Rental Property Investment Resources

Real estate investors/developers often need to think “outside the box”

Case Study: Developer sees great potential in second home segment

In doing research for a new line of country homes, Trendmaker found 3,400 parcels of land in the Round Top area that hadn’t been built on and whose owners lived in other cities.

It was part of what gave the builder the confidence to enter the rural central Texas housing market.

“With baby boomers retiring and Texas leading national population growth trends, we see tremendous potential in the second-home market,” said Will Holder, president of Trendmaker Homes.

The company is launching a line of manufactured homes called Texas Casual Cottages for buyers who own their own property in country settings where it can take longer to build a second or retirement home because the locations are so remote.

“You don’t have to worry about it getting framed and then deer season comes and it sits for a month, and it’s out in middle of the woods and stuff gets stolen,” Holder said.

The homes are being built off-site by GroundForce Building Systems of Navasota. Trendmaker will deliver and assemble them at the home sites, as well as build porches and handle other infrastructure issues.

3 Crucial Keys To Investing Success: The most successful real estate investors #1. Pick a niche like foreclosures, probate sales, commercial property, tax certificate sales and the like – #2. Learn all there is to know about that niche – #3. Exploit the heck out of it for maximum profits.
Click here to get proven help with selecting the most lucrative real estate investing niches

P.S. Need money for your deals?
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They will have metal roofs, large porches, pine floors and wood walls, along with modern finishes like open family room and kitchen combinations, large bathrooms and walk-in closets.

Floor plans will range from a 450-square-foot guest cottage to a 4,500-square-foot farmhouse. And prices will start in the $50,000s for a small cottage and reach more than $300,000.

A model home will open in Round Top next month on Texas 237 across from the Big Red Barn, a well-known antiques center.

If sales go well, Holder said, he would like to expand the product into other parts of Texas, including Corpus Christi, the Canyon Lake and Lake Livingston areas, Galveston and Bolivar.

Longtime Houston real estate agent Sandy Reed, who moved to Round Top in 1990 to renovate and sell historic houses, will serve as sales manager and design consultant for the new home line.
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Source: http://www.chron.com/disp/story.mpl/headline/biz/7027826.html

real estate investing, commercial property foreclosure, property investments, buying rental property, rental property investment, property investors

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Some banks have a special technique for dealing with business borrowers who can’t repay loans coming due: Give them more time, hoping things improve and they can repay later.

Banks call it a wise strategy. Skeptics call it “extend and pretend.”

Banks are applying it, in particular, to commercial real-estate lending, where, during the boom, optimistic borrowers got in over their heads to the tune of tens of billions of dollars.

A big push by banks in recent months to modify such loans—by stretching out maturities or allowing below-market interest rates—has slowed a spike in defaults. It also has helped preserve banks’ capital, by keeping some dicey loans classified as “performing” and thus minimizing the amount of cash banks must set aside in reserves for future losses.

Restructuring of nonresidential loans has tripled in a year

Restructurings of nonresidential loans stood at $23.9 billion at the end of the first quarter, more than three times the level a year earlier and seven times the level two years earlier. While not all were for commercial real estate, the total makes clear that large numbers of commercial-property borrowers got some leeway.

But the practice is creating uncertainties about the health of both the commercial-property market and some banks. The concern is that rampant modification of souring loans masks the true scope of the commercial property market weakness, as well as the damage ultimately in store for bank balance sheets.

3 Crucial Keys To Investing Success: The most successful real estate investors #1. Pick a niche like foreclosures, probate sales, commercial property, tax certificate sales and the like – #2. Learn all there is to know about that niche – #3. Exploit the heck out of it for maximum profits.
Click here to get proven help with selecting the most lucrative real estate investing niches

P.S. Need money for your deals?
Click here for the best sources for money or zero down real estate sources

Georgian Bank in Atlanta used “extent and pretend”

In Atlanta, Georgian Bank lent $13.5 million to a company in late 2007, some of it to buy land for a 53-story luxury Mandarin Oriental hotel and condo development. The loan came due in November 2008, but the bank extended its maturity date by a year. The bank extended it again to May 2010, with an option for a further extension to November 2010, according to court documents.

Georgia’s banking regulator shut down the bank last September. A subsequent U.S. regulatory review cited “lax” loan underwriting and “an aggressive growth strategy…that coincided with declining economic conditions in the Atlanta metropolitan area.” Some of Georgian Bank’s assets were assumed by First Citizens Bank and Trust Co. of Columbia, S.C., which began foreclosure proceedings on the still-unbuilt luxury development. The borrowers contested the move, and settlement talks are in progress.

Bank of America Corp. in Atlanta uses “extent and pretend”

Also in Atlanta, Bank of America Corp. has extended a loan twice for a high-end shopping and residential project. Three years after a developer launched the Streets of Buckhead project as a European-style shopping district, all there is to show for it is a covey of silent cranes and a fence. The developer, Ben Carter, says he is in final negotiations for an investor to come in and inject $200 million into the languishing development.

Bank regulators have given banks a variety of ways to restructure loans

Regulators helped spur banks’ recent approach to commercial real estate by crafting new guidelines last October. They gave banks a variety of ways to restructure loans. And they allowed banks to record loans still operating under the original terms as “performing” even if the value of the underlying property had fallen below the loan amount—which is an ominous sign for ultimate repayment. Although regulators say banks shouldn’t take the guidelines as a signal to cut borrowers more slack, it appears some did.

2/3rds of bank commercial real estate loans maturing between now and 2014 are underwater

Banks hold some $176 billion of souring commercial-real-estate loans, according to an estimate by research firm Foresight Analytics. About two-thirds of bank commercial real-estate loans maturing between now and 2014 are underwater, meaning the property is worth less than the loan on it, Foresight data show. U.S. commercial-real-estate values remain 42% below their October 2007 peak and only slightly above the low they hit in October 2009, according to Moody’s Investors Service.

Number of delinquent commercial property loans are up

In the first quarter, 9.1% of commercial-property loans held by banks were delinquent, compared with 7% a year earlier and just 1.5% in the first quarter of 2007, according to Foresight.

Holding off on foreclosing is often good business, says Mark Tenhundfeld, senior vice president at the American Bankers Association. “It can be better for a bank to extend a loan and increase the chance that the bank will be repaid in full rather than call the loan due now and dump more property on an already-depressed market,” he says.

But continuing to extend loans and otherwise modify them, rather than foreclosing, amounts to a bet that the economy will rebound enough to enable clients to find new demand for the plethora of offices, hotels, condos and other property on which they borrowed. If it doesn’t work out this way, the banks will end up having to write off the loans anyway.

At that point, if they haven’t been setting aside sufficient cash all along for potential losses on such loans, the banks will face a hit to their earnings.

Banks’ reluctance to bite the bullet on some deteriorating commercial real estate can have economic repercussions

The readiness to stretch out loans puts a floor under commercial real estate and keeps it from hitting bottom, which may be a precondition for a robust revival.

More broadly, the failure to get the loans off banks’ books tends to deter new lending to others. It’s a pattern somewhat reminiscent, although on a lesser scale, of the way Japanese banks’ failure to write off souring loans in the 1990s contributed to years of stagnation.

It’s a Catch-22 for banks

As long as some of their capital is tied up in real-estate loans that are struggling—and as the banks see a pipeline of still-more sour real-estate debt that will mature soon—their lending is likely to remain constricted. But to wipe the slate clean by writing off many more loans would mean an even bigger hit to their capital.

“It does not take much of a write-down to wipe out capital,” says Christopher Marinac, managing principal at FIG Partners LLC, a bank research and investment firm.

Federal bank regulators tackled the issues in October with a 33-page set of guidelines. Bank regulators have said they were concerned about commercial-property losses and debts coming due on commercial property.

Banks don’t have to disclose how terms on their loans have changed, making it hard to know whether they are setting aside enough cash for possible losses.

In a large proportion of cases, modifying the terms of loans ultimately isn’t enough to save them. At the end of the first quarter, 44.5% of debt restructurings were 30 days or more delinquent or weren’t accruing interest, up from 28% the first quarter of 2008.
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Source: http://online.wsj.com/article/SB10001424052748704764404575286882690834088.html?mod=googlenews_wsj

extend and pretend, commercial loan delinquencies, real estate investing, commercial property foreclosure, property investments, buying rental property, rental property investment, property investors

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Mitsubishi Estate Co., Japan’s biggest property developer by market value, said it will set up a real estate fund in the U.S. this year and seek takeovers overseas to counter declining demand at home.

“We cannot just sit back and be satisfied with what we’ve built over the years at home as demand will probably remain weak and competition will increase,” Chief Executive Officer Keiji Kimura said in an interview in Tokyo on May 19. “We believe this is a good time to start building up our global platform.”

His plans come as commercial property sales in Manhattan, the biggest and most expensive U.S. office market, tripled in value in the first quarter from a year earlier. Office vacancies in Tokyo are at a record high and commercial land prices declined to the lowest in at least 36 years.

The firm may initially invest in about two buildings on the East Coast through its Rockefeller Group Investment Management unit, said Kimura, 63. He declined to elaborate on the size of the fund. Mitsubishi Estate is also in talks with several real estate asset management firms in the U.S. and Europe for possible takeovers and alliances, Kimura said.

3 Crucial Keys To Investing Success: The most successful real estate investors #1. Pick a niche like foreclosures, probate sales, commercial property, tax certificate sales and the like – #2. Learn all there is to know about that niche – #3. Exploit the heck out of it for maximum profits.
Click here to get proven help with selecting the most lucrative real estate investing niches

P.S. Need money for your deals?
Click here for the best sources for money or zero down real estate sources

The firm aims to increase operating profit from overseas business to about 20 percent of the firm’s total, from 7 percent last year, he said.

‘Very Transparent’

“The U.S. real estate market is very transparent,” said Masahiro Mochizuki, a real estate analyst at Credit Suisse Securities (Japan) Ltd. in Tokyo. “It’s a good move for the company to seek expansion in that market rather than some of the Asian markets that are less so.”

At home, Mitsubishi Estate, the biggest landlord in Tokyo’s Marunouchi central business district, is planning to start its first private real estate investment trust, allowing it to securitize property investments, Kimura said.

In February, Nomura Real Estate Asset Management Co. announced plans to start a private REIT, Nomura Real Estate Private REIT, nine years after Japan opened the REIT market to developing securities pioneered by the U.S. in the 1960s.

“Private REITs are good vehicles in a way that it doesn’t get affected by the market prices,” Kimura said. “We’re starting to see some interest from pension funds to invest in real estate, so this could be a good offering.”

The TSE REIT Index, which tracks 37 funds, had a record market value of about 6.79 trillion yen in May 2007, compared with about 3 trillion yen today.

Profit Forecast

Mitsubishi Estate’s net income dropped 74 percent to 11.9 billion yen in the year ended March 31 as the firm wrote down losses on projects in Tokyo. It forecasts profit to jump more than fivefold to 63 billion yen.

Tokyo’s office vacancy rate rose to a record high of 8.82 percent in April, according to Miki Shoji Co., a Japanese office brokerage company. The number of condominiums put up for sale in Tokyo and surrounding areas rose 23 percent in April from a year earlier, a third straight monthly gain, according to Real Estate Economic Research Institute.

Japanese commercial land prices declined 6.1 percent in 2009, more than the 4.7 percent drop a year earlier, the Ministry of Land, Infrastructure, Transport and Tourism said in a report released in March. Values are at their lowest since the ministry began collecting comparable data in 1974.

Signs of Rallying

By contrast, the U.S. property market is starting to pick up. About $3.3 billion of transactions priced at $10 million or more were closed or went under contract in the first quarter, almost matching the $3.5 billion sold during the whole of last year, New York-based property broker Cushman & Wakefield Inc. said in a report on April 6. About 5.7 million square feet (529,000 square meters) of offices were leased in the first quarter, 84 percent more than a year earlier.

“We expect the condominium market in Japan to slowly pick up, but we will never see the kind of growth we used to see at its peak,” said Kimura. “In the U.S., we’re starting to see some investments return to the market.”
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Source: http://www.businessweek.com/news/2010-05-21/mitsubishi-estate-plans-u-s-property-fund-takeovers-update2-.html

Opportunity is knocking for smart investors

There are profits to be made for smart real estate investors who know how to find and finance commercial properties that are bank foreclosures, short sale prospects or are owned by other distressed sellers.

Shorten your learning curve and avoid costly mistakes with knowledge from seasoned investing pros. Take a look at these courses:

# Commercial Property Foreclosures The next real estate bubble starting to burst is commercial real estate. Learn how to buy commercial property short sales and pre-foreclosures for pennies on the dollar with 100% financing without good credit and without any real estate experiences or licenses needed.
#####

# Commercial Property Buildings Learn how to buy office, warehouse and retail buildings with no cash and no credit. Right now the most profitable units are retail stores, small office space and smaller industrial spaces like warehouses of 3,000 square feet and under.
#####

# Apartment Buildings Learn how to start making $24,000 per month (or more) in passive, cash flow, by investing in apartment buildings with no cash or credit within 90 days.
########
real estate investing, commercial property foreclosure, property investments, buying rental property, rental property investment, property investors

Technorati Tags: real estate investing, commercial property foreclosure, property investments, buying rental property, rental property investment, property investors

Laura Pomerantz, a principal and founding partner of PBS Real Estate LLC., says it’s time for REITs to invest in NYC commercial real estate

In a recent blog post on forbes.com, Pomerantz, shared her positive outlook.

Pomerantz noted that New York’s economy is on the mend, with a strong stock market and employment improving. She sees that the mood is clearly changing. The stocks of New York-centric commercial REITs have been big winners. In the last 12 months, Vornado Realty Trust (VNO) has jumped by 60%; Boston Properties (BXP) gained around 60%; And SL Green (SLG) climbed by 180%.

Investors can obtain New York City commercial REITs at a generous discount

Despite the gains, New York REITs have plenty of more room to grow. In fact, with underlying dynamics poised to push asking rents higher, a rare window of opportunity has emerged in which investors can obtain New York City commercial REITs (Real Estate Investment Trusts) at a generous discount.

Asking rent for prime commercial property space should rebound

Beginning in mid-2011, asking rent for prime commercial property space in New York City, which can buoy or sink a REIT’s value, should rebound, marking the beginning of a steady rally, according to Real Estate Econometrics, an analytics firm tracking commercial real estate. By 2014, asking rents are expected to climb by more than 20% reaching $84.10 per square foot. Even at this point, prices will not have hit their upper echelons–a peak of more than $91 per square foot in mid-2008.

Property managers still rely on lower rents and concession packages to attract nervous tenants but these should fade away by mid-2011

By 2011, however, Pomerantz thinks tenants with pending lease expirations will race to renew in hopes of securing favorable rates–particularly those who want more space. With a healthy dose of demand back in the market, concession packages should fade away by mid-2011. REITs will again be in a position to make deals that create revenue and add to profitability.

Meanwhile in Downtown Manhattan, One World Trade Center (formerly known as the Freedom Tower) is slated to open its doors in 2013, adding 2.6 million in new office space to the mix. Combined with a handful of other large lots of space expected to become available, vacancy rates in the Financial District are expected to spike higher. While this usually spells trouble for landlords, Real Estate Econometrics expects overall asking rents in NYC to climb. That’s because the incoming space is better quality to what’s currently available, and will command higher rents.
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Source: http://blogs.forbes.com/investor/2010/05/21/buying-time-for-nycs-commercial-reits/

Opportunity is knocking for smart investors

There are profits to be made for smart real estate investors who know how to find and finance commercial properties that are bank foreclosures, short sale prospects or are owned by other distressed sellers.

Shorten your learning curve and avoid costly mistakes with knowledge from seasoned investing pros. Take a look at these courses:

# Commercial Property Foreclosures The next real estate bubble starting to burst is commercial real estate. Learn how to buy commercial property short sales and pre-foreclosures for pennies on the dollar with 100% financing without good credit and without any real estate experiences or licenses needed.
#####

# Commercial Property Buildings Learn how to buy office, warehouse and retail buildings with no cash and no credit. Right now the most profitable units are retail stores, small office space and smaller industrial spaces like warehouses of 3,000 square feet and under.
#####

# Apartment Buildings Learn how to start making $24,000 per month (or more) in passive, cash flow, by investing in apartment buildings with no cash or credit within 90 days.
########
real estate investing, commercial property foreclosure, property investments, buying rental property, rental property investment, property investors, new year city commercial real estate

Technorati Tags: real estate investing, commercial property foreclosure, property investments, buying rental property, rental property investment, property investors, new year city commercial real estate

Former executive, Adam C. Hochfelder, was once a rising star in Manhattan’s real estate commercial world. At his peak, Hochfelder, managed or had ownership stakes in $2.7 billion worth of skyscrapers.

Hochfelder pleaded guilty to stealing more than $18 million from banks and investors, including relatives and close friends, to cover debts and finance his lifestyle as a mogul.

The former executive, Adam C. Hochfelder, 39, pleaded guilty to 18 counts of grand larceny and schemes to defraud investors; he was accused of misrepresenting his personal wealth to obtain loans and investments. Justice Michael J. Obus of State Supreme Court in Manhattan said he would consider a prison sentence of 4 to 12 years.

It was a fast fall for Mr. Hochfelder, a Long Island native and University of Pennsylvania graduate who was associated with an enviable real estate portfolio in his 20s. By his 30th birthday, he had taken over the office once occupied by the renowned skyscraper owner Harry B. Helmsley and was socializing with some of the city’s biggest real estate names.

Plagued by his own demons

According to Mr. Hochfelder’s lawyer, Marc A. Agnifilo, a soured partnership with the real estate investor Peter S. Kalikow led Mr. Hochfelder to buy out Mr. Kalikow in 2002 for far more debt than he could handle. Court records show that Mr. Hochfelder also used some of the money investors placed with him to pay for perks like his sons’ school tuition and private jets.

Mr. Hochfelder also suffered from a severe cocaine addiction that sent him into rehabilitation and required several operations to repair his nose, according to court filings.

The Manhattan district attorney’s office said Mr. Hochfelder forged documents and lied about the collateral he owned or the deals he was undertaking to obtain loans and investment capital fraudulently.

At his courtroom appearance on Friday, Mr. Hochfelder spoke in a low voice as he read the names of investors he had bilked, including some relatives. As he spoke, his father, James L. Hochfelder, held his head in his hands.

In a statement, Mr. Agnifilo said Mr. Hochfelder had already paid back $15 million to investors and would pay back “every dollar he owes.” Mr. Hochfelder’s plea agreement requires him to pay $9.5 million in restitution. Hochfelder’s sentencing is scheduled for Sept. 7.
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Source: http://www.nytimes.com/2010/05/22/nyregion/22hochfelder.html

Opportunity is knocking for smart investors

There are profits to be made for smart real estate investors who know how to find and finance commercial properties that are bank foreclosures, short sale prospects or are owned by other distressed sellers.

Shorten your learning curve and avoid costly mistakes with knowledge from seasoned investing pros. Take a look at these courses:

# Commercial Property Foreclosures The next real estate bubble starting to burst is commercial real estate. Learn how to buy commercial property short sales and pre-foreclosures for pennies on the dollar with 100% financing without good credit and without any real estate experiences or licenses needed.
#####

# Commercial Property Buildings Learn how to buy office, warehouse and retail buildings with no cash and no credit. Right now the most profitable units are retail stores, small office space and smaller industrial spaces like warehouses of 3,000 square feet and under.
#####

# Apartment Buildings Learn how to start making $24,000 per month (or more) in passive, cash flow, by investing in apartment buildings with no cash or credit within 90 days.
########
real estate investing, commercial property foreclosure, property investments, buying rental property, rental property investment, property investors

Technorati Tags: real estate investing, commercial property foreclosure, property investments, buying rental property, rental property investment, property investors