Commercial real estate investors and developers know the term: “Green”. In Florida, it seems that “green” is the phantom criteria for real estate: many have heard of it, few have seen it. The term brings to mind vague notions of sustainability and energy efficiency, but what exactly is it? What is the merit in “going green”? As an effort to shift toward sustainability becomes a rising trend in the nation, Florida continues to lag behind as commercial developers and investors grapple with the nebulous nature of sustainability and green construction.
Sandra Adomatis, SRA, and LEED green associate is an appraiser with a focus on green initiatives and sustainability in real estate. Based out of Punta Gorda, Florida, Sandra has over 25 years of experience in real estate appraisal in the state of Florida. Sandra is a green valuation expert for the Appraisal Institute. Through course development, seminars and literature, Sandra has been helping commercial real estate investors integrate sustainability and energy efficiency into their investments.
6 Elements of a True Green Building
Low-flow plumbing, greywater recycling, rain barrels/cisterns, energy star rated washing appliances
Commercial real estate investing is not the same thing as residential real estate investing. Just because both property types have four walls and a roof does not mean they have the same investment strategy. Commercial deals and contracts are subject to different regulations than residential properties. Residential real estate investors looking to invest in commercial real estate should be aware of the different facets of commercial deals and contracts.
Shawn Yesner, of Yesner Law Firm of Tampa, specializes in real estate law. After getting his start in real estate law representing lenders, Shawn began his own law firm in 2004 representing homeowners. Shawn has since expanded his firm to encompass all aspects of real estate law, representing property owners in a variety of legal processes. Shawn discusses some important points for investors to consider when completing commercial deals and contracts.
Residential real estate uses one contract template – FARBAR (FL Assos. of Realtors + FL Bar Assos.)
Attorneys specialized in commercial real estate should draft commercial contracts
Only clauses that meet buyer/seller agreement should be introduced
Make sure tenants are current on lease payments
Track lease deposits
Keep leasing contracts in same format
Tax-Deferred Opportunities (1031 Exchange)
Strict timelines and regulations to be aware of
Seek assistance from CPA or certified agent
Be able to prove constructive receipt of funds; don’t get stuck with tax liability
“As Is” Contracts
Seller should always disclose state of property
in FL, Johnson v Davis sets “as is” precedence: Seller must disclose anything material to purchase of property and/or anything that might not be found after a reasonable inspection
Buyers may choose to assign ownership of property to LLC or other business name
Contracts should hold original buyers liable
FL recently changed LLC laws
Sellers should be aware of who holds legal authority to make buying or selling descisions
Title companies can do bulk of research on this
A detailed contract should outline purchase agreements
Sellers should not leave any gray areas to argue incomplete agreements
Make sure you know your property’s zoning authorizations
Zoning can be changed, but make sure your property can accommodate changes
May pose big concern for environmental properties
Owners may be responsible for environmental factors that occurred prior to purchase
Buyers should complete phase I assessments of properties for any red flags during due diligence process
To contact Shawn for any real estate law needs, visit his website!
Shawn also hosts a podcast covering many legal topics in real estate investing and ownership. Check out Yesner Law Podcast on iTunes, Stitcher or your favorite major podcast platform!
Many of our past guests on the show have referenced the Jacksonville real estate market in their lists of rising, hot Florida markets. The area has been making a steady recovery since the economic recession and investors are taking notice. With a stable economic base and opportunity in a variety of asset classes, the Jacksonville real estate market has a lot to like for investors.
Maxwell Lee and Kelly Lei, of Glocal Network, know firsthand the appeal of the Jacksonville real estate market. Two years ago, Kelly and Maxwell both left traditional, W-2 income careers for a life in real estate investment and started Glocal Network, a real estate investment firm based out of Jacksonville. Though the company is young, they have a combined portfolio of individually owned and partnered investments of over 20 properties in a diverse collection of asset classes. Kelly’s brokerage and agent’s license combined with Maxwell’s hometown knowledge of the Jacksonville real estate market have established Glocal Network as a leading investor in the Jacksonville real estate market.
Jacksonville Real Estate Market
Large amounts of single family foreclosure properties still being released
40th largest metro in U.S., with strong growth potential
Strong single family markets: Riverside; Avondale; Springfield; San Marco
Things are happening in the Miami real estate market… Well things are always happening in the Miami real estate market, but BIG things are happening right now. Miami has long been the focal point for real estate investors due to the density and scale of development and the investment opportunity for a variety of asset classes. Real estate investors all over Florida have looked towards the Miami real estate market as a forecast for current and future conditions throughout the state.
Tom Blazejack, of Blazejack & Company knows all of the ins and outs of the Miami real estate market. In addition to nearly 40 years’ experience as a real estate appraiser and analyst, Tom is also a native of Miami. Tom’s extensive appraisal knowledge of commercial and residential properties and intimate knowledge of the Miami real estate market make his consultation highly sought after by investors. This episode, Tom gives us an overview of the Miami real estate market, including development highlights and what investors should expect.
Miami Real Estate Market
2011 purchase of Miami Herald building for $236 million marks return of market
Foreign investment and cash-heavy market
Foreign investors seeking stable properties to invest cash
New deposit requirements for investors and developers insures accountability
Lenders alleviating construction loan costs for developers
Projects moving quicker
Land price increases
Miami seeing $200-300/sqf on new commercial developments but even as high as $3000 in some prime locations
Residential continues to increase… up to $3/sqf in best projects
Development spreading into surrounding Miami
Little Havana, Wynwood, Coral Gables all seeing new projects
Nobody said real estate investing was an easy business. Aside from the hard numbers and financial side, commercial and residential real estate investing requires dedication and perseverance from investors and a certain ability to thrive under pressure. For many, these pressures prove too great of obstacles to find success as real estate investors. Invest Florida Show aims to provide its listeners of all investment levels with the tools and resources necessary to make actionable investment decisions. In addition to providing educational resources to our listeners, we also want to inspire would-be investors to make the first big step and invest!
This episode our guest is all about inspiration. Mark Nathwani is a real estate investing specialist and international entrepreneur. Mark has assisted in the growth and development of many businesses and currently serves as CEO of RAMS Real Estate Holdings, a U.S./U.K. based firm focusing on foreclosure properties and other sensible Florida real estate markets. Above all else, Mark believes the first step is the biggest one: want to get into real estate investing? Just do it!
Mark’s Tips for Beginning Investors:
SFR properties are relatively stable, secure markets for those looking to begin real estate investing
Florida has many strong SFR markets:
Tampa, St. Petersburg, Jacksonville, Orlando
Tailor strategy to investment type:
Fix-and-flip, wholesales, holds
Invest based on yield as opposed to price and valuation
Yield is generally higher in complicated markets i.e. low-income housing
Choose a market and apply strategies that suit that market, don’t cherry-pick strategies from other real estate markets
Cast a wide net to find deals
Brokers, letters, bandit signs, banks, etc.
Never lose confidence in your deal!
To contact Mark with any potential investment opportunities or to find out more about his real estate investing services, visit his website!
Normally, our episodes focus on making strong, equitable real estate investments but as investors feel the restraints of a tightening lending market, they are looking for alternative financing options. Mortgage notes represent a secure and a stable income market. Buying and selling mortgage papers can yield sizable returns that can supplement an investor’s income-base.
David Campbell is a jack-of-all-trades in real estate investing. He is an experienced real estate investor and developer, he handles property management, and he buys and sells mortgage notes and offers private financing options. David, who made the transition from high school band director to real estate investor in 2001, began buying and selling mortgage papers in 2012 and has manged an increasingly profitable debt portfolio since. This episode, David discusses his multi-transitional career in real estate and how buying mortgage notes can be a great way to invest in real estate.
Market demands alternative financing options
Private lenders + Seller financing
Self-Directed IRAs – about 60% of alt. lending market
Used for non tax-efficient assets like mortgage notes
A significant mortgage/debt portfolio can be stable and lucrative income-base
Happy to make $ on deal by end term?
Deal still profitable w/ out loan payment?
Predatory loan claims risks?
Mortgage notes and Dodd-Frank
Work with Registered Loan Mortgage Originator – creates ‘Qualified Mortgage’ papers
Loan can be guaranteed against inconsistencies with Dodd-Frank regulations
Ensure notes are good before buying
Borrowers – debt-to income ratio 45% or lower; no higher than 6.5% above average prime offer rate; 15 + 30 year terms (9.5% rates)
David’s website www.hasslefreecashflowinvesting.com is loaded with materials and resources for real estate investing, development and financing. Visitors can find out more about David’s enterprises as well as check out his blog for even more information! For other inquiries, David can be reached directly by email: firstname.lastname@example.org
Family offices are becoming a burgeoning industry in terms of real estate investment and financing. Wealthy families are increasingly looking towards commercial real estate as a stable, generating market to channel and secure funds. Florida real estate markets are poised to receive family office investments and financing, but there is one problem: how can an investor find family offices?
Richard Wilson is founder and CEO of Miami Family Office, a $500 million AUM single family office. Through his company, Wilson Holding Company, Richard also oversees and advises on several other family office business enterprises including Billionaire Family Office and the membership-driven Family Office Club. Through his companies, Richard owns, manages, markets and facilitates family offices. This episode Richard discusses how commercial real estate investors can access family offices as a source for deals and financing.
Network and market towards family offices
Networking through social media
Narrow search: source for certain deal-types
Compile list of family offices in your area, find out what propoerty-types they are investing in
Family offices look for credible, practical deals as investments
Most family offices like to invest locally
Good cap rates: properties earning 15-17% IRR
Family offices looking for investors
Put out property mandate alerts for certain desired investments
Will reach out directly to investors
If you think you have an actionable family office investment deal, contact Richard at email@example.com
When 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.
Commercial vs. Residential Leases
Commercial properties have different costs and expenses that can be transferred to tenants: common area maintenance expenses (CAMs)
CAMs may include: utilities, landscaping, management fees and other costs associated with owning and operating commercial properties
CAM and Triple Net Leases
Triple Net Lease – For landlords and tenants who want stability; does not account for unanticipated expenses or for properties without a familiar investment history
CAM lease – Serves as umbrella to protect landlord/owner from future costs and expenses incurred from property management; specifies expenses and tenant liabilities
Though not frequently addressed in lease, tax implications are a major tenant-landlord discussion that could be beneficial for both parties
Leases can stipulate landlord ownership over tenant-improvements with proper recompense for tenant
Americans With Disabilities Act (ADA)
Commercial real estate considered public accommodations and subject to more ADA compliance regulations
Represents huge liability for landlords not in compliance
Sub-letting and Tenant-Assigned Leases
Landlords can address sub-leasing and assigning terms in commercial leases
Landlords entitled to portion of income from tenant leases
Do not attempt to draft generic commercial leases if self-managing property
There are many changing facets to follow when drafting commercial leases
If drafting your own lease, have attorney or specialist review
Protection Against Bad Tenants
Always ensure strong deposit from tenant
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 firstname.lastname@example.org
Commercial real estate investing is a big decision for many investors to make. For many, the potential benefits of commercial real estate are overshadowed by the increased risk. Ordinarily investors work up to commercial real estate from residential investing or they merely avoid commercial altogether.
George Levey represents an exception to the common approach to commercial real estate investing. In 2012, George made a tremendous leap purchasing a bank-managed retail center as his first foray into commercial real estate investing. Bringing with him little more than a keen business-sense and ambition, George dove head-first into the world of commercial real estate investing. This episode, George discusses his purchase of the now thriving retail center and the various ups-and-downs of a first-time commercial real estate investor.
Why Retail Center?
As a businessman, George wanted to invest in a relatively stable market where he would have control over his funds
Recognized benefits of commercial real estate investing
Do’s and Dont’s for First-Time Investors
Support your customer: the same philosophy in business applies to commercial real estate; tenants are your customers, treat them with respect
Align yourself with like-minded business partners (investors, associates, contractors, brokers/agents)
When purchasing a new property be wary of existing tenants; it is difficult to remove bad tenants
Good tenants drive business
Have specific investing goals; know what you are looking for before you invest
Jay 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.
Out-dated wiring methods may preclude properties from meeting current insurance requirements
Aluminum wiring dating mid 1960s-1970s a prevalent issue; Cloth wiring; Knob-and-tube wiring
No safety outlets by water areas source of concern
Major area of concern when inspecting properties. Damage can be detrimental to property and repairs costly.
Look for flat roofs or areas where water pools
Leaks cause major damage
A/C units on roofs – water damage from condensation, impede accessible roof maintenance. New FL building codes require roof-units be on raised platforms
Changes to FL insurance coverage a important concern for new buyers
Standards for coverage have changed over recent years
Require more detailed inspections, won’t insure certain construction methods/materials
Insurance coeerage under previous owner will not extend to new buyer
Costly and potentially dangerous inspection issue
Look for long, horizontal cracks in and around structure
$2000 geo-technical survey
Serious issue in FL
Difficult to asses severity or extent of infestation
Especially an issue in vacant or untended properties
Inspector Due Diligence
In FL especially, determine certifications of inspectors prior to selecting
FL requires Home Inspector license only
International Association of Home Inspectors – largest H.I. association in U.S.
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