Category Archives: Blog

BREAKING: Water Rates and Apartment Buildings in Glendale

For months we’ve been following the issue of water rates being hiked up in Glendale. This is obviously pretty important for people who own multiple buildings in the city because a majority of landlords pay the water bill for their tenants. Brittany Levine of LA Times has been keeping a close eye on this and really giving us a good look at how the rate increases could impact landlords. Her May 28th article has a cool data visualization chart that shows what 20.4% increase over the next four years looks like. Looking through her tweets, you’ll get a sense of how urgent this really is. Thanks for all your hard work Brittany!

I’ll be releasing a series of shorter posts about this topic in the coming days, including some responses from apartment owners here in Glendale.

In the meantime, if you own property in Glendale, I highly recommend checking out the data in the previously mentioned article and taking a look at how your own expenses will change in the coming years.

Don't Forget: We Love Doing Commercial BPO/BOV for Lenders Anywhere in Los Angeles!

Outside of our standard scope of services, we’ve built an excellent reputation for our top-quality pricing report production for lenders like LSI, Chase, and many local private lenders. We’re NABPOP certified and can normally turn a file around in about 36 hours, depending on your deadline. We understand that most of the time if someone is working with a private hard money lender to finance their off-market commercial real estate, getting things done quickly is usually a necessity. That’s why we’re committed to giving our clients top-quality and detailed Broker’s Pricing Opinion and Broker’s Opinion of Value reports in as little time as possible.

Have a look around our site and give us a call. We’re always available to talk. (866) 251-3851

URGENT BUYER NEED: California Multifamily 100+ Units

Fellow brokers/investors,

We’re working with a group who is IMMEDIATELY  looking to purchase an apartment complex of 100 units (or more) in California. Here’s some more info:

– 100+ Units

– 8% CAP minimum

– Value-add opportunity preferred

– Max $90k per door preferred

– Working closely with private lender  – approved borrower!

SEND ALL RELEVANT DEALS! george@verdugoproperties.com

 

Call George if you think you may have a deal that fits. (818) 400-7557

"Is It Time To Refinance My Apartment Building?"

 

Here’s a letter we received from our trusted commercial loan expert, Dennis Dishaw of ACI Capital, talking about the favorable conditions for people looking to refinance their apartment buildings:

“Over the last few months we have seen the “Fannie Mae” 10 year fixed rate remain in the 4% range.  That means today (11/30) you can get up to 80% LTV fixed for 10 years at 4.40%.  Want lower?  Take their 7 year rate at 4.13% today.  Currently “Freddie” is offering an ARM as low as 3.10% with a max note rate of 6.5%.  Can it get lower than this?  Your loan has a prepay penalty that doesn’t expire until next year?  Add the fact, that FNMA offers extended rate locks at better pricing now and using this option gets you today’s low rates for a 2012 close.  Loans under $3 million are priced higher but are still in the low 5% range.

We heard the Fed say over the last year, that they would do everything they could to avoid a double dip recession.  They are keeping rates very low for that reason.  Lenders are reading that rents have stabilized for apartment units nationwide as have values in many markets.  A few banks are approaching FNMA pricing also.  This adds up to more confidence for lenders and consequently, lower pricing.

The unspoken benefit of a lower rate is lower payments.  Putting a number to the new payment tells the investor if the time and cost of a new loan is worth the effort.  Even with a 5.5% rate now, a new rate of 4.4% on $4.0 million would reduce the annual debt service by over $32,170.  Smaller loans have slightly higher rates but the effect is similar.  On an existing loan of $1.1 million at 6%; the new payment at 5% would save you $8,200 per year.  One final issue to consider is that interest rates will surely rise in the future.  An existing loan at these rates will be very attractive when it comes time to sell.

One thing is sure.  New loan requests to refinance will not come to the table with a higher rate!  We recommend that you look at your existing portfolio to see if you can maximize your income stream by lowering existing debt service.  ACI is happy to provide a detailed quote in advance to help with this decision.”

 

Dennis E. Dishaw

ACI Capital

(818) 654-5212

ddishaw@acicapital.net

The Trustworthiness Of Prospective Tenants

A few days ago I stumbled upon this article in the NY Times and it got me thinking about the different ways some of my clients (and myself) pick the best possible tenants to rent apartments to in the Glendale area.

The article obviously talks about how credit reporting agencies are essentially changing the substance of their reports to better identify low-risk and trustworthy consumers. Now, a person’s rent payments, bounced checks, broken leases and such will have an impact on their credit score.

Why should an apartment owner care?

With the onslaught of foreclosures and bankruptcies that took place over the last couple of years, many former homeowners are left with damaged credit. Most of them were forced to rent somewhere, but had to get “creative” with signing a lease because most landlords won’t accept someone with the amount of debt they have. The changes being made to credit reports now will help landlords identify the good tenants from the bad tenants without wasting much time.

For example, a young lady I recently showed an apartment unit of ours to in Glendale, CA had absolutely terrible credit stacked with delinquent accounts, huge debt and so on. She also mentioned that she’d be breaking out of her lease to rent the unit because her job simply wouldn’t cover her rent there. On the flip side, I had an older gentlemen who had just been foreclosed on and suffered through a tough divorce from his wife of 30 years. His credit score was also butchered, but it was because of his foreclosure and bankruptcy. He had the same decent job for the last 10 years and was making more than enough to cover rent. So, who’s the obvious winner?

We’re going to be dealing with “bad credit tenants” for years to come because of the financial situation. That just means we’ll have to find the honest and trustworthy ones to work with in order to keep our investments in the green.

What other leasing challenges have you faced as an apartment owner/manager?

Verdrugo Properties can Guide you through Apartment Short Sales in Glendale CA

Apartment short sales in Glendale CA can present a challenge to those inexperienced with the process. Given the typical short sale situation, it is a good idea to consult with an experienced real estate team to make sure that the best deal possible is achieved. Verdugo Properties has the experience and expertise to help you navigate short sale complexities, helping to ensure that everything goes as smoothly as possible. After all, they deal with short sales regularly and are more than familiar with procedures and requirements.

Glendale is a bustling place, conveniently located between the San Gabriel and the San Fernando valleys. With the wealth of regional businesses and industries in the area providing numerous employment opportunities, and a well organized public transportation system, Glendale is an attractive residential option for a broad range of people, including those seeking specifically to deal in the apartment short sales market. That helps keep activity in the real estate market moving, despite the difficulties still being experienced in other parts of the state and the nation as a whole.

There are excellent opportunities for both buyer and seller in the specialized market for apartment short sales in Glendale CA. Buyer advantages, aside from local employment opportunities and commuting options, include excellent schools, comfortable climate, regional cultural entertainments, and a host of other quality of life enhancing pleasures and conveniences. And, for sellers, those qualities that draw so many to the area mean interest and activity in the real estate market, which translate into sales potentials. Because homes are in demand, short sales have the opportunity to be not quite as short as they would be other places.

With all the positive potentials of the short sale market in Glendale, there are still pitfalls for those unfamiliar with the short sale market or its processes. Buyers and sellers can both benefit from the experience and expertise offered by local real estate professionals. The Verdrugo Properties real estate team is committed to ensuring that you have access to the best short sale opportunities in the area and that the complexities that sometimes arise in these types of sales are managed as quickly and smoothly as possible.

Fast Food Investment Properties in CA are priced to sell Right Now

Fast food investment properties in CA are attracting attention from all over the state and around the nation. While the struggling economy has had a slowing effect on mid range and high-end restaurant revenues, the value priced fast food industry still enjoys brisk trade. Because of that, these food venues have attracted the attention of investors. Fast food is a business option that offers a sense of security to would be small business owners, appreciating the potentials in today’s market conditions. However, commercial property of this type is best chosen with the assistance of an experienced commercial real estate professional that is familiar with the local market.

That oft stated bit of real estate and business wisdom – “Location, location, location!” – is especially true when considering investing in fast food industry related properties. Take care to research carefully and to double check the experts when you can. Get multiple professional opinions on property values and potentials. Ask questions outside of the commercial real estate realm concerning vehicle and foot traffic in the area and about other details and statistics that could impact business success at the property. The potential for success at the site will certainly affect property value, making these factors important considerations.

Local chamber of commerce organizations can be a valuable source of information to consult when considering which region of California to seek out commercial real estate properties in. When choosing from the various opportunities for fast food investment properties in CA, you’ll want to make sure to include local, community-based real estate professionals in your circle of inquiry, as well as the larger realty companies. Basing your final decision on multiple data inputs and perspectives is smart business, and will help ensure that you find a property that meets your specific investment needs and goals.

Many people are looking to investments that feel safer than the volatile stock market and similar, less tangible types of investment. Property is the classic comfort investment in economically unsure times because it is a tangible, real asset. It’s been that way for years and years, even with market fluctuations. If the time is right for you to consider making an investment in California fast food properties, contacting commercial real estate professionals in the areas you are considering is a great way to start the research process.

Office Buildings in San Fernando Valley offer more than Just a Good View

There are many reasons that office buildings in San Fernando Valley are great commercial real estate options. Naturally, the comfortable climate and the natural beauty of the region attract many to the area, but those are far from the only features that keep the area’s commercial real estate market active. The San Fernando Valley region is home to numerous types of business and industry, and could be considered a regional center of commerce, something that local and regional officials work hard to preserve and maintain.

This business-friendly region makes good use of resources for targeted commercial development, working hard to attract even more businesses to the area. That is a positive for the overall economic health of the region, as well as a plus for San Fernando Valley commercial real estate. Those types of activities help to stimulate movement in the commercial real estate market, offering advantages for both buyers and sellers of commercial real estate. Economic redevelopment efforts make the area an attractive place for business owners and real estate investors to buy.

Office buildings in San Fernando Valley economic development regions do come with opportunities that make it worthwhile to spend some time with local commercial real estate specialists. It is typically the insiders on the local scene that can provide the best information on commercial real estate opportunities. Checking with the local chamber of commerce can also provide information on which commercial areas are most active, offering further insight into the local commercial real estate market. If you’re considering commercial real estate in southern California, the San Fernando Valley region should be among your top areas of interest.

The San Fernando Valley is a thriving region, thanks in part to its diversity, both in terms of population and businesses. Because of this, areas in and around the San Fernando Valley have been more fortunate in terms of overall real estate market activity than other parts of the state and the nation have been. Commercial brokers in San Fernando Valley areas have a positive outlook on the future because of the region’s economic resilience. With that in mind, now seems like a great time to investigate the potentials and possibilities that the San Fernando Valley real estate market holds for you.

The Advantages of Investing in Non Rent Control Apartments in Burbank CA

Burbank offers many conveniences to potential residents, making it one of the more sought after residential areas of the region. That is part of the reason that the real estate market is making a comeback in this region of the state. Less than 15 miles from downtown Los Angeles, it offers a great location for those working in LA and the surrounding area, whether the daily commute will be made via driving or by using public transportation. The desirability of living in this region is just one of the advantages of investing in non rent control apartments in Burbank CA.

Apartment investments in Burbank CA have the opportunity to offer a solid return on a person’s investment, because there are so many reasons why people seek homes in this area. All of the conveniences of being near a big city are available — employment opportunities, excellent schools, museums and other cultural experiences, fine dining, shopping, high quality medical care, etc. — yet many Burbank neighborhoods have managed to keep a hold of that small town atmosphere. Burbank is a place that people like to come home to at the end of a busy urban day.

People invest their money because they want to earn a reasonable return on their investment. And, the primary advantage to investing in non rent control apartments in Burbank CA is the freedom to determine what that return will be for yourself, rather than being limited by rent control agreements. It’s not at all unreasonable to want to have as much control as possible over your investment and it’s potential. According to recent statistics from the Realty Times, apartment vacancies are decreasing in the area as people continue to flow into the Burbank area looking for places to live.

Another advantage to making an investment in apartments in this area is that many people are choosing to downsize. Older couples, for example, often prefer to sell their homes after the children are grown to free themselves from the costs and hassles associated with home ownership and maintenance. This is just one of several demographic trends towards apartment living that can be of benefit to those making apartment investments in Burbank CA. Talk to an experienced local realtor and see what opportunities Burbank holds for you.

Finding Off Market Commercial Real Estate Deals

Please note that we work in the Los Angeles, CA area and are no longer active in sourcing national deals. However, we’re always help with investment advice if warranted. 

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Believe it or not, it’s rough out there for commercial real estate investors. The amount of time some buyers spend analyzing deals is more than they spend at their real jobs. Day after day, I meet more buyers who are absolutely against looking at anything on the market. If it’s already been on LoopNet, they’ve “seen it” and completely disregarded it. There’s the problem, though. They’ve “seen it”…meaning they looked at the price, location, unit mix, read a few words of the description, and MAYBE called the agent and said “DO YOU HAVE ANY OFFERS?!” and once the agent lied and said ‘yes’, they gave up and moved on.

It’s no wonder you have all these brokers running around asking each other for off-market deals or “pocket listings”. When nothing on the market seems reasonable, it’s time to hit up the people who DON’T actively want to sell. That makes sense, right? Nope.

In a perfect world, listing agents who put their listings on sites like LoopNet would 1) price it correctly 2) be descriptive 3) sufficiently inform their clients. Also in a perfect world, someone who claims to be a savvy apartment investor would know that everything is negotiable to a certain extent, including price. I get a kick out of the guys who, no matter how high of a CAP rate they’re getting, will insist on offering $100k less. “Property’s listed at $1m? Deliverable at $900k? I’ll offer $800k.” This isn’t the right way to make strategic investments in multifamily properties.

I’ll use a previous client of mine as a case study to show you how my father and I successfully find deals that make sense for our investors AND sellers. We used all the tools and resources available to give our client the technical data, facts and ideas necessary to make the most educated decision possible.

First, we’ll identify their buying needs: In this example, our client came to us with $2million that he needed to invest. His main objective was to gain cash flow and build equity in an appreciating asset that he can cash out in a few years. He had a steady job, paid off home, and was generally in great financial shape. He saved up this capital over the course of a decade, so he was naturally very careful of any risky investments. He decided real estate was the way to go and even did quite a bit of research on his own…even went so far as to get on LoopNet and start calling on the deals that were on the market in his neighborhood.

Clarify market knowledge: It’s always challenging when a client comes to you reciting things they heard their realtor friends saying about the commercial real estate market. That’s because 99% of it isn’t true. “My sister’s realtor friend told me people are buying apartments  in Montrose for 20 cents on the dollar!” No. “But I read online that you can make 15% on your money in apartment investing.” Hmm.

So, we spent about half an hour bringing him up to speed on market metrics (CAP rates, IRRs, vacancy rates, etc.) and what the current market conditions were like in the area.

Set reasonable goals: We set reasonable goals for the local markets here surrounding Glendale, CA that we would aim to achieve; 7% CAP, 10.5 GRM, 10% IRR, ~$130k/unit. If you don’t know what these metrics mean, well…don’t worry about them. Basically, we wanted to accomplish a reasonably profitable investment rather than try to find a “steal of a deal” and be stuck with problems.

Deal-searching: Yea, he’s seen every apartment building for sale in Glendale, CA  on LoopNet all right. He even knows each on-market property’s address and physical description by heart and he’s not happy about any of them. When we put the LoopNet results page on the screen in front of him for North Hollywood apartment buildings, he started going down the list one by one saying “this one’s great but not worth it, that one looks like a dump, this one’s empty.” We explained to him that the “price” on listings aren’t like price tags on stuff you buy at the store. You can negotiate. In fact, there are quite a few agents out there who specifically over price their listings because they’re used to being low-balled. Also, every property is being sold for a reason. Leveraging that information could be very lucrative in this business.

Naturally, he wasn’t content with what was on the market no matter how low we negotiated some of the deals. We had literally talked each seller down by at least $100k off of each listing. Our stubborn buyer still wanted to see more. We developed a method which would help us target off-market sellers (and yes, I’m totally giving away my secrets by saying this but I must warn you…no one does it quite like we do.)

  1. Foreclosure Records: filtered and searched through Notice of Default and Notice of Trustee Sale records (or properties that are in foreclosure).
  2. Expired Listings: pulled a list of all properties that match our criteria that were on the market in recent years.
  3. Target Search: went through my database of apartment buildings and found properties that match our criteria but are also owned by elderly retirees and have no debt/depreciation left on them. Why? Because older investors who have managed and dealt with their apartment buildings for decades are going to love the idea of exchanging into a NNN fast food restaurant for more cash flow and no hassle. =)
  4. Contact Property Owners: After all of that, we had 12 off-market properties to work with, all of which were in awesome locations and had great potential to add value. I contacted every single owner directly and had a brief conversation about their investment, told them what I was trying to accomplish and suggested letting us do a property valuation for them, free of charge. Only four of them agreed to have their property valuated by us. One out of four of those owners actually decided she would very much love to get fair market value for her building because her home was also in foreclosure and she needed money fast in order to save it. We put the deal together literally over-night and opened escrow the next day.

Boom! Our picky buyer acheived/surpassed every single one of the target goals and thanked us over and over again. This is what we do for our clients. Sure, some of our clients can probably just do it themselves if they really wanted to. However, the advantage of using Verdugo Properties as your commercial real estate brokers in the areas surrounding Glendale, CA is that we’re extensively trained and experienced in surgically orchestrating and executing transactions just like this. No matter which product type you’re into, we’ll achieve the same result over and over again; success.