Last night’s call was a rousing success, with even more people jumping on the ½ price early bird special and enrolling in Jayme’s upcoming Commercial Paper and Financing class.
Don’t forget that you, too, can save $2000, but only if you hurry! Not only are there only a handful of seats left, but the special pricing ends on Tuesday! Call 888-877-0430, ext. 201 to reserve your seat.
And now that the shameless (but necessary) commercial is out of the way (and yes, you really should be there!), more on last night’s call!
Jayme started off the How-to-Tell-A-Good-Deal-From-A-Bad-Deal call by interviewing Rex Crim, co-owner and a managing member of SCS Capital Group, L.L.C.
Mr. Crim’s 30+ years of real estate experience includes development, project management, sales and service, financing and providing equity and JV partners for all facets of the real estate business including institutional funding of real estate companies.
Even more impressive, he has personally been involved in over $1 billion in real estate transactions, including managing debt, creating joint ventures, and the formation of public companies.
It was really fun listening to him give his take on today’s market in his wonderful East Texas accent! Accent aside, Rex and Jayme espoused how important it is in today’s market to find properties that are owned by lenders and bring in equity partners to reduce that debt.
They also discussed multi-family units as being the best product to pursue in today’s market, and Rex went on to talk about the things he looks for that make it a good deal.
What makes a good commercial deal and how to tell a good deal from a bad one?
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It’s all about the numbers. Numbers do not lie.
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Location, location, location
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Prefer to be in a high growth area
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Demand generators (people)
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Number of rooftops in area – where people live to use what service your tenants provide
The best tools for analyzing your commercial property and paper deals:
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Market Study –Demographics, Supply/demand, Appraisal (lender ordered MAI appraiser) $3,500 to $7,500
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Proforma- Income/expenses NOI, Future growth patterns
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Historical performance
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Research reports from real estate firms-Residential Strategies ($400) 163 page report
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Commercial property websites – loopnet.com costar.com
Action Steps:
Step 1 – Get Operating Statement – 2 years
Step 2 - Get Rent Rolls – 2 years
Step 3 - Get “comps” from Apartment Associations, various Websites, and of course, Commercial Brokers
Who you need to have on your commercial property and paper team and how to find them and get them to want to work with you
If you’re developing property, be sure and put up signage! Also, include on your team:
Appraiser
Title Company
Surveyor
Architect
Attorney
Environmental Engineer
Structural engineer
Commercial Real Estate Agent
Commercial mortgage Broker- Banker Lender
Analyzing your deal to be sure it works for everyone involved
We’ve said it once and will say it again: It’s ALL about the numbers,
Barriers to Entry- City has moratorium on new construction
Found property in Austin, thought it perfect, found that there was moratorium on new construction for multifamily, so highest & best use from the Economic Development commission found that retail was in demand & zoning change not a problem.
Supply/Demand
Location
Age of property ie. Property condition
Rehab costs
City ordinances
Zoning
Walking the deal – physical property inspection
Math and calculator shortcuts for valuing your deal
Cap rate
Rate of return on investment
How to put together your Due Diligence Package for a Commercial Property or Paper Deal!
Use a Check list (we’ll provide you one in class). It will include:
Detailed property description- # units, rent per square foot, unit mix, net rentable area, parking spaces, swimming pool, handicap access, year built, type of roof, metered for utilities, HVAC System
Current zoning
Copy of old appraisal if available
Environmental
Title work
Property Taxes
We can’t wait to see you on next Tuesday’s call August 5th, but if you’re going to come to the Commercial Workshop, and you would be crazy not to, sign up now and take adavantage of the early bird savinigs of over 60% off the normal price before the early bird discount flies away forever!
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