Speeding Commercial Real Estate Sales in Slow Markets
Effectively building commercial real estate wealth requires the ability to spot a great bargain and the ability to sell that property well, no matter what the state of the market. The real estate market is notoriously cyclical in nature and somewhat difficult to predict. The market for local and national real estate can turn quickly and it is important for every investor in real estate, from the largest player to the smallest, to have strategies in place for selling properties in down markets.
In a hot real estate market, of course, little marketing is required. We have all heard the stories of bidding wars breaking out in the residential market at open houses in California and elsewhere. In the commercial world, it’s not unusual to have 30, 40, or more institutional and private investors bidding on a piece of prime commercial real estate in a strong urban market. In these kinds of markets, all a Seller needed to do was hang up a metaphorical “For Sale” sign and wait for the hordes of buyers to appear.
Of course, these markets do not last forever. Lately, we’re seeing some pressure on cap rates as short term interest rates have climbed in response to the Fed’s tightening. Those formerly “hot” markets have become “luke-warm” markets and are cooling further. As prices for residential and commercial real estate spiraled ever higher, more and more buyers found themselves priced out of the market. Even the creative financing schemes created by mortgage lenders often failed to close the gap. In hindsight, the downturn seemed inevitable, but many failed to see it or prepare for the inevitable slowdown to follow.
Fortunately it is not too late for sellers of residential and commercial real estate to get the most out of their property, even in a slowing market. Listed below are some strategies for turning that “For Sale” sign into a “Sold” sign.
• Price the property properly. The market will tell you what you property is worth, regardless of what you think. Price the property realistically, especially in a down market. It is important to understand that the value of a particular piece of real estate is derived not only from the underlying value of the property itself, but by market conditions.
• Offer incentives to attract buyers. Offering unique incentives can go a long way to boost the attractiveness of a particular piece of property and help you stand out from the crowd. Some sellers are including perks like free plasma TV’s, vacations, sporting event tickets, and other unique incentives. What’s important to note about these offerings is that while they represent a very small percentage of the value of the property being sold, they create traffic, interest, and distinguish you from the competition.
• Don’t overlook the value of curb appeal. How your property looks from the outside is an essential part of marketing, called “packaging.” Enhancing your property’s curb appeal can often be achieved with little expense. Consider painting, re-landscaping, signage, and minor parking lot repairs. Between two similarly priced properties, the better looking one will probably get sold faster.
There is no doubt that selling a property in a down market can be a challenge, but the good news is that these strategies can help to preserve those hard earned profits.
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Agreeing to have a lien placed on real estate property in Ohio?I loaned my brother a large sum of money; he lives in Ohio. He signed a promissory note but did not pay it back on the due date. He stated he would pay when he sells his house. I would like to place a lien on the property to assure I receive my money. If he voluntarily agrees to a lien, can it be filed without obtaining a judgment from court.
you both are responsible and whether the property is real estate or not if you own it or your spouse in some states a lien can be placed against it
You don't say whether or not your father left a will or what it said if he did.
In CA, if he died without a will and was married at the time, his wife is probably entitled to at least one-third of his separate property and all of his community property. So, as a legal co-owner of the property, she probably would not be liable to pay rent to the estate.
You should hire a qualified probate attorney to help you with this. Attorney fees are set by statute and come from the estate assets.
Make sure you know what you are buying but you can't protect yourself entirely. Civil unrest or political changes can take your property without paying you anything if they decide to nationalize.
This is just ridiculous and creepy.
I wish my school had this stuff in it! That would be so COOL!!!
That depends on whether you want to be a landlord or not. Rental properties are great if you hold them, and can afford the maintenance on them, AND can cashflow. Be prepared to replace the carpet with just about every tenant though, and to get calls about every little thing that goes wrong with the place. Here in Charlotte there are some great properties that bring in massive amounts of rent. It's all in where you invest.
indeed just weird
Try calling the town hall and asking.
County assessments are as of a specific date. Usually January 1st of each year. Your January 1, 2008 assessment does not reflect the downturn in the market. Check with you tax assessor's office and discuss your assessment. There should be an adjustment based on the January 1, 2009 market.
realtor.sailor
Cost of a title insurance policy is based on the price/cost of the home. You will need to call some title companies in your area to get an accurate estimate.
It is unwise & risky to purchase a property without one. There could be unrecorded issues that may arise like an encroachment or adverse possession and you will have no insurance against them.
man that thing is creepy. lol
The type property you are describing is called commercial property or commercial residential property. Most lenders would want to know if you have any experience of owning rental properties
Are you sure you want to step out that far at this stage of the game? The type property you are describing requires a lot of down payment and then qualifying for a Commercial mortgage. The interest rate would be high and the mortgage note would not be for more than 10-15 years and could be called in 5 years though it could be amortized for 30 years.
There is another possible way you can do it. It might take a little time, but then you will gain valuable experience and the qualification and down payment would be a lot different.
I suggest you try getting into a 4 unit complex. This type of property is considered as a single family home for the purpose of a real estate mortgage.
Therefore the interest rate would be less, you would have to come up with less of a down payment. With you staying in one of the units you still have 3 renters that will assist with the rent. With this type mortgage your mortgage note would be for 30 years,normally at a fixed rate and would be called in 30 years. For the purpose of mortgage finance this is considered an owner occupied property.
If you apply for and qualify for a FHA mortgage then for the 4 units you could have only a 3% down payment.
Once you do this about 3-4 times you should have enough experience and units to qualify for a larger unit that you might find in your local area.
Find a mortgage broker or banker in your local area that can pre-approve you for a mortgage. In order to do this he will have to run a credit check, collect your income proof, and other items necessary to get this pre-approval completed.
Once you are pre-approved you might then contact real estate agent through someone that was referred to you or a referral from the mortgage broker. You will then find a 4 unit complex to purchase.
Once you have located your 4 unit complex there are a few things still needed to be done by your mortgage broker. An appraisal will be obtained as well as a purchase contract.
You should consider joining the Apartment House Association in your local area. This association will assist with the local customs and laws governing renting in your area. They will also be able to assist you with the various forms you will need to be successful in being a landlord. I am speaking of being able to run credit reports on prospective renters, evictions and the forms necessary for this activity.
Joining this association might be tax deductible on your federal income tax. There might be points and fees that are tax deductible in obtaining your mortgage. Please check with your tax consultant about matters concerning taxes.
I hope this has been of some use to you, good luck.
"FIGHT ON"
The cash flow would come from rentals, leases, or the use of the property for the owner's business or use. NPV will measure the rate of return for the investment while taking inflation into account. IRR will likewise attempt to determine the potential future earnings of the project. Since both of these involve seeing into the future, pessimistic outlooks may wind up doing better than optimistic ones. The key to making these decisions is having a firm grasp of what the current rental rates are, what expenses the owner would be responsible for, and realistic vacancy rates for the neighborhood/use/type of tenant. hope this helps,good luck!