What interest rate hikes mean for multifamily property investors

As the Fed continues to ramp up interest rates, find out how increases could impact real estate investors.

Inflation—and rising interest rates—are at the center of the American economic conversation. And for good reason. In 2022, the Federal Open Market Committee (FOMC) raised rates by 75 bp four consecutive times between June and November.

In December 2022, the Fed raised rates by 50 basis points, bringing the target federal funds range to 4.25% to 4.50%.

While inflation has slowed in recent months, it remains near 40-year highs. Combined with historically tight labor markets that are driving higher wages, “we’re in uncharted territory,” said Ginger Chambless, Head of Research for Commercial Banking at JPMorgan Chase. “As a result, the Fed is currently tightening monetary policy as rapidly as ever.”

Rate hikes may not impact all financing structures

Interest rate hikes may impact short-term and adjustable rate loans more than long-term, fixed-rate ones.

“The Fed’s actions on short-term rates don’t directly translate to a like effect on fixed rates underlying commercial real estate mortgages. After any Fed rate hike, it’s possible that fixed rates might rise or fall depending on circumstances,” said Mike Kraft, Commercial Real Estate Treasurer for Commercial Banking at JPMorgan Chase.

For investors with fixed-rate loans, you may also want to keep an eye on the Treasury yields, which help determine mortgage rates. The Treasury yield is viewed as a sign of investor sentiment about the economy. Yields are driven by the market and aren’t directly under the Fed’s control. “Treasury yields depend on long-term inflationary expectations, on the market’s assessment as to whether an economic downturn is impending,” Kraft said.

As of December 2022, yields are near the low end of that range. “While they will certainly continue to move about, they are not likely to take off in the immediate future,” he said.

What interest-rate hikes mean for multifamily investors

“As one of the most sensitive sectors in the economy to changes in interest rates, housing activity has weakened significantly in the last few quarters of 2022,” Chambless wrote in her 2023 Outlook. “However, demand for multifamily housing has held up amid tight single-family home supply and affordability challenges, with multifamily housing starts still close to the highs of the cycle.”

The Fed anticipates more increases in early 2023. While multifamily property owners and investors may feel the negative effects of rising interest rates, there may also be some offsets.

Higher interest rates could price would-be homebuyers out of the single-family housing market, causing them to remain renters for longer. Inflation, along with rising costs and construction delays may increase existing properties’ rents.  

Multifamily property owners and investors with fortress balance sheets in particular can benefit from the current economic environment, offering an opportunity to grow their portfolio at a lower cost. 

Looking beyond interest rates

For those looking to purchase a multifamily property or refinance their apartment complex, there’s more to look at than interest rates. Consider other factors, including:

Supply, demand and demographic shifts: The housing inventory—especially affordable housing—is low, with demand outpacing supply. Likewise, more people have moved to the center of the country and are seeking workforce housing. Investors may also want to weigh the merit of a shift from suburbs to cities.

Local market: Real estate is a largely local business, so investors may want to take a close look at the specifics of the market before purchasing or refinancing. It’s also important to evaluate each property individually, including its capitalization rate, which generally goes up when interest rates increase.

What’s next for interest rates, inflation and the economy

“While inflation is likely to remain somewhat elevated through the end of 2023, we see signs that a moderation is already underway and that this cooling will become more prominent over time,” Chambless said.

Interest rate fluctuations could correspond. “The Fed’s own projections indicate that the target would top out at 5.25% by the end of 2023,” Kraft said. “Markets have treated this forecast with skepticism, with futures implying a maximum 5.00% target by May. Shortly after that, markets imply a ‘pivot’ by year end—at some point, the Fed could begin easing to accommodate a possible economic downturn. The Fed itself doesn’t project such a pivot, maintaining that it will be necessary to hold rates at a higher level for a while to bring inflation in check.”

Unexpected national and international geopolitical uncertainties may continually arise, resulting in market volatility and interest rate fluctuations.

Source: https://www.jpmorgan.com/commercial-banking/insights/rising-interest-rates-effect-on-commercial-real-estate

Commercial Real Estate Mid-Year 2022: The Big Slowdown

Winston Rowe and Associates

To paraphrase Ernest Hemingway, distress in commercial real estate markets typically develops gradually, then suddenly. Perhaps that is because we spend a long time talking about trends, and then suddenly investors wake up to a more risky market and spreads instantly widen. In our 2022 outlook, we explored the hightened complexity within the real estate markets as economic dynamics alter the math in predicitng investment yield. Most importantly, we are transitioning from an artificial landscape of monetary and fiscal stimulus that inflated returns and asset values toward a market-based interest rate and pricing environment as both the federal government and the Federal Reserve withdraw. At the beginning of the year we knew interest rates would rise, but we didn’t know the pandemic would continue to unleash waves of new variants around the world, exacerbating global supply chain disruption.

And we couldn’t know that the first major war in Europe in eighty years would erupt, causing unimaginable human tragedy, dislocating the energy markets, and intensifying already high inflation. What a difference six months has made. The magnitude and unpredictability of change has resulted in a riskier investment market for all asset classes and the accompanying requirement for higher risk adjusted returns.

The immediate impact of this more challenging investment environment, particularly the higher cost of capital, has been a slow down in transactions. Higher interest rates to real estate are like fire to a scarecrow. They reduce profit margins on new deals and can spoil the anticipated exit on existing deals.

Accordingly, investors and their lenders are taking more time to model cash flows and valuations. The longer-term impact will bring both opportunity and pain. As the market transitions so will owners and investors, from the sprint of the last few years to a marathon. As we wrote in January, focusing on the longer-term horizon is not only an appropriate strategy in a period of volatility but healthy for the markets. In the next few years, as market participates adjust to the new reality, it will likely take more capital and sweat to achieve success in real estate investing.

Despite the economic volatility, most properties continue to outperform expectations. The fundamentals of real estate remain strong, creating somewhat of a disconnect between the property markets and the capital markets. Of course, real estate is a leveraged business, and each must exist with the other. The strength in market liquidity and property performance heading into this period of change will soften the blow of the newly emerging interest rate and inflation environment. This article will highlight the factors investors will need to consider in response to a new investment environment. While investors are currently taking a risk-off approach, long-term real estate investment opportunities remain.

The Exogenous Factors – Economic Volatility

The inflation caused by supply chain disruptions during the pandemic and exacerbated by the war in Ukraine has proven to be stubborn. The 7.5% annual Consumer Price Index (CPI) was expected to fall during the year but instead rose to 9.1% by June.1 The Wall Street Journal’s June Economic Survey indicated an average estimate of year-end inflation of about 7% (the lowest estimate was 4.5% and the highest 9.9%), twice the 3.4% estimated in January. Interestingly, the same group’s estimate for year-end inflation in 2023 is a relatively modest 3.26%, but the markets do not appear to be thinking that far ahead.

Inflation is often the real estate industry’s friend, enabling increases in rents that are hopefully higher than increases in operating costs. Hence the view that real estate is an inflation hedge, particularly for properties with short-term leases. But the sword cuts both ways as the market’s response to inflation has been significantly higher interest rates, both through the Fed’s aggressive remedies and the market’s anticipation of further Fed rate hikes. Recent fears of recession have tempered interest rate escalation. With first quarter Gross Domestic Product (GDP) down 1.6%2 and second quarter estimates hovering around neutral, the recession may already have arrived. The probability of a recession rose from 18% in January to 44% in June in the WSJ Survey. But not all recessions are alike, and whatever comes will likely be far more benign than our memories of the Great Recession fifteen years ago. Today’s buffers against a severe economic downturn are immense liquidity and a strong job market. At the same time, reductions in the Fed’s balance sheet and investor concerns have the potential to gradually, then suddenly, pull capital out of real estate.

The 10-year Treasury rate started the year around 1.6% and ended the second quarter around 3%, reaching a peak of 3.5% mid-June (awkwardly during the CRE Finance Council’s annual meeting, putting the group in a rather somber mood).3 At the time this article was written the rate had fallen to about 3.0%. Reflecting higher risk in the system, credit spreads have also widened, resulting in a cost of capital double whammy. According to data from Trepp, CMBS AAA spreads have widened between 70 and 90 basis points since the beginning of the year and BBB spreads have widened between 185 and 215 basis points, depending on the issuer of the bonds.

It is important to remember that real property performance, with the exception of hospitality, is far more correlated to job growth than GDP. The June job creation number surpassed analyst expectations. We are enjoying record low unemployment. There are over 11 million job openings nationally.4 As long as Americans have jobs and their wages grow more than long-term inflation, the performance of most property sectors should be sustained through a mild recession.

Property Performance Supported by Demographics and Jobs

The higher cost of capital, rather than real estate fundamentals, is what is slowing down real estate investment. Of course, inflation and a recession could dampen demand for some property types; as discretionary spending decreases more people may stay home rather than spending money on retail and hotels. But overall, demographics and other demand generators are keeping occupancy up and rents high.

Multifamily and industrial continue to be the two most desired property types. The rapidly rising cost of owning a home is further fueling multifamily demand. The Case Shiller U.S. Home Price Index rose more than 20% year-over-year through April. On top of continued higher prices, the 30-year fixed rate mortgage rate rose from about 3.2% at the beginning of the year to 5.7% at the end of June.5 The upshot is that the National Association of Realtors Housing Affordability Index fell 24% between January and April, which does not reflect the steep rise in rates in June. Based on home prices, down payment requirements and mortgage rates, only a quarter of American households qualify for a mortgage on a medium-priced home.6

Multifamily demand is being further bolstered by new Gen Z household formation. A study by Cushman & Wakefield estimates that Gen Z will comprise over 30% of renting households by 2025, roughly equivalent to Millennials. Additionally, more Boomers are taking advantage of the hot market to sell their homes and rent for a while. Each of these factors has driven up apartment rents and pushed down vacancies. A recent analysis by Moody’s indicates that national rents are up about 17% in the last twelve months. As apartments become unaffordable, household creation is likely to slow. Rents will continue to grow, but at a slower pace.

Industrial demand also remains strong. While there are risks of over-building in several markets, many companies are increasing product inventories to avoid supply chain disruptions and extending their reach toward customers through last mile distribution centers. According to Marcus & Millichap, a record 551 million square feet of industrial space was absorbed in the twelve months ending April 2022. Robust property performance is expected to continue.

Retail has been the problem child of the real estate industry for many years as oversupply is slowly and painfully wound down and retailers adjust to new consumer behaviors and preferences. The University of Michigan Consumer Sentiment Index fell from 67.2 in January to 50.0 in June, the lowest in the history of the index, and the Conference Board’s Consumer Confidence Index fell from 113.8 to 98.7 during the same period. These gloomy statistics are not surprising given the recent spike in inflation, particularly gas and food prices, and recession fears. Yet retail sales are holding remarkably well, with only a small decline in May. The good news is that online spending as a percent of all sales has been flat as consumers are eager for in-store shopping experiences with family and friends. Even malls have recently had more traffic. This recent in-store performance does not suggest retail real estate is poised for growth; a recession would put continued stress on retailers and the nation continues to be severely over-stored.

The office market continues to pose significant risks for investors and owners. The number of workers going back to the office is increasing every month. However, most workers no longer want to be in the office full-time, especially as gas prices increase the cost of commuting. Office tenants are listening to their employees and watching their checkbooks. Many are trying to renegotiate rent and reduce space prior to the expiration of their leases. Others will clearly reduce space and move to higher quality properties as leases turn. A recent tenant study by CBRE found that over 50% of respondents expect to reduce office space over the next three years.

Despite this, we read a lot about new office leases. Almost all companies need office space, and many of those new leases are companies moving to better quality space. The net effective rents achieved on new leases are not part of the press release, so rent trends are not clear. And national vacancy remains stubbornly high, particularly in gateway cities. According to CoStar, office availability in New York City has risen almost 40% since the beginning of 2020. Hemingway was not an office investor, but his adage holds particularly true for this segment of the market. Owners will go through the drip, drip of lease negotiations until suddenly, over a period of years, they run into trouble with their lenders. We are already seeing, very early in this process, a slight uptick in office loan delinquency. A recent study by New York University predicted an average 30% reduction in office values. The pain will be mostly felt in older, lower quality buildings that lack what tenants now demand: excellent design and floorplans, state of the art air flow, excellent light, building amenities, and environmental and wellness certifications.

Whenever the investment environment becomes riskier, investors differentiate assets and markets in the pursuit of rent growth. Sun Belt and Mountain markets continue to experience in-migration and above average job creation, and investment dollars will follow those trends. Around the nation suburban markets are outperforming the cities they surround as people work and play closer to home. Property users are more focused on environmental vulnerabilities and impact, as well as health and wellness. In a recession there is always a flight to quality, including higher quality properties. These and many other variables will be used to distinguish investment options for the foreseeable future.

Capital Flows and Valuations in an Upside-Down Market

Rent and cash flow growth is even more critical for successful investing as the cost of capital rises. Investors are currently faced with the unusual inversion of lending rates and capitalization rates, or negative leverage. Theoretically, cap rates reflect the aggregate of required returns of both equity and debt. But during the past decade a wave of capital, fueled by artificially low interest rates, compressed cap rates below their historical averages. Many investors believe that liquidity has made cap rates invulnerable to rising interest rates. However, when lending rates rise and yields fall, capital often seeks a new home in other asset classes. Real estate is always cyclical. The only way to deal with the current rate environment is through cash flow growth, which will vary greatly by property type and market and may be mitigated by a prolonged economic slowdown. Hence, the investors are pausing to re-evaluate their strategies.

The cost of debt becomes even greater when considering the higher cost of locking in rates. Many investors want the flexibility of mortgage prepayment and therefore prefer floating rate loans. Uncertainty in the rate market has blown out the cost of swapping from floating to fixed or buying interest rate caps. This is putting further pressure on transaction yields and making investment in transitional properties more difficult.

Of course, the other impact of rising cap rates, particularly without adequate rent growth, is a fall in valuations. This is perhaps the most alarming development for investors. We are currently in a period of price discovery where buyers are looking for deals and sellers are unwilling to reduce asking prices. It will take many months and many transactions to fully assess the impact on valuations, but anecdotal evidence suggests modest cap rate increases to date, with the resulting diminution in value.

Given these new dynamics, perhaps the most difficult part of the investment process is estimating the exit. Existing investment syndicates planning to improve and sell a property within the next few years may not be able achieve the expected exit price, reducing investor returns and sponsor promotes. And predicting exit prices on new deals is next to impossible. Hence, the major slow down in transaction volume ahead of us until rates and valuations find their new equilibrium.

Real estate lenders, which provide most of the capital that fuels the industry, are also slowing things down. With higher rates and recession concerns lenders have tightened underwriting, often reducing proceeds and adding structure to bolster credit. Lenders are particularly focused on debt service coverage given the potential for weaker cash flows and the certainty of higher rates. They are also laser focused on near-term maturities and the ability of borrowers to refinance the loans in a higher rate environment. Transitional lenders, particularly debt funds, are carefully monitoring the performance of their collateral, and requiring more frequent reporting from borrowers on their ability to achieve their business plans.

Not all transitional loans will make it. Despite the many tailwinds supporting property performance, the new interest rate regime is certain to result in pockets of distress. As mentioned, loans with near term maturities are the most vulnerable, but lenders will likely kick the can down the road for a while and see what happens before racking up defaults and impairments. Loans collateralized by retail properties offering the wrong product in the wrong market will continue to default. And office loans are waiting in the wings. The proliferation of debt funds in the last two years (Commercial Mortgage Alert listed more than 150 in a recent issue) have a tough road ahead. They are not only providing loans to fund property repositioning, but mezzanine loans at a time when values will likely fall. Unlike banks, the funds are reliant on warehouse lending to originate loans, and often refresh capital by selling loans into the commercial loan obligation (CLO) market. On the front end the borrowing rates on the lines have rapidly risen, and on the back end the CLO market is practically closed. Again, things are slowing down, and the more complex transactions will move particularly slowly.

Finding a New Path Forward

The suddenness of rate increases and recession concerns in the second quarter has left many real estate investors and operators in the doldrums. The Commercial Property Executive’s CPE 100 Quarterly Sentiment Survey in June revealed that 92% of respondents believed real estate performance will weaken in the next six months versus only 23% in their first quarter survey. Despite the gloomy outlook there are always opportunities. As we concluded in our January market review, investors need to work harder to navigate the uncertainty and risk in commercial real estate. Investors can no longer paint with a broad brush, but must differentiate by property and market, seeking quality in the path of growth.

The math in real estate investing has changed. Transitioning to higher interest rates and cap rates, lower valuations and less robust yields will be a painful process. Once things have settled down and investors are accustomed to the new reality, liquidity and transaction volumes will return. Patient investors with longer term horizons will win out, as long as they have short-term leases and long-term debt maturities, and have avoided the office sector. Above all, investors need to be nimble and rapidly adjust their strategies. We are entering a new real estate cycle, not because of real estate supply and demand but because of economic volatility and a regime change in government support for liquidity. The respective timing of rising cap rates, rising rents, lease renewals, and loan maturities will sort out the winners and losers.

How to Get a Business Line of Credit in 4 Steps

How to Get a Business Line of Credit: What You Need to Know

Traditional business loans are the most common way to finance a business, but a business line of credit can be more accessible for startups or business owners with bad credit. A business line of credit is one of the most flexible forms of financing for small businesses.

You can use a business line of credit for working capital, to cover cash flow issues, or to fund an emergency or unexpected opportunity. If you’ve decided that a credit line is the right financing solution for your business, you may now be wondering how to get a business line of credit.

How to Get a Business Line of Credit: A Quick Guide

Step 1: Check your business’s qualifications.

Step 2: Compare your options.

Step 3: Prepare your requirements and documentation.

Step 4: Apply and make a decision.

Apply for a Business Line of Credit Now

4 Steps to Get a Business Line of Credit

Step 1: Check Your Business’s Qualifications

The first step is checking your business’s qualifications. By knowing where your business stands ahead of time (as in, before you start comparing options and completing applications), you’ll save time and effort throughout the process.

Although there are a variety of business line of credit requirements you might have to meet depending on the lender you’re applying with, there are a few common qualifications that you can use to evaluate your business’s prospects.

Personal Credit Score

To start, you’ll want to determine where your personal credit score stands. When applying for a business line of credit (or any financial product for that matter), your personal credit score will very likely be one of the first things a lender looks at. Here are a few reasons why:

Indication of trustworthiness. The higher your personal credit, the more likely you are to qualify for a line of credit, and one with the best rates and terms.

Determine if collateral is needed. If your credit score is below the threshold as laid out by the lender, you might need to offer up some kind of collateral that can be used to pay off debts if your business is unable to.

Find which loans you qualify for. If you’re applying for a bank or SBA line of credit, you’ll likely need to have excellent credit, as well as other top qualifications.

Generally, it’s safe to say if you have a credit score of 600 to 630 (or higher) you’ll be in decent shape to qualify for most business lines of credit.

Annual Revenue

Like your credit score, most lenders will implement a minimum requirement for annual revenue that a business needs to meet in order to qualify for a line of credit. They do this to answer a few questions:

Can you pay back the loan? A lender will use your annual revenue (as well as other business financials) to ensure that you have enough money coming in to pay back any funds you use from your credit line.

What will the terms of the loan be? Regardless of the small business lender you’re applying with, a higher annual revenue will also give you access to a line of credit with the most desirable terms and lowest interest rates.

Which lender is best for you? If you’re looking to get a bank or SBA business line of credit, you’ll generally need to meet a fairly high annual revenue requirement. Alternative lenders, on the other hand, will show greater flexibility, with many lenders setting their minimum annual revenue requirement at anywhere from $25,000 to $100,000 or higher.

On the whole, just like with your credit score, the higher the amount of annual revenue you have, the better.

Time in Business

When you’re looking to get a business line of credit, you’ll also want to consider your time in business as you evaluate your qualifications. Why?

Determines risk. Longer time in business means less risk for a lender, as your business has been able to maintain ups and downs in operations thus far, and therefore, is more likely to be able to pay back a loan.

Determines what you can actually qualify for. Compared to traditional business term loans, it’s often easier to qualify for a business line of credit with only a year in business, sometimes even less.

Online lenders such as BlueVine and Fundbox have very flexible time-in-business requirements for their lines of credit. BlueVine requires six months in business and Fundbox only requires three months.

Collateral

Finally, you’ll want to evaluate what kind of collateral you can offer, especially if you’re a newer business or have bad credit. There are a few options.

Actual collateral. Most business lines of credit are secured business lines of credit, meaning they’re backed by some form of collateral. Some lenders will require physical collateral to secure your credit line, such as real estate, equipment, or inventory.

Personal guarantee. Some lenders may require that you sign a personal guarantee stating that you’ll use your personal assets to repay the funds you’ve borrowed in the event your business can’t pay.

Lien. Some lenders may file a lien again your business assets when you get a line of credit with them, meaning that the lender has a legal claim to recoup your business assets in the case that you can’t repay your debt.

Putting up collateral may make you more likely to qualify for a credit line if your other qualifications are lacking.

Step 2: Compare Your Business Line of Credit Options

Once you’ve evaluated your business’s qualifications, you’re ready to start exploring your options.

You’ll want to determine what type of revolving line of credit will be best for your business, considering secured vs. unsecured, short-term vs. long-term, and bank vs. online credit lines.

By using the qualifications you established in Step 1, you’ll be able to narrow down your options to find the right business lines of credit to apply for.

Short-Term vs. Long-Term Business Lines of Credit

Generally, a short-term line of credit is a credit line with repayment terms of a year or less, whereas a long-term credit has repayment terms of longer than a year.

Short-term lines of credit are most often offered by online, alternative lenders. Here are some benefits of short-term lines of credit:

Easier to qualify for

Simpler applications

Fund faster

And now, here are a couple downsides:

More expensive

Need to pay back faster

If you have higher qualifications and can accommodate slower funding, you’ll want to focus on longer-term lines of credit, like a bank or SBA credit lines. Here’s why:

Longer repayment terms

Lower interest rates

Secured vs. Unsecured Business Lines of Credit

Next, you can narrow down your business line of credit options by deciding whether you want a secured or unsecured line of credit.

It’s actually very difficult to find a truly unsecured business line of credit. Even if a lender doesn’t require physical collateral, they’ll often require a personal guarantee or implement a blanket lien to secure your credit line.

To avoid putting up physical collateral, you’ll want to focus on lines of credit from alternative lenders. Lenders like Winston Rowe and Associates won’t require you to put up business assets for your line of credit, but they will likely ask for a personal guarantee or take out a lien on your business.

On the other hand, if you are willing to put up collateral (and have other top qualifications) you may turn to bank or SBA credit lines. These lines of credit will also have the best rates and terms.

It’s also important to consider that putting up collateral for your line of credit may not only make you more likely to qualify, but overall, it may also help you secure more desirable rates and terms.

Bank Lines of Credit vs. Online Lines of Credit

It can be tough to determine if you should go with a bank line of credit or an online lender. This might help:

Bank Pros

Offer most desirable rates and terms

Long-term, secured line of credit

Bank Cons

Difficult to qualify for

Require more documentation

Slower to fund

Online Lender Pros

Greater variety (for bad credit, startups, low annual revenue, etc.)

Simple application process

Faster to fund

Online Lender Cons

More expensive

If you have strong qualifications but simply don’t want to go through the process of applying for a bank or SBA line of credit, you might turn to a lender like Fundation, which can offer a longer-term credit line with affordable rates, and funding in as little as one business day.

Step 3: Prepare Your Business Line of Credit Requirements

After you’ve narrowed down your options, you’re ready to start preparing your applications.

Let’s say, for example, you considered your business’s qualifications and the different types of credit lines and decided that applying for Kabbage and BlueVine lines of credit will be best for your business.

Now, you’ll want to take a look at the application for each of those lenders and determine what requirements you’ll need to meet to qualify.

Determine what each of these lenders sets for their minimum requirements. Check your personal credit score, annual revenue, and time in business before you start gathering documents and filling out the application. After all, if you can’t meet these requirements, you don’t want to waste your time applying for a credit line you’re unlikely to qualify for.

Prepare your application. On the whole, the documents and information that will be required for your business line of credit application will be specific to the lender; however, you may expect to provide any (or all) of the following:

Basic personal information including your name, social security number, and ID

Basic business information including business name, entity type, tax ID number, and industry

Personal and business credit score

Personal and business tax returns

Business financial information including annual revenue, bank statements, balance sheets, profit and loss statements, etc.

Debt schedule (if you have existing debt)

Legal contracts and agreements

Step 4: Apply and Make a Decision

After you’ve gathered all of the documents necessary based on your lender’s requirements, you’re ready to complete your application and apply.

If you’re applying for a business line of credit from an alternative lender, you’ll likely find that the online application is fairly simple, requires limited documentation, and can be completed in minutes. On the other hand, if you’re looking to get a business line of credit from a bank or from the SBA, you need more documentation and the process will be longer. Many banks (like Chase) will require that you go in-person to apply for a line of credit.

Once you’ve submitted your application, make sure that you’re prompt to answer any questions or requests from your lender. This will help expedite the process and get you access to your funds faster.

Generally, online lenders can fund business line of credit applications quickly, sometimes even within one day. As you may have expected, banks will be slower to fund, taking anywhere from a few days to a few weeks.

After you’ve completed the application and answered any requests, the lender will come back with an offer (if you’re approved). At this point, you’ll want to carefully review the offer to understand how much your business line of credit will cost—and you should compare all of the offers you receive to ensure that you’re getting the best rates and terms. In particular, here are some things to keep an eye out for:

Terms and amount: You’ll want to review all business line of credit applications to see the credit line you’ve qualified for—in other words, the maximum amount of your line of credit, as well as the terms. The terms will indicate how long you’ll have to repay the funds you’ve borrowed.

Payment schedule: Lenders will have different payment schedules that designate how often you’ll make payments on the funds you borrow—some will require daily payments, whereas others may offer weekly or monthly payments. You’ll want to see what kind of payment schedule your business line of credit offer includes.

Interest rate: As you might imagine, the rate on your line of credit will be one of the most important things to review. This being said, you’ll want to look for the APR on your credit line, as opposed to the simple interest rate. The APR will give you a better sense of how much your line of credit will actually cost.

Additional fees: You may find a variety of additional fees that a lender can charge with a business line of credit. In particular, you’ll want to look out for withdrawal fees (charged every time you draw on the credit line), non-use fees (charged if you don’t draw on your credit line for a certain period of time), and prepayment penalty fees (charged if you pay off your balance early).

Once you’ve reviewed the offers, asked your lender any questions, and decided on the best business line of credit for you, you’ll be all set to sign the agreement and receive your funds.

Frequently Asked Questions

Can you get a business line of credit with bad credit?

What are the loan amounts for a business line of credit?

How do business lines of credit work?

The Bottom Line

Once you’ve decided to focus your financing search specifically on business lines of credit, you’ve already tackled a huge part of the process.

Getting a business line of credit comes down to evaluating your qualifications, finding the right line of credit for your business, gathering your documents, and completing the application. Once you’ve completed all of these steps, you’ll have access to one of the most flexible and useful financial products on the market.

Plus, after you’ve gone through this process once, it will only be easier the next time you decide to apply for any type of business financing.

Did You Know – Pre-Qualification and Pre-Approval Mean Different Things?

Although the terms Pre-Qualification and Pre-Approval are often used interchangeably, the two differ greatly in the process involved in obtaining them and in the benefits, they provide when. Here’s what you need to know about each of them:

Pre-Qualification:

This is a lender’s informal way of estimating how much you may be able to borrow. It is based on the information you provide (often by phone), none of which needs to be verified or documented. Since a letter of pre-qualification gives you an idea of how much house and the amount of mortgage payments you can afford, the best time to get pre-qualified is as soon as you decide you want to buy a home.

You supply to the lender unverified information about your income, assets, debts, and possible amount of a down payment. There is no cost involved in obtaining pre-qualification, and there is no commitment for either party. Understand, however, that a letter of pre-qualification does not mean you will get a loan; it is simply a ballpark figure of the amount you can afford to spend on your home and an indication that you might qualify for a mortgage in that amount.

Pre-Approval:

This designation is a firmer commitment on the part of the lender and requires a more detailed and formal process which includes a credit check and employment verification. You will need to provide W2’s, pay stubs (tax returns if you are self-employed), and bank and investment statements to verify your assets.

While this process is more detailed and complex, it is definitely worth your time and effort! Not only does it allow you to shop for Jersey Shore homes with more financial confidence, but pre-approval also shortens the actual loan application process and often allows for quicker settlement. In addition, sellers appreciate the fact that pre-approved house hunters are serious about buying their property and that financing should not be a problem. This was shared by a East Coast Broker and Lending Firm.

In Summary:

Pre-qualification:

1. Informal collection of data

2. No documentation required

3. Verification not done by lender

4. An estimate of the amount you might be able to borrow.

5. Not an entitlement to a loan; simply the first step in the home buying process.

Pre-approval:

1. Comprehensive collection of data

2. Documentation required

3. Verification is done by lender

4. Certification of how much money the lender would most likely be willing to loan you

5. Not an absolute guarantee of financing. Funding won’t be given until after the property appraisal, title search, and any other items needing verification have been completed.

Office Building Funded in Brighton Colorado

Winston Rowe and Associates is pleased to announce that they have successfully assisted in the funding of an owner-occupied office building in Brighton Colorado through their extensive contacts in the capital markets.

This was a very time sensitive and challenging transaction. The client had a hard money loan with a 10% interest rate and balloon payment coming due.

Winston Rowe and Associates was able to help their client secure a long fixed term loan with 30 years amortization at around 4% interest.

They have a full spectrum of asset based commercial real estate financing solutions with no upfront fees.

Winston Rowe and Associates Capital Deployment Objectives Include:

Apartment Buildings
Debtor in Possession
Office Buildings
Vacant Commercial Buildings
Equipment
Medical Buildings
Assisted Living Facilities, CCR
Industrial Buildings
Strip Malls & Shopping Centers
Hotels & Motels
Manufactured Home Communities
Owner Occupied Business for SBA
Fix & Flip Rehab Rental
Rental Portfolio
Real Estate Portfolio
Special Purpose or Single Use Properties

Loan amounts from $250,000. to $25,000,000.

Winston Rowe and Associates best business and commercial real estate funding solutions occur when they combine data with consultation and common sense.

You can contact Winston Rowe and Associates at https://www.winstonrowe.com

They are a national consulting firm that specializes in commercial real estate investing, labor relations and business turn around financing.

Contact
Winston Rowe and Associates
processing@winstonrowe.com
248-246-2243

10 Mistakes That Kill Real Estate Deals

This list of 10 big mistakes real estate investors make, which will hopefully help you be able to AVOID doing them! It’s funny to talk about because between the two of us, we probably not only each made this mistakes once, but maybe twice… or more! Real estate investing can be a complicated business, so it’s important to pay close attention to your process and try not to make the same mistake twice, especially if it costs you money.

Mistake #1: Bad Planning

When you make an offer on a house and it gets accepted and you put down your earnest money, you’re probably going to have about 2-4 weeks in between until you actually close on the property. Everything from budgets, schedules and Scopes of Work should be in place.

Mistake #2: Under Budgeting Property Repairs

It’s SO important to make sure that your contractor is on the same page as you are right from the start. You need to make sure that the product you are putting on the market is consistent with the neighborhood.

Mistake #3: Add-On’s

After you have put together your schedule, your Scope of Work and your budge, and you’ve started demo is NOT the time to decide you want to move walls around. If you decide you are going to move walls, that needs to be decided BEFORE you have finished your plumbing, mechanical, HVAC, etc.

Mistake #4: Missing the ARV

Figuring out what the correct After Repair Value (ARV) of your property is KEY. You need to figure out what sets your property apart from the other houses in the neighborhood – whether it’s got neighbors in the backyard or it’s wooded, the size of the lot, the finishes and fixtures, etc.

Mistake #5: Financing Costs

Sometimes I see when students put together their budget, they don’t factor in interest costs, paying points or paying for appraisals. They look at it like, “I’m going to buy $100,000, put $20,000 and sell it for $180,000, so that’s $60,000 in profit.”

Well, NOT REALLY.

You have to factor in your closing costs and financing costs, it eats into that $60,000.

Mistake #6: Holding Costs

This is another big mistake that newer investors make that can eat into your profits. This includes insurance, utilities, property taxes, etc.

Mistake #7: Contractors Missing Days on the Job

This is a very important thing to keep in mind – most of the time, your contractor is NOT working JUST for you, so you will constantly be fighting a battle to get them to dedicate the time to your project. Setting expectations with your contractor is very important so you don’t get behind on your schedule.

Mistake #8: Markup on Materials

It’s incredibly important to find a contractor who will estimate the cost of materials and have a clear understanding of your budget and how much you want to spend to avoid markups. Just starting out as a new investor, it might take a few

Mistake #9: Not Selling Your Property Quick Enough

You put a good property on the market, so it should sell itself and it SHOULD sell quickly. But sometimes, properties just don’t sell as fast as you expect them to. Days on market can kill a property. Make sure that when you go to sell, you are hiring an experienced, elite realtor who has been around for a while and has a great marketing plan of action.

Mistake #10: Your Buyer Flakes Out

What happens when you did an incredible job on your rehab, you list your property and it sells quickly, but then, your buyer flakes out?

People think when they get their property under contract, they are good to go and start dreaming about their profit money. DON’T make this mistake!

Real Estate Investing Mistakes Happen

Trust me, I know better than anyone that mistakes will happen regardless, especially if you are a newer investor just starting out. The biggest thing is to TRY and not to make the mistakes that cost you money. Every extra day that your rehab goes longer than planned, that’s costing you money.

What happens to real estate during inflation?

Inflation, the economic term which refers to the devaluation of your money, can sound like a blaring car horn to the ears of many investors. However, while its consequences are simple enough (a rise in the cost of goods and services) it’s also comprised of many less obvious negative aspects as well.

For example, the direct effect that it has on the real estate market and housing prices (which includes impacting the many financial aspects involved in many kinds of real estate investment, from commercial real estate to single-family rentals).

Below, we describe these consequences in fuller detail and offer a solution that will allow investors to avoid the consequences of an inevitable rise in the inflation rate.

Consequences of Inflation on Real Estate Investment

Three consequences of inflation on real estate investment

1) Increase in cost of home construction

Remembering that inflation refers to a rising cost in the price of everyday goods, think of all the materials it takes to build a new home: from concrete and bricks to drywall and stucco, the list is quite long. Inflation means that all of these required materials just became more expensive for home builders.

2) Rising home prices

Consider the consequence of higher home building costs once more: as these put a greater financial burden on home builders, they have little recourse but to make up for it with higher listing prices for just-built properties. Unfortunately, this isn’t the only reason inflation causes real estate prices to rise. When the Central Bank increases the money supply in the economy (a primary cause of inflation), house prices automatically increase.

3) Decline in financed home purchases

Another effect inflation has on the housing market and real estate investing involves debt. When inflation rises, causing money to become more expensive to borrow, people don’t borrow as much of it; they may not even borrow any at all. This results in a chain reaction of fewer mortgage-financed home purchases, which may flatten economic growth.

7 Successful Self-Storage Site Selection Strategies

LOCATION, LOCATION, LOCATION!!!! We have all heard how important it is to have the right location, but how do you find the “killer” site? Let’s review some proven tips and tricks for finding the best site.

Purchasing the right site is as much trial and error as it is good luck and science. Do not be discouraged if you burn through five or six (or ten or twelve) sites before you “land” the deal. Be patient AND persistent. If you work long and hard enough, you will eventually close on a property. Detours that you may encounter:

Zoning Issues

Changes in Credit Markets

Sellers That Change Their Minds

Title Issues

Environmental Problems

Competitors

PLAY GOLF. NETWORK, NETWORK, NETWORK. – I honestly believe that some of the best self storage sites in the country today are being found on the 7th green, or in the golf cart on the way back to the clubhouse. Your attorney, CPA, clergy, neighbor and therapist may be a “friend of a friend, who knows a guy, whose uncle has a piece of land…” In other words, use your list of contacts influential to spread the word you are serious about self-storage. Prepare yourself with a concept package. Once the investor is intrigued, be prepared to follow up with a concrete business plan. Include graphics, spreadsheets, and demonstrate that you have a team of experts to get the deal through the 18th hole. Show them that once you have a site identified, that you are prepared to move quickly to execute your plan.

TRAVEL TO NEW AND EXCITING PLACES – One of the largest mistakes first time real estate investors make is they select a market area that is geographically convenient, not economically viable for self-storage. Know that when you limit yourself to one or two markets, you have greatly increased the time it may take to find the best site. In fact, you may have chosen an area that is not ready for self-storage growth, and you may be forcing your project into a crowed market. Check saturation levels, competitive environment and the economic climate of many areas that are acceptable to you and broaden your horizons.

BEGIN WITH THE END IN MIND – Think first about the end. What is your exit strategy? Is this a short term play to springboard into larger ventures? If so, then build your store at a location which meets “Institutional Grade Criteria”. The most important of which are:

Metropolitan Area Population

Traffic Counts

Primary Market Area Population Density

Visibility

Access

Primary and Secondary Median Incomes

Property Size

If your strategy is a long term hold, remember to “never say never”. As soon as you proclaim you will “never” sell your store, Murphy’s Law or your children who want cash, not a bunch of garage doors, may create a need to exit a property. You will want to make certain that you have covered all the bases, and not have created a store with extended marketing times. Be careful of building:

In small towns

In an inferior, less expensive location

Because you already own the land

A store of less than 50,000 square feet (net rentable)

Behind your competitors (both identified and yet to be identified possible)

Two or more Floors in a single story market

Life has a habit of taking strange turns. If you believe that one door opens when another closes, you may not want to be encumbered by a self-storage property that does not allow an efficient exit.

FOLLOW THE MONEY – Be prepared to play with the big boys, where they have invested lots of money. There is much to be said for being “where the action is”. If you are an experienced operator (or hire an expert management company), and build the right product in the right location, you should have no trouble competing with even the largest of operators. In fact, this may give you a distinct advantage. Consider:

Large operators have the resources to conduct thorough market research and have the ability to spend lots of money to analyze markets. I would be very cautious of building in a market that is absent of institutional players. Piggy back off of their market research.

Large operators tend to be rate leaders. I do not know of any major player in self storage with a “lowest price” strategy. Typically, institutions require strong rates of return on an investment, and are not prepared to win customers on price points. What better competition to have than one who is always raising prices. Learn from this, and follow suit accordingly, or be a little braver, and YOU take the initiative and lead the market with the highest pricing. I can almost assure you the big boys will follow suit and move their pricing up as occupancy grows or stabilizes.

Large operators like the efficiencies of multiple stores. This means you may be a good acquisition candidate when you (or your children) are ready to sell. Make it easy on them and yourself to sell the store. If they are in a market, chances are they believe in the market and that makes the purchase of your store much easier.

Be very careful of a market where the big guys are selling their stores. There must be compelling reason for a self-storage investor to get out of a market. This is an indication that the market may be soft, or rates are weak.

GET PROFESSIONAL HELP – There are two sources to look to when finding and evaluating sites. The first are brokers and the second are consultants. Keep in mind that brokers (and boy will I get some hate mail form this statement) may not have your best interest in mind. They ONLY get paid when your money is spent. This motivates them to get the deal to closing, but does not ensure that they are really concerned with what is in YOUR best interest. Here is the second statement that will make every broker hate me…”Make them work for their money”. Nothing irks me more than a lazy broker. Too many brokers believe their role in life is to pass along a name. Most brokers have the ability to “make a deal happen”. This two edged sword can be used to your advantage. Make sure that your broker has been given the right tools to find you a piece of property. Inform them of the following:

Site size

Traffic counts

Density required

Price range

Zoning parameters

There are several broker strategies. One is to use an experienced self-storage broker that knows the business (they are an owner or develop of self-storage properties, not just a broker). This may help to eliminate a number of sites as you are not chasing dead end deals. One caution: this broker is often a competitor, or becomes one.

Make certain that you have a non-compete clause with the broker whom may operate self-storage properties (contractually specify distance and time-frame). The challenge with this type of broker is they may already be wired into an institutional or seasoned developer which means you may be looking at leftovers.

If you have several seasoned self-storage developers in your area, and a site is visibly for sale, there may be something wrong with the site. The second strategy is to hire an aggressive broker that you may have to educate or be patient with in having them find you a site. Once the broker brings you a site, make sure your broker provides you with:

Current demographic data

Traffic Counts

Parcel specific zoning data

A site plan or survey

Recent land sale comparable

Self-storage facility sale comparable

Be equally careful choosing a consultant. Make certain they have a plan and are following it. Make sure they have the resources to carry the ball across the finish line. If they are helping you find a site, have the consultant give you a written strategy to find you the right site. Make them commit that they communicate with you often, and you monitor their performance. If the consultant is strictly helping you with feasibility, make certain that they have informed you up front of what they see as the strong points of site selection, and that you concur as to what the project should achieve. This will save you lots of time and money in evaluating sites.

EXERCISE YOUR CREATIVE GENIUS – Get creative in digging up sites. Consider sites that are too large, and what other types of uses may be compatible with self-storage at that location. Do not be afraid to negotiate. Think about ways to reduce your land cost…

Tax parcel splits

Pad site spin-offs

Joint developments

P.U.D’s

Subdivision creation

Assemblage

Think about joint land uses:

Car Washes

Fast Food Restaurants

Flex Space or incubator space

Record and documents storage

RV and Boat storage

Limited service hotels

Strip centers

Use creative financing to leverage properties:

Seller Financing

Land Leases

Options

Contingent Sales

Life Estates

All in all, life is short and play hard. Be bold, and follow your dreams. If you believe in the industry, and dedicate the necessary resources, you will succeed. While you are looking, educate yourself. Attend conferences, trade shows and seminars. Be diligent. Read trade magazines and absorb as much information as possible about self-storage. But most important maintain a high energy level, do not be discouraged, and if you do not succeed, try, try again!

This Year’s Renters Want More Space, Good Deals and the Great Outdoors

Winston Rowe and Associates

Renters are on the hunt for open-air amenities, more space, and a better deal in the city they already live in as 2021 unfolds, according to a recent RENTCafé survey on how renters’ preferences have changed as a result of the pandemic.

An improvement in lifestyle was the main driver for the more than 10,000 people who participated in the survey while searching for an apartment on rentcafe.com. The top features respondents searched for a year into the pandemic included open-air amenities (21%) and more space (20%)—data that stands in stark contrast to RENTCafe’s March 2020 survey, where top drivers were price and safety. In addition, space and open air amenities were more important to renters than WFH amenities like home offices.

The prospect of a better deal motivated 29% of respondents, while the need for a change of scenery prompted a quarter of those surveyed to move. And perhaps most interesting? Contrary to breathless pandemic-era reports of Americans ditching their cities for secondary markets, approximately 90% of renters were looking for long-term rentals with 48% looking to remain in the same city. A mere 4% of renters chose to move because they could now be more flexible by working remotely.

“This shows that improving housing conditions—not drastic change—is the goal,” RENTCafe notes in the survey findings. Of those surveyed, one-third (34%) reported they’d already moved once over the last year, with the majority doing so because of the pandemic.

“After months of staring at the same walls, it’s understandable that some people want to make a move now, if only for a change of scenery,” the survey findings note. “However, many of those who moved back in the spring of 2020 seemed to have done so out of need—not because they wanted to. More precisely, their reasons for moving during those uncertain early days of the pandemic were related to their lease being up or feeling financially insecure.”

The survey also revealed that space and open-air amenities were more important than work-from-home amenities. Only 10% said a good internet connection was crucial, and  5% said they needed a home office.

Despite this data, the multifamily industry is prepping to meet the demands of a growing body of WFH renters. Research last year from Newmark showed that multifamily owners are increasing floor plans to create more flexible spaces (think one-bedroom plus a den) and more outdoor space to accommodate workers who are staying home. The firm advises developers, however, to make more incremental changes to unit mixes and amenities since resident needs are still being hashed out as the pandemic wears on.

Source: globest.com

New York Apartment Demand Surges As The City Jumps Into Reopening Mode

Winston Rowe and Associates

A full year into the pandemic, New York City landlords are securing new leases at a rapid clip as depressed prices appear to be luring back—or holding on to—tenants willing to sign for the right deal.

New York buildings in Manhattan, Brooklyn and Queens, the number of leases signed during February beat a record set in 2012 during the comeback from the global financial crisis. The median rental price—lease value net of concessions—fell at least 11% across those boroughs last month, according to a new report by Douglas Elliman Real Estate.

The news comes as New York City slowly begins to reopen. Restaurants will soon be able to operate at 50% capacity and movie theaters are once again beginning to show films. It’s been a brutal year for the city; the seasonally adjusted unemployment rate stood at 11.4% in December, a 7.8% increase over December 2019.

Hundreds of thousands of New Yorkers fled the city at the onset of the pandemic, to ritzy enclaves upstate, quiet towns in the Northeast and other pockets of the country. The coming months will help reveal how many intend to return, and whether rental prices will subsequently increase.

In light of the revived demand, some owners are temporarily keeping units off the market in the hopes of a sustained rebound that may help them get higher rates sooner than expected. According to UrbanDigs, a real estate insights firm, in Manhattan landlords took more than 1,800 apartments off the market in February, as the Wall Street Journal reported earlier this week. For their part, renters are enjoying the reprieve from record prices, which peaked just before the pandemic.

Below is a closer look at the current New York City rental market, utilizing data from Douglas Elliman and Miller Samuel Real Estate Appraisers & Consultants.

Manhattan

Non-luxury units offer the best deals, with apartments of three or more bedrooms having the biggest year-over-year discounts, possibly a sign that after living through lockdowns, renters are looking to live with fewer roommates. The median rental price dropped 22.7% over the last 12 months on those units. Two-bedroom apartments are down 8.9%, while studios are down 19.3%.

New signings are up dramatically from February 2020, but the overall vacancy rate remains high, at 5%, compared to 2.01% last year.  More than 40% of new leases come with some form of landlord concessions, the authors said, often one or more months of free rent during the first year after signing.

Brooklyn

Brooklyn saw the “highest number of new lease signings since tracking began during the financial crisis,” Miller Samuel reports, at 1,834 for February, a 133% year-over-year increase. Still, the median effective rent dropped 16.3%, more than any other year in almost a decade. Nearly 40% of new signings last month included landlord concessions.

Studios are commanding the best discounts; median rental prices fell 18.8% compared to last February, while second place goes to apartments with three or more bedrooms, at a 12.5% decline. Still, a glut of inventory remains; there are 3,438 listings in Brooklyn, up from 1,375 a year ago. That figure doesn’t even account for units that have been pulled off the market.

Queens

The story is largely the same in Queens, where February also set a nine-year record. Inventory is up 64% compared to last year, and 36% of signings include concessions.

Overall, the median rental price dropped 13% compared to last February, to $2,522, with studios taking the biggest hit at a drop of 28.7%.

Source: forbes.com

9 Reasons to Reject A Tenant Application During the Pandemic

Winston Rowe and Associates

The pandemic led to many property owners finding themselves with tenants that are thousands of dollars behind in rent. Property owners, faced with the recently-extended eviction moratorium, likely want to know how to avoid renting to applicants that may add to their list of tenants not paying rent during the COVID-19 crisis. One way to reduce the risk of having tenants that do not pay rent is to explore the reasons to reject a tenant application during the pandemic. 

Understanding the nationwide eviction moratorium likely helps property owners collect as much as possible in rental payments from tenants. The effect of non-payment of rent on property owners, and the rights of landlords during the pandemic, is another area that needs exploration while considering whether current screening methods are effective. The American Apartment Owners Association assists property owners with tenant screening services, tenant credit checks, and information related to landlord rights. 

If you are a property owner with tenants that owe back rent, you are not alone. The Los Angeles Times reported that millions of tenants were unable to pay rent at the time of the article publication in February 2021. The article cited the Urban Institute and Moody’s Analytics, who stated that more than nine million tenants owed an average of nearly $10,000 each in back rent. The article included information from a survey conducted by USC and UCLA indicating that households with less than $25,000 income in 2019 were the most likely to default on rent during the COVID pandemic, with households earning less than $50,000 at a close second among those that were most likely to not pay rent. 

What does this mean for property owners that want to avoid renting to tenants that cannot pay rent? In addition to the rules that prevent landlords from evicting tenants that comply with the moratorium rules, they are also prohibited from denying housing to applicants based solely on rent that is accrued during the coronavirus pandemic. 

Another issue for landlords to be aware of is the fact that several sources indicate that the rate of fraud in tenant rental applications has increased during COVID-19. This typically occurs during recessions, and requires due diligence to fight tenant application fraud. 

Consider these nine reasons to reject a tenant application during the pandemic, and to thoroughly screen applicants, using the AAOA rental application as your guide. 

1. The rental application is not properly completed 

Missing or vague information raises a red flag. Many states have identical or similar guidelines for rental applications and screenings. One example is the Ohio Fair Housing Guide for Landlords. The guide suggests that property owners use current applications that ask detailed questions without violating laws regarding protected classes or other illegal application information. 

2. The applicant insists that the property owner uses the credit check printout that the applicant brought along 

Credit check printouts provided by applicants are easily created on a home computer. Relying on a professional rental credit check for information helps to protect you. 

3. Information on the application does not match information obtained through the tenant screening report 

Applicants that transpose digits of their social security number, provide a false or misspelled name, or that provides a fake address are reasons to reject a rental application even during the pandemic. 

4. An applicant provides self-supplied references  

Self-supplied references from an alleged employer or landlord may be the applicant’s friend or relative. The standard rental application form provides property owners with documentation of the contact information for references. If the references do not check out as valid, or otherwise do not meet rental requirements, there is a record that protects property owners. 

5. An applicant provides pay stubs but does not want the employer contacted 

Pay stubs and a written statement regarding an applicants’ employment can be faked or forged with little effort. Requiring employer contact information on the basic rental application form provides the company contact information, which allows for a direct check with the company. 

6. The prospective tenant is vague about income 

Many people work from home since the pandemic started, and there are millions of people that are legitimately self-employed.  

USA.gov, the Official Guide to Government Information and Services lists verifying a tenant’s income as one of several ways that property owners can protect themselves from scams that target property owners. 

7. The applicant wants to rent the property sight unseen 

The FBI lists this as one of the warning signs that is an indicator of fraudulent activity targeting property owners. Agreeing to this likely means that the applicant also wants to send the application fee and rent without meeting in person. 

8. There is an unusual sense of urgency to rent the property 

What does the tenant have to hide? Why is there an urgent need to rent the property? Applicants may offer to pay more than the deposit or rent to get the property owner to quickly rent them the apartment.  

This is another red flag from the list of common rental scams described by the FBI. Sticking to the strict tenant background check procedures means less risk of being scammed while still complying with the extension on the eviction moratorium. 

9. There is a history of evictions 

Although property owners are not permitted to deny tenancy to an applicant that is based solely on rent accrued during the coronavirus pandemic, a history of prior evictions is still a legitimate reason to reject a rental application.  

Can I Evict a Tenant for Reasons Other than Non-Payment of Rent? 

This is an area where property owners still have protections and resources during the COVID pandemic. The State of North Carolina provides an answer to this question which is similar to many other states. Property owners can indeed have tenants removed for reasons not related to rental payments.  

If a landlord discovers that tenants lied on their application, engaged in criminal conduct, damaged the property or committed other offenses in violation of the landlord tenant laws, an eviction action may proceed if the property manager explains the reason for the proceedings, and the judge or magistrate grants the request. This is true even if the tenant completed the CDC Declaration Form. 

Some property owners likely feel that they have no recourse to reject rental applicants or tenants once they move into a property because of the pandemic. Fortunately, courts and government agencies still allow property owners to continue screening for qualified applicants, and to legally remove tenants for just cause. 

How to Price Your Rental in a Small, Secondary Market

The time-honored mantra of real estate – “location, location, location” – drives everything from a property’s purchase price to the rental rate. It can even dictate how much or little you should invest in improvements.

Real estate markets are classified by location type. There are primary, secondary, and tertiary markets, sometimes called Tier I, Tier I, and Tier III. The market classification for your rental property will be a crucial consideration as you set its rental rate.

An area’s population and state of real estate market development determine its classification as a primary, secondary, or tertiary market.

Primary Markets

Primary, Tier I markets are typically larger cities of 5 million people or more, with well-established rental markets. Examples include Chicago, New York City, Boston, San Francisco, Los Angeles, Washington, D.C., and Dallas-Fort Worth.

These large metro areas are usually more expensive than other metro areas – for both buyers and renters – due to consistent demand for housing.

Secondary Markets

Growing cities are considered secondary markets; their growth creates demand as new people move into the area, supporting new business development and job creation.

These Tier 2 locations demonstrate more real estate market flux, creating attractive opportunities for real estate investors.

Secondary markets tend to be a population of 2 to 5 million people. They are usually less expensive than primary markets but still in demand. Examples include Philadelphia, San Antonio, Phoenix, San Diego, and San Jose.

Tertiary Markets

Tertiary markets involve a lower population density of fewer than 2 million people. The population is spread out across a bigger geographic area.

There is typically less reliable job growth. In a strong economy, tertiary markets can provide attractive investment opportunities as property prices are typically lower.

These areas may be more expensive to develop as many are rural or outside of secondary market cities.

But can be prime markets for real estate investors as the properties cost less.

Whether you invest in a secondary market, tertiary, or primary market, it is essential to consider market-relevant data to price your rental correctly.

The key to pricing rentals in a primary vs. secondary market

The whole real estate cycle – from the purchase price to rental rate and eventual selling price relies on intelligence gleaned from current, comparable sales data for properties in the same price range.

When you review these comparables, you will get a good sense of amenities and the property improvements for other properties in the price range. As you determine your target rental rate, the purchase price is one factor but not the whole story.

You may be able to invest a small amount in fixing up the property, add or improve its amenities, and charge a higher rental rate than similar unimproved properties sold in the past year.

How you need to look at properties in secondary and primary markets differently.

Demand for rental property is always a local story. You can’t take an apartment in New York City and compare it to a similar apartment in Des Moines. Even if both cities are the largest in their respective states, large is relative –Des Moines has a population of 210,000, and New York City’s population is 8.175 million.

Even within Iowa and New York, you have the full range of markets to consider. So how do you determine the rent?

In real estate, comparing neighborhood properties wins out.

While you need to be aware of overall rates in the city where you plan to buy, your rental rate should be based on going rates in the immediate neighborhood. Each neighborhood will have a range that extends across unimproved and improved properties.

High-demand primary markets are top dogs because they have low turnover and can command higher rents. Secondary markets can present many growth opportunities. You can still improve a property in a secondary market to make it more attractive to tenants.

This will also allow you to raise rents accordingly. Tertiary markets also offer good opportunities, especially when the primary and secondary market values seem overblown.

Comparing apples to apples

In any market, you want to rely on current, accurate information to complete your analysis. Rentometer pulls rental rates from all online sources for current listings to provide you with accurate rental rates for any area. You can search within any state, city, or neighborhood to get the most up-to-date picture of rental rates.

Let’s compare rates for 2-bedroom, 1 1/2 bath rental units in Des Moines. The city’s average rent for this property type is $1,186 per month, but rates range from $943 to as high as $1,429. This range tells you that the right purchase price and a few property improvements could create a nice cash flow.

Comparing similar properties in a secondary market

Going a bit deeper, let’s compare three different neighborhoods in Des Moines: Downtown Des Moines, Bloomfield-Allen, and Merle Hay. Downtown has the highest average rents at $1,482 per month, while Bloomfield-Allen and Merle Hay show average rents of $890 and $891. Looking more closely at each area, you’ll find that Downtown has an entirely different culture and amenities from both the Merle Hay and Bloomfield-Allen neighborhoods. And while the two other neighborhoods are similarly priced, they have different amenities, culture, and crime levels.

It’s Time To Prepare Your Apartments For The Busy Leasing Season

Though every apartment community experiences its own unique seasonality, there are two points of the year that signal changes in leasing activity. There’s the slow season, which usually begins in the fall when the school year starts and the weather turns cold. Then there’s the busy season that begins when school’s out and the weather is nice.

We’re now only a few weeks away from when most communities will begin experiencing their busiest stretch of the year. They’ll have their highest demand—renters want to make their moves when it’s warmer—and their greatest turnover. It really is a make-or-break time for many properties because if they can’t generate enough leases to account for the number of residents moving out now, the task will become much harder when leasing activity slows.

To help, here are our recommendations to prepare your community for success over the next couple of months:

1. Check Your Lease Expirations

Reviewing your lease expirations is your first line of defense when trying to make your busy season more manageable. Why? If you know in advance that there will be a certain week or month ahead when a high concentration of leases will be expiring, you won’t be bombarded by suddenly having multiple units turnover at once. You can get ahead of it.

Plus, taking this step now gives you the opportunity to start thinking through your renewal strategy. Check out our blog post ‘4 Ways to Improve Your Apartment Community’s Retention Rate’—it has great ideas you could apply here to help you keep more leases.

2. Set Your Staffing

Take a look at your work schedule for the upcoming weeks. Will your best manager, or leasing agent, be going on a vacation or be away from the office? If so, get on that now. Being understaffed may affect your closing rates because your team’s ability to conduct in-person tours will be limited. Evaluate whether or not there’s an opportunity or need to add to your staff.

Don’t forget your maintenance team. You need to make sure they’re properly staffed and equipped to be able to handle their increased workload, too. When it’s your busy leasing season, your entire team needs to be hitting on all cylinders.

3. Make Changes to Your Digital Advertising Budget

The purpose of your digital ads is to drive more qualified traffic to your website, which begins the process of converting leads to leases. Think of using them in the same way as you’d use a water faucet. When you need traffic the most, just turn the faucet on.

We talk all the time about dynamic apartment marketing, and a lot of it is tied into how you utilize your digital ads. We believe that pairing a high budget, for times like the busy season when you’ll have more turnover, with a low budget, for when your occupancy is strong, is the best way to maximize your marketing dollars.

So, be ready to turn the faucet on and spend more on your digital ads for the next couple of months compared to other times of year. You will need to have enough ad dollars budgeted to run Defensive ads that defend your community’s identity, Remarketing campaigns on both Google and Facebook that keep your apartments top of mind, and perhaps some Offensive campaigns that allow you to compete against similar properties.

4. Review Your Rental Rates

An odd trend we see is some communities raising their rental rates on January 1st. Right now, at the onset of your busy leasing season, is actually the best time to be taking this measure.

You know you’re going to have more potential residents looking at you over the next few months compared to any other time throughout the year, because whenever you’re experiencing more turnover you’re also going to have more demand. It would make sense to raise your rates at a time when pricing isn’t weighed as much as availability.

We recommend lowering your rental rates about a month or so before the busy period ends. That way you have a better chance of filling up any units remaining in the final few weeks leading up to your slow leasing season, when it will become much harder to do so.

5. Prioritize Your Time

When you’re in the midst of your busy leasing season, you won’t have much time to focus on many parts of your job. For example, why would you be trying to do things like make design decisions when all you’re going to be concerned with in that moment is retaining current residents and attracting new ones?

If you have any pressing managerial decisions, like standard updates, try and complete those now. The goal here is to make sure you’re prioritizing all of your focus and energy for the busy leasing season, when time will be your most important asset.

Guide to Buying a Duplex: Pros & Cons of Duplex Ownership

Searching for a home, especially your first, is one of the most exciting pursuits of your life. You’ve got financial freedom and you’re ready to use it to get a place all your own! And while you might be eager to ditch the shared walls of an apartment complex, don’t rule out buying into the shared walls of a duplex. There are plenty of reasons why purchasing a duplex could be the right choice for you. Let’s take a look.

Duplexes are very popular in the U.S. The National Multifamily Housing Council claims that about 1 in 5 households currently live in a duplex. Although they may not have been on your radar while shopping for homes, owner-occupied duplexes can be a wise investment. Similar to a single family home, duplexes are essentially two homes that share a wall with another home.

How does a duplex work?

Each home in a duplex can be either independently owned or by one entity. These owner-occupied duplexes can be split if the owner wishes to sell one or both. But what makes them so attractive is that duplexes — when one side is rented out — can help to generate income and pay down half the mortgage at the same time.

Is a Duplex a Good Investment for First-Time Homeowners?

To many, the prospect of renting out one half of a duplex is considered a good option. As far as starter homes go, it can also be a sound financial decision, too. If you’re thinking about buying a duplex as a first-time home buyer, it’s important to weigh your options and your long-term goals before making the call.

Buying a duplex and renting half out to a tenant is a big responsibility. You’ll be legally responsible for keeping the unit in a habitable state. And if something should go wrong with the HVAC or the water heater, you’ll need to be able to react — both physically and financially — to make repairs and line up service personnel if you can’t. Another consideration when buying a duplex as a first home is to be sure you’ve got the financial reserves in place to pay for the rental’s mortgage in case the tenant doesn’t work out. You may have trouble replacing the tenant if they unexpectedly move out.

Owning a Duplex: Pros and Cons

Buying a duplex and living in one half while renting out the other seems like a smart idea — and it can be a very good investment! However, like all investments, there are always some negatives to take into account. Let’s explore the pros and cons of having an owner-occupied duplex and see if it’s the right fit for you.

Pros of owning a duplex

One of the biggest reasons most people consider buying a duplex when they’re searching for their first home is the investment opportunity. Check out why it’s a good financial move to invest and live in a duplex.

Income on your property. With a tenant contributing to half of your monthly mortgage, you’ll be poised to build savings.

Renting your duplex could help you during the loan process. When you plan on renting out one side of a duplex, you may be able to factor that into your income and qualify for a larger home loan. Talk to your mortgage officer for specific details.

Your tenants help pay your mortgage. When you’re living in one side of the duplex and renting out the other, you’re taking a big chunk out of your mortgage payment every month. When you compare your reduced mortgage payment to what you’d be paying if you purchased a single-family home, duplex living seems like a no-brainer.

Tax benefits. Not only do you get your standard deductions for being a homeowner, but you can also deduct the expenses you incur while renting and maintaining your rental unit. Selling an owner-occupied duplex may also give you some exclusions from capital gains taxes since it’s treated as two properties.

Talk to your tax professional for more specific advice, but since your duplex is producing income, it’s technically a business — and that means you’ll have some opportunities for tax benefits that you wouldn’t have if you’d picked a single-family home.

Beginning of a real estate portfolio. A duplex is a great stepping stone for anyone looking to invest in real estate. While you live in half, you can pay down your mortgage. Then, when you move out, you can rent out both sides — doubling your rental income.

Rent goes up. In general, rent goes up over time, but a fixed, 30-year mortgage stays the same. So while your mortgage payments don’t change, you can charge more for rent, adding to your income over the years.

Close to your tenants. There’s nothing like living next door to your tenants for property checks and maintenance issues.

Cons of owning a duplex

If the income portion of owning and renting a duplex sounds good to you — great! But don’t let that drive your entire decision. There are plenty of other work, social and risk factors to consider before you jump into the rental game. Check them out:

Twice the expenses. There are many financial benefits to a duplex but some of the expenses double — maintenance is one of the biggest considerations. Make sure you do the math at the outset to see how your finances line up.

Tenants have expectations. When your tenants are next door, they may expect you to deal with any issue they encounter immediately.

The landlord business. Once you rent out the other half, you become a landlord. Whether you love being a landlord or could leave it, it’s a business and needs special attention. Some mortgages require you live in your half for a year. Are you able to commit to staying put for a year? Or do you need more flexibility?

Location limitations. Your region may have zoning limits on where multiple family units can be located, which could restrict your location options.

Handling an empty unit. If the other side of your duplex doesn’t have a renter, you need to be prepared to advertise, show the unit, maintain it and handle months of no rent payments. Make sure you’re able to devote as much time as necessary to keep the unit in good shape and get it occupied.

Sharing walls. If you had your heart set on privacy that your old apartment couldn’t offer, you might not love the fact that your unit will share at least one wall, ceiling or floor with your neighbors. Be prepared for the occasional noises, especially if your tenant likes to entertain.

Respecting shared property. You’ll probably be sharing a driveway, a lawn or other parts of your property with your tenants. Making sure that you’re both respecting the shared property and cleaning up after yourselves is an important part of creating a healthy tenant and landlord relationship.

Renting Out An Owner-Occupied Duplex

Buying a duplex to live in can be appealing. And joining the ranks of the hundreds of thousands in duplex ownership is a great way to have a go at being a landlord for the first time. Unfortunately, buying and renting out a duplex isn’t a “set it and forget it” kind of investment. Before you ever show the unit to a prospective renter or hold an open house, you’ll need to brush up on some landlord basics. Here are some tips for learning to become a duplex landlord:

Research rent prices in your city, town or neighborhood. Setting a fair rental price is a major key to getting renters and keeping your other unit occupied. Look for similar units and compare and contrast the features, prices and location to yours.

Check out local rental and landlord laws. Depending on the location of your duplex, you’ll have different rules and regulations to abide by. Your tenant’s rights will depend on your location, too. These laws will cover things like security deposits, what you’re required to disclose about the unit to potential renters and more.

Prepare for repairs. If you don’t fancy yourself a handy person, ask around and search online for a reputable maintenance person in the area. You’ll be doing yourself and your tenants a favor by making sure you’ve got someone trustworthy to handle the unexpected maintenance issues that come with renting.

Don’t expect regular, on-time payments. It’s a tough pill to swallow, but as a landlord, you won’t always be paid promptly by your tenants. That’s why you should work to build a strong rapport with whomever is living on the other side of the duplex. Give your tenants the respect and honesty you’d expect to get, and you’ll be better off — both financially and personally — in the long run.

Learn about the required insurance

Get in touch with an American Family Insurance agent to get the coverage and peace of mind you deserve. Here are the policies you should consider:

Homeowners insurance. One last consideration when buying a duplex is your homeowners insurance. In most situations, if you have an owner occupied duplex, you can insure both sides through a traditional homeowner’s policy.

Business insurance. But, if you decide to move and rent both units you may need to look into business insurance. Your American Family Insurance agent will be happy to navigate these policy options with you so you can find the best option for your unique situation.

Landlord insurance. While you handle the day-to-day of managing your rental unit, you also want to make sure you’ve got landlord insurance that protects you from the surprises that come with the job.

The next steps to purchasing a duplex

Once you’ve made the decision to purchase a duplex, you’ll need to make preparations for the purchase in much the same way that you would if you were buying a home for the first time. As you’re considering how to buy a duplex, you’ll need to apply for a mortgage and figure out how much cash you can put towards a down payment.

Frequently Asked Questions

How can I buy a duplex with no money down?

You’ve got a few options if you’re looking to purchase a duplex with no money down. In addition to working out a lease-to-own arrangement with the current duplex owner, you could join forces with a financial investor who’s willing to partner with you on the deal.

How can I buy a duplex with bad credit?

In order to qualify for financing, you’ll need a minimum FICO credit score around 580 – 620. With that, you may qualify for an FHA loan to buy the duplex.

Suburbs Apartment Rents Close to Their Pre-Pandemic Peak

Though the rental market in major cities has been hard hit by the Coronavirus pandemic—plagued with a mass migration by remote workers seeking larger homes, as well as relocations because of social distancing concerns—it appears that the suburbs have not just survived COVID-19’s wrath, they’re thriving in spite of it.

While rents have declined steadily in the larger, denser, principal cities at the core of each metropolitan region, rents in the outlying suburban areas have, on the whole, rebounded to pre-pandemic levels,” according to a new report from Apartment List.

From June through September, rents dropped in cities but “quickly rebounded” in the suburbs from losses that were seen from March to June across all of the property type’s markets, the report stated. In October, rents were 0.5% higher than they were at the start of the year, and came in just under their pre-pandemic peak in March.

Suburbs are outpacing cities across the country. In 27 of 30 large metropolitan areas tracked by Apartment List, “principal cities are experiencing faster rent drops or slower rent growth than their surrounding suburbs. And in 11, including major economic centers like Atlanta, Dallas, and Philadelphia, apartments in the principal city are getting cheaper while at the same time apartments in the suburbs are getting more expensive.”

The data jibes with other recent research concerning the impact of move-outs from cities, and the resulting strength of the suburbs. A recent report from Redfin showed that in the third quarter 29.2% of Redfin.com users looked to move to another metro area—the highest share since Redfin started tracking migration at the beginning of 2017. The uptick is partly due to the pandemic, Redfin stated, as well as the now pervasive work-from-home culture.

Short-term suburban rentals—which it defines as one-to-two-year lease terms—could be demand drivers for residents seeking work-from-home space and outdoor access. Suburban renters typically seek larger units, such as two-to-three bedroom apartments.

If this work-from-home trend is going to be a little bit longer term, people will feel more comfortable with moving out into the suburbs.

Efforts to socially distance also are fueling shifts away from major cities to the suburbs people just don’t want to be in enclosed, dense areas.

Landlord Inspections: The Do’s and Don’ts of Apartment Inspections

Maybe you’re suspicious one of your tenants is breaking the lease’s pet policy. Maybe you just haven’t checked in with them for a while.

If so, you may ask yourself: can a landlord do random inspections? Well, the answer isn’t an easy yes or no.

As a landlord, you can drive by, walk by, or bicycle by your property anytime. But you cannot walk into the property unannounced. We’re here to walk you through the do’s and don’ts of landlord inspections.

Legal Reasons to Inspect an Apartment

Apartment inspections need to be performed for a variety of reasons. Let’s take a look at those situations in which you can legally enter and inspect an apartment.

Maintenance and Repairs

Your tenant might ask you to service or repair something. Typically, landlords are only permitted to enter the premises during “reasonable hours.” That varies from state-to-state.

Any time between 9 a.m. and 5 p.m. is usually considered reasonable. Those hours are within normal business operating hours.

However, when a repair is specifically requested by the tenant, you can enter and perform the necessary service at any hour that is mutually agreed upon.

In a scenario where the tenant has not requested maintenance or repair, but you still need to perform it, give them 24-48 (dependent on state and local law) hours’ notice of your arrival. Additionally, make sure to come at a time that falls within the scope of “reasonable hours.”

Decorations, Alterations, or Improvements

Can landlords do random inspections to address the aesthetic? As a landlord, you have the right to make aesthetic changes as you see fit. This is different from maintenance or repairs. That’s because it’s not something that you need to do to maintain the unit’s habitability.

For example, you might want to repaint the front porch or install new light fixtures. In these cases, stick to the “reasonable hours” rule. Make sure to give your tenant proper notice.

Showings

You have the right to show the unit to prospective tenants. Again, be sure to notify your tenants in advance. This gives them the opportunity to ensure that they’re out of the apartment during showings or give the unit a good once-over, if necessary.

Keep in mind, with millions of Americans working from home due to COVID-19, it may be difficult to schedule a showing during the workday. If that’s the case, you’ll need to work with your tenants to schedule a time that works for them without disturbing their work. You could also “show” prospective tenants your available units via 3D apartment tours.

Lease Violations

Though you may have done your due diligence, there’s always the chance that you may have a tenant that is egregiously committing lease violations. Whether you suspect there’s an illegal subletter on the premises or that your tenant has willfully ignored your no-pet policy, you have a right to check it out.

As it goes for all instances in which you may want to enter the unit, give notice. If you find that your tenant is committing lease violations, you may need to serve a notice to quit.

Move-in/Move-Out

It’s essential for landlords to conduct move-out inspections to assess the damage, if any, that the last tenant is responsible for. Your findings will dictate how much of a tenant’s security deposit you’ll refund back to them.

Upon move-in, inspections enable landlords to confirm the condition of their unit. Then, they can make any necessary repairs before their new tenant officially moves in.

Extenuating Circumstances

While the previous reasons to perform an apartment inspection were very clear, there are also extenuating circumstances in which an inspection can be legally performed. These include:

Court Orders: If you’ve obtained a legal order granting you permission to inspect one of your units, then you can legally perform the inspection. Typically, the order may stipulate a specific date and time that you can perform the inspection.

Tenant Abandonment: Keep in mind that the requirements to be considered “abandonment of a property” are different state by state. If a unit has been abandoned, you’ll need to remove any remaining possessions. Be sure to document the abandonment.

Tenant Violation of Health/Safety Codes: Not only does this put the tenant and others at risk, but it can also lead to significant damage to your property in the form of a pest infestation.

In Case of an Emergency: For example, a fire, gas leak, water leak, burst pipes, or an extreme weather event that may threaten the safety of your tenant gives you license to make necessary repairs as quickly as possible.

Do’s of Landlord Inspections:

Give Proper Notice of Any and All Inspections (24-48 hours)

Also keep in mind that, even after giving notice, you can only enter a tenant’s unit during “reasonable hours.” Typically, though this varies by state, a time between 9 a.m. and 5 p.m. is considered to be within the scope of “reasonable hours.”

It’s even better to give even earlier notice than the recommended time frame. That’s the case especially in cases of routine inspections that you’ve scheduled in advance.

There are real legal consequences for failing to give notice. Those include arrest, fines, and legal action being taken against you.

Avoid this by giving written notice, leaving a note on the door or in the mailbox, or sending notice via email. Those methods are sufficient and serve as proof that you adhered to the law.

Schedule Property Inspections a Few Times Throughout the Lease Term

There’s no magic number for this. It’ll depend on the length of the lease (we recommend no more than quarterly for a year lease).

What’s the rationale behind scheduled, incremental inspections throughout the duration of a lease? Well, it ensures that maintenance and safety standards are up to date without being excessive.

Remember: Purpose, Professionalism, and Tenant Privacy

If you must enter a tenant’s home to perform an inspection, consider purpose, professionalism, and tenant privacy. State your purpose upon your arrival, give proper notice as a professional courtesy, and respect your tenant’s privacy by ensuring that you don’t overstep.

Document All Routine Inspections in the Lease Agreement

If you have a policy that allows for inspections over a set interval of time, then you need to document that in the lease agreement.

It’s imperative to discuss these provisions when you’re face-to-face with the tenant at signing. This way, everyone knows what to expect ahead of time. It’s much better than having tenants, who haven’t read through the lease, be caught off guard by your routine inspections.

Be Smart and Reasonable

Just because the law is on your side, doesn’t mean you should completely disregard the importance of a good tenant-landlord relationship. If you’re continuously notifying your tenant that you’ll be stopping by, it’s likely to frustrate your tenant over time. If you’d like to increase your rate of renewed leases, limit your inspections.

Don’ts of Landlord Inspections

Breach a Tenant’s Right to Quiet Enjoyment

The right to quiet enjoyment is legally protected. For tenants, this means that they can peacefully enjoy their homes, bar entry from landlords, and that the landlord is responsible for the maintenance and upkeep of the property. Entering the apartment without permission or not giving notice would breach this right.

Show Up Unexpectedly

Outside of an emergency or extenuating circumstance, you need to give tenants proper notice. If your state has a statute that describes a specific notice period that you must give to tenants before entering their homes, then you must always adhere to it.

Remember that a tenant may refuse entry to a landlord that has not given appropriate notification. Additionally, avoid requesting inspections outside of reasonable hours: typically, 9-5.

Ignore State and Local Law

Laws regarding apartment inspections vary in different states, so it’s imperative to be up-to-date with your knowledge of current inspection law. For example, Alabama requires a two-day notice. Connecticut requires reasonable notice. New York has no statue on a state level.

Give a Vague Notice

When you are letting your tenant know you’ll be coming by, stipulate a date and time. Don’t leave the “when” up in the air. Be sure to state your purpose for entering.

Are you coming by for a showing? Are you repairing something? Or is it a regular inspection? Fill your tenant in on the details for your upcoming visit.

Final Thoughts

As a landlord, you’re ultimately responsible for the upkeep and condition of your property, even when you’re renting it out. Though you’ve gone through the process of thoroughly screening all tenants, there’s always a chance that your tenants may not keep their apartment in top-notch condition. That’s where landlord inspections come in.

Whether your tenants don’t report a leak which ends up causing extensive damage or you simply want to perform a routine check-in, you have a legal right to inspect your property.

However, you must comply with the law when you do. Typically, this means giving proper notice and not entering a unit without permission from your current tenants, except in emergency circumstances.

Can landlords do random inspections? The answer is yes if you follow the above advice and adhere to local laws, your lease, and best practices.

Strategies for Managing the Commercial Loan Post-Closing Process

Contact Winston Rowe and Associates

After a commercial loan transaction closes, it’s easy to feel that all the important work has been completed, but the truth is there are many post-closing matters that still require the lender’s attention.

Often, the tasks that must be performed after a loan closing involve perfecting the lender’s collateral liens, and in many situations, lenders need the borrower’s cooperation in order to satisfy post-closing requirements.

However, borrowers are often eager to focus on managing their businesses, creating difficulty for the lender to redirect their attention back to the loan closing. Taking an opportunity during the closing process to define and communicate the responsibilities of each party, including post-closing expectations, can help simplify the cumbersome post-closing process for lenders.

A crucial step in an efficient post-closing process is letting borrowers know that their cooperation may still be required after a loan closes, which is why we recommend using a Post-Closing Agreement with all loan transactions.

These agreements outline specific requirements that need to be satisfied post-closing, and they provide an opportunity to manage the borrower’s expectations while informing them that they still have a responsibility to communicate and work with their lender after their loan closes. It is advisable that all post-closing requirements have specified deadlines listed in the agreement.

Another document we recommend lenders use is an Errors and Omissions Agreement. This document requires borrowers to provide additional information and execute additional documentation, as may be required by the lender after a loan closing.

The closing process presents several opportunities for mistakes to be made, including omitting certain documents from the closing document package, incorrect signatures on documents, and execution of outdated versions of documents.

The Errors and Omissions Agreement is a good way for all parties to agree to resolve these potential issues after closing.

An additional tool that lenders can use to help manage post-closing issues is the Loan Agreement. A good Loan Agreement clearly outlines each party’s ongoing responsibilities, and in doing so, helps manage the borrower’s expectations. Loan Agreements are particularly useful in more complicated transactions because the agreements can be tailored to fit various scenarios and include additional terms a lender may require.

The Loan Agreement may include events of default should the borrower fail to satisfy any post-closing requirements prior to the applicable deadlines.

Depending on the type of collateral involved in a transaction, there can be many different potential post-closing issues for a lender to track and resolve.

Real estate is a good example of a potentially complicated type of collateral to deal with post-closing because it involves ensuring mortgages get recorded properly, tracking receipt of recorded documents and final title policies, confirming the adequacy of title policies, and working with title companies to resolve any issues or unexpected exceptions that may appear on a final policy.

Automobile liens can also be especially tricky, and not only require the correct documentation from the borrower, but also may require substantial interaction with the DMV in the state where the vehicle is titled.

Additional post-closing responsibilities include review of executed loan documents, filing UCC financing statements, obtaining confirmation of UCC terminations, tracking financial reporting covenants, ensuring proper documentation is received in connection with draw requests, and following-up on collateral insurance expirations.

As complicated as the post-closing process can be, lenders can help ease the burden by utilizing Post-Closing Agreements,

Errors and Omissions Agreements, and Loan Agreements, all of which clarify the responsibilities of each party and help manage post-closing expectations with borrowers.

 

Reasons to Reject a Tenant Application

Many landlords believe that they cannot reject a tenant application for any reason, that they have to accept the first one to come along with the money or risk the grief of a lawsuit.

Not so.

There are numerous legitimate, businesslike reasons to reject a prospective tenant’s application.

Unsatisfactory references from landlords, employers and/or personal references.

These could include reports of repeated disturbance of their neighbors’ peaceful enjoyment of their homes; reports of gambling, prostitution, drug dealing or drug manufacturing; damage to the property beyond normal wear and tear; reports of violence or threats to landlords or neighbors; allowing people not listed on the lease or rental agreement to live in the property; failure to give proper notice when vacating the property; or a landlord who would not rent to them again.

Evictions.

Frequent moves. You have to decide what constitutes frequent moves and apply the same criteria to every applicant.

Bad credit report.

If a report shows they are not current with any bill, have been turned over to a collection agency, have been sued for a debt, or have a judgment for a debt, that is grounds to reject. These do not have to be debts connected in any way with housing.

Too short a time on the job.

As with frequent moves, you have to decide what too short a time is and apply the same criteria to every applicant.

Too new to the area.

There is nothing to say you have to rent to people who have just moved to town. Be careful, though, many times these would be excellent tenants and the time and long distance call expense of checking them out could pay big dividends.

Smokers.

Some newspapers mistakenly believe that smokers are a protected “handicapped” class. They will never be. The tobacco companies would not allow it. Do do so would be to admit that tobacco and nicotine are addicting. Industry lobbyists would be sure to fight that idea tooth and nail. So you can safely discriminate against people who smoke. Newspapers will not accept ads that say “no smokers,” but they will accept ads that say “no smoking.”

Too many vehicles.

Lots of cars can be a real source of irritation to neighbors and make the entire neighborhood or apartment complex look bad. Chances are, if they have more than one vehicle for every adult they spend a lot of time broken and being fixed. That means they could be in pieces in the front yard or parking lot.

Too many people for the property.

Be extremely careful with this. Before the familial status protection clause of the Fair Housing Act, you could discriminate on this basis without fear of any problems. Not any more. Now the same criteria must be applied without regard to the age of the inhabitant. Be sure it is applied equally to all applicants. Check your state’s Landlord-Tenant Law.

Drug users.

They must be current drug users. If they are in a drug treatment program and no longer use drugs, the Federal Government considers them handicapped and protected by the Fair Housing Act.

Any evidence of illegal activity.

You must be able to come up with some kind of satisfactory evidence. I don’t know what that would be, every case would be different. Certainly a letter from the police department warning a previous landlord of their illegal activity and threatening to close the property is considered sufficient evidence.

Insufficient income.

You must set up objective criteria applied equally to each applicant. Insufficient income could reasonably be if the scheduled rent exceeded 35% of their gross monthly income.

For example, if the rent is $600, their gross monthly income must be at least $1714.29. The formula is: Acceptable income= scheduled rent divided by income ratio. You can require proof of all income.

Be careful, though, if you are willing to accept only one member of a married couple to supply the total dollar income, you must be willing to accept the same of unmarried, co-tenants that share the housing. Under Fair Housing law you cannot require that unmarried people meet different income requirements than married people.

Too many debts.

Even if their gross income is sufficient, they may have so many other debts that they would be hard pressed to make all the payments.

A rule of thumb might be that all contracted debts, including rent, cannot exceed 50% of their gross income. Contracted debts would be such things as credit card payments, car payments, loans, etc. Those would not be cable TV, water and garbage, telephone, or other utilities.

Conviction of a crime which was a threat to property in the past five years.

Included in this could be drunk driving convictions, burglary convictions, robbery convictions, and other such misbehaviors.

Conviction for the manufacture or distribution of a controlled substance in the past five years.

The best way to proceed is to post a list of the acceptable rental criteria and hand it to each applicant.

You can use the list above, but under no circumstances is it intended to be legal advice. Check with an attorney who is familiar with the Landlord-Tenant Law before posting or handing out anything like a list of acceptable criteria for applicants. Laws change constantly, and what you don’t know can and will hurt you.

 

What Is Equity Financing?

Equity financing is the process of raising capital through the sale of shares. Companies raise money because they might have a short-term need to pay bills or they might have a long-term goal and require funds to invest in their growth.

By selling shares, they sell ownership in their company in return for cash. Equity financing comes from many sources; for example, an entrepreneur’s friends and family, investors, or an initial public offering (IPO). Industry giants such as Google and Facebook raised billions in capital through IPOs.

While the term equity financing refers to the financing of public companies listed on an exchange, the term also applies to private company financing.

Equity financing is distinct from debt financing, which occurs when a business borrows funds.

Types of Equity Financing

Equity financing involves the sale of common equity but also the sale of other equity or quasi-equity instruments such as preferred stock, convertible preferred stock, and equity units that include common shares and warrants.

A startup that grows into a successful company will have several rounds of equity financing as it evolves. Since a startup typically attracts different types of investors at various stages of its evolution, it may use different equity instruments for its financing needs.

Later, if the company needs additional capital, it may choose secondary equity financing such as a rights offering or an offering of equity units that includes warrants as a sweetener.

How Equity Financing Is Regulated

The equity-financing process is governed by rules imposed by a local or national securities authority in most jurisdictions.

Such regulation is primarily designed to protect the investing public from unscrupulous operators who may raise funds from unsuspecting investors and disappear with the financing proceeds.

Equity financing is thus often accompanied by an offering memorandum or prospectus, which contains extensive information that should help the investor make an informed decision on the merits of the financing.

The memorandum or prospectus will state the company’s activities, information on its officers and directors, how the financing proceeds will be used, the risk factors, and financial statements.

Key Takeaways

Companies seek equity financing because they might have a short-term need for funds or they might need to finance a long-term growth strategy.

Companies raise capital through equity financing by selling common equity, preferred stock, convertible preferred stock, and equity units that include common shares and warrants.

• A startup that grows into a successful company will have several rounds of equity financing as it evolves.
• An IPO occurs when a private company decides to issue stock to the public.
• Equity financing is heavily regulated by national and local government.

Investor appetite for equity financing depends significantly on the state of the financial markets in general and equity markets in particular.

While a steady pace of equity financing is a sign of investor confidence, a torrent of financing may indicate excessive optimism and a looming market top.

A Real Estate Investing Guide

When you think about buying real estate, the first thing that probably comes to mind is your home. But physical property can play a part in a portfolio too, especially as a hedge against the stock market.

However, while real estate has become a popular investment vehicle over the last 50 years, buying and owning brick and mortar is a lot more complicated than investing in equities and bonds. In this article, we’ll examine the leading options for individual investors, listed in approximate order of how direct a real estate investment they are, and reasons to invest.

Basic Rental Properties

This is an investment as old as the practice of land ownership. A person will buy a property and rent it out to a tenant. The owner, the landlord, is responsible for paying the mortgage, taxes, and maintenance of the property.

Ideally, the landlord charges enough rent to cover all of the aforementioned costs. A landlord may also charge more in order to produce a monthly profit, but the most common strategy is to be patient and only charge enough rent to cover expenses until the mortgage has been paid, at which time the majority of the rent becomes profit.

Furthermore, the property may also have appreciated in value over the course of the mortgage, leaving the landlord with a more valuable asset. According to the U.S. Census Bureau, real estate in this country has consistently increased in value from 1940 to 2006.

While there was a dip during the subprime mortgage meltdown of 2008 to 2010, it has now rebounded and has been increasing overall.

An investor must know the market in which he is searching for property or hire an expert to help. For investors seeking an income stream from rental properties, the most important aspects to consider are property location and market rental rates.

As for location, many successful rentals are located in close proximity to major schools. For example, if you buy a property near a state university, students are likely to want to rent it year after year.

There are also many other features of a profitable rental property, and some take time to learn.

There are, of course, blemishes on the face of what seems like an ideal investment. You can end up with a bad tenant who damages the property or, worse still, ends up having no tenant at all. This leaves you with negative monthly cash flow, meaning that you might have to scramble to cover your mortgage payments.

There is also the matter of finding the right property. You will want to pick an area where vacancy rates are low and choose a place that people will want to rent.

Once you’ve found an ideal property in an area where people want to rent, use a mortgage calculator to determine the total cost of the property with interest. It’s also worth researching different mortgage types in order to secure a favorable interest rate for your rental.

Perhaps the biggest difference between a rental property and other investments is the amount of time and work you have to devote to caring for it.

If you don’t want to, you can hire a professional property manager. But his or her salary then becomes an expense that impact’s your investment’s profitability.

The Flip Side: Real Estate Trading

This is the wild side of real estate investment. Like the day traders who are leagues away from a buy-and-hold investor, the real estate traders are an entirely different breed from the buy-and-rent landlords.

Real estate traders buy properties with the intention of holding them for a short period, often no more than three to four months, whereupon they hope to sell them for a profit. This technique is also called flipping and is based on buying properties that are either significantly undervalued or are in a very hot area.

Pure property flippers will not put any money into a property for improvements; the investment has to have the intrinsic value to turn a profit without alteration, or they won’t consider it.

Flipping in this manner is a short-term cash investment.

If a property flipper gets caught in a situation where he or she can’t unload a property, it can be devastating because these investors generally don’t keep enough ready cash to pay the mortgage on a property for the long term. This can lead to continued losses for a real estate trader who is unable to offload the property in a bad market.

The second class of property flipper also exists. These investors make their money by buying cheap or reasonably priced properties and adding value by renovating them. They then sell the property after renovations for a higher price.

This can be a longer-term investment, depending on the extent of the improvements. The limiting feature of this investment is that it is time-intensive and often only allows investors to take on one property at a time.

Real Estate Investment Groups

Real estate investment groups are sort of like small mutual funds for rental properties. If you want to own a rental property, but don’t want the hassle of being a landlord, a real estate investment group may be the solution for you.

A company will buy or build a set of buildings, often apartments, and then allow investors to buy them through the company, thus joining the group.

A single investor can own one or multiple units of self-contained living space, but the company operating the investment group collectively manages all the units, taking care of maintenance, advertising vacant units and interviewing tenants. In exchange for this management, the company takes a percentage of the monthly rent.

There are several versions of investment groups, but in the standard version, the lease is in the investor’s name, and all of the units pool a portion of the rent to guard against occasional vacancies, meaning that you will receive enough to pay the mortgage even if your unit is empty.

The quality of an investment group depends entirely on the company offering it. In theory, it is a safe way to get into real estate investment, but groups are vulnerable to the same fees that haunt the mutual fund industry. Once again, research is the key.

Real Estate Limited Partnerships

A real estate limited partnership (RELP) is similar to a real estate investment group: It is an entity formed to purchase and hold a portfolio of properties, or sometimes just one property – only it is in existence for a finite number of years.

An experienced property manager or real estate development firm serves as the general partner. Outside investors are then sought to provide financing for the real estate project, in exchange for a share of ownership as limited partners.

They may receive periodic distributions from income generated by the RELP’s properties, but the real payoff comes when the properties are sold – hopefully, at a sizeable profit – and the RELP dissolves down the road.

REITs

Real estate has been around since our cave-dwelling ancestors started chasing strangers out of their space, so it’s not surprising that Wall Street has found a way to securitize it, turning real estate into a publicly-traded instrument.

A real estate investment trust (REIT) is created when a corporation (or trust) is formed to use investors’ money to purchase, operate and sell income-producing properties. REITs are bought and sold on the major exchanges, just like any other stock.

To keep its status as a REIT, this entity must pay out 90% of its taxable profits in the form of dividends. By doing this, REITs avoid paying corporate income tax, whereas a regular company would be taxed on its profits, thus eating into the returns it could distribute to its shareholders.

Much like regular dividend-paying stocks, REITs are appropriate for stock market investors who want regular income, though they offer the opportunity for appreciation too. REITs allow investors into non-residential properties such as malls (about a quarter of all REITs specialize in these), health-care facilities, mortgages or office buildings. In comparison to the aforementioned types of real estate investment, REITs also are highly liquid.

Real Estate Mutual Funds

Real estate mutual funds invest primarily in REITs and real estate operating companies. They provide the ability to gain diversified exposure to real estate with a relatively small amount of capital. Depending on their strategy and diversification goals, they provide investors with much broader asset selection than can be achieved in buying individual REIT stocks, along with the possibility of fewer transaction costs and commissions.

Like REITs, these funds are pretty liquid. Another significant advantage to retail investors is the analytical and research information provided by the fund on acquired assets and management’s perspective on the viability and performance of specific real estate investments and as an asset class.

More speculative investors can invest in a family of real estate mutual funds, tactically over weighting certain property types or regions to maximize return.

Why Invest in Real Estate?

Real estate can enhance the risk and return profile of an investor’s portfolio, offering competitive risk-adjusted returns. Even factoring in the subprime mortgage crisis, private market commercial real estate returned an average of 8.4% over the 10-year period from 2000 to 2010, based on data from the National Council of Real Estate Investment Fiduciaries (NCREIF). And usually, the real estate market is one of low volatility especially compared to equities and bonds.

Real estate is also attractive when compared with more traditional sources of income return.

This asset class typically trades at a yield premium to U.S. Treasuries and is especially attractive in an environment where Treasury rates are low.

Diversification and Protection

Another benefit of investing in real estate is its diversification potential. Real estate has a low, and in some cases, negative, correlation with other major asset classes – meaning, when stocks are down, real estate is often up. In fact, in 14 of the 15 previous bear markets, going back to 1956, residential real estate prices rose, according to data from Yale University’s Robert Shiller, the co-creator of the Case-Shiller Home-Price Index. Of course, there are exceptions: real estate tanked along with equities during the Great Recession (though this was an anomaly, Schiller argues, reflecting the role of subprime mortgages in kicking off the crisis).

This means the addition of real estate to a portfolio can lower its volatility and provide a higher return per unit of risk. The more direct the real estate investment, the better the hedge: More indirect, publicly traded, vehicles, like REITs, are obviously going to reflect the overall stock market’s performance (and some analysts think the two will become ever more correlated, now that REIT stocks are represented on the S&P 500). Interestingly, though, this also has been changing of late. The correlation between listed REITs and the broad stock market hit a 12-year low in 2015, according to research by the National Association of Real Estate Investment Trusts (NAREIT), “suggesting that whatever factors happen to drive the non-REIT part of the market will not necessarily spill over to affect the REIT market,” an article on Reit.com, the association’s website, concluded.

Because it is backed by brick and mortar, real estate also carries less principal-agent conflict or the extent to which the interest of the investor is dependent on the integrity and competence of managers and debtors. Even the more indirect forms of investment carry some protection: REITs for example, mandate a minimum percentage of profits be paid out as dividends.

Inflation Hedging

The inflation-hedging capability of real estate stems from the positive relationship between GDP growth and demand for real estate. As economies expand, the demand for real estate drives rents higher and this, in turn, translates into higher capital values. Therefore, real estate tends to maintain the purchasing power of capital, bypassing some of the inflationary pressure on to tenants and by incorporating some of the inflationary pressure, in the form of capital appreciation.

The Power of Leverage

With the exception of REITs, investing in real estate gives an investor one tool that is not available to stock market investors: leverage. If you want to buy a stock, you have to pay the full value of the stock at the time you place the buy order – unless you are buying on margin. And even then, the percentage you can borrow is still much less than with real estate, thanks to that magical financing method, the mortgage.

Most conventional mortgages require a 20% down payment. However, depending on where you live, you might find a mortgage that requires as little as 5%. This means that you can control the whole property and the equity it holds by only paying a fraction of the total value. Of course, the size of your mortgage affects the amount of ownership you actually have in the property, but you control it the minute the papers are signed.

This is what emboldens real estate flippers and landlords alike. They can take out a second mortgage on their homes and put down payments on two or three other properties. Whether they rent these out so that tenants pay the mortgage or they wait for an opportunity to sell for a profit, they control these assets, despite having only paid for a small part of the total value.

The Drawback of Real Estate Investing: Illiquidity

The main drawback of investing in real estate is illiquidity or the relative difficulty in converting an asset into cash and cash into an asset. Unlike a stock or bond transaction, which can be completed in seconds, a real estate transaction can take months to close. Even with the help of a broker, simply finding the right counterparty can be a few weeks of work. REITs and real estate mutual funds offer better liquidity and market pricing, but come at the price of higher volatility and lower diversification benefits, since they have a much higher correlation to the overall stock market than direct real estate investments.

Maximizing Apartment Building Investments

Real estate investors, especially those that invest in residential apartment buildings or entire complexes, have a wide range of products and services at their disposal to help ensure they keep their units filled and properly maintained.

As we all know, each time an apartment turns-over it costs money in order to prepare the apartment for the next resident. It must be cleaned, often updates may be necessary, such as replacing counter tops, appliances, carpeting and tiles.

The better resident you can place and the longer they stay the more money you save. One of the main ways to maintain residents is to provide a wide range of amenities and keep the property well maintained. Not just the interior, but the exterior and the surrounding grounds like fountains, playgrounds, pools, gym-facilities and dog areas.

There are several products and services that can help building management find the right residents. Other than screening and conducting the proper credit procedures, having a company in place to take care of the maintenance is another key area of importance.

Hiring the right property management firm can be instrumental in helping apartment building owners keep their properties attractive to the right kind of renters and maintain the property inside and out in order to maintain the integrity of the asset.

Many property management companies offer a wide range of products and services that will keep a property well-maintained. They can create a schedule of services to make sure that all units get seasonal maintenance several times a year.

Defining Normal Wear and Tear for Apartment Owners

Simply living in a rental place will eventually lead to scuffs, scrapes, and stains. The longer a tenant lives in a property, the more potential there is for accidents and everyday deterioration.

In America, the onus is on landlords to understand that a certain level of wear and tear is unavoidable and an expected aspect of renting out their unit or home. Despite this, many landlords are sticklers and it is not uncommon for property owners to try and withhold a security deposit for minor concerns, leaving their tenants in a financial predicament.

To combat these cases, many states have implemented legislation that safeguards tenants from this type of unfair treatment— making landlords potentially liable if they do not adhere to the applicable regulations.

When approached correctly, disputes can often be avoided, and if they do occur, can be resolved more easily and quickly, making the rental experience more enjoyable for both tenants and owners.

What is Normal Wear and Tear?

In a nutshell, normal wear and tear refers to any damage that takes place as the result of aging and/or regular usage.

It’s important to note, however, that each case is unique. This means that if a landlord and tenant dispute is handled in court, it will be up to the judge’s discretion to determine if an inappropriate amount of damage has occurred.

It’s also important to remember that laws differ from state to state, so rulings relating to these types of issues can vary significantly.

For the purposes of this explanation, though, we’ll be sharing an example that is more definitive.

EXAMPLE:

Small nail holes and minor scrapes in wall paint would be considered usual wear and tear, while large, gaping holes in gyprock would be considered excessive damage.

Understanding Normal Wear and Tear VS Excessive Damage

It isn’t always easy for a landlord to determine when an issue qualifies as excessive damage, or when the responsibility should fall on the tenant to repair a particular concern.

Below are some guidelines that can assist with differentiating between ordinary wear and tear and unreasonable damage:

Wear and tear does NOT include damages that occur as a result of a tenant’s negligence, abuse, or accidental destruction.

Wear and tear does NOT include damages that occur as a result of negligence, abuse, or accidental destruction by a tenant’s guests or pets.

Excessive damage does NOT include the cost of regular maintenance and repairs that must be completed after a tenant moves out and prior to another tenant occupying the space.

Examples of Normal Wear and Tear

To further clarify the normal wear and tear definition, below are some common issues that landlords would NOT be justified in deducting from a tenant’s security deposit:

• Carpet deterioration caused by foot traffic, normal use, etc.
• Broken cords on blinds or curtains
• Fading on carpets or flooring caused by sun exposure
• Non-functional light bulbs, wiring issues, etc.
• Loose door handles, hinges, cabinetry, etc.
• Leaky toilets
• Broken light switch plates

Examples of Excessive Damage

Below are damages that would NOT qualify as normal wear and tear rental concerns:

• Excessive amounts of pet urine on carpets
• Smoke or burn marks from cigarettes on flooring, walls, etc.
• Broken or missing cabinet doors
• Unauthorized renovations
• Gaping holes in walls, doors, etc.
• Smashed mirrors, broken window glass, etc.
• Clogged toilets as a result of improper use

Examples of Regular Maintenance

It is unlawful to claim regular maintenance as security deposit wear and tear, since landlords assume responsibility for a certain level of property upkeep when they make the decision to rent their space.

Below are some examples of projects or activities that would be considered regular maintenance:

• Rodent or insect exterminations
• Repairing of water damage or leaks
• Installation of functioning fire and carbon monoxide detectors
• Gutter cleanings
• Sprinkler system repairs
• Safety inspections
• Replacing fire extinguishers
• Updating or replacement of kitchen appliances

If you aren’t sure whether or not an issue qualified as reasonable wear and tear rental concern, it’s always advisable to seek a second opinion.

Too often, landlords bring their case to court, only to realize their definition of wear and tear rental property issues differs from the definition set forth by the law.

You can review Winston Rowe and Associates by clicking here.

 

Appealing To Millennial Renters Who Wish To Remain Child-Free And Mortgage-Free

Apartment Building Investing

If you own or manage rental properties, your ideal tenant is likely a young, gainfully employed person who plans to rent long-term.

Luckily for you, this dream occupant comprises one of the largest renting demographics: millennials.

According to Pew Research Center, 74% of them are renters. And given that the same study states that they’re also less likely than other age groups to move once they’ve found an ideal rental space, marketing your properties to millennials is a great way to attract reliable, long-term tenants.

Most millennials view home ownership as a risk they’d prefer to avoid. Many have amassed stifling levels of student loan debt and, having come of age during the 2007-2009 credit crisis, are more cautious about investments.

This is good news, but it also means that appealing to this market requires a nuanced marketing strategy. Here are five guidelines:

1. Become Tech Savvy

You need an online strategy that includes not only websites like Craigslist, but also top rental sites and social media platforms. The importance of the latter cannot be overstated: Over 76 million millennials in the U.S. are on social media.

Be sure to include numerous high-quality photographs (preferably professional) with your listing. Write-ups should be thorough. Applicants should be able to apply online and easily ask questions.

In addition to offering prospective tenants a seamless online experience, be prepared to upgrade the technology available to current residents. Wi-Fi is a must, and such things as USB-equipped wall plates or keyless entry have great appeal.

2. Go Eco-Friendly

According to research by Nielsen, millennials care deeply about and allow their purchase decisions to be influenced by a company’s environmental focus. For property owners, that means it is best to use digital statements, communications and marketing.

Energy efficiency should also be top of mind. Install solar panels to curb electricity costs, and switch to Energy Star appliances, energy-efficient lights and self-regulating thermostats.

Building materials are equally important, and the use of paints and construction materials with low or no volatile organic compounds (VOCs) will be viewed favorably.

If your property is close to public transportation and can thus reduce driving and carbon emissions, say so. It’s also worth mentioning if your corner of the city or town features bike-sharing programs, bike lanes or walking trails.

3. Allow Pets

While properties have had the luxury of restricting pets in the past, shifting priorities among younger generations have made it a real handicap to ban animals. Millennials may not want to own houses or cars or become parents, but they are the largest demographic of pet owners.

Therefore, it’s wise to adopt a lax pet policy and ensure that whenever opportunities arise to reassess furnishings or to renovate, pet-friendly materials are chosen.

Certain flooring and fabric options tolerate pet accidents better than others, and choosing those will likely prove more lucrative than preventing renters from co-habitating with their furry family members.

4. Promote Neighborhood And Lifestyle

Location is everything, and when you’re describing yours, it’s imperative to think through the elements of your neighborhood and the lifestyle they beget. If you’re in the city, highlight walk-ability and access to co-working spaces, nightclubs, breweries, parks or other places where young professionals will likely congregate.

Likewise, if your rental is outside of the city, advertise it as a quiet retreat that’s close to nature, where residents can decompress.

Make a list of everything your area offers that could interest people in their 20s and 30s, and include them in the descriptions of your property.

This demographic is very interested in their proximity to work and their options for play, so focus should be placed on those neighborhood conveniences rather than school districts or safety.

5. Offer Better Amenities

It’s time to assess what conveniences you are offering to tenants. Installing a washer and dryer can often be the best and easiest way to add value to your property. Parking (especially of the off-street variety) is another priority for most tenants.

If you own older buildings, you’re likely competing with newer rental properties that offer glitzy amenities like gyms, pet spas, swimming pools or room service. Ensure that you’re competing to the best of your ability by offering as much as your checkbook and your property can reasonably accommodate.

Older buildings typically benefit from having larger units than newer construction. Coupling that space with a handful of alluring amenities positions properties to go head to head with the newer, luxury-branded options that are emerging across the country.

Community spaces are also really important for young professionals, especially unmarried individuals who are seeking opportunities to meet new people and congregate with friends.

Having built-in communal areas like shared decks, lounges or gardens can make a huge difference with millennials. Perhaps your property could accommodate a fire pit, a grill or a garden. Or, if you’re lacking outdoor space, consider transforming an unused room into a game room, fitness center, library or kids’ playroom.

Whatever you decide, remember that millennials are longer-term tenants who expect their apartments to offer all the comforts of home (if not more).

While all of these suggestions aren’t going to apply to every millennial applicant, and many might not be cost-effective options for you, every landlord and property manager needs to be thinking about how to maximize their properties’ assets in the context of these millennial-friendly features.

Simplify Your Landlord Duties in 3 Steps

The digital age has brought new technology that will make your landlord duties easier than ever. Here are 3 simple ways to get your landlord tasks done faster and more efficiently.

Automatic Rent Payments:

Your first order of business is to simplify your rent collection method. Your tenants are sure to appreciate this just as much as you will. Rent is how you make money, and you should aim to reduce any obstructions that slowdown that cash from entering your bank account.

If you haven’t done so already, bid farewell to the days of mailed-in cash and check. Mailing money has plenty of inconveniences:

Tenants must go to the bank if they don’t have cash or have run out of checks

Tenants must take the envelope to the post office

You must wait for the envelope to arrive

The money could get lost in the mail

You’ll have to make your own trip to the bank to cash or deposit the rent

Mailing should always be an acceptable option for tenants, but most folks nowadays have Internet access. Use software like Cozy to let tenants pay their rent online. Rent collection software will save everyone time and inconvenience, and you’ll get your money faster.

Digitally Manage Contractors:

One of the toughest things about being a landlord is having to manage all the maintenance requests at each of your properties. If a drain gets clogged, you’re the one who must call a plumber.

If a property’s HVAC stops working, you’re the one who must hire someone to fix it. If you want to be productive in the contracting department, you’ll want to:

Keep digital lists of reliable contractors that can service your properties

Digitally record contractors’ contact information

Keeping a set list of contractors will shorten the amount of time it takes for you to respond to a maintenance emergency at one of your properties, and you’ll be able to familiarize yourself with each contractor’s pricing so that you can budget more efficiently.

If possible, find contactors who are able to do invoicing through certified software. For example, House call Pro plumbing software sends invoices and maintenance updates to the property owner and tenants automatically.

High-tech contractors are more communicative and prompter, and that’s important because you always want to know that maintenance tasks are being performed efficiently. After all, happy tenants make a happy landlord.

Hands-Off Tenant Screening:

One of the most important responsibilities you have as a landlord is to find good tenants. You probably want to avoid tenants that have:

A lengthy criminal record

History of evictions

Poor financial history

Tenants with any of these characteristics could wreak havoc upon your property and finances. Not to mention, a tenant who engages in criminal activity may very well draw criminal activity onto your property.

A tenant with a poor financial history is less likely to pay his or her rent on time. And a tenant who has been evicted numerous times could have a number of issues, such as causing property damage or consistently breaking the rules of the lease.

Suffice to say, you don’t want these kinds of tenants. And you can easily avoid them with proper tenant screening. Although tenant screenings are important, they’re also very tedious to perform on your own.

Thankfully, a middle-man exists! Tenant screening companies’ shoulder most of the workload for you.

Many of these companies perform both background checks and credit checks, and some even take on the task of collecting personal information from the prospective tenant. This is the safe, reliable, and easy way to find the best tenants for your properties.

With these 3 steps, you’ll automate and simplify your most important landlord tasks so that you can be more productive in managing each of your properties. Like they say, time is money. By reducing your workload, you’ll be able to boost your amount of free time and maximize your profits.

Fed Keeps Interest Rates Steady Despite Political Pressures

With U.S. inflation at 1.6 percent for Q1 2019, the Federal Reserve continues to hold off on any interest rate changes following last week’s meeting of the Fed’s Open Market Committee.

With both President Trump and Vice President Pence urging the Fed to cut interest rates, the central bank is working to convince observers that its goal is to see price and wage increases without the expectation of rate cuts.

Fed Chairman Jerome Powell said the Fed, as a nonpolitical institution, would not be swayed by pressure from the White House.

Powell said he expects price gains to emerge eventually. U.S. employers added 263,000 jobs in April, resulting in a 3.6 percent unemployment rate.

If the labor market continues to tighten, employers may raise wages to attract talent, while consumer demand may allow companies to raise prices. Both are slow to appear at this time.

Economists agree that today’s job boom and low inflation seem unlikely, as low unemployment tends to slow the rate of job creation.

What’s interesting is how wrong the talking head economists have been for the last 24 months.

These are the same experts that thought it was a great idea to have home mortgages of 125%+ of value some years ago.

It appears that the Q4 2019 fears of an economic slowdown are completely unfounded.

 

 

Tips for Buying A Commercial Investment Property

Buying a property is always a great way to invest. However, there are several things to keep in mind before buying an investment property.

How well you manage the proceedings will go on to determine whether your financial goals will be realized.

You don’t have to be wealthy to buy an investment property. Yet it is extremely important to make wise decisions whether you have bought three investment properties or this will be your first.

Since the property market is one of the most volatile ones, understanding the correct dynamics can be pretty difficult, especially if you are not familiar with the market.

Hence, it would be prudent to make a purchase only with much forethought. The following tips can be helpful.

Choose the right property and the right price

Investing in a property is only sensible if the given property is going to increase in value in the upcoming years. In addition to this, it is also equally important to understand the correct market price so that you make a fair deal.

Since the market prices of real estate are not highly transparent, it can be difficult to understand the actual price.

Therefore, it would count to do some background research. This is also where using a qualified local realtor can really pay off.

Prepare a long-term financial plan

If done in the right way, property investment can be one of the most profitable sources of income generation, giving you very quick returns.

However, it is important that you have a clear financial plan. For example, you can use a loan or a mortgage when buying the property and then later rent out the property. This way, the rental income itself can be used for paying the mortgage.

However, the rental income will also be affected by the system of taxation followed in the area. Therefore, make sure that you learn about the cost of all insurances and taxes before making a move. Many areas charge a bed tax which can be between 10% – 15% on top of normal taxes.

Hire a property manager

Buying a property involves a massive financial investment. If you are not familiar with the market, it can be hard to understand the actual value of different properties. Along with this, the process also involves a number of other things such as taxes, legal process, rental laws and much more.

Property managers, being professionals in the field, can easily help you through all of these issues. You may have to shell out some amount as a fee for the property managers. However, they will definitely help you secure a constant flow of renters in your home as well as make sure maintenance is kept up.

Understand the area

When you are buying a property, it is important to understand the area. It is not possible to learn everything on the internet. Hence, it would be advisable to talk to knowledgeable local real estate agents. This is important because your local realtor will know which neighborhoods have the best chance or history of increasing or decreasing property values.

Go for a massive down payment

FHA and VA mortgages are generally not available when you are buying an investment property. However, you can always opt for conventional financing, which will require you to make a down payment of 20%.

You can also opt for a higher down payment so as to bring down the rates and monthly payments. It should be noted that the mortgage rates for investment property tend to be higher than those of primary residences. Hence, it is important that you plan on this when adding up your potential profits on homes you’re looking at.

Additional costs for repairs

If you are buying an old property, you may have to make a number of repairs before renting them out or making a resale. Not doing so can affect its market value. Hence, it is important that you include the cost of upkeep and repair to the total cost of the property.

Do not put off making repairs to save money. It will cost you much bigger in the end.

While investing in property, it can be tempting to go for large-scale investments with the expectation of getting an equally large profit line. However, this can be very risky unless you have grown very familiar with the market and can afford to play around with the investments.

If you are new to the area, it would be more advisable to start small and then gradually move on to larger properties when you are prepared enough to handle them. This will give you an idea of how things work out in the market while also giving you a continuous profit on the side.

 

Fees to Expect When Financing Your Commercial Loan

Credit Report

Lenders usually request a copy of your credit report to review your credit history and ultimately determine if they should risk lending your money.

Appraisal

Since the commercial appraisal process requires a certain level of knowledge and experience with a particular type of property and market area, lenders will typically only accept appraisals from one of their tested and approved partners.

Environmental Report

Since the commercial appraisal process requires a certain level of knowledge and experience with a particular type of property and market area, lenders will typically only accept appraisals from one of their tested and approved partners.

Building Inspection Report

This is usually paid before closing as well.

Buyer’s Attorney Fee (Not required in all states)

This fee is paid to the attorney who prepares and reviews all of the closing documents on your behalf.

Closing Fees

The other expenses involved in the financing of a commercial transaction are closing costs. These are due at the time of funding of the loan and can be included in the financing. These costs are usually the origination fee, property insurance, title insurance and title related expenses, property insurance, and escrows for property taxes.

Commercial Property Insurance

This cost protects you and the lender if there is ever any damage to your property. The cost range from state to state and depends on the value of the property.

Legal Fee for Lender

Lenders can require the borrower to cover reasonable legal fees and costs needed by the lender in order to complete funding. This fee amount ranges depending on loan size and details of the loan and/or property.

Title Insurance

This fee is associated with loan policy, loan endorsements, and settlement fees. This generally protects the lender from liability with inadequately performed lien or title searches.

How to Make A Commercial Property Stand Out

Optimizing properties is about more than installing new appliances and a fresh coat of paint. Here’s a step-by-step playbook to help landlords target niche demographics and optimize their properties to maximize value.

Understand your tenants:

Always be transparent with clients and let them know how the value you present meets their needs, with an emphasis on accommodating their budget.

Trustworthy landlords not only empower tenants to confidently buy or rent from them, but may also ultimately improve their own bottom line with higher sales. When both you and the tenant understand the meaning behind what you’re charging, both sides can feel confident that they’re getting the most out of the transaction.

Understand your property:

Just like people, buildings age and require maintenance. Understanding the values and faults of your property helps fix problems as they happen, not as they spiral out of control. The last thing you want to sell is a flawed piece of property.

Location:

Connect with the property’s neighborhood to understand of what you’re presenting to clients. Knowing about amenities, transportation and demographics only scratch the surface — if you’re serious about investing in a particular neighborhood, consider opening local offices to show future tenants that you’re serious about the area they’re considering living in.

Renovations:

Regular property inspections allow landlords to find problems with the unit’s structure right away. Renovations and updated finishes can increase your asking price. Based on property type, consider what kind of renovations will pop up in the future.

Develop a unique strategy based on that understanding:

Powerful and unique marketing strategies separate the best landlords from the rest. Strategies materialize from a deep understanding of your properties and the tenants you want to attract.

Data-driven leasing:

Over the years, I’ve seen the more renters have lease terms that appeal to them, they are more likely to stay at a property. Today’s best leasing solutions use data and predictive analytics to assess patterns in consumer behavior so that landlords can attract and generate more qualified leads. Data allows landlords and brokers to work together to reach the right audience.

Timing:

Consider the timing and execution of your construction schedule. Marketing units during peak seasons can attract the highest rents and keep leases in the right cycle. These concerns demand collaboration between landlords, brokers, and contractors to deliver high-quality luxury units when the market needs them most.

Real estate isn’t easy, and success requires more than drive. It calls for a deep understanding of the fundamental appeal of a great property, and without a solid underpinning, you’re selling facades rather than strong foundations.

10 Things to Include/Outline in a Lease

Tenant Lease Agreements

Developing a lease isn’t an easy task. It requires a lot of your time and energy, and even then it’s possible you’ve forgotten some pivotal information. For that reason, it’s all the more important that you understand what details absolutely need to be outlined in your lease.

When it comes to renters, consider the fact that many are renting for the first time, and every detail truly needs to be spelled out for them.

When you look at your lease that way, it’s imperative that you include all vital information. In order to help you get started when it comes to the more important details, here are ten things to include/outline in a lease.

1. All Relevant Dates

Any time you draft a lease, it’s important to outline the relevant dates, all of them. This includes the move-in date(s), the move-out date(s), the length of time the lease is for and even the dates when you can resign your lease are (as well as the deadline). Also, though this is typically an item due at signing, you should always mention when the security deposit is due as well as how long it takes to process these payments to avoid any late fees etc.

Essentially, any information as far as dates that are pertinent to your renters go, they should be clearly outlined in a lease to avoid any confusion on their end as well as to have written proof that the renters were notified well in advance regarding all dates pertinent to the lease.

If there are any additional dates of note (i.e. dates when first month and last month of rent are due) make sure you clearly indicate those in your lease as well. Basically, if there’s a date they need to know about, those are items that you need to clearly outline in a lease.

2. Subletting Information

Subletting an apartment is stressful for college students, but oftentimes extremely necessary. Most leases run from fall to fall, but students attend school from fall to summer in most circumstances. For this reason, they are left with the options to pay their lease and stay on campus, to pay their lease while returning home for the summer, or to sublet their apartment while they stay home for the summer.

Again, many students are renting for the first time, so it stands to reason they would also be subletting for the first time. Therefore, something essential to outline in a lease is any subletting information relevant to your renters. This includes, but is not limited to, who is liable for what, how those payments work, whether or not subletting is done through the main office or on their own, and if subletting is even an option available to them. (If your office doesn’t allow subletting, you may also want to include relevant information related to summer rent – i.e. what a student is supposed to do if they are returning home for the summer but still paying rent. Is there any upkeep that needs to be done in the apartment? If so, make sure they are aware of this information well in advance, otherwise, their plans may not work out with how your lease is outlined.)

For some, subletting rules are a deterrent from signing a lease; while you may lose out on the rent from that individual, it’s better than taking advantage of them by leaving out pertinent information that could have been outlined in a lease. So, make sure that all rules related to subletting are clearly stated to avoid any confusion and harm to your renters.

3. Emergency Details

Nobody likes to think about it, but there are instances of emergencies. This could be, but isn’t limited to, fire, break-in, gas leaks, campus shooters, etc. There are so many variables here, but being prepared for any one of them is a good first step, whether or not an emergency actually presents itself.

If there are any details that a renter would need to know, such as a location to take shelter during a tornado siren or a protocol to follow if there is a break-in, make sure you outline this in your lease. Again, this doesn’t necessarily mean that anything will happen, but, as they say, better safe than sorry when it comes to the safety of you and your renters.

Also important is to include a number to call in case of emergency (i.e. gas leaks) and when it’s important to notify authorities. While it’s always a safe bet to alert the police or fire department, outlining this information can prevent unnecessary calls when there is an easier series of steps for your renters to take. Many renters are unfamiliar with such circumstances so, again, it’s much better to be safe than sorry.

4. Maintenance Details

It’s very likely your renters will need to reach out to maintenance at least once during their lease. For others, the outreach to maintenance may be more common. When you develop your lease, maintenance schedules and contact information are very important to outline in a lease. Whether you’re simply including the contact information for your maintenance people, the emergency contact information or a basic time frame of expected response for maintenance requests, this is all relevant information that your renters should be equipped with from the start.

I recommend speaking with the maintenance department, determining the best course of action for working together and outlining those details in the lease. This provides students with a general idea of what to expect when something breaks or goes wrong in an apartment.

As a side note, you should also outline in your lease what move-in day looks like from a maintenance perspective. Typically, they are provided with a checklist and required to document any aspects of the apartment that aren’t working, so let them know what this looks like and what to document to avoid charges later on. It should also be mentioned that maintenance is typically busy this day, so requests are handled on a first come first serve basis (or in another manner if applicable.)

5. Cleaning Specifications

Typically, before an individual moves into their new apartment, there is a certain amount of cleaning that needs to be done. For many landlords, this work is outsourced and charged in the last month’s rent of the previous owners. However, in many cases, there are additional costs that aren’t specified in the lease and come as a surprise when they are deducted from the security deposit. Getting ahead of this confusion and clearly letting your renters know what costs for cleaning entail is in your best interest.

Repeat customers are big for business, so negatively impacting your current renters doesn’t make sense. For this reason, let them know what costs to expect when you outline in a lease what these costs would be.

Let them know the charges for paint, for additional cleaning, for damages etc. You don’t need to provide specifics on every item, but essentially give them an outline of what to expect should there be any damage to the apartment.

6. Rent Details

Rent details are obviously essential to outline in a lease. This comes down to what your student is going to be paying monthly to live in their apartment. This also includes any additional costs they may not have considered in apartment hunting.

For example, if they plan to pay by credit card, is there an associated fee? Can they pay by check? Do they have to drop the check off at the leasing office every month, or can they mail it in? Can they pay cash? What happens when their rent is late? Is there a late fee? Is there a grace period? Does the fee increase after a certain number of days?

There are countless details to include here, and it’s all information that they will need to know, guaranteed. Think of all the questions you’ve gotten as a landlord and include their answers in your lease, as this is the best way to ensure you’ve included all the information they need.

7. Additional Rules

Let’s be honest, there are always rules. Some are unspoken, but additional rules are something to definitely outline in a lease.

For instance, do you allow pets? If not, what happens when a family member visits with a pet? Are there any areas students aren’t allowed in an apartment complex? What are the repercussions? Is there a rule for having guests? Is there a length of time before they need to leave?

These are all rules that may not necessarily be understood without being clearly written out, so I recommend clearly defining them in your lease to avoid any questions when it comes time for reprimanding your renters.

8. Additional Fees

Stating additional fees in your lease is imperative. Is there a charge for owning a pet? Is it a per-pet charge? Is there a laundry charge? What about charges for parking?

Any additional fees are imperative to outline in a lease. Basically, if there is an extra charge for something, you definitely need to state that in your lease. Additional costs should never be hidden – always state everything upfront, very clearly to avoid any problems when it comes to payment later on.

The more upfront you can be with your renters, the more likely they are to return or recommend your complex to another student. So, in other words, it’s in your best interest.

9. On-Site Resources

Most apartment complexes have a variety of on-site resources that are available to their renters, but many renters aren’t aware of these resources. For this reason, it’s a good idea to mention the available resources to your renters and include them when you outline your lease.

For instance, if you have a fitness or recreation center, that’s something to outline in a lease. You should also include any laundry facilities, parking garages, cafeterias etc. that you have available to your renters.

Many students look for these on-site resources, and they are often large perks to signing a lease, so including these details is a great idea to show all available options to your student so they feel they are getting the most out of their lease.

10. Office Availability

Last, but definitely not least, it’s important to provide your renters with your office availability. This might not be the first thing that comes to mind when thinking about drafting a lease, but it’s definitely information you should outline in a lease.

Like it or not, there are going to be a large number of times in which your renters need to get a hold of you. Sometimes, it’s related to quick questions that can be answered on the phone, and other times, they need to come into the office to speak with one of your leasing agents about changes to their lease etc. No matter the circumstances, you should always list your office availability in a lease.

This includes your contact number (both the main office and individual contact information), perhaps a link to the website for an FAQ section, your office hours and any other emergency contact information not previously listed in your lease.

It’s important that your renters always have someone they can contact, so the more information you provide in your lease to that end, the better off you are and the more comfortable they (and their parents) will feel.

While this is by no means the entirety of the information required in a lease, this is a good starting point as far as items to outline in a lease go. Again, there will be plenty of information pertinent to your complex alone, and other information that you may need to leave out, but make sure you develop some form of outline to begin with to ensure you’re not missing any relevant information.

When it comes to including information to outline in a lease, more is always better, as you would much rather provide them with too much information than not enough. So don’t be afraid of being wordy, it’s not going to do you any harm!

Use these items to outline in a lease in order to develop yours and good luck drafting your lease!

Structural Liabilities For Apartment Buildings

Apartment deals that involve significant remediation or structural mitigation cost more, are more difficult to broker, and carry far more risk for all commercial real estate stakeholders.

Looking for small signs and reversing correctable issues through proactive due diligence such as building assessments and property-condition assessments is essential to formulating informed decisions and mitigating risk.

Here are potential liabilities to consider at your current and prospective properties.

Balconies and Stairs Balconies and exterior stairs are a component of many multifamily projects but are often overlooked as a potential source of water intrusion and life-safety liabilities.

They require regular maintenance and inspection to limit the loss of structural integrity due to corrosion, wood rot, or concrete deterioration. Maintenance may also help to prevent water intrusion into the interior living spaces.

Garages Multifamily developments in densely populated or high property–value areas often include multilevel parking garages to increase the utilization of land area.

These structures include below-grade parking decks, adjacent or adjoining parking decks, and tuck-under parking. A current trend is to place living spaces around a central parking deck.

Small garages may be built with steel structural elements, while large garages are typically made with reinforced concrete. Either construction is susceptible to deterioration over time, especially due to the corrosion of steel elements that are exposed to water.

Properties in Northern climates, where residents routinely traverse roads that have been treated with brine to remove snow and ice, are especially susceptible to corrosion.

Accessibility can be a very complicated issue. Two federal laws, the Americans with Disabilities Act and the Fair Housing Amendments Act, dictate that properties built after 1991 meet accessibility guidelines.

State and municipal governments may have differing statutes, but owners who obtain financing through publicly funded lenders may be required to retrofit their property to meet current accessibility requirements.

Seismic Retrofits Determining structural risks posed by seismic activity requires an analysis of the structure and evaluation of the location relative to the known faults, hillsides, and liquefaction zones.

In earthquake-prone areas, many cities are mandating the retrofitting of vulnerable building types. San Francisco, Los Angeles, and Santa Monica in California, as well as other cities in areas of elevated seismic activity, have instituted mandatory compliance guidelines for retrofitting vulnerable buildings.

The two most frequently identified types of seismically vulnerable buildings are wood-frame “soft story” buildings, where the ground floor is used for parking and built with open walls on one face of the building; and nonductile concrete buildings, which are prone to crumble and collapse under seismic forces. Retrofit costs vary widely depending on the size and construction of the building and the objectives of the retrofit.

Attention to small indications of impending issues, paired with preventive measures to stave off greater structural concerns, can extend the life and structural integrity of a building, saving money and minimizing risk in the long run.

A thorough property-condition assessment by a qualified, experienced consultant can simplify the due-diligence and risk-evaluation process, helping to ensure a safe and viable property.

Debtor-in-Possession (DIP) Financing Defined

Debtor-in-Possession (DIP) Financing

Under Chapter 11 bankruptcy, a business files for protection from creditors while it reorganizes itself.  During the reorganization process the bankruptcy count allows the business to secure additional financing from lenders in order to continue its operations.

Under the jurisdiction of the bankruptcy court, such post-bankruptcy lenders assume a senior position on liens and security interests in the business assets, normally by consent of the pre-bankruptcy senior lenders.

In practice, the continued operation of the business allows the debtor in possession to reorganize, reposition itself, and improve its chances of repaying its debts.

DIP financing is important since it extends a lifeline to any business in Chapter 11 bankruptcy, enabling it to maintain payroll and suppliers, stabilize operations, restructure its balance sheet, and eventually repay creditors and emerge from bankruptcy.

A business in bankruptcy is normally able to obtain DIP financing only by giving its post-bankruptcy lenders protection in the form of a senior lien position.

While a senior lien position ensures that the lender will be repaid fully even in liquidation, it also limits the business with strict payment terms, which can hinder the reorganization process.

Strict oversight by the bankruptcy court serves as an additional protection to DIP financing lenders, helping to assure that new credit can be extended to businesses in bankruptcy.

Breaking Down Debtor-in-Possession Financing (DIP Financing)

Since Chapter 11 favors corporate reorganization over liquidation, filing for protection can offer a vital lifeline to distressed companies in need of financing. In a debtor-in-possession financing, the court must approve the financing plan consistent to the protection granted to the business. Oversight of the loan by the lender is also subject to the court’s approval and protection. If the financing is approved, the business will have the liquidity it needs to keep operating.

When a company is able to secure debtor-in-possession financing, it lets vendors, suppliers and customers know that the debtor will be able to remain in business, provide services and make payments for goods and services during its reorganization. If the lender has found that the company is worthy of credit after examining its finances, it stands to reason that the marketplace will come to the same conclusion.

DIP financing is frequently provided via term loans. Such loans are fully funded throughout the bankruptcy process, which means higher interest costs for the borrower. Formerly, revolving credit facilities were the most utilized method — a favorable arrangement for the borrower, as it offers good flexibility and the option of reducing interest expenses by actively managing borrowings to minimize funded amounts.

GSA’s Real Estate Leasing Policies

When looking for a starting point for examining the federal government’s real estate policies, it is best to start with the GSA’s Public Building Service (PBS). PBS is the arm of the GSA that leases space for numerous federal agencies.

PBS is also the caretaker of federal properties the GSA owns, occupies, and leases to other federal agencies across the country. PBS’s real estate policies are numerous and address almost all the federal government’s real estate leasing activities since the formation of the GSA in 1949.

Narrowing the focus to policies currently in place finds that PBS sets the policy baseline for the federal government’s real estate policy.

This policy baseline is best described by PBS as its “basic policy” to lease quality space that is the best value to the federal government, is located in a central business district (with some exceptions), is accessible by persons with disabilities, and is sustainable and provides a safe work environment.

The bulk of PBS’s real estate policies are found in the PBS Leasing Desk Guide (Desk Guide). The Desk Guide sets forth the guiding principles and policies for GSA employees engaged in government real estate contract activities.

The policies in the Desk Guide also apply to federal agencies leasing space under delegated authority from the GSA. In 1996 the GSA administrator granted GSA leasing authority to all federal agencies.

Known as “delegated authority,” this change permits federal agencies to lease their own space without using the GSA as their real estate representative.

If a federal agency uses the GSA for its real estate needs, that agency becomes either a tenant in federally owned GSA-managed space or a subtenant to the GSA, with the GSA holding the primary lease with the private-sector property owner.

The GSA has a separate occupancy agreement with the federal agency to which it is subleasing the space. The costs for managing that space are usually added to the lease payments made to the GSA by the subtenant leasing the space from the GSA.

The GSA typically has special clauses in its occupancy agreements that allows the federal agency to vacate the leased space before GSA’s lease term expires with the private-sector landlord; the GSA is typically left paying the remainder of the lease term rents regardless of the whether the space is still occupied by the federal agency subtenant.

As recently as 2014, the GSA made changes to its leasing delegation authorization process. Some of these modifications centralize the GSA delegation authorization process and require additional oversight of federal agencies, which now are required to show they can manage and administer their own leases.

To better understand the GSA’s leasing authority and the GSA’s authority to delegate this authority to other federal agencies, it is best to look at the United States Code (USC) Title 40, formally known as the Public Buildings Act of 1959.9

Multifamily Investing Due Diligence Do’s and Don’ts

With historically high rents fueling the apartment market, sellers are once again demanding top dollar and buyers have become increasingly aggressive in their pursuit of available inventory. During this process, the prevalence of defective construction in the apartment industry over the past several decades should not be overlooked.

Amateurs and professionals alike have purchased properties that were economic disasters because they were fraught with undetected construction defects. As a consequence, conducting thorough “due diligence” investigations are essential in avoiding the substantial repair and maintenance costs that can result from latent construction defects.

Understanding Apartment Construction

As owners and operators know, apartments are hybrid commercial/residential projects that have a history of problems unique to their classification. Making sure that a buyer, or a buyer’s inspection company, understands these problems, and where and how they manifest in apartment construction, can make or break a due diligence investigation.

Even reputable commercial inspection companies focus their due diligence investigations on interior systems, such as mechanical and plumbing systems, and generic sources of water intrusion common to all construction (roofs and windows). It’s doubtful, however, that these inspectors will discern hidden points of water intrusion such as handrails, deck edges, and stair stringers. Thus, it’s important the investigator be aware of not only how and where water penetrates, but how evidence of that water penetration—even when hidden behind finish materials like concrete and stucco—manifests itself on the finished surfaces of the building.

Forensic investigators who provide support to attorneys can be an excellent resource for buyers, too, during the due diligence process. They can, for example, review a building’s architectural plans for common architectural details that can allow water intrusion. They can also walk a project and identify areas that have a high probability of leaking, without conducting destructive and costly testing. If destructive testing is necessary, the forensic investigator can perform the testing and provide estimates the buyer can then use in soliciting bids for the repair work. The investigator’s findings can also help the buyer evaluate the economics of the purchase and renegotiate the sale price, if desired.

Understanding the Construction Team

An apartment building’s original construction documents are commonly made available as part of the due diligence process and should contain design drawings, subcontracts, and prime contracts, at the very least. These files can answer many questions you, as a buyer, may have, including the following:

First, ask whether the builder built the property for the builder’s own profit. Some extremely reputable developers occasionally function as their own general contractors. This is a red flag that should trigger caution, because the economics of development can be in conflict with the time and cost requirements of contractors. When developers act as their own general contractors, there’s an increased probability that quality control will suffer for the sake of maintaining the development pro forma and schedule. This is particularly true if the developer didn’t “hold” the asset for a significant amount of time after it was built.

Second, ask about the design professionals who worked on the job. Different firms have different reputations. Some architectural firms are better at generating plans that are more subcontractor–user-friendly than other firms. If the plans are too complicated, it’s common for subcontractors to ignore them.

Third, ask about the subcontractors who were retained to perform the construction work. Among the major trades, such as framing, waterproofing, sheet metal, and lightweight concrete, how many of those subs are still in business? What was their reputation when they worked on the project?

Trade contractors tend to use the same means and methods on every project they work on, often despite the requirements of their contract documents. It would astound the common consumer to learn how frequently trade contractors ignore essential contract drawings and specifications. As a consequence, a builder’s habits tend to carry over from project to project, good and bad. Attorneys and inspectors who work with apartment owners in your region should know who they are.

Understanding the Maintenance History

Because purchase and sale agreements commonly have limited representations and warranties, buyers should seek to gain as much “actual knowledge” about the function of the project as possible. Maintenance records are often the most important records for ascertaining this information, yet they are commonly ignored.

Patterns in maintenance records can provide valuable insight into which, if any, of the building’s systems aren’t performing. For example, is there a history of complaints of water coming through door thresholds or windows? Are there particular units with multiple maintenance requests for mold abatement? Is there a correlation between maintenance requests in a particular place (such as on a certain floor, or facing one particular orientation)? The problem may lie not with the tenants but with the system itself.

Talk to the maintenance personnel. What do they think works well and not so well at the property? On one occasion, a client of ours was horrified to learn that a team of painters did nothing but caulk and paint siding, because of installation errors in the building envelope. The buyer never bothered interviewing any members of the maintenance staff, some of whom freely volunteered to lawyers in subsequent litigation that the project was referred to as the Golden Gate Bridge because the asset was perpetually being painted.

Understanding Claims Preservation

Besides the building, its construction team, and the maintenance staff, there are three important legal theories apartment buyers should be aware of prior to closing escrow on a property.

Ten-year defective-construction limit. There is an absolute bar against suing a builder for defective construction more than 10 years after the project was completed. As a consequence, when a purchaser fails to identify defective construction in older properties, there can be no recovery against the builder to help offset repair costs, making thorough and effective due diligence inspections all the more important.

Three-year potential claims limit. For projects less than 10 years old, claims for construction defects can nonetheless become time barred if not pursued within three years of when an owner knew or should have known that the defect existed. Moreover, when a buyer purchases a piece of real property, the buyer is charged with the knowledge of the prior owner. Thus, if a prior owner discovers or should have discovered defective workmanship, the statute-of-limitations period commences as to that owner and all future owners.

Limits of transference. The right to sue for defective construction is a personal property right that does not automatically transfer with the sale of the real property. To the contrary, if a seller is aware of defective construction prior to the close of escrow and does not specifically transfer the legal right to sue for that defective construction (through a document called an “assignment of choses in action”), the right remains the personal property of the seller, and the buyer will have no recourse against the builder.

By conducting a thorough review of the project file, maintenance materials, and any prior sales documents, an apartment buyer should be able to determine whether the seller discovered or should have discovered any defects at the property. However, as a matter of course, purchasers of property less than 10 years old should demand that assignments of choses of action be included in the closing documents.

Good due diligence requires patience, hard work, and professionals who possess the expertise to correctly advise their clients. A proper investigation yields a thorough understanding of the building’s construction and maintenance history as well as the available rights to be conveyed.

How Commercial Construction Loans Work

Securing a commercial construction loan for various types of commercial real estate can be a difficult process to navigate. This post will shed some light on commercial construction loans and demystify the lending process.

Commercial Construction Loans and Lenders

The construction loan process begins when a developer submits a loan request with a lender. Construction or development lenders are almost always local community and regional banks.

Historically this was due to bank regulation that restricted trade areas for lending. More recently, life insurance companies, national banks, and other specialty finance companies have also started making construction loans.

However, community and regional banks still provide the majority of construction financing, since they have a much better understanding of local market conditions and the reputation of real estate developers than larger out of area banks.

There are two normally two loans required to finance a real estate development project, although sometimes these two loans will also be combined into one:

Short term financing. This stage of financing funds the construction and lease up phase of the project.

Long term permanent financing. After a project achieves “stabilization” and leases up to the market level of occupancy, the construction loan is “taken out” by longer term financing.

When a bank combines these two loans into one it’s usually in the form of a construction and mini-perm loan. The mini-perm is financing that takes out the construction loan, but is shorter in duration than traditional permanent financing.

The purpose of the mini-perm is to pay off the construction loan and provide the project with an operating history prior to refinancing in the perm market.

Commercial Construction Loan Underwriting

After the initial loan request is submitted, the bank typically goes through a quick internal go/no-go decision process.

If the project is given the go-ahead by the bank’s senior lender, the lender will sometimes issue a term sheet which outlines the terms and conditions of the proposed loan, provided all of the information presented is accurate and reasonable.

Once the non-binding term sheet has been reviewed, negotiated, and accepted, the lender will move forward with a full underwriting and approval of the proposed loan.

During the underwriting process the lender will evaluate the proposed project’s proforma, the details of the construction budget, the local market conditions, the development team and financial capacity of the guarantors, and in general address any other risks inherent in the loan request.

Typical documents required in the underwriting process include borrower/guarantor tax returns, financial statements, a schedule of real estate owned and contingent liabilities for the guarantor(s), the proposed project’s proforma, construction loan sources and uses, cost estimates, full project plans, engineering specifications, and in general, any other documents that can support the loan request.

From an underwriting standpoint, one of the most notable differences between a commercial construction loan and an investment real estate loan is that with a construction loan there is no operating history to underwrite.

The economics of the project, and thus the valuation of the property, is based solely on the real estate proforma.

The credit approval process is similar to other commercial loans, but because of the additional risks inherent in construction loans, further consideration is given to the development team and general contractor, as well as the prevailing market conditions.

Once the commercial construction loan is approved, the bank will issue a binding commitment letter to the borrower.

The commitment letter is similar to the term sheet, but contains much more detail about the terms of the loan.

Additionally, the commitment letter is a legally-binding contract whereas the term sheet is non-binding.

Commercial Construction Loan Closing and Beyond

Upon completion of the loan underwriting and approval, a loan then moves into the closing process, which can take on a life of its own.

Commercial construction loan closings are complex and involve an overwhelming quantity of documentation and procedural nuances. Typically, the closing is handled by the lender’s attorney, the borrower, and the borrower’s attorney.

A loan closing checklist is also normally issued to the developer along with the commitment letter, which outlines in detail what needs to be completed before the loan can close and funding can begin.

After a loan closes, the loan mechanics are primarily the responsibility of the loan administration department within a bank.

The loan administers (sometimes just called the loan admin), will fund the loan according to the internal policies and procedures of the bank.

Commercial construction loans are typically funded partially at closing to cover previously paid soft and hard costs.

After the initial partial funding, loan proceeds are disbursed monthly based on draw requests for costs incurred. These costs are submitted by the developer and verified by the lender.

Commercial construction loans can quickly become complex and difficult to secure. But understanding how construction loans work and how commercial developments are evaluated by lenders can help demystify the funding process.

In future posts we’ll dive into various parts of this process in detail. In the meantime, if you have any specific questions about commercial construction loans, please let us know in the comments below.

US Economy Grew 4.2% Second Quarter Of 2018

The U.S. economy grew at a robust annual rate of 4.2 percent in the second quarter, the best performance in nearly four years.

The performance of the gross domestic product, the country’s total output of goods and services, was unchanged from an estimate the Commerce Department made last month, the government reported Thursday.

The strong GDP performance has been cited by Trump as proof that his economic program is working.

“We’re doing much better than anybody thought possible,” Trump said at a Wednesday news conference.

How To Purchase An Apartment Complex

Buying an apartment complex is a long, sometimes complicated, process. It’s important for you to gather as much information as you can before you make the decision to buy. Applying for a mortgage to finance an apartment complex is not at all similar to applying for a home mortgage. Apartment complexes with four or more units are commercial properties, and loans for them have different underwriting rules.

Types of Properties:

Decide if you want to purchase a residential apartment complex of a mixed-use building. A mixed-use building has a combination of office and residential units, but at least 80% of the space has to be residential. The complex has to have a grade of C+ or higher. This means you can’t rent the units daily or weekly, and the units can’t be single-occupancy, as in a rooming house or motel.

Gather information about the building you would like to buy. You may not be able to get a loan if the building will require excessive maintenance, or if the complex has not had 90% occupancy for the three months immediately preceding your loan application.

Background:

Talk to local real estate agents. Get their advice about the location you have in mind. Inquire about the possibilities of future zoning changes or any public works projects that may impact an income producing property. If there are plans for a regional airport to be built a few miles away in the next few years, for example, you might find it difficult to rent out your residential units. Don’t assume that everything will remain static; look at the past history of the location and try to imagine any major changes that could be likely to take place in the future.

Professional Expertise:

Have the building inspected by a professional who has experience inspecting commercial buildings. Make sure the inspection covers every aspect; don’t settle for a standard inspection, which may not include trouble spots, such as a wet basement. Pay extra money if you have to for a thorough inspection that goes above and beyond what is required by mortgage lenders. If the inspection reveals serious flaws, don’t make an offer, or reduce your offer amount by the amount it would cost to make the necessary repairs.

Supporting Documentation:

Assemble the documents you will need for the loan application. Your real estate agent will be able to assist you in this. Most lenders require the following documents, but your lending institution may require more:

The ensuing is a list of supporting documents that are required to process and underwrite (due diligence) your commercial loan request. Additional documents will be required.

Financial Supporting Documents:

The last three (3) years corporate tax returns

The last three (3) years business tax returns

Name and address of corporate bank

Business Profit & Loss 3 Years, For Seller or Buyer

Most recent copy of business bank statement

Personal financial statement for all guarantors

Use of Proceeds In An Excel Format For Cash Out Refinance

Property Supporting Documents:

Schedule of tenants leases

Copies of Tenant Leases

Schedule of Units with Square Foot Per Unit

Schedule of improvements to be made with cost breakdown to subject property

Exterior Photos of Subject Property Photos of Parking Lot, Street view

Interior Photos of Subject Property

Most Recent Appraisal

Copy of the First Page of the Insurance Binder for Refinance

List of All Litigation Past and Present

Guarantor Supporting Documents:

4506 T executed

Tri merge credit report

Government issued photo ID copy – front and back

Personal Financial Statement

Articles of Incorporation

The Difference Between Primary and Rental Mortgages

Winston Rowe and Associates

Primary Mortgage: The primary mortgage is underwritten based on the assumption that your day job income + other alternative incomes will be around so that you can comfortably pay every month. Your W2 income viability is the ANCHOR that propels a bank to move forward and give you a new mortgage. After assessing your W2 income will the bank then account for your alternative income streams if needed?

The most important ratio your bank will look at is your debt to income ratio. They ratio they are generally looking for is roughly 33% or lower. That said, my recent loan modification required just a D/E ratio of 42% or less. Each bank is different. The number one goal for the bank is to earn a consistent spread over the life of the loan.

Rental Mortgage: Your rental property mortgage is underwritten based on the assumption of the feasibility in collecting rental income. The bank then looks at your W2 income to arrive at your total income. W2 income is preferred, however underwriters try to match income sources with the types of mortgages they are lending. The main issue is the viability of your income streams.

If you are refinancing an existing rental property, you’ve got to come up with a lease and rental history. No lease and a sketchy rental history full of missed payments will probably end your rental property mortgage refinance. Rental property mortgages often require a 30% or more down payments compared with your typical 20% down payment for a primary residence.

Risk Reward: It’s all about risk assessment for a bank. From the bank’s point of view, they are making a default assumption that you as the landlord require rental income to pay the mortgage. Even if you have a huge salary and lots of money saved in the bank with the existing institution, the mortgage underwriter does not put as much weight as the rental history of the property. For rental mortgages, they are essentially making a derivative bet.

Last Property Standing: In a housing downturn, the first properties to go are vacation homes followed by rental properties. A primary residence is the last mortgage a multi-property owner will default on since s/he has to live somewhere. The primary home mortgage is presumably more affordable once the multi-property homeowner gets rid of other debt. Banks know this and are more stringent in their rental mortgage lending practices. The last thing a bank wants is to repossess a property. Banks are not in the business of buying and selling properties!

THINK LIKE A BANKER WHEN YOU BORROW MONEY

Now that you understand why a bank places a higher risk on rental properties, you now know why rental property mortgage rates are often 0.5%-1.5% higher than the SAME primary property mortgage rate. Due to higher risk, banks demand a higher return on their investment in you. Banks have tighter lending standards post crisis.

Take my current San Francisco rental for example. My 5/1 ARM rate for a conforming rental loan (<$417,000) is 3.375%. Meanwhile, my 5/1 ARM jumbo primary resident mortgage is only at 2.625%. My primary home mortgage is more than double my rental property mortgage and my rental property income is more than quadruple my rental mortgage interest payments, yet the rental property mortgage is still 0.75% higher.

Source: Financial Samurai

Review of Winston Rowe and Associates Commercial Real Estate Financing

Free Book Review

Announcing , The Free eBook Commercial Real Estate Finance published by Winston Rowe & Associates  discusses the fundamentals of the different types of commercial property, the various options that are included with properties and the capabilities that you will have as a commercial property investor.

It will enable you to make the right decisions when it comes to commercial properties. After you have read this book, you will be able to successfully choose a commercial property for your real estate business.

This book will help you to figure out everything that has to do with commercial properties. Also included with this book are different ideas on what you can do to make sure that you are getting the best financing possible. You will be able to truly enjoy the opportunities that come along with financing and with the different options that you have.

It’s loaded with all the check lists you’ll need to conduct your due diligence to avoid a bad investment. There are detailed descriptions of the various types of capital sources and how to prepare and submit your financing proposal.

You will need to make sure that you can secure financing but it is not a cut and dry experience for everyone. The tips that are included with this book will give you the best chance at getting financing.

 

 

How to Become a Success in Real Estate

Create a Strong Real Estate Team:

Though it is possible to have some success in real estate as a one-person business, you’ll eventually need to build a team around yourself in order to scale up.

Your team of people can include direct employees to find and negotiate property sales for you, as well as well-liked contractors to handle repairs on the properties you acquire.

By surrounding yourself with talented and driven people, you will be able to focus in on only the most important aspects of your real estate investment business.

Balance Flipping and Rental Properties:

In real estate investment, there are two basic ways to make money.

The first is to realize a large sum by buying a property, improving it in some way and then reselling it for a higher price.

The second method is to create a flow of passive income by acquiring and then renting out properties.

Though both of these are great ways to make money in real estate, truly successful investors typically include both in their businesses. By flipping and renting at the same time, you will be able to create a more stable financial situation for yourself and your business.

Getting Mortgages For Rental Homes Winston Rowe and Associates

Mortgages For Rental Homes Winston Rowe and Associates

Winston Rowe and Associates offers financing products and solutions to help you consolidate your existing loans and grow your single-family rental portfolio.

Winston Rowe & Associates Fixed and Floating Rate financing highlights include:

No Upfront or Advance Fees

National Coverage

$500 Thousand to $100MM+

Up to 75% LTV (no less than a 1.20x DSCR)

5 and 10-year terms

Up to 30-year Amortization (I/O considered for low leverage loans)

Non-recourse (standard CMBS-style carve-outs apply)

Single Purpose Entity borrower

Soft/Springing Cash Management

Minimum net worth and liquidity requirements

Whether you are looking for a creative solution through our private money investors, or in search of institutional money, Winston Rowe & Associates can help put together a loan that will secure the rental home portfolio financing you need.

When you call Winston Rowe & Associates, a principal is always available to speak with prospective clients.

 

Guide To Financing & Buying A Business Winston Rowe & Associates

Guide To Financing & Buying A Business

Winston Rowe & Associates, a no advance fee commercial real estate due diligence, advisory and financing firm has prepared this article to address the five most common mistakes that first time commercial real estate owners make when purchasing a business.

If you would like more information about Winston Rowe & Associates and their commercial real estate financing programs, they can be contacted at 248-246-2243 or visit them on line at http://www.winstonrowe.com

According to Winston Rowe & Associates, the one common denominator that most millionaires have is that, they own their own business.

Owning your own business can be a very financially rewarding experience. The thrill of being the boss and having complete control over your own destiny are the primary reasons people leave the work force to operate their own company.

Owning your own business can easily turn in to a nightmare if you make mistakes. These mistakes are avoidable if you know what to look for in the business.

You have a better chance of becoming a millionaire if you avoid these 5 major mistakes when buying a business.

1) Due Diligence:

Winston Rowe & Associates has found that through their years of experience when performing due diligence for clients commercial real estate business financing. One thing they caution clients on is that not everything is as it seems and that is especially true when buying a business.

The owner can produce financial statements that show a business is thriving. You need to do due diligence to make sure the information presented to you is valid and shows an accurate picture of the condition of the business. For example, will they produce Business Tax Returns to verify the profit and loss statement they gave you?

You want to make sure you know what items the business actually owns, what is leased, what is owed to the business and what the business owes to others. You do not want to buy a business only to find out there is a huge pile of bills that are due and the income you were expecting does not materialize.

Doing a solid job of due diligence is what a firm like Winston Rowe & Associates does that will help you to avoid buying the wrong business or paying too much for the business.

2) Not Having Enough Cash Reserves:

Running a business requires capital. Successful businesses are able to generate enough revenue to cover the cost of their expenses. In times when the revenue is less than the expenses then you need cash reserves to cover the shortfall. If you spend all your money in the acquisition of the company then you will not be able to cover shortages when they occur. This can be the quickest way to bankrupt your new business.

Winston Rowe & Associates always recommends to clients not buy a business until you have the necessary funds to both buy the business and the necessary funds to keep it open after the purchase.

3) Cash Flow & Debt Service Coverage:

There will always be a transition period when buying a new business. Some vendors will have a loyalty to the seller and will pull their business when management changes. Likewise you might lose some of your buyers after the transition. These changes are unavoidable. They can have a tremendous impact on the cash flow of your business.

If you purchase a business assuming the current cash flow will cover the payment on your debt, then you might be in for a rude awakening. Working with Winston Rowe & Associates will ensure that the business you are financing will support the monthly mortgage payments and show a profit.

4) Don’t Pay For Future Potential:

Sellers will try to set a price on a business based on the projected value of the business. For example a self-storage business that is 40% occupied at the time of purchase may be worth $1 million dollars. If the occupancy rate was 80% then the value of the business might increase to $2 million dollars. You should not pay $2 million for the business because the seller entices you on the future potential of the business.

It will be your time, effort and energy that create the future potential in the business. You should be awarded for your efforts. Do not make the mistake of over paying for a business and rewarding the seller for your hard work.

The value of the business should be based on the condition at the time that you purchase it.

5) Wrong Finance & Entity Structure:

The worst mistake that you can make is to buy a business using the wrong entity structure. First time business owners will buy a business and sign every contract in their name. This is a major mistake because it makes you personally liable for any loss that the business incurs.

If there is loss your creditors will go after your home, your car, and your savings. Buying a business using an entity structure such as a corporation or a LLC can minimize your personal risk.

Use an advisory and finance firm like Winston Rowe & Associates to ensure that you have the correct financial qualifications and a business attorney and an accountant to help determine what the best entity structure for you to use is.

Do not make the mistake of putting everything you own at risk when you buy a business.

Owning your own business can be the quickest path to becoming a millionaire but you may never reach that goal if you don’t avoid these 5 major mistakes when buying a business.

At Winston Rowe & Associates, their primary objective is to provide the most reliable and efficient means of sourcing both debt and equity for your commercial real estate loans.

Winston Rowe & Associates provides no upfront commercial real estate loans in the following states.

Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine,  Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia,   Washington, Washington DC, West Virginia, Wisconsin,

Direct Commercial Funding No Upfront Fees Winston Rowe & Associates

Commercial real estate investors have been turning to Winston Rowe & Associates, a no upfront fee commercial financing advisory and consulting firm for their excellent customer service and private banking approach.

They offer their clients direct access to the most aggressive commercial real estate loans in the industry. Whether you are in need of short term financing, such as a private capital, private equity and traditional permanent financing, they work with clients to structure a transaction that will meet or exceed their client’s expectations.

For more information about Winston Rowe & Associates loan programs, they can be contacted at 248-246-2243 or visit them online at http://www.winstonrowe.com

Winston Rowe & Associates specializes in student housing building loans, apartment loans, ethanol plants, shopping center loans, office building loans, mixed use loans, industrial and medical office loans, warehouse loans, mini storage loans, strip center loans, hotel loans, golf course loans, subdivision loans, and lot loans.

They also have direct access to financing for joint ventures, equity participations, bridge loans, construction loans, acquisition loans, and permanent financing for both owner-occupied and non-owner occupied properties.

Direct Commercial Funding From Winston Rowe & Associates:

Never an Upfront or an Advance Fee
International & Nationwide Coverage
Loan Amounts from $400,000 to $500,000,000
All Property CRE Types Considered

Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine,  Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia,   Washington, Washington DC, West Virginia, Wisconsin, Wyoming

National Medical Building Financing No Upfront Fees Winston Rowe & Associates

Winston Rowe & Associates provides a diverse innovative Medical Complex lending platform provides Medical complex loans from $1,000,000 to $50+ million dollars.

For more information about Winston Rowe & Associates medical building loan programs, they can be contacted at 248-246-2243 or visit them online at http://www.winstonrowe.com

Winston Rowe & Associates specializes in arranging financing around the United States for Medical Office Developments, Medical Facilities of almost every description and Medical Research & Development Buildings.

Winston Rowe & Associates can also arrange quick close private financing, including bridge loan for all types of Medical office and commercial office properties with emphasis on speed.

Medical Building Financing Programs:

No upfront or advance fees to process your transaction
National coverage
One Million Dollars to Fifty Million Dollars
All medical property types considered
Purchase, Refinance & Cash Out
30 day close with complete submission

At Winston Rowe & Associates, their primary objective is to provide the most reliable and efficient means of sourcing both debt and equity for your commercial real estate loans.

Recognizing that people and relationships drive this business, they are affiliated with some of the industry’s most committed commercial finance professionals.

Underwriting Commercial Loans Winston Rowe & Associates

Winston Rowe & Associates, a national no upfront fee commercial real estate finance firm has prepared this article to provide prospective clients with the fundamentals of underwriting commercial real estate loans.

For more information about commercial real estate financing, you can contact Winston Rowe & Associates at 248-246-2243 or visit them online at http://www.winstonrowe.com

Commercial Loan Underwriting Overview:

Property owners conducting a commercial mortgage refinance are often surprised by the new range of loan programs that have become available in the last 5 years. Programs such as commercial 30 year fixed, second lien position loans, etc are turning heads. However the process is still expensive and time consuming and underwriting is still tied to the fundamentals – loan to value, debt service coverage ratios, global income, property analysis, and credit worthiness of the borrower.

Description & Guidelines:

Loan to Value

Loan to value restrictions on your typical commercial mortgage refinance are limited to 80% on rate and term and 75% on cash out refinances. However this guild line is what separates many banks from each others. Some get more aggressive and offer higher loan to values while others stay conservative and stay well below the percentages mentioned above.

This ratio is critical to banks as they underwrite files with the worst case scenario in mind – “what if the borrower defaults and we have to take this property back and sell it on the open market?” All loans rates are predicated on risk, therefore the lower the loan to value, the less risk for the lender and therefore lower rate for the borrower.

Debt Service Coverage Ratio:

On investment properties the Debt Service Coverage Ratio restrictions are typically set at a 1:1.25. Meaning that for every $1.25 of net income (income after taxes, insurance, repairs, etc) the property produces, the mortgage payments cannot exceed $1.00. Said in another way, after all expenses and the mortgages have been paid, the owner needs to net $.25 to qualify for the typical commercial mortgage refinance.

Lenders that allow lower DSCR are considered more aggressive (and normally charge higher rates) while banks with higher DSCR requirement are the considered the opposite – more conservative.

Global Income:

For owner occupants a different type of ratio is used called the Global Income approach. Basically this ratio compares ALL income the borrower has, including business profit, salary, dividends etc to ALL the expenses the borrower has including personal and business. The maximum Global ratio normally is 60%. For example, on monthly basis, if the borrower’s total personal and business income is $10,000, his total monthly debt payment would not be allowed to exceed $6,000.

Property Analysis:

The type of building being refinance has a major impact on what financial options are available. For example, there’s a huge difference in what a restaurant would qualify for vs. an apartment building. Market value, market rent, appearance, location, accessibility, local market conditions, as well as other factors play a major role into what refinance options will be available.

Credit Worthiness:

The personal credit worthiness of the borrower will be heavily scrutinized as this is an important component. A 680 credit score is the threshold for the best finance options. For smaller mortgages, credit scores play a bigger role in the underwriting decision and interest rates are heavily influenced by the borrower’s credit score.

Winston Rowe & Associates has a core focus on building long-term relationships, delivering exceptional and individualized customer service, and positioning financial products that best achieve their client’s goals.

Winston Rowe & Associates has no upfront free commercial real estate financing solutions and in the following states.

Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine,  Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee,   Texas, Utah, Vermont, Virginia,   Washington, Washington DC, West Virginia, Wisconsin, Wyoming

Commercial Loan Underwriting and Due Diligence Winston Rowe and Associates

Winston Rowe & Associates offer expert due diligence, underwriting and funding solutions for apartment loans, office, hotel, industrial or retail property loans, with no upfront or advance fees.

Whether you are a seasoned investor or new to the market, Winston Rowe & Associates is there to help you explore your best options for commercial financing.

They can be contacted at 248-246-2243 or visit them on line at http://www.winstonrowe.com

Professional Underwriting & Due Diligence:

With almost a decade of experience in structuring commercial real estate deals, they have direct relationships with private equity, private capital. agencies, life companies, conduits, and “out-of-the-box” regional and national commercial lenders.

It’s important to work with a partner who understands your industry and can structure the right program to help you achieve your goals.

In addition to permanent debt financing, Winston Rowe & Associates regularly structures transactions using high-leverage bridge loans, mezzanine debt, construction loans and straight equity.

At Winston Rowe & Associates, their primary objective is to provide the most reliable and efficient means of sourcing both debt and equity for your commercial real estate loans. Recognizing that people and relationships drive this business, they are staffed with some of the industry’s most committed professionals.

Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine,  Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia,   Washington, Washington DC, West Virginia, Wisconsin, Wyoming

How To Finance Special Purpose Properties Winston Rowe & Associates

Unique properties are not easily understood by traditional lenders. Winston Rowe & Associates, a national no upfront fee commercial finance firm has solutions for non-traditional financing for funeral home financing as well as commercial financing for other special purpose properties.

Prospective clients can contact Winston Rowe & Associates at 248-246-2243 or visit them on line at http://www.winstonrowe.com

Funeral homes, assisted living facilities, campgrounds and other special purpose properties represent one of the most difficult commercial loan situations which will be confronted by a business owner

Why Are Special Purpose Commercial Properties So Hard To Finance?

By definition special purpose properties are not similar to other commercial properties. This makes many lenders uncomfortable due to the likely difficulty of finding another owner for a unique commercial property should it be necessary due to a loan default.

For funeral homes and many other special purpose commercial properties, most of the business value is represented by non-real estate assets. With traditional commercial lenders that focus on commercial real estate loans, it is almost impossible to get a loan based on the real estate value and the business value.

For example, it is not uncommon to have a situation in which the real estate for a funeral home is valued at less than one million dollars while the overall business value is in excess of three million dollars.

Because commercial financing is so difficult to arrange for special purpose properties such as funeral homes, assisted living facilities and campgrounds, sellers of such properties are generally willing to provide substantial seller financing to assist the buyer in acquiring the business.

However, many traditional lenders do not recognize or accept seller financing as a means of reducing down payment requirements for special purpose properties.

Many lenders simply do not understand the business complexities associated with a special purpose property. As a result, it is not uncommon for these lenders to attach onerous and expensive requirements such as business plans and environmental reviews.

In most cases such lenders do not even want to make the business loan but will use undesirable loan requirements as a means of appearing to approve a loan when in fact they have disapproved the loan by adding commercial loan terms that they do not expect a commercial borrower to accept.

Winston Rowe & Associates Commercial Loan Solutions:

For a business borrower facing the situation described above, the highest priority should be to locate a non-traditional commercial finance firm like Winston Rowe & Associates that engages in the following commercial loan practices:

Does not charge upfront fees to process or underwrite you loan
Openly welcomes special purpose properties and routinely finances such properties
Provides commercial financing for both the business and real estate
Accepts substantial seller financing

Winston Rowe & Associates has an excellent knowledge based investor resource for commercial real estate valuation and market analysis located at:

http://www.winstonrowe.com/Free_Real_Estate_Resources.html

Their professional staff is dedicated to streamlining the loan process and providing unsurpassed lines of communication.

Winston Rowe & Associates
31408 Harper Ave
Suite 147
Saint Clair Shores MI 48082
248-246-2243

Winston Rowe & Associates has no upfront free commercial loans in the following states.

Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine,  Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia,   Washington, Washington DC, West Virginia, Wisconsin, Wyoming

What Is Private Equity Winston Rowe & Associates

Winston Rowe & Associates, a no advance fee international commercial business financial advisory firm. They have developed this article to assist their prospective clients with the fundamentals of Private Equity.

For additional information concerning Winston Rowe & Associates financing solutions, they can be contacted at 248-246-2243 or visit them on line at http://www.winstonrowe.com

Overview:

Private equity investors (also called financial sponsors or buy-out firms) invest in non-public companies and typically hold their investments with the intent of realizing a return within 3 to 7 years. Generally, investments are realized through an initial public offering, sale, merger or recapitalization.

While venture capital firms tend to invest in earlier stage growth companies, private equity groups tend to focus on more mature businesses, often contributing both equity and debt (or some hybrid) to the transaction.

What Private Equity Firms Look For:

Strong management team.
Ability to generate cash.
Significant growth potential.
Ability to create value.
A clearly defined exit strategy.

The Value Proposition:

While private equity firms employ various strategies to create value in their investments (such as the consolidation of a fragmented industry), a common strategy is to acquire a “platform” company and grow the platform through further “add-on” acquisitions. Add-on acquisitions are typically smaller in size, but complementary to, the platform investment. Ideally, the synergies of the combined entity create a more efficient whole, both operationally and financially.

Leverage & Cash Flow:

Private equity groups typically use leverage (debt) to increase the return on the firm’s invested capital. The amount of leverage employed is normally determined by the target’s ability to service the debt with cash generated through operations.

The ability to generate cash allows the private equity investor to contribute more debt to the transaction. Because of the aggressive use of leverage, often, the cash flow a business generates in the early years following the acquisition is almost entirely consumed by the debt service. Furthermore, if the strategy is to grow the business, and it usually is, growth also consumes cash. For this reason, private equity investors are keenly focused on the cash flow of the business.

Because cash flow is the basis for valuation, the ability to improve operations to generate increased cash flow will also yield a greater return on investment upon exit.

Exit Strategy:

Private equity groups make money from both the cash flow of the acquired business and from the proceeds generated upon exiting the business. The exit provides the investor a mechanism to monetize the firm’s equity. This is also referred to as “a liquidity event”. The exit provides the financial sponsor with a finalization of the investment and an opportunity to distribute profits. In fact, a significant component of a private equity professional’s compensation is based on this profit distribution, called “carried interest”, or just “carry”. Profits upon exit go to back into the cash account to fund new acquisitions.

Winston Rowe & Associates has an excellent knowledge based investor resource for commercial real estate valuation and market analysis located at:

http://www.winstonrowe.com/Free_Real_Estate_Resources.html

Winston Rowe & Associates has a core focus on building long-term relationships, delivering exceptional and individualized customer service, and positioning loan products that best achieve their client’s goals.

Winston Rowe & Associates
31408 Harper Ave
Suite 147
Saint Clair Shores MI 48082
248-246-2243

Winston Rowe & Associates has no upfront free commercial loans in the following states.

Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine,  Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee,   Texas, Utah, Vermont, Virginia,   Washington, Washington DC, West Virginia, Wisconsin, Wyoming

What Is Private Equity Winston Rowe & Associates

Winston Rowe & Associates, a no advance fee international commercial business financial advisory firm. They have developed this article to assist their prospective clients with the fundamentals of Private Equity.

For additional information concerning Winston Rowe & Associates financing solutions, they can be contacted at 248-246-2243 or visit them on line at http://www.winstonrowe.com

Overview:

Private equity investors (also called financial sponsors or buy-out firms) invest in non-public companies and typically hold their investments with the intent of realizing a return within 3 to 7 years. Generally, investments are realized through an initial public offering, sale, merger or recapitalization.

While venture capital firms tend to invest in earlier stage growth companies, private equity groups tend to focus on more mature businesses, often contributing both equity and debt (or some hybrid) to the transaction.

What Private Equity Firms Look For:

Strong management team.
Ability to generate cash.
Significant growth potential.
Ability to create value.
A clearly defined exit strategy.

The Value Proposition:

While private equity firms employ various strategies to create value in their investments (such as the consolidation of a fragmented industry), a common strategy is to acquire a “platform” company and grow the platform through further “add-on” acquisitions. Add-on acquisitions are typically smaller in size, but complementary to, the platform investment. Ideally, the synergies of the combined entity create a more efficient whole, both operationally and financially.

Leverage & Cash Flow:

Private equity groups typically use leverage (debt) to increase the return on the firm’s invested capital. The amount of leverage employed is normally determined by the target’s ability to service the debt with cash generated through operations.

The ability to generate cash allows the private equity investor to contribute more debt to the transaction. Because of the aggressive use of leverage, often, the cash flow a business generates in the early years following the acquisition is almost entirely consumed by the debt service. Furthermore, if the strategy is to grow the business, and it usually is, growth also consumes cash. For this reason, private equity investors are keenly focused on the cash flow of the business.

Because cash flow is the basis for valuation, the ability to improve operations to generate increased cash flow will also yield a greater return on investment upon exit.

Exit Strategy:

Private equity groups make money from both the cash flow of the acquired business and from the proceeds generated upon exiting the business. The exit provides the investor a mechanism to monetize the firm’s equity. This is also referred to as “a liquidity event”. The exit provides the financial sponsor with a finalization of the investment and an opportunity to distribute profits. In fact, a significant component of a private equity professional’s compensation is based on this profit distribution, called “carried interest”, or just “carry”. Profits upon exit go to back into the cash account to fund new acquisitions.

Winston Rowe & Associates has an excellent knowledge based investor resource for commercial real estate valuation and market analysis located at:

http://www.winstonrowe.com/Free_Real_Estate_Resources.html

Winston Rowe & Associates has a core focus on building long-term relationships, delivering exceptional and individualized customer service, and positioning loan products that best achieve their client’s goals.

Winston Rowe & Associates
31408 Harper Ave
Suite 147
Saint Clair Shores MI 48082
248-246-2243

Winston Rowe & Associates has no upfront free commercial loans in the following states.

Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine,  Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee,   Texas, Utah, Vermont, Virginia,   Washington, Washington DC, West Virginia, Wisconsin, Wyoming

http://www.prlog.org/11900564-what-is-private-equity-winston-rowe-associates.html

Nationwide Commercial Real Estate Loans

Nationwide Commercial Loans

Winston Rowe & Associates is a commercial real estate finance firm with a core focus on loans from $500,000. up to $50 Million, without upfront or advance fees.

They provide a diversified mix of national commercial real estate financing products, and a state of the art online commercial lending platform, with a staff of experienced professionals.

Savvy commercial real estate investors choose to work with Winston Rowe & Associates because they can often provide better terms than their local banks provide; such as longer fixed periods, longer amortization schedules, lower rates and or they need more aggressive underwriting standards than they have been able to find locally.

Winston Rowe & Associates Considers The Following Property Types:

Motels
Hotels
Apartments
Mixed Use
Resorts
Nursing Homes
Senior Apartments
Assisted Living Facilities
Hospitals
Shopping Centers
Truck Stops
Office Buildings
Automobile Dealerships
C-Stores
Manufacturing Facilities

They have the knowledge, relationships and experience to make sure that clients not only receive the financing that best fits their needs, but also that the clients complete the transaction with minimal headaches and in a timely manner.

Commercial Real Estate Listings & Investing

Winston Rowe & Associates, a no upfront fee commercial property financing firm has scoured the Internet to find the best sources for free commercial real estate listings and investment analysis.

If your looking for real estate properties for commercial investing or need background information on a asset?

Description of The Free Resource Links:

National Real Estate Investor.com

This is the leading authority on commercial real estate trends. The magazine’s readers represent a cross-section of disciplines — brokerage, construction, owner/development, finance/investment, property management, corporate real estate, and real estate services. No other publication provides as much independent research on a variety of topics that pertain to the office, industrial, retail, hotel and multifamily markets as National Real Estate Investor. We also produce webinars, white papers, research, custom publishing, reprints and custom conferences for our clients.

Cityfeet.com

This is the leading online commercial real estate network, connecting commercial real estate property owners and brokers to tenants, brokers and investors. Cityfeet offers commercial real estate products and services catering to the national and local needs of the commercial real estate industry. Cityfeet specializes in all commercial real estate property categories including office space, executive suites, commercial land, industrial property, retail space and businesses for sale. Cityfeet is the #1 source of free commercial real estate information for commercial real estate professionals and powers the commercial real estate area of many of the country’s most popular websites.

CIMLS.com

They provide real estate brokers and investors with a centralized online commercial multiple listing service (MLS). With over 250,000 registered members and $47 billion dollars worth of commercial property listings ranging from farms for sale to office buildings for lease CIMLS.com offers the largest free commercial real estate information service online today. Our partners attract a strong community of investors, commercial real estate brokers, appraisers, lenders and other real estate professionals. By working together, the CIMLS.com community offers you a full-service free commercial mls to buy, sell, or lease your investment properties. Join the commercial realty professionals at Century 21, CBRE, Coldwell Banker, Grubb & Ellis, Prudential and ReMax.

Commercial IQ

They are the most powerful commercial real estate search online, drawing commercial property listings from local brokerages and associations nationwide.

SHOWCASE.com

This search engine is for business professionals and investors looking for their next commercial property to lease or buy. Search from over one million properties across all asset classes, including: office space for lease, office space for sale, industrial property for lease, warehouses for sale, retail properties for lease, retail property for sale, multifamily apartments and land investments.

Zillow.com

They are one of the largest real estate Web sites in the U.S. and has become the premier destination for buyers, sellers, renters, homeowners, landlords, and real estate professionals.

Trulia.com

It’s an all-in-one real estate site that’s jam-packed with the most useful and timely information on homes for sale, apartments for rent, neighborhoods, markets and trends to help you figure out exactly what, where and when to buy. And you can get advice and opinions from local experts on Trulia Voices, your online real estate community.

LoopNet.com

They are the largest commercial real estate listing service online. Search commercial properties for sale or lease.