Ep. 86 Jonathan Moore: You Will Want to Know These Real Estate Development Hot Points!

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Real Estate DevelopmentReal estate development in Florida is currently in great demand. With real estate investors turning towards ground-up real estate development as an increasingly more viable means of investing, new projects are springing up state-wide. However, with increased pressure on real estate development and a construction workforce stretched thin, it is important to keep in mind key points if looking into real estate development as an investment goal.

Jonathan Moore, AIA is president and founder of InVision Advisors. His firm offers owner’s representation and project consulting services for owners and investors, architects and contractors during real estate development. As owner’s representatives, InVision Advisors takes a comprehensive approach to real estate development deals handling day-to-day and overall project oversight. As an experienced architect, Jonathan brings a unique insight to his knowledge of the real estate development industry. This episode, Jonathan discusses hot points for investors to know about real estate development.

 7 Real Estate Development Hot Points

  • Sub-contractors
    • Markets state-wide are saturated with work
    • Sub-contractors control velocity of development
    • Artificial inflation caused by over estimation of construction costs
  • Communication
    • Problems frequently arise due to lack of communication
    • Loss of face-to-face time and on-site meetings contribute to communication breakdown
  • Land Quality
  • Construction Quality
    • Large loss of construction force from mid-2000s recession
    • Current construction force stretched thin over spike in development
  • Unrealistic Project Expectations
    • Make sure all involved parties are in agreement over project deadlines
  • Scheduling
    • Scheduling oversights complicate and potentially ruin deals
  • Mitigating risks
    • All real estate development deals have inherent risks
    • Hold parties accountable for actions
    • Thoroughly research deal
    • Partner or work with experienced real estate development investors

To contact Jonathan about the services offered by InVision Advisors or to discuss more about real estate development, visit www.invisionadvisors.com or call 813-784-3146

Ep. 75 Garrett Kenny: Irish Builder Talks Foreign Investment in Florida & Hot Orlando Real Estate Sub-Markets

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Gary_editedIn a recent episode, we spoke with an investor who managed a Florida real estate portfolio from outside the country. This week’s episode features an investor who runs a foreign investment firm out of his home-base in Davenport, Florida.

Garrett Kenny started building his investment portfolio in Florida after being introduced to Orlando’s vacation markets in 1996. Since then, he has built his investment firm, Feltrim, into an international name for foreign investment in Florida real estate, handling all aspects of the investment process. This episode, Garrett discusses foreign investment in Florida and hot real estate sub-markets in Orlando.

Foreign Investing in Florida

  • Most foreign investors can expect to average 6% annual ROI
  • Easy to find financing options, but many do cash deals
    • Usually require more up-front from investor for financing
    • 4-4.5% interest rates
    • Some foreign investors use local banks and mortgage brokers
    • Some financing may be available through institutions in home countries
  • Brazil and China emerging as dominant foreign investors in Florida markets
  • Foreign investors expanding portfolios in Florida real estate

Orlando

  • 62 million visitors to Orlando area in 2014
  • Diverse investment opportunity
    • Vacation rentals, commercial and industrial markets
    • Top 3 vacation rental areas – Championsgate, Davenport, and Kissimmee
    • Medical + Technology – Lake Nona
    • Long-term investing in 30 mi. radius of Disney
  • Other hot sub-markets
    • Distressed and repossessed homes
    • “Class A” properties – Windermere, Winter Park

Tips on Foreign Investment

  • Having a local knowledge of your desired market is key
    • Find out about the area before investing
  • Location, Location, Location
    • Finding the right location for your investment is important

To find out more about Garrett and Feltrim’s services or about investing in Orlando real estate, visit the firm’s website

Garrett recently published a book, Buying and Owning Property in Central Florida available on Author House and Amazon

 

Ep. 72 Santosh Govindaraju – Florida Developer Applies Wall Street Lessons to the Tampa Market

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5xa5OmeFor the average Florida real estate investor, Wall Street banking and investing practices may seem worlds away. However, one investor and developer in the state has managed to successfully fuse his expertise in Wall Street investing with the Florida real estate market.

Santosh Govindaraju is a Florida developer with an interesting history. Prior to finding success in Florida real estate markets, Santosh was immersed in the world of high-strategy investment banking on Wall Street. After moving to Florida, Santosh applied his investment banking expertise to Florida real estate with a focus on the Tampa market. Santosh and his firm, Convergent Capital Partners, have been providing equity and debt investment options in a variety of Florida commercial real estate for over 17 years. This episode, he discusses his transition to real estate investing and what’s next for the Tampa market.

  • Wall Street Lessons
    • “Reversion to the Mean” – markets and prices fluctuate, but they will always indicate a trend, or mean
    • Relative-value trading – With two similar asset classes, sell asset class sitting above the mean and buy the asset class sitting below the mean
  • Convergent Capital Partners
    • Santosh paired his understanding of financial side of investing with partner’s physical knowledge of real estate
    • Saw relatively stable markets in FL during late 1990s
    • Opportunistic commercial investing: all commercial asset classes except industrial; looking for properties with mixed-use potential
    • Private Equity Platform Fund-Operation: base of 10 investors; deal offered first to fund as whole, then to individual memebers
  • Tampa Market
    • Strong recent investment/development growth
    • Institutional capital competing for projects
    • New vision for Downtown Tampa
    • Harbor Island Project: “The Point” – Convergent Capital developing 115k sqf. property in Tampa harbor

For more information about Convergent Capital’s current projects or to contact Santosh, visit their website

Ep. 71 Elise Batsel – 7 Things Landlords Should Know About Commercial Leases

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11058_bioimageWhen transitioning from residential or simply starting your investment portfolio in commercial real estate, it is important to remember one thing: commercial leases are not the same as residential. Commercial leases are subjected to a much higher percentage of risk if not properly structured.

Elise Batsel has made it her business to ensure landlords are protected in any commercial lease issue from the ground up. As counsel with the Tampa firm Phelps Dunbar, LLP, Elise specializes in commercial real estate land-use and zoning. Elise represents developers and institutional lenders in acquisitions, dispositions, financing and transactions as well as all aspects of commercial leases. In this episode, Elise discusses seven hot-topics all landlords and owner/operators should know about commercial leases.

  1. Commercial vs. Residential Leases
    1. Commercial properties have different costs and expenses that can be transferred to tenants: common area maintenance expenses (CAMs)
    2. CAMs may include: utilities, landscaping, management fees and other costs associated with owning and operating commercial properties
  2. CAM and Triple Net Leases
    1. Triple Net Lease – For landlords and tenants who want stability; does not account for unanticipated expenses or for properties without a familiar investment history
    2. CAM lease – Serves as umbrella to protect landlord/owner from future costs and expenses incurred from property management; specifies expenses and tenant liabilities
  3. Tax Implications
    1. Though not frequently addressed in lease, tax implications are a major tenant-landlord discussion that could be beneficial for both parties
    2. Leases can stipulate landlord ownership over tenant-improvements with proper recompense for tenant
  4. Americans With Disabilities Act (ADA)
    1. Commercial real estate considered public accommodations and subject to more ADA compliance regulations
    2. Represents huge liability for landlords not in compliance
  5. Sub-letting and Tenant-Assigned Leases
    1. Landlords can address sub-leasing and assigning terms in commercial leases
    2. Landlords entitled to portion of income from tenant leases
  6. D-I-Y Leases
    1. Do not attempt to draft generic commercial leases if self-managing property
    2. There are many changing facets to follow when drafting commercial leases
    3. If drafting your own lease, have attorney or specialist review
  7. Protection Against Bad Tenants
    1. Always ensure strong deposit from tenant
    2. Small-Claims Court
    3. Write effective demand letter to tenant

For any commercial lease, zoning or land-use issues and questions, Elise can be contacted by phone at 813-472-7564 or through email at elise.batsel@phelps.com

For even more information on commercial leases as well as landlord and tenant relationships, Elise suggests the following articles: Tenant’s Checklist of Silent Lease Issues  and Model Landlord’s Checklist of Silent Lease Issues – S.H. Spencer Compton, Esq. & Joshua Stein, Esq.

 

 

 

Ep. 70 Livingston Hessam: You Will Want to Hear What Is Happening With Mortgages!

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Livingston-Hessam_jpgThe coming year is looking to be an eventful period for mortgages and financial lending in real estate. Debt markets are poised to undergo significant changes over the following years amidst regulatory changes and geo-political headwinds. Investors, both seasoned and novice, should be aware of the changes and the effects they could have on current and future mortgages.

Livingston Hessam, Vice President of financial solutions firm Walker & Dunlop and financing expert, discusses these changes in the debt markets and what investors need to know about their impacts on mortgages and other debt-equity options.

  • 2016 Mortgage Bankers Association Conference
    • Annual conference gauges financing market for coming year
    • Mixed outlook for 2016
    • Multi-family holds strongest appetite for lenders
  • Debt Categories
    1. Agency Debt – Fannie Mae / Freddie Mac
      1. Conventional rates, senior housing, student housing, manufactured housing
      2. High-leverage, non-recourse, cap limits
      3. Reached 2015 cap before end of year
      4. Introducing smaller deal offerings ($1-5 million) – lower upfront closing costs, for typically novice borrowers, not included in annual cap limit, do not require same level of eligibility requirements
      5. Only can acquired through authorized servicers/lenders
    2. CMBS Markets (Commercial Mortgage-Backed Securities) – Loans sold by banks into secondary markets
      1. Amid current CMBS 10 year maturity loans wave
      2. Several regulations coming into effect causing uncertainty: Risk Retention (Dec. 2016) – Req. CMBS issuers to hold 5% of loan to securitize deal
      3. Investors and lenders advised to close deals in first half of year
    3. Life-Insurance Company Loans
      1. Typical deal – sub-70% leverage, non-recourse, strong exp. sponsor, well stabilized market
      2. Positive lending outlook for 2016
    4. Conventional Lending (Banks)
      1. Regulatory changes: Dodd-Frank Act
    5. Alt. Lending
      1. Walker & Dunlop offers bridge-lending packages
      2. Good for investors with assets not ready for perm. agency lending
      3. Up to 80% of cost for pre-stabilized deal or value-add deal, up to 36 months, help re-sell or re-finance
      4. For multi-family, student housing, manufactured housing, independent & assisted living, and skilled nursing

Livingston kindly provided us with a detailed, corporate overview package for Walker & Dunlop, further describing the financial solutions they offer as well as contact information.

Corporate Overview 2.22.16

 

 

Ep. 60 – Mark Fleming: What Does the Fed Rate Hike Mean to Real Estate Investors

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about-markWinter is coming… And so are national interest rate increases.

The Federal Reserve has recently announced a new national interest rate hike, the first since 2006. Real estate investors are very anxious about the announced rate hike. Many investors are wary that the rate hike may be instituted prematurely in an economy that is not capable of facilitating the effects on real estate markets.

Mark Fleming, Ph. D. serves as the Chief Economist for First American Financial Corporation. With over 20 years’ experience in mortgage and property information, Mark analyzes and forecasts national mortgage and real estate markets. This episode, Mark lends his expertise to our discussion on the new rate hike‘s effect on current real estate markets at a national level, and tells us why investors shouldn’t be so worried.

  • Federal Reserve Rate Hikes
    • First rate hike in 9 yrs
      • 2006 – +5% increase
      • 2007 -’08 to Present – 0%
      • End of Year (2015) – .25% increase
      • 2016 – +1% increase
    • Instituted to correlate with expected income/wage growth
    • Long-term, fixed-rate loans not affected
    • Good for housing markets
      • House-price appreciation seeing “asset inflation”, especially in Florida
      • 5-6% nationally, higher in FL markets (South Florida)
      • Out-pacing current wage growth, causing increase in housing rates
      • Rate hike should slow appreciation growth rate
  • 2016 and Beyond
    • Rate hike est. 5% increase
    • House-appreciation (Nationally) projected to slow to 3-4%
    • Income growth est. 3-4% increase
    • Commercial real estate to benefit from economic growth
    • Multi-family to benefit from strong millennial rental market

Interested in contacting First American Financial or want to learn more from Mark on the new rate hike and other economic info? Check out the company website and visit the Economic Center

Ep. 59 Jay Smith: 6 Hot Spots for Inspecting Properties

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thumb2_JayJay Smith, CEO of A Snoop Inspections, is a veteran in his field of property inspection. Jay possesses over 30 years in property inspection experience as well as hands-on knowledge of building construction. Jay has an invaluable insight into the key concepts of inspecting properties.

Property inspections can cause even the most seasoned real estate investor to shudder. Not only do inspections have the potential to turn up devastating issues for investors close to finalizing a deal, under-qualified inspectors may cost an investor thousands of dollars in corrective aggravation. Recent changes to insurance policies and coverage in Florida have led to increased concern over property inspections and their impact on real estate investment. Commercial investors need to be especially careful as there are many more aspects to commercial property inspection as opposed to residential. This episode will cover six hot spots or areas of focus for any investor to cover when inspecting properties.

  1. Electrical
    1. Out-dated wiring methods may preclude properties from meeting current insurance requirements
      1. Aluminum wiring dating mid 1960s-1970s a prevalent issue; Cloth wiring; Knob-and-tube wiring
      2. No safety outlets by water areas source of concern
  2. Roofs
    1. Major area of concern when inspecting properties. Damage can be detrimental to property and repairs costly.
      1. Look for flat roofs or areas where water pools
      2. Leaks cause major damage
      3. A/C units on roofs – water damage from condensation, impede accessible roof maintenance. New FL building codes require roof-units be on raised platforms
  3. Insurance Changes

    1. Changes to FL insurance coverage a important concern for new buyers
      1. Standards for coverage have changed over recent years
      2. Require more detailed inspections, won’t insure certain construction methods/materials
      3. Insurance coeerage under previous owner will not extend to new buyer
  4. Sinkholes
    1. Costly and potentially dangerous inspection issue
      1. Look for long, horizontal cracks in and around structure
      2. $2000 geo-technical survey
  5. Mold
    1. Serious issue in FL
      1. Difficult to asses severity or extent of infestation
      2. Especially an issue in vacant or untended properties
  6. Inspector Due Diligence
    1. In FL especially, determine certifications of inspectors prior to selecting
      1. FL requires Home Inspector license only
      2. International Association of Home Inspectors – largest H.I. association in U.S.
      3. For specific issues, contact specialists (i.e. mold inspector, master electrician, professional roofer)

To contact Jay for information on inspecting properties or to inquire about his own property inspection services, visit his website: www.a-snoop.com or call (813) 345-2600

 

 

 

 

Ep. 57 Albert Berriz – McKinley Bullish on I-4 Corridor for Multi-Family

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00f4451Florida real estate investors should be familiar with the name McKinley. With over 55 million square feet of commercial and residential real estate in 34 states, McKinley, Inc. is 37th largest real estate investment and management firm in the nation.

Albert Berriz, CEO, Co-owner & Co-Managing Member of McKinley talks with us this week about the firm’s special interest in Florida. The Interstate 4 Corridor, connecting Tampa, Lakeland, Orlando and Daytona Beach is favorite of McKinley for it’s unique position as a major economic engine for Florida. The firm owns and manages 55 multi-family communities along the I-4 corridor. Albert discusses the firm’s attraction to the corridor as a region of of immense population growth.

  • I-4 Corridor
    • Tampa/St. Petersburg, Lakeland, Orlando, Daytona Beach
    • 3/5 of Florida Residents centralized around I-4
    • 6.5 million residents (6th largest population concentration by geographic area in U.S.)
  • Economic Growth
    • 1.3 times over growth rate of South Florida
    • Panama Canal to introduce Port of Tampa to new markets
    • All Aboard Florida rail project to provide high-speed transit between Orlando and South Florida
      • Tourism/Entertainment
        • Theme Parks in Orlando and Tampa
        • Coastal attractions

For any investor seeking to improve their success in the real estate market, Albert believes that a mentor is an invaluable resource for investors. The expertise and understanding of a seasoned investor can provide knowledge and guidance to make actionable investment decisions.

Albert cites Colin Powell as a distinct influence on his development as a leader. Despite his focus in military and politics as opposed to business, Gen. Powell established himself as a true leader in his field and exhibits the qualities of leadership that can be applied to any individual.

Check out Colin Powell’s literature on leadership on Amazon

To find out more about Mckinley’s properties in Florida visit their website

 

 

Ep. 52 – Real Estate Development is a Big Part of All Aboard Florida Rail Project

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john_guitar_final_3-24-2015For those who haven’t heard, All Aboard Florida is a high-speed rail project connecting Miami and Orlando via Fort Lauderdale and West Palm Beach. The project is slated for public use in 2017.

The project will have a major impact on transit in South Florida and Central Florida. The rail project will also have a profound effect on real estate development in the state. John Guitar, Senior V.P. of Business Development discusses All Aboard Florida’s interests in stations and transit-oriented real estate development.

  • 4 million sq. ft. rail transit
    • Miami
    • Orlando
    • Ft. Lauderdale
    • West Palm Beach
  • Utilizing privately owned space in F.E.C. “Flagler Corridor”
  • High-speed Transit
    • 79-110 mph
    • 125 mph (with no grade crossings)
  • Miami
    1. Retail
      1. 200k sq. ft. real estate development for Downtown Miami Station
      2. Servicing local and commuter traffic
    2. Office
      1. 2 Developments planned: 200k sq. ft. & 100k sq. ft.
      2. Accessible locations for commuters
  • Ft. Lauderdale / West Palm Beach
    • Several retail and residential plans in works for future development

To contact John with questions regarding All Aboard Florida’s real estate development and leasing opportunities or to find out more about the project visit the project website www.allaboardflorida.com

www.miamicentral.com

All Aboard Florida – Economic Story

 

Ep 40 – Don’t Forget About Small Business Loans for Investment Real Estate

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Hoyt PrindleHoyt Prindle of the Florida Business Development Corporation talks about Small Business Administration (SBA) loans for investment real estate. Most real estate investors overlook this type of financing, because, frankly, it has limited use for investment property…BUT, the financing source can be excellent for mini-warehouses, hotels, golf courses, etc…OR, the professional or retail user who decides to have some attached rental space on the current space in which they own and run their business/practice. The terms of an SBA loan can make a deal VERY attractive for investors. Listen to Hoyt tells us what programs work best.  

Check out this episode!