Rose City GPT – Page 16

Focusing On Niches To Serve Clients Better

At their best real estate brokers are true professionals. 50 to 80 hour weeks, always looking for additional training, and a new way to provide clients better service. Their quest for excellence often takes them away from their families more than it should…but nobody ever became the best in 40 hours a week. There are a few that miss the mark…but that’s true in every field. Working hard isn’t enough though.

A Success Story: John Adams and Logo-Products.com

A lot of Realtors® could learn from watching my friend, John Adams. Several years ago John went shopping…and came away disappointed. He wanted to show his support for his beloved U of O Ducks and protect his trailer hitch…but none of the stores had any product that fit the “bill.” That told my friend that there was an unfilled need. John learned all about the trailer hitch cover niche…from manufacturing, to licensing, who the clients might be, packaging and all of the facets of the industry. He focused his efforts on a very narrow field..trailer hitch covers…and now he is the King of them. His own proprietary designs have been approved the by collegiate licensing authorities…and as his success has grown, others have offered him their lines for distribution. (Check it out at www.Logo-Products.com.)

Like John, by focusing on a niche and becoming highly proficient at it we can maximize our results. In coming posts I will demonstrate this further by highlighting real estate professionals that have created great success by dominating their niche. They have leveraged a narrow focus…into great abundance! Check back for the first in the series: Short Sales.

Call Rick Bean at 503.577.1034 or: e-mail me at: Rick@rosecitycre.comtoday! Shouldn’t you invest in Real Estate with a professional that focuses soley on your success?

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Investment Strategies / April 20, 2009

Free Training: “How To Deal With Difficult People”

The two times when profitablity managing a property is important are when you want to keep, it and when you want to sell it. Property managers need training to perform at their best. This opportunity for FREE training should not be missed. Grace Hill Property Management Training does a great job…here’s a no cost way to give them a try:
Dealing with Difficult People
PRESENTED BY: Jackie Ramstedt, Deb Bronson & Terri Norvell
COST: Spherexx.com is sponsoring this event…there will be no cost to you. Thanks Spherexx.com!

DATE/TIME: Friday, May15, 2009 – 1pm PT

SESSION DESCRIPTION: Can you remember the last time you had to deal with difficult people or an event where someone was negative? Never fear! Our positive panelists will chat about what you can do in the future to get through these tough situations with harmony and grace.

RSVP: Visit Gracehill Taining at: www.gracehill.com and look for the details of this event on their home page. Click the RSVP link to sign up and receive Chat Event Instructions. Then, log into Grace Hill about 10 minutes prior to the event and click on the Chat Room link, under the chat description, to be delivered to their Chat Room.

* Please note that space is limited to 350 attendees in our chat room. Be sure to log-in to the chat room 10 – 15 minutes prior to the event.

What else is free? Call contact me at 503.577.1034 or rick@rosecitycre.com for an equity redeployment assessment.

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Multifamily Management / April 17, 2009

Another Reason To Be Bullish On Portland Multifamily Investments

Portland, rose city, Rick Bean, affordable housing — Beautiful, Affordable Portland

One of the metrics to look at when picking an area for a long term investment is the affordability index. And by that I don’t mean looking soley at how much the median income is in an area…I mean:

Average Rent/Median Household Income = Affordability Index. (What portion of your pay goes to rent?)

It’s great that some investment counselors track Median Household Income (MHI), but without the context of average rent for that area we really don’t have a way to evaluate areas that have long-term rent expansion capability. An obvious example is New York City. Clearly the MHI is higher there, but so are average rents. New York has an affordabilty Index of 57.2%. That means that between half and two thirds of the household income goes for rent. I suggest that while NYC has posted impressive rent gains for all property types, that the pace of those increase is likely to wane…how much more than 57% of your income could you afford to pay for rent? Years ago I had an employee that considered himself to be a real tout, a master horse race handicapper. Mark would always tell me: “Rick, there are horses that run fast, and horses that run long…but aint no horse that runs fast and long.”

Highly Ranked Portland

With Average Rents at $825 and Median Household Incomes at $57,757, Portland’s Affordability Index is 16.8%. That’s fifth in the nation. Portland-Beaverton-Vancouver “Asking Rents” jumped an average of of 3.1% in the fourth quarter of last year compared to a year earlier. Full disclosure: Oklahoma City had the nations best ratio at 12.3%…but the catch is that if you move there …every morning you wake up in Oklahoma.

With room for long term rents to expand and a great area to live in, isn’t this a great time to invest in Portland area multifamily properties?

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Investment Strategies / April 15, 2009

The Best Deal In Portland?

This isn’t even my listing…but I’m making good on my commitment to find great deals for my investors. This NE duplex is a great value: for under $165k you get two residences for less than the normal price for one. My faithful readers know that I eschew residential multifamily in favor of commercial multifamily due to the usual lack of cashflow. On most plexes you have to put huge downs just to keep from having an alligator to feed monthly. As such, many entry level investor’s feel their sole option is to live in one side and rent out the other. As this is already approved for a short sale below $165K, someone else has already done the hard work of negotiating with the bank on the owner’s behalf. That means most investors can buy it, rent out both sides and still have it cash flow. One thing about buying distressed property…they are often older residences and trashed inside. On their way out some homeowners remove every light bulb switch cover, and even the toilets. The reason I am selecting this as a “best buy” is the condition of the units and their effective and actual age. (They were built in 1997.) Anyone who has entered an REO property will have a hard time believing that these pictures are really Short Sale Units.

Details: The large unit is 1,208 Sq. Ft. 2 bedroom/1.1 bath home with a fireplace. It rents for $795 per month. the smaller 1 bedroom/1 bath unit has 650 Sq. Ft. and rents for $625/month. Contact me at 503.577.1034 if this sounds attractive. Or e-mail me at rick@rosecitycre.com.

I will be describing cash flowing commercial deals soon!

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Investment Strategies / April 9, 2009

Lending Professionals: Love Funding

Finance Professional, Holly Bray, Love Funding, Love, Commercial Real Estate Loan, Rick Bean — Finance Professional, Holly Bray

In the old days, bankers used to take commercial brokers out to lunch…we were customers. They’d tell us how much we were valued, and they would tout their customer service. Nowadays, we invite them to lunch and we’re pretty delighted if they return our calls.
Brokers differ on which used to be more difficult to find: deals worth doing, or finding a buyer and seller that could agree to terms. Financing was never easy, but it certainly was the least problematic of the three. Now it may be the most important of the three and the hardest to find.

Several months ago I spent several hours with a commercial mortgage broker reviewing current needs. One project needed a $2 million loan, one was twice that, and others were smaller. That broker hasn’t called back yet. Actually it’s been so long I wouldn’t take his call now. I worked with another company for weeks on a deal…then they called and wanted additional information and additional equity so that the loan would be at 49% LTV. Oh, and by the way that’s a full recourse loan. Additional information requests I can explain to the client, the LTV part is tougher. Recourse loans on development projects are expected, but on take-out multifamily financing? Did I mention they had a 1.30 DSCR?

ENTER HOLLY BRAY:I felt at one point that I needed to stop looking for new clients and deals, and focus on funding for the ones I had. Holly Bray and Love Funding changed that. She noticed one of my LinkedIn posts and called. We spoke at length about the market, my needs, their offerings, and she promised to send me some information. She restored my belief in bankers by answering my questions, getting me the information faster than promised, and then checking back with me to discuss the details of the various programs. Love Funding is a National, full-service, mortgage banking firm specializing in financing a broad spectrum of commercial real estate including multifamily, nursing homes, assisted living facilities, and board and care facilities. With Rose City’s focus on the multifamily segment it was their HUD 223-f loans that caught my eye.
These are non-recourse loans permitting LTV’s as high as 85%, and DSCR’s as low as 1.1765. You can finance repairs and upgrades up to $6,500/unit adjusted to the high cost factor for the market (Portland’s factor is 248%, or $16,120 unit). They’ll even base loans on current market income and consideration of improvements (proforma). Added benefit: 223-f loans feature 35-year amortization schedules.

For complete details about this program or other loan products, call Holly Bray at: 202-887-1849 or email: hbray@lovefunding.com. Isn’t it time to start working with professionals?

Note: Rose City Commercial Real Estate does not have an undisclosed interest in any of the firms we discuss in this column, nor do we receive compensation. We believe in superior service and support firms whose actions demonstrate that they do as well.

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Multifamily / March 30, 2009

David Moore to Deliver April CCIM Keynote Address

Mr. David Moore, CCIM will be the featured speaker at the Portland CCIM’s monthly luncheon on April 1st at the MAC Club. He and brother/partner Tom founded Equity Advantage Incorporated in 1991. Since then EAI has become the heavyweight of 1031 Exchange Accomodators. They have leveraged their thorough knowledge of contract law, taxation, and investment analysis with a customer centric focus to earn a reputation for getting the tough deals done.

MULTI-TALENTED: While I always learn new aspects of exchanges from listening to David, my hope is that his presentation will focus on his new firm’s services. For years the public was led to believe that Wall Street Mutual Funds were the sole options for 401K investments. David and Tom founded Equity’s sister company, IRA Advantage to empower the investors they’d worked with for the past eighteen years, and offer them a self-directed alternative. With IRA Advantage’s Checkbook LLC structure you receive a time tested procedure that literally gives you the flexibility of writing a check when the investment opportunity arises. No more waiting for a custodian to rationalize your next investment. They utilize proven procedures to enable IRA holders and ease of investment while maintaining their IRA’s integrity. I recommend preparing for your future, and calling your own shots by contacting IRA Advantage to set up your IRA Checkbook: 503.635.1031. I also recommend looking at multifamily investments for solid long term gains without wide fluctuations in value. I’ll go to a rodeo if I want a wild ride.

CCIM LUNCHEON TIME: 12:15 to 1:30 PM on Wednesday, April 1, 2009. Members $35/Guests $45; $5 off early registration.

LOCATION: The Multnomah Athletic Club is located at 1849 SW Salmon St. At over 550,000 Sq. Ft., The MAC is the worlds largest indoor athletic club. Phone: 503.223.6251 Web: www.TheMac.com

CCIM:There are fewer than 9,000 professionals worldwide that have earned the designation; many industry insiders refer to CCIM as the “Doctorate of Real Estate.” The CCIM Institute provides cutting edge training on a broad range of Real Estate Investment topics, as well as signifcant networking opportunities. The Portland Chapter meets at the MAC on the first Wednesday of each month. Brokers network and share “Haves and Wants” from 10:00 am to noon; top tier industry specialists speak at the luncheon, 12:15 to 1:30 PM.

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Multifamily / March 26, 2009

LOOKING FOR GOOD NEWS?

SolarWorld Group not only reaffirmed their commitment to the Portland area, they’re increasing their investment in a major way. So reports Brian K. Miller in today’s Globe Street:

HILLSBORO, OR-SolarWorld Group said Friday it plans to expand its five-month-old, 480,000-square-foot operation here with a new 210,000-square-foot building. The existing building serves as a production facility for the Germany-based solar panel manufacturer. The new building, slated for completion in November, will be primarily a distribution facility.

“We are fully committed to not only marketing the proven renewable energy of photovoltaic technology in the United States but also manufacturing it here,” Boris Klebensberger, SolarWorld’s chief operating officer and president of SolarWorld Industries America, said in a prepared statement. “This project further demonstrates our resolve.”

This is welcome news to an area that’s 10.9% unemployment rate is almost 2 points higher that the national average.

www.Globest.com is a great source for business news. They offer updates on local, regional, national and international developments that impact business owners and investors. Globe St.’s feeds can be tailored to focus specifically on Retail, Multifamily, etc. When you want to up to date information, think Globe St. For excellence in Real estate, think Rose City Commercial Real Estate.

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Good News! / March 23, 2009

WHAT’S NEW AT GRACE HILL?

If you follow my blog, you know that I’m a strong advocate for training all multifamily employees, and that I hold Grace Hill as the creme d’ la creme in that niche.

Their newest online course, Property Management Financials, is now available! Grace Hill’s Apartment Management Learning Center, the premier destination for online multifamily education for more than 10 years, has expanded offerings yet again.

By completing this highly interactive course, you will learn how to manage your community’s financial performance in order to maximize value and earn a positive return on investment. Property Management Financials includes engaging exercises and scenarios to reinforce knowledge. In addition to the thorough course content, Property Management Financials includes numerous downloadable resources to be used as job aids. You will be empowered to take control of your community’s fiscal fitness, which is more important than ever thanks to today’s challenging market.

Here is what is covered in this 2-hour title:

How to earn a favorable return on investment, or ROI, in multifamily real estate management
Learn about the two most useful tools for understanding the financial goals for a community: the Budget and the Income Statement
How to impact your community’s value by maximizing income and controlling expenses
How to use key indicators found on the Income Statement to help monitor your community’s fiscal fitness

Property Management Financials is an Essentials title and included in our Unlimited Training Subscription at no extra charge. Property Management Financials is also available at the Pay-Per-View price of $79 per student, per course.

WHO SHOULD TAKE ADVANTAGE OF THIS OPPORTUNITY?

Multifamily managers, assistant managers, leasing teams, investors, and multifamily service providers that want to understand facility owner’s perspectives.

Grace Hill can be reached at: (866) 472-2344, or www.gracehill.com.

For quality training think of Grace Hill…for quality investment properties, think of Rose City Commercial Real Estate. You deserve the best, don’t you?

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Multifamily Management / March 5, 2009

People Would Move To Hell If That’s Where the New Jobs Were

job growth, portland, Rose City, Rick Bean,multifamily, apartment — Portland, OR

Look at current and future job growth as key factors when evaluating a market for multifamily purchases. To research opportunities I have traveled to Reno, Albuquerque, Phoenix, Seattle, and Los Vegas. Without exception job creation/population growth seemed to be the common fundamentals that told the tale. It seems that folks would move to hell if they could get a job.

That’s why I’m so strong on Portland. We’ve seen good job growth on a consistent basis here for years and the promise of the future is for the pattern to continue or accelerate.

For those that are dour about the current multifamily market…remember that while Cap Rates are decompressing currently, there are many properties that were purchased at the average 8.3 Cap in 2002. They would now trade at a 6.50 Cap. Do the math: 8.3 divided by 6.5 equals a 28% increase in value even if NOI only stayed constant. The truth is that this market enjoyed significant increases over that period and many Portland multifamily investors have huge sums of redeployable equity, and this is the time to act.

Contact me for equity redeployment information now at: rick@rosecitycre.com

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Investment Strategies / February 25, 2009

Demystifying LTV’s

Commercial Loans,Portland, Commercial Real Estate, Rick Bean, Yogi Berra — Figuring LTV's

Simply expressed, LTV is the loan amount divided by the property’s value, expressed as a percentage. The value used will be the lower of the sale amount and the appraisal. Banking theory goes that the lower the LTV the more the investor goes from involved to committed. Yogi Berra might explain that discrepancy thus: “In a ham and eggs breakfast the hen that laid the egg was involved, but the pig the ham came from was committed.”

Example: What would a bank with a 60% LTV maximum, loan on a 42 unit multifamily asset under contract at $117,000 per door that was appraised at $4,850,000? The lesser of:

60% of Purchase = .6 X ($117,000 per unit X 42 units) = $2,948,400

60% of Appraisal : .6 X $4,850,000 = $2,910,000.

The answer is $2,910,000. That applies to most banks currently lending practices…there are other options.

TRENDLINE: a year ago the internet was rife with commercial multifamily loans with 90 -95% LTV’s…those are yet another victim of the lending crisis. For most purchases now banks want a minimum of 25% down (75% LTV) but many require 40% down (60% LTV). I’m working with a lender on a multifamily loan right now that is requesting an additional down payment to be submitted that will bring my client’s effective down payment to 51% (49% LTV.) Stricter LTV requirements are probably here to stay…at least for awhile. But to those that think the forces that caused this change are permanent, please remember that $6 trillion bucks of market value was lost when the tech bubble burst…but only a few years later the DJ not only recovered…but went well past the pre-bubble highs. The recent downturn has again wiped those gains out…but I long ago transferred my 401K and stocks into a self directed program with checkbook control so that I can focus on Real Estate.

In the interest of full disclosure…while I wish LTV’s were lower…I’m definitely not a fan of extremely high LTV loans. Remember that as the LTV rises resources available to make it through difficulties diminish. As banks have become more risk adverse they are requiring those taking out loans to have more “skin in the game.” They want committed investors. Think of it this way: A buyer of a $1,000,000 property who puts down 5% ($50,000) often is creating a no cash flowing deal with no funded reserves. If the economy in that area goes soft and rents drop $50 per month he’s going to have a “Cash Call” every month. Then he stops maintaining his property and stops making full payments. This creates a distressed property that lowers values of competing properties. If that same property had a 30 or 40% LTV loan the debt service would be less, making it possible to weather the storm better.

I mentioned previously that there are other options…among them are HUD Loans…which I’ll cover in a future post.

If you found this information useful, please use the orange subscribe button to sign up for periodic updates! Or, e-mail me: Rick@RoseCityCRE.com

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Demystifying Investing / February 23, 2009