workout with the owners than take a big haircut today.So I get the calls everyday too from groups chasing a pipe dream for very little inventory.

I think where many make a mistake is trying to fit one situation into a way everyone should invest.

In the multi-family arena most small investors will not pursue class A properties.The reason is they will lose out to Reit's,pensions,hedge funds every day of the week.

These companies will seek SAFETY for MARGINAL returns to place their money.They are into wealth preservation with small growth instead of wealth creation.

This is why I get calls from investor groups looking for B,C buildings with an A,B,C location.

They don't go after A's because the returns don't justify their investor pools guidelines for acquisition.

I have investors from California,New York etc. contact me every week looking for property here in Ga. In the other states they are only hitting say a 5 or 6 CAP for trophy class A properties.

A self-manage will usually hit a wall at anything more than 20 units or start to run very poorly.Many want at least 50 units or more as you can land a quality IREM property manager for 5%.

If you buy less units the fees go up and you have a different type of manager.

Wow I can't believe nobody is talking about the other points.

In my area Atlanta,GA some parts of downtown are a real craphole. The cops won't even drive down the roads and one is named (gun alley dr) seriously!

3 to 4 years ago we had rampant fraud in Atlanta.They said they had rehabbed and sold junker 2/1's and 3/1's for 150k to 225k that were built in the 1940's and 1950's.

I went to look at these junkers and man what a waste.The city of Atlanta is still having crazy assessments of 240k and yearly taxes of 4,000 !

So if I buy this junker for 7k I would have to rent it out for a year at the going rate of 400 and then if I was lucky I would break even and not make a dime ! If I had to evict I would go into the red.

These homes are in such bad shape that even if the values rise they will never go to the level to cover the costs of improvements needed over time.

If you are smarter you look as I did for house in better areas outside of the city limits where lot sizes are bigger,properties are newer,and taxes are about 1,200 a year with higher rents as it is still close to Atlanta but in a nicer area.

These properties get valued lower because the REO listing brokers use comps from the war zones to give a value.

Using this strategy you can clean up.I also look for older houses that I can rent out that will eventually go commercial.

You can try to corner a whole block in a war zone but other investors will fight you and politics will get involved.

Basically what I am saying is I can get a higher return with a nicer class of properties in a better area.

Hello Emily,

You will find many opinions on this. My take is I list and sell commercial properties for my clients all the time. Some keep great records and others not so much.

Looking at schedule E tax returns give insight into the numbers.When you inquire on a property and the seller says I haven't been keeping the records up the last year or I filed an extension those should be immediate red flags.

My biggest pet peeve is words in listings like POTENTIAL,PRO-FORMA,POSSIBLE returns etc. The sellers has a problem property and is trying to make it smell like a rose. I always tell them I only pay based on the numbers it is doing today.

Certain times I won't follow that rule.For instance if I look at rent rolls for the last 3 years and they hovered at 70 percent and just when the seller lists for sale they are at 90 percent the last 2 to 3 months I will discount that. I will be the numbers off of the longer period of time. Conversely if the numbers are trending down I will put more weight on that.

The 50% rule doesn't work if the seller is lying or misrepresenting the numbers.I tell my sellers all the time lets be honest and put real numbers out there.This way when we go under contract it will close.If not they will just find out in due diligence and cancel if your numbers aren't right.

For most apartment buildings the down and dirty is 30% operating and expenses,10% vacancy loss turnover,and 10% property management.

Costs can be lower or higher.One I just closed the seller ran at 29% but she self managed and ran an extremely tight ship.

When calculating I like to use the 50% rule upon exit strategy as that's what many go by.If you run at 40% the new buyers will feel they might can not run it as good as you especially if they are out of state buyers.

Hope it helps.

This is my experience listing and selling retail and apartment buildings. Residential is a little different. I don't like owning homes as they can be spread out everywhere and I have many more exit strategies with commercial properties rather than residential.

To use other peoples money at decent rates you need (passive investors).Many will want a track record to feel safe and not someone who is just starting out.

All I can do is add my perspective to the discussion. I certainly have not done as many deals as some of the others on here.[LINK REMOVED]

As far as hard money goes this has been my experience.When the market was hot 3 + years ago HML lenders were maybe at 11 percent with low credit scores and a few points with a high ltv. Now some are at 14 tp 18 percent with 4 to 6 points and minimum credit scores in the high 600's.Why do they want high credit scores?

Simple before they were having to foreclose on the investors because they could not sell off their rehabs for a profit. So the HML's decided to fund to investors with high credit scores they could roll in to a conventional loan if they couldn't sell after rehab.This way the HML lender wasn't left taking back a property.

my other broker friends sell hundreds of REO properties a year. If the property is a great deal you will not do NO MONEY DOWN,assignments,or any of that other junk. The reason is a cash investor will come and beat you out every day of the week.

These techniques with no to little money you will chase a ton of properties and get beat out a ton of times and eventually will close a deal. If you think it will be easy you are fooling yourselves.

If you don't have cash or enough to put down to get a good interest rate for low debt service you have no leverage in making any demands to my seller the bank,

On my commercial properties there are many investors trying to put just 10 percent down.The problem is all lenders make the interest rate in the high 8's to 9's which kills the debt service and east up cash flow. The investor then wants to lowball the seller which the seller then rejects the offer.

Conversely if you have 20 percent down in commercial you can get close to a 6 percent interest rate which on a 1.7 million dollar purchase price will save about 30,000 a year in debt service.

Now these same investors want the sellers to also hold back a 10 percent second to be at a 80 ltv with the lender.The problem is used to if the seller held say a 10 second at 100k they could immediately sell off for 50k after closing.Now no note holder companies have bought a second position in over a year. This means anything the seller holds for a second they will be stuck with until they get paid off. This is a very unattractive scenario for a seller.

As you can see the stuff these people huck in books and videos is very different from the real world people in the trenches doing deals day in and day out.

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Hope this info helps........................

Lynda,

A good basic book on tax liens that list the process and return by state as well as the risk is "Make money in real estate tax liens" by Chantal Howell Carey and Bill Carey

Understand with tax liens that most people will redeem at the 11th hour at the end. So you have to be okay with getting the interest and not the property.

There are many landmines as well.Some cities and counties have been known to auction off drainage ditches that are worthless or you foreclose on a contaminated building where EPA cleanup will be more than the value of the land to get into a useable or sellable state.

In bid down states where the interest rate starts at 18 percent for example but goes down you can get bid down to horrible rates.The reason is there are not only investors there but institutional buyers along with groups represented by attorneys
that are just looking for a slightly higher interest rates than what they can get at a bank.

You will also answer the whether you can foreclose question when buying the senior note position with note sales.You have to be okay knowing you will have that money tied up for the long haul.

Example you buy 100k worth of liens at 12% with a 1 year redemption period.You have every intention of foreclosing but almost all redeem.For having your 100k tied up for a year you make 12k.

Conversely in a years time you could have doubled that 100k with other real estate investment. So it's just about expectations and returns.

Investors that have alot of money will invest in buying properties,buying notes,and buying tax liens.They will diversify their money to achieve different returns based on the level of risk.

Hope it helps some,,,,,,,,,

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Dennis in my experience what you are proposing is a waste of time. I list REO's and my other colleagues list hundreds of them.

The banks DO NOT allow assigment.No asset manager (who gets paid salary plus a bonus) wants to lock up a property for an assignment to an unknown third party.

The more junk as an investor you put in the contract the more an asset manager will say NEXT !

They want clean deals to get the file off their desk so they can get a bonus.Not have an investor tie up a property for months and then go out of contract because they couldn't find a buyer to close or the one that did want to buy can't.

I am not saying you can never do assigning but the vast majority of times if the property is priced right a cash investor will be all over it OR the asset manager will take a much higher offer from a home buyer who wants to live in the home.Even with the home buyer financing the asset manager will go for that sometimes and take the risk if it nets them more.

Now there are some real piece of crap properties out there that not many want that banks own where you might be able to structure a deal like this.

As far as hard money lenders most that I know want you to have good credit these days.Before they were loaning out on bad credit or no credit when the market was rising.Now they charge much more points and want the good credit so that after rehab the investor can refi into a conventional loan instead of the hard money lender foreclosing on them.

Now in the commercial arena private money,hard money,regular loans,joint ventures are put together differently.

good luck

Sorry to hear about your health issues.

Maybe I can be of some help. I am the principal commercial broker that owns my own firm in Georgia.

For about the last 4 years I was working strictly with developers on mixed use projects.The last one assembling 20 parcels for a 650,000 sq ft mixed-use retail project with after build values of 150 million.

For the past few years I have focused on commercial investment listings as most land is dead. Any shopping centers you see going up now generally those sites were approved and financing lined up and locked in 2 to 3 years ago.

Today with so many national,regional,and community banks holding defaulted land deals and half built out fractured projects nobody wants to touch land.If a bank employee put a land deal in front of a loan committee to fund it's a good way to get fired these days.

The problem with your land is you said it has HOA fees and more than likely inflated county taxes from the boom times. So If I buy a parcel for 5k and I hold for 2 years and sell for 25k it might look like this.

Bought for 5k,2 years worth of taxes 5k,and 24 months of HOA fees at say 200 a month which is about another 5k.So pre-tax I am looking at 5k a year return which is not that great.

The problem with builders is even if you give them the lot for free what it would cost to build the home is more expensive than what a bank is selling a 1 to 2 year old new construction home that is a foreclosure. In my area there are subdivisions that are 25 to 75 percent empty with pipes in the ground. These projects are usually sold to a land investor in bulk that is willing to hold for the long term and sell off 3 to 4 years from now when inventory supply is low and demand is high for building permits on the residential side.

You would do much better to invest in commercial land.You could also get a mobile home park with owner finance in the path of commercial for cash flow and then wait for the market to return and sell off piece by piece for development.

Residential you usually have only one out.In commercial I can change the land,change the use,split out the land,reposition and existing building,etc.

There are so many ways in commercial for your exit strategy. Whereas a home in a subdivision you are regulated to one value most of the time.You can do some small things but not like in commercial.

Also when buying land a critical mistake is people just look at price per acre. I and developers look at expense per acre before going vertical with improvements.

I could buy at 5 per acre and have 80k an acre in clearing costs or I could buy at 15k an acre and have 30k in clearing costs. In this analogy I am spending 45 an acre instead of 85 an acre to clear the site even though I paid more per acre up front.

A land's value is more about traffic counts,site development costs,utility hookups,topography,zoning,soil analysis,etc. then asking price.

You really need someone to help you with your investments that knows what they are talking about and what buyers are purchasing in this market.

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