ADM All Dominion Mortgage Blog

When it comes to raising private money for your apartment deals, you are only limited by the scope of your imagination and creativity.  The amazing thing is that there is a simple, four-part formula that you can use to raise private money for multifamily real estate investing.  Most people, however, don’t know about this magic formula much less that there are four parts and what those four parts are.  Let us examine each of these four parts for raising private cash.

Keep in mind that all four of these need to be done simultaneously for the formula to work in real estate investing.

Predisposed:  You don’t want to make this a difficult process.  So to make it easy, you need to target people who are already predisposed to investing in real estate such as apartments.  They have already shown some affinity, some familiarity, and some willingness to invest in real estate.  They don’t need persuading that real estate is a good investment vehicle.  All they need to be persuaded on is you and your deal.

Control :  Preservation of capital is the primary concern before a private investor releases his or her funds.   Control is described best as when you are putting together an investment vehicle, how does the investor feel that they are retaining control over the transaction if something goes wrong?  If the borrower does not perform, how does the investor get control of the situation?

Low Risk:  The second complimentary part to Control is low risk.  How do I design a real estate investment vehicle that is as low risk as possible for the investor?  Ideally, it is no risk and if you go to the extreme, it is risk reversal.  The private investor actually makes more money if the borrower defaults.

High Return:  Once you have found someone who is predisposed to real estate and you have convinced him that you have a low risk transaction then the other human condition kicks in.  The investor then wants to know how good a deal he is getting for the low risk investment.  You have to craft an investment for them that yields a high return but doesn’t give away too much of your profits.

The premise of this formula is that you are building an investment product thru apartment investing.  The more you can package up your deal, and quickly and clearly articulate its merits makes all of the difference in the world in raising private monies.  With this formula alone, you probably know more about raising private money than 80% of real estate entrepreneurs out there.  The key is remembering that all four components need to be done at the same time in order for you to be successful.

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You don’t have to “graduate” from single family to multifamily. You can start with multifamily – just like Lance Edwards did.  And besides owning apartments, you can flip them for big cash. Utilizing the multifamily apartment strategies he now teaches and writes about, Lance retired from his job in July, 2005. For more information on how you can achieve financial freedom using other people’s money, visit http://www.ApartmentWealthMachine.com .

Source: http://www.submityourarticle.com

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Loan Modification is not just for homes. Apartments, Strip Centers, Commercial Bldgs and other investment properties can now qualify for a loan modification. With our nation in financial crises, and with retail market suffering, tenants on commercial properties are having a difficult time paying their rents and owners are defaulting on their leases at an alarming rate. Because of this, more and more commercial property owners are having a difficult time meeting their financial obligations.

What is a Commercial Loan Modification?

A commercial loan modification is the process of providing for either a permanent or a temporary change in one or more of the terms of a debt obligation or encumbrance because of some type of economic hardship currently affecting the borrower.  Because of the rising number of defaults, banks and commercial lenders, and in attempt to minimize their losses,  are willing to restructure the terms of their defaulted loans, in the hopes of avoiding a costly foreclosure process and having to show huge losses to their investors.

By modifying a commercial loan properly, a property owner can avoid foreclosure, and greatly reduce their monthly payment and in some cases reduce the principal amount of their debt. Examples of these hardships may include, but are not limited to, reduction in the rent roll, because concessions had to be made to tenants in order to keep them viable; loss of tenants due to the current economic conditions, loss of revenue from sales.

What are the types of Commercial properties can you Modify? Most all commercial properties. For Example:

* Strip-mall
* Shopping center
* Apartment building
* Warehouse
* Multi tenant building
* Investment property
* Business Complex
* Office Building
* Restaurant
* Commercial lots
* Other Income producing property

How does a commercial loan modification differ from a residential modification?

The modification of the commercial debt is being accomplished to assist the “viable” business to continue to operate profitably. By modifying some of the current debt terms, the business or investment can remain at a positive cash flow, thus allowing the borrower the motivation to continue to make payments to the bank or lender during this time of economic uncertainty.

With that being said, generally a Commercial loan modification company will do the following:

* Consultation and analysis
* Pre-qualification
* Qualification
* Negotiation
* Final Modification/ Restructuring of Loan

Who qualifies for a commercial loan modification?

The “viable” business owner or property investor who can demonstrate current or expected economic hardship, but at the same time is able to a business plan that can meet the proposed financing/modification will qualify for a loan workout. The bank or lender must become very comfortable that the borrower is not just delaying the obvious- foreclosure – but that the modification will benefit both the borrower and the lender. The borrower will be able to make the monthly payments established through the modification/workout.

How long should a loan modification take?

A typical commercial loan modification should take between one and three months, but it could take longer if the borrower or lender cannot agree on the terms. The time for the modification will depend upon how rapidly the application is processed and how quickly the debt instrument holder responds.

The biggest part of the process is research and analysis. Once all the components are put together to get a precise picture of the borrower’s financial situation, the next step is to review the current loan and come up with options that will work with the borrower’s situation today.

Experience shows that when the borrowers talk openly and honestly with us about their situation, many problems can be avoided in the modification process. This is not a situation where one signs up for a modification and then the modification company take it from there. They will need the borrower’s help. Documents will be requested, forms signed, conversations about the current loan. Once everything is in place and agreed, the modification application is presented to the bank for approval.

Will I or my property qualify for a loan modification?

There are many factors that determine on what basis a lender will modify a loan. Equity, income, payment history, debt ratio and many other factors. Every case is different. If your property is producing income that you can prove, then you probably will be able to come to a resolution.

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How do I know if I qualify for a commercial loan modification? There are many factors that determine on what basis a lender will modify a loan. Equity, income, payment history, debt ratio and many other factors.Find Out If Your Commercial Property Qualifies For A Commercial Loan Modification.  Visit: http://tinyurl.com/mxmef9

Source: http://www.submityourarticle.com

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Are you trying to figure out a way to raise the rent on your multifamily property?  You can raise rents through a process called repositioning.  Whenever you buy a property and make improvements or repairs or convert a property from a Class D to a Class C or a Class C to a Class B, you are repositioning.  There are three ways you can reposition your multifamily property.

1.  Cosmetic:  You are likely to hear some vernacular in the industry like “putting lipstick on a pig”.  This refers to things like painting or landscaping and anything else that is non-structural in nature.

2.  Complete Rehab and facelift:  This option is more involved.  You can place in all new appliances and new carpet on the uninhabited units and completely rehab it so some of the stuff looks new.  The rehab does not necessarily change the class that the property is in.  For instance, if you have a Class C property that was built in the 60’s, it will still be a Class C after you rehab it.

3.  Put new management in place:  If you buy a distressed property that has a 70% occupancy rate and has an existing manager, the first thing you want to do is fire the manager because he probably has bad habits.  If you are serious about what you are doing, you want to put new guidelines in place.  Clean house and replace the property manager because that is the first step to raising rents and increasing the occupancy.

There might be a contract in place with the property manager but most have a 30- or 60- day out clause for both parties so you would have to give notice.  Management contracts are usually pretty flexible.

The first thing you want to do when repositioning is to remove the bad tenants because they are dragging down your property.  Other tenants in the apartment complex know who the bad tenants are.  You want to get rid of the bad tenants so you can create a family-friendly environment.  You want your tenants to feel safe and sound.

Even if the bad tenant is paying his rent on time, you still want to remove him because he is bringing down the rest of the property.

Repositioning offers you a way to increase the rent on your multifamily apartments.  You can either go “all out” and completely rehab the property or go with the less intensive changes of cosmetic improvements or management restructuring.  Be sure to carefully evaluate which option is best suited for your needs.

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Think you need big cash and experience to do apartments?  Well, Lance Edwards is living proof that you can start with multifamily investing – just like he did and using none of his own money. Utilizing the multifamily apartment strategies he now teaches and writes about, Lance retired from his job in July, 2005. For more information on how you can achieve financial freedom using other people’s money, visit http://www.ApartmentWealthMachine.com

Source: http://www.submityourarticle.com

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