Archive for May, 2009
May
20
Commercial Tenant Representation
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In today’s business world, there are a lot of options to consider when choosing the right location for your business. You have to consider area demographics, rental rates, size of the space for today and for growth, tenant build-outs and much, much more. For the general business owner, whose mind has to be on running the business, this may be too much to handle. This is where a good commercial real estate tenant representative comes in.
Many business owners would prefer leasing over buying a property because it frees them from the responsibility of having to keep up with the maintenance of the property; it costs less and does not tie the business owner to the property long term. But leasing is not as cut and dried as it used to be. Having quality Commercial Tenant Representation can help ensure that the tenant (business owner) is getting a good rate, a good deal and is getting the space that is needed for the business.
Many tenants have a lot of different preferences and tastes when it comes to choosing a space to lease. Do my customers live in the area? Is it accessible to public transportation? Is there quality ingress & egress? Are there competing businesses nearby? Are there other businesses around that may help draw customers? Will the space be built-out to my needs? What are the total costs I will incur each month? What kind of rate increases should I expect? And the ultimate question: Is the rent affordable and negotiable? Having Commercial Tenant Representation means that all these and a myriad of other questions can be answered while you keep your mind on your day to day business.
With Commercial Tenant Representation, the tenant can feel confident that they are getting the best deal in the property that he will be leasing. The reason for this is because a good representative will always have access to a wide selection of properties up for lease that they can easily match the tenant with what he needs. Also, using Commercial Tenant Representation ensures that the tenant knows his rights and privileges as well as his responsibilities to the property that he leases. Negotiations can be handled through the representative and any problems that may arise from the rental of the property can be addressed through this rep.
Having Commercial Tenant Representation means that the tenant will be given an analysis of several locations, selected based on the specifications given such as cost, size, and accessibility. With this analysis, the tenant can now have an overview of his choices of property and be able to make an intelligent and informed decision on a property that will best suit his needs. Getting Commercial Tenant Representation makes life as a tenant much easier and safe. And even the landlord will thank him for it.
Repossession
May
18
Banking/lending Changes, Commercial Work Trucks and Construction Equipment
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As the economy has weakened and defaults have occurred at all levels, lenders Have put themselves into a very difficult position how to do business. On one hand, the lender has taken back tremendous amounts of repossessions due to default of payments or non-compliance of terms with the lease. The lessee can’t afford to make payments when the revenue base isn’t there and the costs of doing business has sky rocketed. The lessee has either walked away from his obligation to pay the lender or the lender has taken back the acquisition. Either way, everybody is a loser and the future looks no brighter.
The lender must recondition these repossessed items and either re-lease them or auction them off at a discount. This isn’t a good scenario because the lender is losing time and dollars on every repossession. As this problem has leveraged itself, it has put some lenders into financial crisis. At the present time, some lenders have had to reevaluate their financial models and make dramatic changes. Their normal lending requirements have become more stringent and fewer prospects will now qualify for commercial trucks and construction equipment than one year ago. Many lenders will not lend on new acquisitions unless your personal credit score is above 650, 680 or higher. This has caused a problem on buyer acquisitions but also limited the lenders’ growth which might be his survival. Additionally, financially strapped lenders require time in business of at least two, possible three years. This additional requirement has eliminated a big pool of potential buyers of heavy equipment and trucks.
As the lenders normal credit models have changed, this has caused potential buyers to be cautious and/or nervous of lender’s intentions. Every week, information is in the news pertaining to a bank/lender and for the most part this information is damaging to the lending industry. In some instances, some lenders have transformed itself overnight into a different type of lender.
For the startup business, this has caused them to be almost locked out the trucking and construction industry entirely unless they have a personal credit score of 700 or higher. Additionally, the risk/reward factor that is presented at this level has required the lender to require a 15-20% down payment to consider a startup transaction.
One of the solutions that is available to the start up or the seasoned business without stellar credit is repos offered by these strapped lenders. These trucks and heavy equipment can be attractive to potential buyers because the front money may be minimal and the lender may be more flexible in its financing and credit requirements. This expanding market should be examined by all potential buyers because unique opportunities can exist for all different levels of the customer wants and needs. Seasoned businesses with stellar credit and time in business could be rewarded handsomely in the price, financing or both. .
This following types of work trucks and construction equipment is described in this article:
Dump trucks, bucket trucks, day cabs, concrete and cement trucks, boom trucks, water and vacuum trucks, articulated trucks, garbage trucks, tow trucks, excavators, bulldozers, forklifts, concrete equipment, concrete pumps, forestry equipment, backhoes, etc
In conclusion, when shopping for financing on commercial trucks and construction equipment, it is important that you acquire as much information pertaining to your lender. Times have changed and your contract that you signed must be carefully read and understood. These lenders that exist today may be completely change its lending model in a year or so and/or possibility Be out of business. Boy, times have changed..
Happy hunting for your acquisition and related financing…
Sell and Rent Back
May
17
Online Advertising and Search for Commercial UK Property - Made Easy at Search4premises
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One of the most difficult aspects of selling commercial property is giving your property good exposure and establishing it in the market for prospective investors to see. This is true for both individuals or property agencies – what commonly happens is that they end up spending more money for advertising than planned. Although putting up a big sign or draping a huge “4 sale” banner on your building would catch people’s attention, the advertisement will only be seen within that small group of people around the vicinity of your property. Nothing beats publicity through the Net where the market reaches the widest possible audience. Search4premises is a web-based facility that lets you step into this market. What the site chiefly offers is a listing cost for advertising UK commercial property or businesses for sale or rent at around just ?4 a week. Other features provided in the site include a search tool for commercial properties in the UK, listings for want ads, and complete security through personal account logins.
What Search4premises sets its sight on is to attracting potential buyers and advertisers alike. This way, everyone benefits from up to date postings and a healthy commercial property market is achieved. With its target of acquiring 5,000 hits a day, this goal is not difficult to reach which is why working with Search4premises is a very good move.
Search4premises has developed a quick and easy way which will make the advertiser’s and shopper’s task easy. For example, it provides an advanced search tool. Posting your ads has been made easy through a well-structured process. Advertiser’s preferences has been given importance by offering two effective ways of getting your UK commercial property ad displayed to the market. You can opt to post your advert in the standard manner where a photo of the property is shown together with all essential information or you can also choose to have your ad listed among the various categories in the classified pages section. In this section you may also post want ads, ideal if you are searching for something in particular.
Register on the site as either a private advertiser or a commercial agent. If you are an individual property owner and wish to list only one advertisement you can register in the site as a private advertiser. Registering as a commercial property agent or surveyor etc allows you to post multiple adverts depending on the package you choose. All advertisers have their own individual account which means they can edit and update their listings as often as they need.
Rent Back Fast
May
14
Rental Property Investment
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The chief goals of any property investment are appreciation, cash flow and tax savings. Rental property investment is the only property investment that provides you all these three benefits at the same time.
The main rental property categories consist of single family rental properties, multi-unit residential rental properties, commercial rental properties and holiday homes. The first category includes long term single family renting, the second category includes apartments, buildings for multiple families while the last category includes shopping centers, office buildings etc. for a long tem renting purpose. Here are other points to consider with real property investments:
1) Methods like repossessions, ugly homes, and probate homes are useful for buying property. Lease purchases can be extremely useful which help you to leverage investment money and reach a positive cash flow from renting. Buying fixer upper homes or repossessions can help to reduce investment money and improve cash flow and appreciation.
2) One cannot expect a considerable cash flow from property with one tenant. In this case, the main goal is to cover the mortgage and current expenses.
3) Research on a potential rental home should include significant financial planning for years ahead, like expenses of property management, repairing, vacancy, emergency etc.
4) The apartment and the 2-4 unit homes are the main classes of the multi-unit residential property investments.
5) With apartment investments the main profit comes from the rental cash flow. A lease to purchase option and leveraging investment money is quite useful in this case. The most significant factors in this case are the financial evaluation and property management. With a steady cash flow from a number of tenants, it is possible to hire a manager for the property management. It helps to increase the cash flow and the value of the apartment building. Underestimation may damage the investment and lead to loss.
6) Commercial properties investments include office buildings, retail shopping centres, industrial properties and the like. The market value of these properties is decided on the cash flow (net rental income). The main objective of rental in these cases is to generate enough cash to exceed the cost of mortgage, insurance, maintenance, future improvements. This is not an easy task to handle. It requires analysis of many things. But if done properly it could prove to be lucrative. Changes in the economic conditions usually have a pronounced impact on these types of real estate investments than on residential property investments. And as office buildings and industrial properties are more susceptible to these changes, it is wise to keep extra capital to support those investments if something does not go as expected. In this case, a money-leveraging approach (lease to purchase option) is very useful.
7) A holiday home can be used in two ways. It can be a property home or an investment property. This category includes resort properties, mountain homes, or beach homes. With holiday rentals, the main profit comes from the appreciation. Cash flow generated from renting is usually used for current expenses like property management, mortgage and insurance. These are short-term rentals and require intensive maintenance.
Sell and Rent Back
May
14
Commercial Bridging Loans: Helping you Clinch the Best Property Deal
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Everyone faces a situation wherein he wants to purchase a property but can’t do so because the person who wants to buy your old property wants more time to pay the amount. Commercial bridging loans help you to cope up with this situation by providing financial assistance in theses tricky situations. Commercial bridging loans are secured loans and you’ll have to place a security against the loan amount. Bad creditors can also avail the benefits of commercial bridging loans.
BASIC INFORMATION ON COMMERCIAL BRIDGING LOANS
Commercial bridging loans are short term loans that help you bridge the financial gap that occurs during sale or purchase of property. If an individual wants to purchase a new property before the sale of the old one it becomes difficult for him to bridge this gap. Commercial bridging loans are meant to provide financial help to such people until he is able to sell his old property. Commercial bridging loans are secured in nature. You’ll have to place one of your properties as collateral against the loan amount it. You can place either your old property or the new one that you want to purchase as collateral. With commercial bridging loans you can avail an amount ranging from £100000 to £400000 with repayment duration of 1 - 10 months. Commercial bridging loans are supposed to be paid when you sell your old property. Commercial bridging loans can also be availed by people having bad credit history due to arrears, defaults, CCJ, IVA, bankruptcy etc. Bridging loans are approved very easily and in very short period of time. Bridging loans carry slightly higher rate of interest compared to other loans, this is because bridging loans are short term loans.
COMMERCIAL BRIDGING LOANS: FEATURES
Commercial bridging loans are very helpful for people who want to purchase a new property but are stuck because they have not been able to sell their old property.
Commercial bridging loans are short term in nature and hence don’t become a burden on the borrower and can be easily repaid. Commercial bridging loans can also be availed by people having bad credit history. People with bad credit history can get rid of their bad credit status by paying the loan installments regularly. Being secured in nature commercial bridging loans is approved very easily and the loan amount is actually transferred to your account within 2 – 3 days. Commercial bridging loans carry a bit higher interest rate but that too is not much due to the intense competition in the market.
Passive Income
May
11
The Advantages of Ground Leases - Las Vegas
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While many people do not consider the possible use of a ground lease or land lease, ground leases offer a great way to retain a long-term ownership interest in real property that can significantly benefit heirs, while providing a current income stream. Vacant land that an owner may not be able to develop on his own can also reach its full development potential sooner using a ground lease. Most ground leases are negotiated with a provision that calls for the short-term development of the land, and once developed land owners / landlords have a relatively small risk of loss.
In Las Vegas, ground leases are used periodically but they have not been a mainstay in the real estate market. Given the cash crunch caused by the “Recession of 2008,” however, more land owners are considering them. Waiting for an end user to purchase a property, when most cannot get bank financing, can be costly. A ground lease provides and alternative to waiting that appears to be promising in the current economic climate.
Establishing a base return rate for a ground lease is not as difficult as one might imagine. Discovering the current market value of a property to be leased is the first step, and it is usually accomplished via an appraisal. With regard to the rate of return, if you were to sell a property for cash and invest the proceeds with as little risk as possible, you have established a base or minimal return figure. The near risk free rate paid on government treasury bonds is usually the base rate. Since more risk is associated with a ground lease than with holding government bonds a risk premium is usually added to the base rate.
One of the biggest issues associated with a ground lease in Las Vegas, as elsewhere, is position or subordination. If a developer is going to borrow money to improve a site, the lender generally wants to be in first position. Since the underlying land owner sees this request for subordination as a way to separate him from the land asset, and the bank feels its investment is larger and should be superior to the underlying land owner, some ground leases fail to materialized due to this security issue. Ground leases are most attractive to land owners when no financing is required for the development of improvements.
Another difficulty establishing a ground lease is the provision regarding rental adjustments. The Consumer Price Index (CPI) adjustments is often built into building leases, and at times CPI adjustments are adopted in ground leases. CPI adjustments provide the tenant with some assurance that they will not be caught up in a revaluation due to an explosive land market. The downside of using a CPI adjustment for the land owner is that the land may dramatically increase in value over time and the land owner will be stuck with the contract terms negotiated based on a much lower value.
Once established, the sum of the net present value of the income stream from a ground lease plus the discounted value of the remainder are the basis for value. So poorly structured ground leases can destroy the value of a parcel of real property.
Thus, ground leases can be detrimental to an owner or tenant if not well crafted. I have personally evaluated a real property encumbered by a 99 year lease with a 60 year term remaining that provided the leased fee owners with a return so low that their heirs could not afford to pay the tax bill. I can’t think of anything worse than being conveyed an asset worth several million dollars that just costs you money every month and that will likely not provide you with a benefit during your lifetime.
The opposite side of the coin is a lease that favors the owner so much that the tenant cannot afford to pay the monthly rent. Driving your leasehold tenant into bankruptcy is also not the best scenario for a long-term lease relationship.
Under certain circumstances a ground lease can be beneficial to both a landlord / owner and a tenant. Recent market changes in Las Vegas have opened land owners to the possibility that a ground lease may be a valuable tool to get a deal transacted. Great care must be taken to develop terms and legal provisions (with the aid of your attorney) that will remain reasonable over the life of the lease. Thus, the use of a ground lease in Las Vegas is being considered by owners and developers as a serious alternative to traditional land sales.
Passive Income
May
10
Quick Bridging Loan Bridges the Financial Transaction
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Bridging loans are the secured loans that are configured to overcome the financial gap between selling of existing property and buying of new property. Quick bridging loans handle the financial problems that are faced by the property owner during buying of a new property.
Quick bridging loans are short term loans that are secured against the existing property of the borrower. Borrower’s collateral plays a vital role in the quick bridging loan as it fetches larger amount in lesser time than other loans.
Quick bridging loans are short term loans as its repayment period varies from a week to month or one year to extend. Therefore, interest rate charged on the quick bridging loan is quite high compared to a secured loan. But your proper search can endeavor to find the best rates for your required deal.
Quick bridging loans are secured against the existing property of the borrower so, if the borrower is confident regarding the repayment of the loan amount then only he should avail quick bridging loans. Otherwise continuously or total failure in the repayment of the loan amount can become a reason of repossession of your collateral.
Quick bridging loans can be distinguished as ‘open’ or ‘closed’ bridge loans. If borrower has placed his property for sale in the market then he can opt for closed bridge loan whereas in open bridge borrower has not placed his property for sale in the market.
Borrower has to pay only the interest till his property is sold but when his property is sold borrower repays the entire loaned amount i.e. principal amount to lender.
In order to acquire the new property, bridging loans can offer you with £25000 to £500000, as per your requirement. So, for acquiring the quick bridging loan borrower must get his property evaluated from the property dealer so that he can avail desired amount.
Bridging loans offer you financial aid at the most critical point that arises during buying a new property before selling the old one.
Sell House Quick
May
06
Commercial Real Estate - Lease Vs. Own
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In my daily dealings with small business owners I see entrepreneurs struggle with the question of whether to lease or own their buildings consistently. The idea of owning can be very appealing, especially now as interest rates are still low (historically), new loan programs are popping up like 90% non SBA financing, commercial second mortgages and 30 year fixed programs. And, building bargains seem abundant as real estate values continue to take a beating.
This question is certainly not new. Businesses have contemplated this for years – in good times and bad. The decision can become complicated quickly as objective (financial, space needs, etc.) and subjective factors (business image, growth plans, pride of ownership, etc.) combine. Forces outside of the business owner’s control, such as the general economy, interest rates, future real estate values, further obscure the issue.
The most thought of advantage of ownership is the potential appreciation. However as we are seeing now, appreciation is not always guaranteed.
Historically, financial experts have broken down the question by quantifying the factors such as the difference between the down payment/monthly mortgage vs. lease payments (among many others factors such as tax rate, tax benefits, interest rate, inflation, depreciation, expected holding period, expenses, etc). The point is to come up with an estimate of the buyers Internal Rate of Return on the down payment injected into the purchase.
Internal Rate of Return is commonly discussed, analyzed and dissected. Many factors can be manipulated, such as the anticipated appreciation rate inflation rate etc, to come up with different projections.
Some of the major pros and cons of ownership include:
Pros
• The creation of equity
• Monthly mortgage payment is usually lower than comparable lease payment
• Potential future rental income
• Assisting owners with wealth/retirement
• Building an asset that will assist in securing business lines of credit and other forms of loans
• Pride of ownership
• Stability
• Control
• Business image
• Not being exposed to increases in rental market
• Not being exposed to whims of landlords
• Dramatic tax benefits
Cons
• Property management responsibilities
• Interest rate exposure on adjustable mortgages and/or if mortgage balloons
• Opportunity costs of down payment not being in a more liquid asset, or being used for business operations
• Decrease in functionality of building
• Building value subject to market conditions
• Length of time in selling building
• Decrease in space flexibility
These types of analysis can be very useful and give a clear perspective on a complicated issue. But, for most small business owners in general and in our economy, the question really boils down to cash in hand and long term plans.
First of all, can the business really afford to inject 10% or 20% into a facility? Equity is hard to “tap” in commercial real estate. Many businesses need that capital for daily operations. Secondly, what is the difference in the potential mortgage payment vs. lease payments? Is owning going to increase cash-flow for the business (as it commonly does)?
Long term plans. Owning can be the wrong strategy for companies with strong growth potential/ expansion plans as selling on the short term can be expensive and difficult. Also, companies seeking venture capital may want to shy away due to how real estate ownership affects their balance sheet.
So, without oversimplifying the issue, the economy seems to be making purchasers think more of “now”, how holding real estate affects their business immediately vs. traditional long term hold IRR type mentality. Many buyers are discovering that despite concerns over the market, ownership still makes a lot of sense for their business and personal wealth.
Repossession
May
05
Commercial Mortgages for Small Business
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By the word “mortgage” We used to have begun only recently: a relatively new concept for the Russian practice. If the mortgage housing is becoming more common, the commercial real estate mortgages - has only sporadic cases.
Mortgage commercial real estate or commercial mortgage (mortgage business), is widespread throughout the world. Western experience shows that with sound operation of commercial real estate - rental of premises for offices, shops, business services - its yield is comparable to any other area of small business and allows the use of mortgage loans.
The essence and conditions of commercial mortgages
Mortgage loan is granted for the purchase of non-residential premises: warehouse, office, etc. The meaning of the mortgage is to lend the purchase of commercial real estate under the same pledge. In contrast, housing loans, commercial mortgages are short term loan, but rather high interest rates.
Typically, the annual rates of commercial real estate mortgage loans range from 12 to 16%, mainly in the currency. The term of the mortgage real estate - a maximum of 10-12 years and the most common term - 5 years. Borrower must make an initial contribution of 25-40% of the value of real estate. In doing so, the client must be profitable and a minimum balance of the year on the market.
The legal nuances of commercial mortgage loan
The scheme of the commercial mortgage is similar to non-residential mortgage housing: there are the same procedures for assessing the borrower and the facility, the requirement of the initial deposit. But there is a fundamental difference - the law does not allow companies to draw up a mortgage on the property until the conclusion of the sale. The object must first acquire and then you can pledge to get the money.
An important legal aspect of commercial mortgages - the registration of ownership of non-residential premises, while mortgage encumbrance Federal law does not provide. The Treaty on mortgage commercial real estate is subject to general rules of the Civil Code of the Russian Federation on the conclusion of treaties, as well as the Federal Law “On Mortgage (mortgage). According to paragraph 1 of article 9 of the federal law in the contract of mortgage must be given to mortgage his assessment of substance, size and term of the obligation secured by a mortgage.
Who will benefit from the commercial mortgage?
Participants in the commercial mortgage market agree that the development of the mortgage business is constrained primarily loopholes in the law. However, it is not clear, and someone who will be the borrower, what is its quality. Reliable stable companies can take to acquire an ordinary commercial real estate loans on bail of any property, they do not particularly need a mortgage. And if the company has no collateral or banks do not consider it possible to give her credit based on the evaluation of such a company - why would need a mortgage borrower?
It is for this reason that Russia mortgage commercial real estate still is, essentially, for large companies. For small businesses do not have sufficient collateral. On the specific risks of small businesses overlap problem opaque commercial real estate market.
Commercial Mortgage Scheme
So, the existing legislation in respect of the mortgage business is not perfect. It defines and possible arrangements for the mortgage lending business. According to the law “On mortgage” for commercial real estate, as opposed to living quarters, is an entirely different mechanism of registration and registration of collateral. Therefore, the market has developed a number of ways to carry out this kind of transactions, enabling them under current legislation.
Scheme I
The conclusion of the sales contract. The seller receives a portion of their funds from the buyer, as well as the guarantee of a bank. Then the registration of ownership of the new buyer. Further, the registration of a collateral agreement, followed by the issuance of credit and final settlement. This scheme experts called the most complex and lengthy.
Scheme II
The buyer pays for pre-contract owner (the seller) of its own funds, and the seller receives from the Bank’s obligation to pay the missing funds in the event of registration of mortgage. Followed by registration of collateral on a bank and registration of all documents on the transfer of ownership of the new owner, that is, the buyer (the conclusion of a contract of sale), after which the seller receives the full amount, but registration is taking its course.
Scheme III
Realtors latest scheme called “Ransom entity.” A company, which is made out of real estate object (entity). Then the borrower to buy shares of the company by paying the loan. In doing so, the company arranged for the property.
Leasing - an alternative to commercial mortgages
According to experts, a good alternative business imperfect until the mortgage can become a commercial real estate leasing. In this case, the leasing organization - an analogue of a cooperative - gives credit for the purchase of the property and is the owner of the facility until the loan is not repaid. One of the advantages of leasing is that his arrangements clearly stated in the legislation. On the other hand, in case of bankruptcy leasing organization all of its property may depart for the debts of third parties, such as banks.
In any case, the risk is unavoidable. Banking experts advise entrepreneurs themselves to influence the terms of lending. According to most experts, the most urgent problem hindering the development of commercial mortgages, the low culture of the financing of small businesses. Mortgage becomes reality when the small business “Light”. The lower the tax culture of small business, the worse the conditions of mortgage lending for the same - the withdrawal of real market-mortgage business.
Real Estate Proffessionals
May
05
Government Repo Auctions for Cheap Seized Cars and Property for Sale
Posted by: | CommentsIf you’ve never heard of or attended government repo auctions then you don’t know what you are missing. There are deals to be had on repossessed and seized cars and real estate at one of these free public auctions that can’t be beat anywhere. If you 18 years of age or older and have a valid drivers license or ID you can participate in one of these money saving events.
There are two types of items you will find at a government repo auction; repossessed and seized properties obtained through criminal investigations and prosecutions, and defaults on loans or owed back taxes. The government uses these auctions to save money on storage costs for the large amounts of properties they seize each and every month. They also are able to recoup much of the administrative costs associated with processing these goods saving the tax payers hard earned money.
Because the government is not interested in making a profit but simply wants to cover their costs the starting bids at these auctions are usually very low. If you research your choices before hand there is a good chance you can save big on whatever you choose to bid on.
Here’s what you’ll find at one of these free government auctions:
1. All makes and models of vehicles. You will find cars, trucks, SUVs, RVs, and motorcycles at well below market value. Many of these vehicles are less then a year old and are in excellent condition. Most of the seized vehicles are a result of law enforcement arrests and prosecutions which means in many cases they are high end vehicles. Being able to score a luxury sedan, sports car, or tricked out SUV for less then Blue Book value is one of the big draws of these auctions.
2. All types of real estate that includes single family homes, luxury vacation homes, and businesses with all the equipment, commercial property, and undeveloped land. For those who are looking to use real estate as an investment tool a government property auction can be a great place to start.
Participating online is also an option in the internet age. The internet auction sites provide updated listings of when and where these auctions are taking place along with updated listings of all the items that can be bid on. This gives you the chance to do the necessary research before hand which can help you decide what things are worth and what type of bid package you are comfortable with.
Sell and Rent Back
