Are you ready to negotiate without a broker?

You do what you do best and we do what we do best… in other words, You run a business, Brokers Negotiate Real Estate.

Today I walked into a wedding planning facility, the wedding planner was meeting with some clients.  For every idea, every obstacle, every detail, she had a solution.  Why? Because she planned weddings on a daily basis.

You need a hair cutt… you go to a hair stylist. Why? Because you don’t want your hair looking like a rag mop.

You need your car repaired… you go to a mechanic. Why? Because you don’t want your car to be improperly repaired.

SO, when you are looking to buy or sell real estate, WHY would you not use a broker?

Answer- you think you will save money.

Result- chances are you don’t save a dime.

Let me explain.

Ed wants to buy an apartment building.  He does his research, gets pre approved financing, and begins a property search on his own.  He finds the perfect building.  He calls the listing broker.  The broker says “if you use a broker we are going to add their commission into the sale of the property.” True? Yes… OBVIOUSLY.

Ed decides to negotiate without  a broker. He puts in an offer for 25% below the asking price.  The seller instructs his broker to not accept the offer and counter with a 15% discount.  Ed thinks it is a good deal and goes under contract.  The Listing agent draws up the contract and tells Ed he needs to put down a 15% Option fee but will have a 90 day free walk period to Examine the building. Because of the free walk period, Ed will not be given a finance contingency.

Ed remembers a friend telling him he got a 90 Free Walk and had to cancel the agreement… when he did so on time, he was released from liability from the contract and all the money he paid was refunded to him.  Knowing this, Ed agreed to the terms and paid the 15%.

Durring the examination period, Ed found several issues with the building that needed repairs.  He told the Sellers that he was going to drop the contract if they were not repaired.  The listing agent replied with a letter stating that they would not repair the problems and Ed was welcome to drop the contract.  He then sent a letter to the listing agent asking to drop the contract and recieve his money back.

The listing agent replied by saying that Ed could drop the contract but would not recieve any money back because the money down was in the form of an option fee and NOT escrow money. Ed only had enough cash from the beginning to put 15% down on his investment.  Ed was now going to loose the entire amount. 

Ed decided to move forward with the building.  He went to the bank to tell them he needed the financing he was prequalified for and was ready to close.  The bank said “no problem Ed, we’ll get started right away”  The bank sent an appraiser out to the Apartment building and a week later denied his loan amount and said they could only finance 70% of the building.  Ed was shocked, he said “I talked them down 15% what’s the problem?” The bank replied “well we ran the numbers and the NOI doesn’t supply adequate cash flow for the required DSR.”

Ed couldn’t believe it, he was getting a good deal on the building and they wouldn’t finance it! He was now 15% short on his deal and out his entire down payment if he could not close.   Ed was in a pickle.

Here is how the deal would have worked if a broker were involved.

The broker would have contacted the listing Agent and told them he had an interested party and would be sending them a commission agreement.  The broker would reply with the appropriate cutt of his commission to the buyers agent.

The buyers agent would then ask for all information regarding rent rolls, expenses, operations, etc.  Before any negotiations take place, the buyers agent would review the information and run a Cash Flow analysis on the property.  He would also run a CMA on other like properties in the market to determine Market Rents, Sales Prices, and Vacancy Rates.

Before sending out a “Purchase Agreement” the Buyers Agent would have negotiated the entire deal through an LOI before making the official offer.  The Buyers Agent would have a good understanding of what the NOI is and would have based their reccomendation on the offer based on Numbers, and not what they “think” the property is worth.  The Buyers agent would also never have gone under contract on a property where the Buyer could not get his money back if any issues came up. 

Chances are, on this transaction, the Buyers Agent would have saved ED a considerable amount of money.  What is a 3% commission really worth if a broker can save you 15-25% in negotiations?

Click here or more informaiton on Tenant/ Buyer Representation.

 

Investing in Real Estate 101…

Are you interested in Investing in Real Estate?

Let me guess, you attended a real estate seminar where they sold you a bunch of books and promised to teach you how to buy real estate with NO money down and next to 0% financing.  You’re now ready to go out and search for property that with a total investment of $1,000 is going to turn into $1,000,000 because you bought the property.

Once you find your commercial or residential real estate investment property you’ll need financing.  If it is commercial you’ll probably hit up a couple specialty financing firms that offer 5-7% interest rates on a 75%, 30 yr am, 10 fixed, 5pt loan, with a 20% Mezzanine at 8-9 over prime and 5% down.  Sounds good right? Let me guess, you didn’t understand half that, and when you hand the mortgage broker an upfront ”Admin” fee of $4K and he returns the favor with a 75% bridge loan at 10-12% over prime, you’ll be scratching your head wondering how the bank ran off with your money and you still HAVE NOTHING!

0% Down… not a chance… 5% maybe in 2005… 10% maybe in 2006… 20% not since sometime in 2007, 25% now we can do business, if you have 15 years of experience a networth of double the value of the subject property and 3 other gaurantors.

Don’t buy a book that has been sold to millions of others telling you you can buy property for 5% down. It isn’t going to happen…. and if it was going to happen EVERYONE else would be doing it.  In real estate you can’t be a Cow and stay in the pasture, you need to be a Bull and venture out… the grass is always greener where less teeth have chomped. 

FIRST, pick your approach.  Are you looking for a value add property, or fully leased NNN Commercial Property? Do you want Residential or Commercial Property?

For the purposes of prosperity let’s focus on Commercial property.

Investors will tell you “DO NOT put all your eggs in one basket” What are the eggs? …and What’s the basket? In Real Estate the “eggs” aren’t just your dollars, they are your tenants. Unlike Residential Real Estate, when you sign a Commercial Lease, you sign a 5+ year partnership agreement. Successful tenants are worth more to you than just money… they are the “egg.”

Many investors look for NNN Single Tenant investments, for example, the Walgreens or CVS store on the intersection closest to your home is actually owned by some 1031 Exchange buyer who bought the property for a good CAP Rate return. 

JUST THINK ABOUT IT FOR A MINUTE.  The property is 100% occupied by a AAA Credit tenant who pays ALL Expenses associated with the building (NNN).

But who is AAA?

Would you rather have Blockbuster or Dollar General?

If you said “Blockbuster” you just made your first $2 million dollar mistake. Dollar General is a AAA tenant, whereas Blockbuster is CC.

Even if you are able to pick your tenant’s wisely they could be forced out of business over night, and when they do your 100% NNN leased investment just became a worthless 100% vacant investment property.  Just look at Bombay Company… they went bankrupt, consolidated, and closed up shop.

If your strategy is Commercial Real Estate Investment, stick with multi-tenant properties.  A strip mall with four tenants is much more stable than a McDonalds on the corner of two major interstate highways.  Why? Because if one leaves you have continued income from the others while you release the property.

Banks looking to finance your property will frown upon NNN Single tenant deals. The first thing they look at is worse case scenario.  Worst case scenario is your tenant leaves and you can no longer afford to pay the loan.

If you are looking at purchasing a multi-tenant property, chances are the seller has an asking price similar to the properties fully leased CAP rate value. If they are only 25% leased the property isn’t worth anything close to the CAP Rate, and you won’t get the financing.

The best thing you can do when investing in Real Estate is find a Real Estate broker you can trust and stick with them.  A good Real Estate Professional will guide you through the process of acquiring property and stick by your side as a Real Estate Advisor for years to come.  If you are investing consult a Commercial Real Estate Broker.  Even if you are looking at single family homes, Commercial Real Estate Brokers analyze properties and rents on a daily basis, Residential Real Estate Brokers do not.  However, some Residential Real Estate Broker ’s are more qualified to assist property investors than others.  If you choose to use a Resdiential Real Estate Broker, interview them and make sure they are equipped to run a proper analysis of your investment.

When using a broker always use a LOCAL broker.  For example, if you are in Greensboro North Carolina and want to buy Commercial Property in Raleigh North Carolina, don’t bring your broker up from Greensboro, use a local representative.  If you are good friends with your Greensboro Commercial Broker, let him find the Raleigh Commercial Broker and work together.

Nobody knows the market better than the local brokers. A Cary Commercial Real Estate Broker knows Cary, NC the best.  A Raleigh Commercial Real Estate Broker knows Raleigh, NC the best.  If you are looking throughout the Triangle Area in NC, you need a broker who knows Chapel Hill, Durham, Cary, Raleigh, RTP, and surrounding areas.  When interviewing a Commercial Real Estate Broker ask him/her what makes them an expert in the market they are working in, how many days a week to they spend researching their markets?  How often do they do deals in different markets?  What qualifies them to be your Commercial Real Estate Broker?

Will Waverly Place Reopen in 2009?

Cary Commercial Real Estate, Raleigh Commercial Real Estate, Durham Commercial Real Estate, North Carolina Commercial Real Estate.

Waverly Place owners,  Zapolski + Rudd of Durham, originally announced the transformation of the beleaguered Cary shopping center in August , 2006 into an intimate, upscale lifestyle center. The new design features 170,000 sq-ft of high end retail space, 80 condos, 150 luxury apartments and a 150 room hotel.

Whole Foods will continue to anchor the center but will relocate into a new, 55,000 sq-ft space to become the largest Whole Foods in North Carolina. Cary’s hometown Crescent State Bank bank will relocate it’s headquarters to the redesigned Waverly Place as well.

CARY - Raleigh’s high-end bedroom community is about to have its own version of the North Hills mixed-use development.

The beleaguered Waverly Place retail complex at the corner of Tryon and Kildaire Farm roads is on the verge of total transformation after being ignored for almost 10 years.

The owner of Waverly Place, Durham development company Zapolski + Rudd, is putting the finishing touches on a plan to redevelop the center in the mold of Raleigh’s successful North Hills remake - retail, but less than now; offices that were planned but never built; and the addition of residential.

A Whole Foods grocery store at the center will remain as the anchor tenant, sources say.

Todd Zapolski, president of Zapolski + Rudd, says he is a couple of weeks away from filing site plans for the center and would not confirm specifics until he has spoken with Cary town leaders.

“We’ve been talking with three different architecture firms the last year, and we’re really trying to do interesting things,” Zapolski says. “The challenge has been keeping the good people there knowing we’re going to have to do major surgery.”

Waverly Place was built in 1987 by a partnership led by Raleigh developer Harold Lichtin. Its design - stores facing inward toward an area where a multi-story office building was to be built - got rave reviews architecturally but never caught on with shoppers and retailers.

About 43 percent of the center’s 181,500 square feet of retail space is vacant. And the office building was never built. Zapolski notes other problems: “There’s a flat parking lot that no one uses and an escalator going up, and no one is using it.”

Ownership of the center has changed hands at least four times since it was built, with each new owner promising to revitalize it. Zapolski’s plan is the most ambitious yet.

Cary Mayor Ernie McAlister says he’s been getting his hair cut at a barber shop in the center since he moved to town in 1988. “It’s been such a troubled property for so long. I hate to say that about a property in Cary, but it never has really taken off,” McAlister says. “It’s always been the next owner would make it happen or the next group of tenants will make it happen.”

McAlister says he tried to convince officials with Wake Technical Community College to place their western Wake County classrooms at Waverly Place last year. Instead, Wake Tech chose a building at Millpond Village down the street on Kildaire Farm Road.

McAlister says he has not talked with Zapolski’s group about its redevelopment plans, but adds: “I’d say the sooner the better.”

Ricky Barker, associate planning director for the town of Cary, says Zapolski’s group met with city planners shortly after buying Waverly Place in January 2005 to discuss changes to the property. Barker says the town suggested making the 22-acre property mixed use and incorporating residential units.

The redevelopment probably would be done in two phases, sources say. The first phase would be changes to the half of the property across from the Whole Foods grocery store so that its service would not be disrupted. Whole Foods’ lease runs through 2010. After Whole Foods is moved to the newly constructed half of the property, the older half would be redeveloped.

Zapolski + Rudd, LLC is a privately-owned, fully integrated real estate investment, development and management firm with a geographic emphasis on the East Coast and Northern California. The company was founded in 1998 by real estate veteran Todd C. Zapolski and entrepreneur Leslie G. Rudd and has quickly become a highly-respected leader within its core markets.

 

 

 

 

 

North Carolina Commercial Real Estate Triangle Region Still Sees Growth « North Carolina Commercial Real Estate

North Carolina Commercial Real Estate Triangle Region Still Sees Growth « North Carolina Commercial Real Estate

North Carolina’s Triangle Region Maintains Growth

Cary Commercial Real Estate, Raleigh Commercial Real Estate, Greensboro Commercial Real Estate, RTP Commercial Real Estate, Research Triangle Park Commercial Real Estate, North Carolina Commercial Real Estate

According to analysts, The North Carolina Triangle region’s prominence as a biotech hub, which also is driven by the tech and financial sectors, isn’t expected to diminish over the long term despite today’s tougher climate.

In the Triangle of North Carolina,1.9 million square feet of office space is to be completed this year, down from 2.2 million in 2007, but up from an average of 1.2 million in the previous three years.

A 10-story headquarters for Quintiles Transnational Corp., is scheduled to be completed this year in North Carolina’s Research Triangle Park. It will be the latest addition to the biotechs and pharmaceuticals already swarming the market.

Quintiles Transnational Corp, will relocate workers from several nearby locations into the new building in Durham, which is being developed by Tri Properties.

PharmaNet Development Group, a drug-development company, has leased roughly half of a 98,000-square-foot speculative building being developed in Cary by Highwoods Properties Inc.

PRA International, a clinical-drug-development organization, relocated its headquarters to Raleigh from Reston, Va., to be closer to clients and reduce costs.

Home to about 1.5 million people and anchored by a trio of cities that includes the state capital of Raleigh as well as Durham and Chapel Hill, the seven-county area saw annual job growth rise 4.6% in 2007, the 10th fastest of 307 of the nation’s largest metropolitan areas, according to Moody’s Economy.com.

Area office, apartment, retail and warehouse rents have been rising steadily since 2005 or earlier. Average vacancies are off peaks hit after the tech bust, although they remain at or above the average for the nation’s major markets, according to PPR.

The North Carolina Triangle region’s commercial-property-sales market hasn’t been immune to the credit crunch. Total sales of commercial properties valued at $5 million or more in the Raleigh area fell to $750 million so far this year through March 20, down about 25% from the first quarter of 2007. That is still better than the 80% drop seen nationally to $29 billion through March 20 from $145 billion in the first quarter of 2007, according to Real Capital Analytics Inc., a New York-based real-estate research firm.

Among those still buying is MayfieldGentry Realty Advisors Inc., a Detroit-based company that recently acquired five high-end office buildings with plans for four more by May. This month, a joint venture of Steven D. Bell & Co., a real-estate investment company based in Greensboro, and New York-based DRA Advisors, paid about $270 million for nearly 3,700 apartment units in the Raleigh area as part of a larger $1.7 billion portfolio purchase.

 

 

Buyer / Tenant Representation

WHAT IS A TENANT/ BUYER REPRESENTATIVE?

Are you looking to lease or buy commercial space for your company? Has your company recently grown or decreased in size? What are the space issues business owners should understand? When is it appropriate to use an attorney? What can a Tenant/Buyer Representative contribute to the process?

Thorough consideration of these issues is critical to making successful real estate decisions.

A Tenant/Buyer Representative will begin by helping the client to define specific requirements and objectives, and by providing market research and space alternatives meeting those objectives.

After identifying a variety of space alternatives, the Representative will provide further assistance in negotiating the terms of a lease, and ultimately signing a contract for space that best meets the needs of the tenant/buyer.

Leasing or buying space directly affects both your company’s operations and your employees’ well being. Use of a Tenant/Buyer Representative helps to ensure that this critical decision is the culmination of a professional assessment.

WHY USE A BUYER / TENANT REPRESENTATIVE?

LABOR COSTS - Finding a site and then negotiating terms is a time consuming process. A Tenant / Buyer Representative guides the process - making it faster and more efficient - and at no cost to the tenant/buyer.

MARKET RATES - Tenant/Buyer Representatives are experts on current market conditions and can offer advice regarding what is reasonable. They make sure you are getting a fair deal.

ECONOMICS - Tenant/Buyer Representatives are able to perform financial analysis, based on the specifications of your business, to help you select the most cost effective location.

NEGOTIATING - Professional representation shows a landlord your level of commitment and establishes that you are aware of market alternatives. Tenant/Buyer Representatives negotiate daily with landlords and their brokers. They know the mechanics of a deal and can structure a transaction to work in your favor. You have to know the game to play it at a higher level!

DOCUMENT KNOWLEDGE - Knowledge of the documents involved in a commercial real estate deal is critical. Our Tenant/Buyer Representatives have a working knowledge of Proposals, Counteroffers, Letters of Intent, Lease Agreements and Lease Amendments. Our experience in working with these documents on a daily basis helps us effectively guide you through the process.

WHO PAYS FOR A BUYER / TENANT REPRESENTATIVE?
A Tenant / Buyer Representative can be compensated in differentways.
In most cases, the real estate agent will seek compensation from the seller or landlord.

You may also pay the real estate agent out of your own pocket if the seller or landlord refuses to compensate the broker. In Commercial Real Estate Transactions this is very rare.

Sellers and landlords most often have a representative working for them. In their agency agreement with their representative they usually spell out compensation terms ahead of time.

These terms usually include provisions for co-broker transactions that identify how much will be paid to the Buyer / Tenant Representative.

Be sure your compensation arrangement with your real estate representative is spelled out in a buyer agency agreement before you make an offer to purchase or lease property.

For more information visit http://www.trianglebroker.com/

Hello world!

Welcome to WordPress.com. This is your first post. Edit or delete it and start blogging!