All Forum Posts by: Frank Gallinelli

stuart888 is absolutely right -- and if you do want to read up on this, go to our web site (realdata.com), click on the "Learn" tab and then click "read all of our real estate articles" Near the bottom of the list you'll find "Understanding Net Operating Income" and "How to Estimate Resale Value - Using "Cap" Rates."

Most appraisers will lean heavily toward the income approach for a 20-unit apartment building and, as mentioned above, the lender will definitely apply the LTV to the lesser of the appraisal or the purchase price.

FYI, portfolio lenders (those that hold their paper in house) may go higher than 75% on an apartment property.

Hello All -

I have have an article on realdata.com, "Investing in Real Estate: Should You Buy Residential or Commercial Property?" that may shed some light on this topic.

If you would like to read it, just go to the site and click on the "Learn" tab. There are a lot of articles there; this is the most recent.

It depends on what you mean by "my list." If you have an actual opt-in list (one where recipient's have signed up (i.e., subscribed) to receive email from you, and where they have an easy way to opt-out (unsubscribe), then you might notify your isp beforehand and tell them exactly what you're doing; or you can use a mailing list management service -- there are several of them -- the name "sparklist" comes to mind, but there are others.

On the other hand, if you're sending out an unsolicited mass mailing to a list of people who didn't give permission to receive messages from you, well... with all due respect, that's pretty much the definition of spam and I wouldn't count on making a lot of new friends.

If your target audience is primarily "local" (ie.. Texas, rather than the entire U.S.) then chasing after a high search engine placement may not be the best use of your time or money, at least not initially. Search engine optimization (SEO as it's called) is a specialized field, and few people, even among those who do it for a living, do it well.

Probably your best bet is to use Google Adwords and/or Yahoo Search Marketing. If you do, the secret to getting some benefit without spending a fortune is to pay for very, very targeted search phrases -- in other words, phrases that verify specifically identify what you have to offer and where you offer it.

Also, get into the habit of putting your website address on just about everything but your underwear -- it should be in all your ads, on any literature you print, on any email you send, on anything at all that you use to connect to the outside world.

Finally, be sure to update your site's content as often as you can, and look for useful third-party content or resources that you can link to so that you offer visitors as much value as possible when they come to your site.

re: the T-Bill -- one reason for it's appeal vs. a savings account is that is can be purchased in a variety of long-term maturities, so your rate can be guaranteed if you hold it to term.

Probably the more important reason however, is that the t-bill is a marketable security. Say you buy a 10-year t-bill at 4.6%. If, during those 10 years, interest rates drop to any significant level, you might choose to sell the t-bill for a profit. Price moves inversely to rate.

Regarding the lease, I as landlord favor giving my version of the proposed lease to the tenant first, even if it is a national tenant. For one thing, it's my property and I think I should have first dibs on proposing how things ought to be. (I once had an apartment tenant hand me what he thought his lease should be. I handed it back unopened and said, "I don't care if it's word-for-word the same as mine. I give you the lease.")

Second, it will cost me less in attorney's fees to if my lawyer doesn't have to spend hours parsing out their standard lease, but instead starts with his own landlord-friendly version.

You got some outstanding advice from TN-Apprentice. I'd like to add just one thing to the "know who your tenant is."

Make you you know who your lessee is, also. Many national tenants may actually lease their property in the name of a real estate division, so the lessee on your deal with Big Box Retailer might actually show a different name. Pull a D&B and follow the money. Find out the proper name of the parent company and require that they guarantee the lease.

You absolutely have a right to see the owner's detailed operating expenses -- and you need to do so.

Most real estate investments today are held as a LLC or sub-S corp and I recommend asking to see the tax return for the property (did you every hear of anyone overstating income or understating expenses on their tax return?)

If the owner holds it personally, then the income and expenses should be on the Sched E of his/her personal return, which he could give without revealing other personal data.

In whatever form the owner gives you income and expense info, I would attach that info to your offer to purchase along with a stipulation that the seller warrants the accuracy and truthfulness of of those representations. It's amazing how quickly the truth tends to emerge when you ask someone to sign a statement that specific representations made yesterday weren't a lie.

When dealing with national tenants, an experienced commercial broker can add a good deal of credibility to your offering and can guide you if you do get into negotiations with such a tenant (and no, I'm not a broker).

In any case, you will absolutely need an attorney who is experienced with commercial leases if you get to that point, because such leases are quite technical. There will be some boilerplate, of course, but many of the issues that need to be covered will be entirely specific to the deal (and no, I'm not an attorney, either).