All Forum Posts by: Brad Simmons

Martin, 

Yes - I agree - Loopnet doesn't do well for us in this area either.

Good for you on getting a good tenant.  When his lease is nearing the end, ask if any of his buddies or his vendors need that space.  You're glad to give him a finder's fee and they know the space so well...

Mike,

Industrial can be tough especially if it is old and tired looking - and yes, it could easily sit a year or three if your people leave - do you have the reserves to cover that? 

Be careful of the NOI - Creative Real estate Accounting Practices (acronym) is widely used. Do your own due diligence.

The first thing you need after you are getting serious about this property is a Phase 1 Environmental Study.  Depending on your area, this will run $7,000 - $10,000. 

We had a 500,000 sf building nearing contract - the sellers had a Phase 1 done already (1100 pages) and the Phase 1's conclusion was recommending a Phase 2.  A Phase 2 on this a building this size, with the issues this one had, was estimated at $50,000 - $75,000.  Wow, that wasn't something we saw coming.  We passed.

But here is the lesson I learned form that building - which I pass daily - not that I am bitter. Someone significantly smarter than I bought it. Someone who had more reserves than I - and he had more environmental knowledge. That building sold for $1M (yes $2/sf) - which has been leased for 12 yrs or more at $1-2/sf NNN since (mind you, not all of it is RSF = rentable square footage), but still that is a home run.

That building is for sale today at $8M - it has not sold, but I am sure the seller doesn't much care with the income and location.

Keep us in the loop what you decide and how it goes.

Martin,

Another thing to think about is --- in our area, there are larger manufacturers who are always running out of space and need warehouse, staging, etc.  So for us, contacting the Plant Managers or CEOs of these companies are key to getting the word out to potential tenants - and those are easily accessed via Linked In.

Also, the Chamber of Commerce will have that info - as a member, you have access to that info as well.

I would also look at the Glendale Association of Manufacturers, or some such group like that - here again, a membership gives you access to all the right info, then mail or call away.

I certainly would want to get it all filled with one tenant, but don't be averse to two or three smaller tenants seeking expansion room.

Just some ideas and angles to ponder.  Keep us in the loop as to what is working for you.

Loopnet, Showcase, then any of the number of commercial agencies (which are ALL on Loopnet) - SVN, NAI, CBRichard Ellis (CBRE).

Adam,

Real Estate is like politics - very local, so in our area 2-4 units don't appreciate.  To a California guy, that is a wild concept, I know - but it is fact.

So, in my opinion, a  4plex makes more sense (more people paying rents) - and in Bakersfield, you'll have plenty of comps.

To a lender, it won't matter 1-4 family is all the same.

So think of performance ration - in a duplex, you are living in one, you tenant moves out - you are paying the whole boat.  In a 4 plex - if bought correctly, you can have two move out - and you are still having your mortgage paid.

And as Bill G said - look around for seller carry - that is always a great alternative.

Hope this helps, Brad

@ChristianCarson "The people who are making the deals happen know best."

Christian is spot on - Real estate is hyper-local, go with the champ seller big dog in that area and have him or her do a walk-through with you. Meeting this person and talking them to lunch may be an invaluable asset to you in the future.

Owning a RE/MAX franchise, we are a bit partial - but you just need to know the person who sells the most in your area.

Blake,

end of 2014? Geez, you need to supercharge your goals there man! :-) With this group of investors and info here, you should have a goal of 30-60 days at lost.

My advice?

1 - If you aren't wealthy, start with Options and Subject Tos. Best way to start to get your toe wet and making money.

2 - stay out of the junk - bigger deals sell easier and make more money - easier.

Study the materials available here - and make it your full time job to learn - as in 8-10 hrs per day. You'll be dangerous in a week. :-)

Jamie,

you have some details correct and some mixed up a bit - let me help.

There are 4 components to a property - let us use a single family home as an example.

There is the house - bricks and sticks.

There is the deed - who owns the property

There is usually a note and mortgage - the Note is the promise, the Mortgage Secures the promise

There is occupancy.

Most people think these are all in the same and sometimes they are - in our instance, they are not. 123 Main St is the physical address. Jamie owns the house (with a lien on it), Darrell holds the note and mortgage, Kelly lives there. OK, got all that? I am going to use you in the example if I may.

Now on to the Sub 2 deal:

Jamie is late on his house payment 30 days - he is in what we call Pre-NOD (Notice of Default). He goes, 30, 60, 90 days and on the 91st day, Darrell files a Lis Pendens (lawsuit pending). That document is filed in the Courthouse of the county where the property is. It is now public record.

Kentucky, where I am is at least a 6 month state - others are different, GA and TN are VERY fast, then there are bank back logs, sheriff backlogs, etc.

So anytime between the time that I was alerted via public record - when the LP was filed - and the date of sale, I can take the deed, make up the back payments, negotiate a short sale, list the house for sale, rent it out and collect rents, etc, etc. BTW, I also do not need a Real Estate License at this point, as I am not managing property for someone else, my company actually has the deed to the house - something to keep in mind.

UNLESS Jamie files for Bankruptcy Protection Chapters 11 or 7 typically for a person. Then it is illegal to transfer title/deed (that's where you were going with that). Even if you get a deed a day or a week ahead of the borrowers' filing, you run a risk of the BK Trustee reversing the transfer via Fraudulent Conveyance - in other words Jamie was just trying to "hide" his asset.

Something you want to stay far away from. Can you imagine getting a house sub2, unselling it - or even lease optioning it - with a promise that your people will own it someday - and the transfer get unwound in the BK - you got yourself in a mess that will cost you more blood, sweat and tears to fix - ALWAYS stay away from a sub2 with a potentially BK borrower.

OK, now all that stuff - not until after the gavel goes down at the Courthouse steps does the bank "own" the house. Up until that point, then lender simply has a lien on the property - and the borrower may do whatever he deems fit with the property.

Once the gavel goes down - assuming 91 days + 6 months in our example, then the Bank gets what is called a Trustee's Deed or Master Commissioner's Deed - which wipes out all debt - 2nds, 3rds, etc.

At that point, you are dealing with an REO (Real Estate Owned) or sometimes called OREO (Other Real Estate Owned) - and when you call the bank, you want the Special Assets Dept. - not Loss Mitigation. Sometimes you can get a better deal in the REO Dept than you can with a short sale - and it is usually a heck of a lot less work. :-)

I hope this helps -

We want full control over the entire process - plus if they tenant doesn't pay, we will - you do NOT want to let the borrower's credit get dinged.

Troy,

It is a nice looking site - but you will have to drive every person to it. Think electronic business card.

If you want the site to help attract visitors who are interested in your service, then you will need SEO (Search Engine Optimization) horsepower.

That will require a competent web master. Look into that - and your website will work for YOU, instead of the other way around.

Hope that helps.