Four questions you must ask your deal sponsor – and one for yourself

Four questions you must ask your deal sponsor – and one for yourself

6 years ago 0 0 2380

In the world of private real estate investing, it’s important to KNOW the sponsor. That individual or group will determine if the deal being considered will be good for you. Ask these four questions of any deal sponsor with whom you are considering investing. Then ask yourself the last one. “What is your track record?” A deal sponsor may claim success with his or her last few investments, but what does the long-term track record actually look like? Have there been failures and what were the circumstances? Has there been consistency in the profile of the properties purchased? Or are they just chasing what’s hot? “What is your proclivity for borrowing?” Deal risk stems from several areas, one of which is the extent of the financing. High loan to cost ratio, short-term loans, and high interest rates raise the risk substantially. Aggressive terms can boost returns, but jeopardize the deal

Read more

Loans mature, but cost basis is forever.

6 years ago 0 0 2492

In the last 24 months, we have seen the demand for real estate investments increase dramatically. Investors can’t get decent returns on “safe” or “core” investments, which makes 5-7 percent unleveraged returns on real estate quite appealing. Fund promoters and private sponsors of these deals increasingly are able to “juice” the returns by utilizing cheap debt. This trend becomes more pronounced as lenders competing for deals become more aggressive, which enables property purchases at higher prices while maintaining returns on equity. While there is a school of thought that we are in a stable, long-term low interest rate and low return (by historical standards) environment, investors should pay close attention to how returns on any individual opportunity are generated. A good real estate deal can be jeopardized by a sponsor’s willingness to borrow aggressively to “win” a deal at a price that is too high. Remember: Loans mature, but cost

Read more

Six Wealth-Building Real Estate Resolutions for 2015

6 years ago 0 0 2332

You might be surprised to know how many commercial real estate purchases are driven more by emotional than rational decision making. With the real estate and stock markets being white-hot and returns on conservative alternatives near zero, it is tempting and easy to throw caution to the wind. Beware if you dare. If you’re considering a real estate investment in 2015, here are Six Wealth-Building Real Estate Resolutions to ensure that rational thinking prevails. 1. Neighborhood trends matter. Google earth doesn’t tell the entire story. A site visit is worth the time and expense. Also, engage a professional familiar with the property type and local market to provide an objective assessment that will reveal opportunities and potential problems associated with planned rezoning, future developments, transportation changes, or market trends. 2. Physical condition of property Get an inspection! Hidden conditions can be very costly. A pound of prevention…well, you know. 3.

Read more

‘Tis the Season to Consider Family Owned Real Estate Assets

6 years ago 0 0 2334

What better time than the winter holiday season to talk about avoiding conflict and maximizing value for family-owned real estate assets? Family gatherings are upon us, tax season is just around the corner, and the real estate market is once again bustling with opportunity. Whether inherited, directly acquired, or held in a partnership, family-owned real estate can be a source of generational wealth and opportunity. Or they can cause considerable heartache today and for generations to come. Here are four tips for harmonious, profitable management of family-owned real estate: 1. Hire an unrelated, independent professional who will give you an unbiased and unemotional evaluation of the real estate owned. Whether you’re incorporating real estate into an estate plan or you have received individually or jointly inherited real estate, an objective professional evaluation is essential. The emotional investment, if you will, that many people have in family owned real estate, combined

Read more

Seo wordpress plugin by www.seowizard.org.