Category Archives: Property Class

Ep. 76 Richard Wilson: Family Offices Can Be An Important Source for Deals and Financial Partners. Find Out HOW!

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AAEAAQAAAAAAAAl8AAAAJDY2NGU0MmU2LTI2NTctNGViYi1hMWY1LWMzZTUyOGVlY2EzNAFamily 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
  • Actionable Investments
    • 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 richard@familyoffices.com

To find out more about Richard’s family office portfolios, visit www.miamifamilyoffices.com or www.detroitfamilyoffices.com and check out Richard’s family office webinars. Richard also hosts a informational podcast about family offices. Visit familyofficepodcast.com for past shows and to stay up-to-date.

Richard’s book, The Single Family Office: Creating Operating and Managing the Investments of a Single Family Office, is a best-seller in the family office industry and the key for investors wanting to find out more about the market. You can find his book on Amazon!

 

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. 74 Jillian Bandes: 6 Hot Topics to Consider About Building Structure When Buying Multifamily

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AAEAAQAAAAAAAATxAAAAJDczYWFhMzZhLWRkOWUtNDAwMi1hNmM2LTYwZmMzNDdkMjk5ZQWhether investing in a multifamily property with value-add intentions or simply as a stable addition to your portfolio, it is important to consider the building structure and the costs associated with structure maintenance.

Jillian Bandes, of Bandes Construction Company knows just what to look for in building structure when valuating a potential multifamily investment. This episode, Jillian shares six hot topics for investors to consider about building structure when buying multifamily properties.

  1. Electric
    1. Costly repair and improvement item
    2. Determine property’s inside and outside amperage
    3. Enlist licensed electrician for any repairs or improvements
  2. Roofing
    1. Unwise to cut costs on roofing materials and construction
      1. Find dependable roofing companies, use quality materials
    2. Roofing Warranties: 1-2 yr Workmanship Warranty; 10-20 yr Manufacturer Warranty
  3. HVAC
    1. Air-conditioning represents a huge aspect to determine in Florida properties
    2. Requires secure maintenance schedule
    3. Replacement costs can be substantial
  4. Doors & Windows
    1. Many things to take into account with doors and windows
    2. Observe building jurisdiction’s code requirements
    3. Buying replacements in bulk may be more cost-effective than as-needed replacements
  5. Interior
    1. Interior trends fluctuate. Stay current with trends that tenants want
    2. Value-add investors may want to put more into interior costs up front for greater tenant appeal and longevity: energy star appliances, natural stone counter-tops, removing partitions, adjusting ceiling heights
  6. Frame vs. Masonry
    1. Wood frame structures usually require much more extensive evaluations than masonry structures: water-proofing report, site level, landscaping, water table, drainage, etc.
    2. Repairs and rehabs can be costly on frame structures
    3. Masonry offers more stability and investment assurance

For more information from Jillian about important items to consider about building structure she can be contacted through Twitter @jillybee or by visiting Bandes Construction Company’s website.

 

Ep. 73 Colin Murphy – This Investor Manages a Large Florida SFR Portfolio from Madrid, Spain!

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Colin Headshot Jan2013 croppedFlorida has long been known as a great real estate market for foreign investors. Commercial and residential markets both represent favorable investment markets for foreign capital. While investing in real estate outside of a county or state may seem a daunting task, this week we talk with an investor who grew and a successful SFR portfolio out of another country!

Colin Murphy is Director and Co-founder of Torcana, Ltd. an investment firm specializing in single-family properties in Florida. With over ten years’ experience behind him, Colin has grown Torcana into a leading name in Florida SFR markets and he was able to do it all based out of Madrid, Spain. This episode, Colin shares with us some tips for building a successful foreign real estate investment portfolio.

5 Must-Haves for Foreign Investors:

  1. Standard Contracts
    1. Avoid unnecessary and overly complex contracts
    2. Standard Realtor’s Assn. contracts offer foreign investors easy-to-understand terms
  2. Title Companies
    1. Foreign investors new to U.S. and FL markets may be unfamiliar with title companies
    2. Title companies ensure a clean title transfer in a real estate transaction. They run a property’s title against any outstanding liens and unpaid fees.
  3. Closing Costs
    1. Closing costs on U.S. and FL real estate is comparatively less than that of markets outside of the U.S.
    2. Despite the relatively low closing costs, foreign investors still need to be aware of what they are paying for
  4. Post-Closing
    1. Follow-up is needed after purchasing a property
    2. Find the right insurance coverage for your investment as well as establishing a property management plan
  5. Taxes
    1. All U.S. real estate is subject to taxes and returns must be filed on them
    2. County tax collector searches can be an easy way for foreign investors to keep track of their portfolios’ taxes

For a more comprehensive approach for foreign investors, check out Colin’s list of 20 things to know for real estate investing:

20 Things to know

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Colin also suggests Rich Dad Poor Dad, by Robert Kiyosaki and Millionaire Real Estate Investor, by Gary Keller, Dave Jenks and Jay Papasan for beginning investors

For more information from on Torcana‘s services or for investing opportunities, contact Colin: Torcana’s website, LinkedIn, or Bigger Pockets

 

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. 69 George Levey: One Investor’s Story on His First Retail Center Purchase

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IShrk51pmu5lyd1000000000Commercial 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
    • Due diligence is critical
    • Evaluate investment risks
    • BE PATIENT

Ep. 68 Kevin Walsh, CPA: Proper Structure of Your Property Business Can Save Taxes, Plus New FIRPTA Rules for Foreign Investors

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MIts tax time again. Although filing taxes can be a tedious and frustrating time for many Americans, real estate investors fall into particularly complex categories. Knowing the structure of your property business can save time and money when it comes time to file.

Kevin Walsh, CPA is an expert on all things real estate when it comes to tax structures and filing. A founding member of Atrox Partners accounting services, Kevin has over 15 years experience specializing in real estate, providing consultant services for investment and brokerage firms. This episode, Kevin discusses the importance of structuring your property business to maximize your tax returns. Kevin also discusses big changes coming to foreign investing in U.S. real estate.

Real Estate Filing Structures:

  1. Business of Real Estate
    1. Realtors; Brokers; Industry Servicers
    2. Most favorable tax structure
  2. Investor
    1. Applicable to small and large-scale investors
    2. Subject to loss-limitations ($3000 max)
    3. Capital Gains/Losses advantages and disadvantages
  3. Dealer
    1. Fix-and-Flip deals; high frequency of deals
    2. Gains taxed as ordinary gains; not offered Capital Gains/Losses filing structure
  • Tax Tips for Investors
    • Knowledge is Power – Planning for your taxes is imperative. It is best to consult an expert to ensure the proper tax structure
    • Documentation – Filers need to verify they are filing within the appropriate structure; provide proof of your property business
    • Preparation – Prepare for taxes early…know your filing structure…certain filing limitations begin at close of each tax year

Foreign Investing:

  • Protecting Americans for Taxes Act, 2015 (PAFT)
    • Revisions to previous FIRPTA, outlining terms and stipulations for foreign real estate investors
    • 2 Provisions: 10% sur-tax on foreign investors abolished; 5% allotment for foreign investors now increased to 10%
    • Poised to bring influx of foreign capital into U.S. markets

Contact Kevin:

info@atroxpartners.com

Ep. 67 Brad Hubbard: You Can Increase the Value of Your Property With This Flood Insurance Technique

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2015-08-10_16.10.35Florida real estate investors should all be familiar with the flood insurance line-item on their properties’ expenditure lists. Much of Florida real estate is subject to blanket, federal regulations regarding flood insurance requirements and financial institutions require flood insurance as a prerequisite for lending on all residential properties. Many investors may not know that their properties may be eligible for flood insurance exemptions on a case-by-case basis .

Brad Hubbard is an expert in all things related to flood insurance coverage and requirements. As founder of National Flood Experts, Brad has been saving investors thousands of dollars in expenditures by eliminating annual flood insurance costs. Brad discusses what he looks for in a property to determine its status in relation to FEMA’s national flood-zone map. He also discusses what investors and property owners can do to reduce flood insurance costs on properties not eligible for exemption. This is a great method for investors to eliminate a long-standing line-item on a property’s financial portfolio and increase the property’s long-term investment value.

  • Individual properties may be built outside of federal flood-zone parameters
  • Compare construction of building with FEMA flood-guidelines
    • Due Diligence on property
      • Elevation Certification – verifies building’s base flood-line in a 100-year period.
      • Surveys
      • Other info on elevation and structure of building

To contact Brad with questions regarding flood insurance or for an eligibility inspection, call the National Flood Experts at: 1-800-561-0396 or email: brad@nationalfloodexperts.com