Author: Jonathan Kampell

Commercial Property for Lease

To choose a proper place we need to look for the right place where we can have our business running smoothly. In such cases many people rely on their own instinct and go ahead with their own strategy and plan to get a lease. They may succeed or they may fail. But if you are looking to get a commercial property for lease, you must always find a broker who knows the tricks of the trade. Getting a broker will help you in selecting the right properties in the area of your choice.

Getting a commercial broker is not at all difficult as they are more than willing to find you the right place if you sign a small representation agreement and part with a little incentive. As they will be getting most of the fees from the owner, they will definitely secure you with the best deal available. If you are trying to lease a place in a small town where commercial brokers may not be available, you can search the public records yourself and have a deal fixed with the landowner. But choosing a broker in a big city will help you as the brokers work for the commissions and they will definitely try to get you the best deal available. Finding such a broker is not difficult at all especially if you are working with any real estate attorney.

As is the case while renting a residential property, you will find that the lease agreement is generally more inclined towards the benefits of the landlord. You have to be very careful about the terms and conditions as there are a few snags that remain almost in every agreement and if not addressed at the beginning, could dent your financial plans. Any commercial property for lease market is a cut-throat market, and any agreement should be prepared so that both the tenant and the owner get to receive benefit from the contract. As of current situation there is no fixed security deposit that you must pay and it varies a lot. You can use your negotiation skills to reduce the amount though.

Tips On Mortgage Lending

There are two kinds of interest rates when it comes to a home mortgage: fixed and floating. If it is fixed it will remain the same throughout the years. If it is floating, however, the interest rate may be subject to change depending on a number of factors in the economy. The Federal Reserve sets the FFR (federal funds rate) which affect mortgage rates. If you are someone with good credit you have a much better chance of getting a lower interest rate on your mortgage.

There are a lot of advantages which come when you take out a mortgage to buy a home. The first and most obvious is that you will be the proud owner of a home without paying a lump sum of money. You won’t have to pay the full amount of the house up front, which can be much more convenient because generally houses are a very large purchase. You can then use the other money which you are saving for other projects and investments. Mortgage loans also improve your credit score and reduce tax liability. You may also get a home equity loan to get some needed cash if you are in a bind. There are a lot of ways you can benefit from our services.

You can experience all of these advantages when you get a home mortgage with a professional. Instead of finding your own way through the financial world trying to get the right mortgage from you, you can utilize options and talk with professionals in order to find the right plan. Professional home mortgage lenders genuinely care about your financial future and they are happy to work with you and cater to your unique financial situation. As a borrower you will be given more options when it comes to your real estate purchases.

By coming to a professional firm you can also benefit from refinancing your home and you get cash back. If you have a lot of equity you can do a cash-out refinance. This can be a very useful tool, one which they offer, and will allow you to use that money when you are in a financial bind or you are doing some other important project and lack the financial means.

Role of a Property Manager

You might already have a general idea of what a property dealer does because chances are you deal with one when you pay rent or need a repair in your home. However, there is more to the job than just those things. A property dealer or manager is typically hired to carry out the day-to-day operations of a particular piece of property. Although they are most often associated with apartment complexes, they can also provide services for owners of single family homes. Each manager is likely to have different responsibilities according to their level of pay and their individual contracts.

Not only will your property manager collect the rent; but odds are good they also set the initial amount and adjust it down the line as needed. They know how to do these things in order to make the amount attractive to new prospective tenants; as well as making sure they take in enough money each month to cover the monthly bills of that property. Believe it or not, they really do know what they are doing and generally have everyone’s best interest at heart.

A typical property manager is also responsible for finding tenants with various marketing campaigns and sometimes offering deals to attract and keep them. Additionally they must screen all prospective tenants extremely carefully. These screening methods may include criminal background checks, as well as credit checks. It is also likely they will request and contact all job references and/or personal references. A property manager is far more experienced in screening prospective tenants than the average person. If you are considering buying property to rent out, you may well wish to hire a property manager.

One task of the property manager that ought to be familiar to you is that they are responsible for the ordering of any repairs or maintenance you need to your specific property. Although they do not literally fix it themselves; they do take your complaint and then disperse the task to the appropriate person who will fix it. They also give the orders for maintenance to the outside areas such as mowing lawns or trimming bushes. Maintenance of the pool/spa and any other amenities the property offers also fall under the direction of the property manager. If you should accidentally lock yourself out of your home, they will have the master key with which to let you back in. You do not have to break into your own home in order to enter it. So you see, they do have quite busy daily responsibilities that they must strictly adhere to. They are worth every penny of the salary they earn.

Property Development Without Money

Let’s take a look at a hypothetical situation. You’ve done your research and identified a specific demand in your suburb, for say units. There is a great site near where you are renting; a nice little 6 pack will fit on it and it’s zoned ready to go. It’s going to make about 35% profit on cost. You have $5,000 to your name and a $15,000 credit card debt. Your car is slowly falling apart and you’re working for a consultancy firm in the industry. What do you do?

Some might say take the $5,000 and hit the casino or the track but that would be monumentally stupid. There are so many options available to you it really isn’t funny.

Hang on, what was that word; “option”? That’s your first point of call. Perhaps you could option the property? OK, so what does that mean? Basically it means signing a contract to purchase the property, but not now, later, much later.

You have $5,000; you can pay a lawyer to prepare an option agreement for you and to pay a $1,000 option fee to the owner. Would the owner accept a $1,000 option fee? That depends on so many things but if you can negotiate this you have a development site; if you can’t then you have nothing; the choice is yours. What would you do?

But before you go too far down the option track you need to find out if the property owner is willing to dispose of their property in the future. If not then forget about an option agreement.

Let’s say that the property owner knows their property can be developed for a hefty profit and refuse to option it but still want to talk to you. You’re wondering why, but they are waiting for you to make an alternate offer; a joint venture arrangement perhaps?

Think about it; you have a development site without having to pay for it. But you have to share your profit. What would you do? It’s very simple yet again isn’t it? Get your lawyer to draft the development agreement.

Congratulations; you now have a development site for basically no cost but only one small problem; you don’t have any money to develop it. Hmmm, what now?

A couple of alternatives come to mind. First, you could sell the development rights (assuming your agreement allows you to do this) and pocket some cash for your efforts. Second you could do a joint venture with a developer. Now that you are in control of the site there will be many people who will want to work with you.

Property Development

Over the past thirty years I have met a multitude of people who have taught me many different things about the industry yet every day I learn just a little more. After about twenty-five years I stopped saying “I know that” because it took me that long to realise that I really didn’t know much at all. There are hundreds, if not thousands, of people involved in a development project. How many consultants do you need to get your project designed and approved by the local Authority? How many builders and subcontractors are engaged on your project? How many people are required to manufacture the building products that you need for your project; and how many people are involved in the mining industry to extract the raw materials for the product manufacturers?

What you may think is a humble little project contributes to employment and economies all over the world; and to the creation of profit all the way along the “food chain”. And if you are a developer yourself you may profit also; if you get your numbers and your product right.

Getting your product right is critical to your project’s success. You need to undertake market research to ensure that your product meets the requirements of your target market. Then you need to make sure that your product is located in the right place so that your target market will buy or lease it. And not forgetting that you have to deliver the building for the appropriate cost so that your target market is willing to pay the appropriate price for it.

As the developer you must assess the risk associated with undertaking this process and for determining the risk associated with the market changing, for whatever reason, whilst you are creating your product. At every possible stage you need to consider risk minimisation and mitigation. Only the developer can make these types of decisions. Welcome to property development!

Benefits of Using a Quality Property Management Company

  • Higher Quality Tenants
    One of the many jobs of a property manager is to find quality tenants to fill vacant properties. They thoroughly screen applicants by examining factors such as their rental history and credit score, calling their references, and even interviewing them to determine if they would be a good tenant. This process ensures that properties are filled with desirable tenants who will take care of the space, make their payments on time, and produce a steady income for the property owner. Management companies have vast experience sorting through applicants, and can spot warning signs and red flags easily.
  • Shorter Vacancy Cycles
    The owner isn’t making a profit if their property isn’t occupied. In fact, unless they own the property outright, during times of vacancies owners typically have to make the mortgage payment out of their own pocket. When a property is occupied tenants’ rent can be put toward the mortgage payment or used as income. Property management companies take care of marketing and advertise properties to the appropriate audience and see that the vacancy is filled.
  • Better Tenant Retention
    Tenant turnover requires additional time and money to clean, market and fill the space, all of which is costly for owners. To avoid turnovers and vacancies retaining quality tenants is imperative. Property management companies serve as a point of contact for tenants and are immediately responsive to their needs. If there is an issue that needs to be addressed it’s their job to handle it, and they work hard to keep quality renters satisfied. Property managers also handle lease renewals and are familiar with the market, so they know how to entice tenants to stay.
  • On Time Payments
    Landlords don’t make a profit if their tenants don’t make their rent payments on time. It may seem innocent to overlook one late payment, but once a pattern of truancy is established it can be a difficult hole to dig out of. Inconsistent payments can put a heavy financial strain on a landlord who has to cover the mortgage costs out of their own pocket-punctual rent collection is a must for consistent cash flow. Instead of owners dealing with awkward confrontation and repeated excuses, it’s a property manager’s job to collect rent on time and enforce the lease agreement if payment terms are not met.

Instead of bearing the on the hassle, headache, and heartache that comes along with being a landlord, it makes sense to hire a property management company to deal with the unpleasant aspects of property ownership for you. No, their services do not come for free and yes, you do have to pay a fee, but the benefits reaped in money and time saved are well worth it.

Private-Mortgage Loans

This loan could be a great option for home buyers who are not able to qualify for a traditional mortgage because of less than exact credit, debt or for self-employed people who can’t always offer proof of a stable income. A debtor should remember that a person with a poor credit record can get a hard money loan if the project shows the profit.

Personal loans are not paid back over 30 years like a traditional loan. A huge big number of private lenders expect the loan to be repaid within a very short time like as six to twelve months. Lenders are often looking for a very quick return for their money, and they generally are not set up to offer a loan for several years the way a typical mortgage company is. Homes that need extra renovations generally can’t get qualifies for conventional mortgages, no matter how better a borrower’s credit score is. In those cases, private money can play a very important role. A non-traditional lender can step in and offer to finance to get the house in sell-able condition, then flip the house.

One major drawback of personal mortgage loans is interest rates. The rates of interest are much higher with a private money lending than with a conventional loan. Even, sometimes mortgage rates are more than double, often 12 to 20 percent per year. Basically, mortgage rates are very high because private lenders don’t need exact credit. Fund from private lenders are generally secured by the property in question, so it is usually not very important to the lender if the debtor has good credit or not.

If you own a house that you believe is a candidate for a personal loan, the approval procedure often takes just a couple of weeks, as opposed, it takes 30 to 45 days for a conventional loan. For many borrowers, qualifying a loan than fast is a very good trade-off for higher interest rates. Generally, private money lenders don’t need a long drawn-out loan process like a conventional mortgage does.

If you have a house and you want to rehab it, as well as you feel that you could make it better enough to boost its worth in a short time that would allow you to pay off a personal loan and replace it with a conventional sale, then applying for a private loan is a viable option. As long as you understand the caveats and complete your research, there has a possibility to successfully secure a property without a conventional loan.

Prepare for a Mortgage Application

  1. Credit History – It is advisable to request a full credit report prior to applying for mortgage. Loan programs, interest rates, and down payment are all determined by credit score. After you have a copy of your credit report, the areas to review include: your credit scores, any inaccuracies found in your credit report, any open collections or judgments, and any past-due accounts. Prior to applying for mortgage you should address any inaccuracies or derogatory accounts directly through the credit bureau. Once you are satisfied that your credit report is correct, you should receive an updated report from the credit bureau with your new credit scores. Your lender will pull a tri-merged credit report and then use the middle credit score for loan qualification purposes.
  2. Residence History – Your lender will require documentation supporting your last 2 years residence history. If you rent from a company, your lender will require the company’s name, address, and phone number. If your landlord is a private individual, you will most likely need to provide the last 12 months canceled rent checks.
  3. Employment History/Income – The lender will require documentation on the past two years of your employment. This will include your employer’s name, address, phone numbers, and the dates that you are employed. If you have a current resume, it would be useful to your lender to explain your employment history in greater detail, especially if you have had multiple jobs in the past 2 years. Depending on the type of income that you receive, such as: salary, tips, bonus, commission, or 1099 income; you’ll want to review the income that your lender is able to use to qualify you. Your lender may not be able to use non-salary income if it has been received for less than two years. Also, overtime and bonuses will likely not be used unless guaranteed by your employer. The lender will also deduct any recurring business expenses that you list on your tax returns related to your employment. Your tax return may also include rental income or loss, annuity income, or other income sources that may or may not be considered on your mortgage application.
  4. Assets – Your lender will require a copy of all pages of your last two months bank statements. This includes all bank and retirement accounts. Any large deposits made within the prior 60 days of your loan application will have to be fully documented showing the source of the deposit. Providing a copy of your retirement or 401(k) account is vital to a loan approval, because the amount of reserves you have after closing will influence your lender’s decision.

Mortgage Lending

You can benefit largely from the services of a mortgage lending firm because a mortgage can be so beneficial to you. Through their services, not only will you end up with your own house, but you will actually find a lot of other benefits to having a mortgage as well. By utilize their services you can be confident that you are getting the best service you could ever ask for.

Rather than stunt your financial growth a mortgage is a tool that allows you to improve your financial standing. When you think about it a mortgage has nothing to do with your home’s value. Your home is going to grow or fall in value regardless of your mortgage. When you are buying a home you are planning for the home to gain more value, obviously rather than fall or stay the same. With a mortgage you can have the value of your home growing at the same time as your equity grows.

Many people carry the wrong notion that the bigger your mortgage is the lower your equity. Equity is a great thing and probably one of the most important reasons you decided to invest in a house. However, the statement is not true that you will have lower equity-the faster you pay off your mortgage, the more you will see your equity growing. That isn’t even the best part, because your home is most likely going to become more and more valuable as the years progress. This means your equity will be increasing.

Mortgages are some of the cheapest loans available, too. It is true that they have interest-and not all loans do, but the amount of money you borrow using a mortgage and the commitment involved is what makes it so cheap. You couldn’t borrow that much money from another source on zero interest. Don’t forget that mortgage interest is not only tax-deductible but also tax-favorable.

When you start to consider all of the pieces, there really are a lot of reasons you might want to consider a mortgage as one of the best decisions you can make. Of course, you can get a mortgage from a lot of different places-but just because a mortgage might be good doesn’t mean you will be happy, especially if you pick the wrong mortgage lending firm. While some mortgage lending companies don’t care at all for their customers or treat them as people, others are out to cheat them. A good mortgage lending firm will see you as a human being and will give you the best options available in light of a mortgage.

Commercial Property Condition Assessment

The Purchase or Leasing of Commercial real estate, whether it be a basic commercial net lease, a commercial triple net lease, the purchase of a church facility, a retail outlet, or the purchase of a million square foot office/warehouse, the prospective buyer or lessee absolutely must conduct an adequate level of due diligence when investigating the physical quality of the commercial real estate they are investing in.

You need to know not only the physical characteristics of the real estate and buildings being acquired, but the approximate condition and age, to assess the good with the bad, such that you can adequately balance the risks and rewards being offered in conjunction with your real estate deal. The single most important part of the real estate transaction process, aside from the purchase price and profitability balance, is a well-documented review of the actual physical condition of the real property. Otherwise, you could find yourself the not so proud owner of a commercial property that, doesn’t suit your needs, costs more than you can afford in upkeep, or the ultimate remorse for investors – capital expenditures are being sunk into a property on a regular basis that someone else is utilizing and making money off of, and you are not. Suddenly, that long term lease with a solid anchor doesn’t seem so attractive anymore.

The process of commercial real estate inspection begins before the offer to purchase real estate is drafted or signed, by visiting the site and discussing the physical condition of the property with the Owner and real estate brokers. This process should be considered invaluable to establishing relationships required to obtain the information that will be necessary to concrete your due diligence with a Commercial Property Condition Assessment (PCA).

During negotiations and drafting of the real estate sales/lease contract it is important to recognize seller or lessor reluctance to points such as the existence and availability of important documents such as warranties, maintenance contracts, architectural and engineering plans and/or local municipality reviews and inspections. Negative reaction to the request for release of these documents by seller or lessor can imply possible deferred maintenance and/or inattention related to property and building condition(s) and inspection issues.

Once the commercial real estate sales contract is signed the due diligence period begins, focus on maximizing efficiency of time and cost and prioritizing concerns to start checking off the costly big ticket items from the top down. Assuming adequate documentation is furnished by the seller for review, adequate time should be allotted to verify the information provided. Additional effort and monies that that will need to be spent to make up a shortcoming of available documentation through extra property condition assessment and additional field inspections and/or experts should be considered essential and figured into the cost of the property transaction. Ask the seller for all documents and contacts the seller received during his due diligence process when he purchased the property to speed up fact finding.

Review of existing property documents where available may include:

Accessibility surveys, Architectural Building plans, Certificates of Occupancy, Citations from Authorities Having Jurisdiction, Emergency evacuation plans, Environmental studies, Electrical System Construction plans, Fire-detection test and maintenance records, Fire-door inspection reports, Fire-Protection System Construction plans, Fire and Restoration records, Maintenance records, Mechanical System, Construction plans, Violation Notices from Authorities Having Jurisdiction, Construction Permits, Plumbing System Construction plans, Previous inspection reports, Roofing System Construction plans and Warranties, Safety inspection records, Seller condition disclosures, Sprinkler System Test Records, Systems and Material Warranties, Current tenant information, Current policy of title insurance, Notices of any environmental conditions, Notices of any new or special assessments or taxes, Copies of all current bills for the property, Service contracts, Evidence of current zoning, As-built plans and specifications, All construction related documents including warranties, All past and present uses of the property, Third party reports or inspections, Any surveys of the land and improvements in seller’s possession.

One of the best tools available to the commercial property due diligence team is the interview process which can unlock a plethora of potentially useful information regarding the subject property.

Interview of any available key personnel with specific knowledge of the property conditions may include:

Owner, Tenants, Maintenance Foreman, Contracted maintenance services personnel or other contracted companies that routinely work on the property and/or building.

Property Inspection, Real Estate Inspection, Building Inspection, Due Diligence Survey, as they may be labeled in the due diligence report is essential to ensure sufficiency of construction considering the intended use of the occupants and the surrounding geography and climate. The furnishing of any available plans and specifications should be helpful here, but will not end the investigation. A current commercial property condition assessment should be done by a qualified third party inspection company experienced in the type of property to be inspected. A previously performed property condition assessment or inspection is nearly always furnished for the use of a single party in a single transaction and is protected under law and not reusable nor transferable to any other party. The focus of the inspection should be primarily on site condition and building components such as the site drainage, parking, building structure, mechanical and electrical systems and general accessibility and usability of the property. Various climates and geographical regions will require more specific inspection knowledge, thus hiring a local inspector is always a good idea if possible, in lieu of hiring a company out of Wisconsin to perform due diligence on a California high-rise building on a fault line.

Site Survey and Walk-Through to Observe Existing Conditions may include:

Grounds and Topography, Parking, Paving, Access, Building Exterior and Fa├žade, Building Interior, Roofing systems, Structural systems, Mechanical systems, Electrical Systems, Plumbing systems, Fire-protection systems, Vertical transportation systems, and any number of other specialty systems.

The 2010 Americans with Disabilities Act is the current guideline for accessibility standards nationwide and is a federal law, hence non-negotiable and to an extent, yes, it’s retro-active even for older commercial and public buildings. Many states also have additional and/or more stringent or specific accessibility standards as well. Most professional property condition assessment and inspection companies can also perform both abbreviated and complete accessibility surveys as part of a real estate transaction.

Basic abbreviated and full compliance Accessibility surveys may include:

Abbreviated survey looking only for basic ADA Accessibility components visible during the walk-through and documented according to the ASTM abbreviated survey form and checklist gives a quick check as to the general status of compliance. Full compliance survey involves physical measurements of distances, slopes, and push/pull forces required within the accessibility standards to allow for a certain level of physically disabled person to be able to successfully navigate a property, site, and building.

Environmental Due Diligence known as Environmental Site Assessment (ESA) is the most utilized Environmental Inspection Report. The typical level of report preferred by lenders to demonstrate adequate due diligence is called a Limited Phase I Environmental Transaction Screening ASTM standard E1528. This explores the past use of the property and the surrounding properties to identify any potential onsite or adjacent environmental problems or future liabilities. These reports normally require a significant monetary investment and take a number of weeks to complete so they should be done as soon as you have determined you will be moving forward with your due diligence. The purpose of this inspection is to determine if the property contains any hazardous materials or poses a threat in any way to its surroundings. This could be caused by underground storage tanks located on the property or runoff from the property into the water table or any other number of hazards listed by the Environmental Protection Agency. While the report is expensive, the cost of cleaning up an environmental hazard can be astronomical. While not every deal will require you to obtain a Phase I Environment Site Assessment, many lenders will require it as part of their loan guidelines. In case of a fairly new development with a clean environmental record and no neighbors of an industrial nature, a simpler less expensive and much quicker Environmental Transaction Screening ASTM standard E1528 may satisfy lender and legal requirements.

Any basic environmental due diligence report may include:

Research of historical site usage, aerial photography records, property transaction records, construction records, building records, EPA mapping data, local municipality topography mapping, and a through site walk-through to visually identify potential environmental issue indicators.

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