Banks Eating More of the Commercial Mortgage Pie
Tenants, Steady Returns
banks have played a major role in some of the markets biggest busts, so caution is warranted. • > Continued from :: PG 53 Opportunity Abounds in Specialized Real Estate Notes • Property sellers who originated two to • Property sellers who originated four or more notes in 2017 decreased by 66%. Investor Notes: The latter two categories posting declining origination three notes in 2017 decreased by 34%.
Dust buildup creates a fire hazard, so clean HVAC systems at least twice a year. Space heat- ers are also a common cause of house fires, and often tenants aren’t aware of the hazard they present. If allowed in your lease, space heaters should be plugged directly into an outlet, not an extension
add $20,000 to your rehab budget (at least) and make sure you work in a contractor-friendly city. As far as tobacco smoke alone, goes, we say, ‘Mold is gold, and smoke is easy.’” – Tom Olson, The Olson Group & Good Success “We buy them often, but they are a real pain [to restore].” – Bryan Blankenship, Ohio Turnkey
trays of coffee grounds. They absorb the stink and afterward, your house smells like coffee!”
this emerging “gap” in seller-finance note origination? Action Item: Explore your options for helping mom- and-pop sellers create high-quality notes. • Data courtesy of Advanced Seller Data Services. Each year, Advanced Seller Data Services compiles statistics on private note creation in every state. > Continued from :: PG 54 4Ways to Finance Buy-and-Hold Real Estate • Contract for deed • Land sales contract • Lease option • Master lease option (on apartments)
> Continued from :: PG 37 Howa Contract Will Make or Break Your Real Estate Transformation As I mentioned, there are dozens of items that can (and in most cases should) be included in your contracts any time an extensive series of repairs or renovations is in order for a property. These four are just the beginning, but they can play a critical role in the success or failure of a project just by helping you and your contractor get on the same page with the same goals in mind. • Investments That Lead to Significant Returns on Luxury Properties and record music, some- thing never done before in that area. This bold move generated lots of buzz for the developer and, out of their 350 units, more than fifteen tenants reported moving > Continued from :: PG 40 3 Invisible
BEST FACE FORWARD Price’s screening process
longer. Consequently, banks are increasingly investing short-term depository capital in a long-term product. More simply, they are borrow- ing short and lending long, which has a history of failure in real estate downturns in the past. None of this is to predict another crisis, or to say that loans originated today will default at an unusually high rate. That said, history has shown that smaller banks tend to be less sophisticated at designing portfolios to mitigate risk, hedging and working out loans, so a crisis could hit the regional/local bank segment disproportion- ately hard.
also plays an important role since her units are designed to appeal to a very specific renter. “I do not have huge
– Greg Rand, Own America
Although sellers are not legally obligated to disclose the smoking history of a home, many buyers will automatically reject a property that they believe was a smoker’s residence. Since heavy air freshener is commonly considered a “giveaway” that another smell is being masked, coffee grounds may be a better option. •
cord, and have an auto shut-off in case they tip over. Tenants should also keep
open houses where hordes of people run through my buildings, and I’m very upfront about what my proper- ties offer: residential, quality living with a vintage feel. That means I didn’t put in new moldings, for example; I preserved the ones that have been there for decades. I might have restored the cabinets, but they’re not new from a big box store. That kind of thing.” By being clear with poten- tial residents about what her properties offer, Price has been able to install long-term, well-paying tenants who are extremely loyal. Some of her residents have lived in her buildings for decades. “I have really wonderful tenants who stay a long time. They treat the properties with respect and they don’t want them changed,” she said. “After all, it’s their home.” • > Continued from :: PG 91 Seasonal Preventative Steps for Avoiding Financial Loss
three feet of clear space around them.
If your property has a fireplace, have the chimney professionally inspected each year before your tenants use it. Creosote buildup is highly combustible and could start a chimney fire. Pro Tip: You can learn more about chimney care and find a certified pro on the Chimney Safety Institute of Amer- ica’s (CSIA) website: www.csia.org. • > Continued from :: PG 93 Experts Reveal Field-Tested Ways to Remove Tobacco-Smoke Byproducts IS TOBACCO-SMOKE REMEDIATION WORTH IT? “Of course. This is easy [to fix] unless you are also dealing with a meth house. If so, and you still buy it, you had better
NATURAL REMEDY: “Bring in big, flat
There are an
activity probably reflect investors, property
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endless number of possibilities for creatively
flippers and developers, not mom-
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purchasing a property,
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although you should work with a lawyer
and-pop sellers. I think the drop is a combination of factors:
Information Management Network (IMN)
67-71, 74-75, 78 & 81
CAN BANKS MAINTAIN DISCIPLINE?
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to make sure every transaction is structured legally and correctly to protect you and your seller. CONCLUSION Don’t fall into the trap of thinking you need to be rich to start buying and holding real estate. Buy and hold real estate is probably the best way to become wealthy to- day, and there are countless ways to finance it. •
Although lending stan- dards do not appear to be extraordi- narily frothy, the growth in commercial
National Real Estate Insurance Group Norada Real Estate Investments
IMN Supplement: 6-7
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• Fears (justified or not) over Dodd-Frank.
3
in specifically because they heard about the recording studio. Investing in community has a high correlation to lease renewals.
IMN Supplement: 16
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41 33
• In the stronger economy they found qualified buyers who did not need a seller- carryback note. • They may have recorded each note in a unique name. Ask yourself: Is there room in my business to take advantage of
mortgages as a share of GDP is
2
Real Wealth Network
83
a warning sign. For now, the banking system
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When residents are socially engaged and have friends in the community, they are far more likely to stay. •
doesn’t appear to be at risk. Leverage levels remain con- servative by historical stan- dards and small banks don’t seem to have enough market share to create systemic risk. However, historically small
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> Continued from :: PG 85 Vintage Style Brings Loyal
> Continued from :: PG 51 Regional/Local
US Probate Leads
93
HEATING DEVICES
NO. 3
96 | think realty magazine :: october 2018
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