All Forum Posts by: Craig Grella

Most properties taken back or in the process of being taken back by the larger banks will be given to asset management companies for the BPO process.

If you've made an offer on a publicly listed property chances are at least one BPO has already been done. Alot of the asset managers have several BPO's done to confirm pricing, especially when they receive credible offers.

To answer your initial question: Regardless of where they are in that process, if you know the name of the asset management company handling the short sale you can simply call the manager and ask if they will be doing another BPO in response to your offer. They are under no obligation to give you an answer, tell you a date, or the number at which they arrive. Don't be surprised if they don't even call you back. The larger asset management companies are managing thousands of properties.

If they do counter your offer higher, however, you can almost guarantee that the number at which they counter was the most recently turned in BPO assessment.

I recently wrote an article about how lenders need to educate themselves on more green building features, and how an energy efficient home is worth more than its non-green counterpart.

There have been several studies culling through recent data from MLS records across the country pointing to evidence showing that green homes sell for a premium of as much as 7.5% more than comparable non-green homes, but lenders are not yet taking these features in account when valuing these properties.

For those interested in helping to bring about a change in those lending practices there is a new designation called the green lending specialist designation. I'm not in any way affiliated with the course or do i derive any income from it, rather I think it is courses like this that will eventually bring about a change in the way to look at and value green property, and eventually the way lenders make loans for such properties.

Read more about it at http://www.examiner.com/examiner/x-23548-Seattle-Commercial-Real-Estate-Examiner~y2009m9d14-Green-lending--the-future-of-real-estate-finance.

Most of the lenders i've seen advertise green loans really aren't doing anything special. They seem to be capitalizing on the term "green" without really offering any special rates that you couldn't get on a non-energy efficient home.

I'd love to get comments from people who have been involved with green building from the lending side of things.

I think its going to be a great area for creative financing in the years to come.

Because of the costs involved in doing the loan many lenders wont touch a HUD loan for loan amounts under $1million. Most wont even do them below $3mil.

IN general, since the property is not completed the bank will assess this as a construction loan. They will want to know the total cost of the project, which means you'll need to get all that data from the previous developer.

They'll of course want to know the remaining amount of construction which will formulate your new loan amount.

They'll want alot more information since this is essentially a previously failed deal. banks are loathe to take over a loan or re-lend on a failed deal from another bank.

Basically you'll have to qualify as if it were a new construction loan. You'll need to show construction docs, draw schedules, market and leasing study, and be able to prove that the property will cash flow upon completion.

Start with your local lenders who know the area or the property. Start with the lender who has the loan now and find out whey they can't finish the project. They may even be able to discount the note if you can take them out with another lender.

There's no reason why a pre-fab home shouldn't appreciate at the same rate as a stick built home.

There are certain areas where there is still a stigma attached to pre-fab homes. particularly where cheaper pre-fab homes were used in large developments by sub-par developers.

With today's manufacturing capabilities, pre-fab home are tested thoroughly in the factory, and go through many quality control procedures. Pieces are fit together several times as the home is pre-built and tested, and in many cases, they are more reliable than built in place or stick-built counterparts.

There are volumes of material written on performing demographic analysis.

One of the best books i've come across to detail the most important demographic concerns for real estate investors and developers comes from the Urban Land INstitute (ULI). The book is called Real Estate market analysis, by Adrienne Schmitz.

Market analysis is very localized and there are few national sources that have true up to date demographics.

If you have time to do it, a market analysis can be completed on your own, using the tips in the book mentioned above, and will be more relevant that any information you get from a national demo company.

If you have the money to spend, check for demographic companies in your area first. If you can't find any, call a few local developers and ask who they use for their market studies. If they've built anything in the pat five years there's a good chance their bank required a market study.

If all else fails, go to the most recent census data for your zip code and those close to your zip. Generally speaking, those where most of the valuable data in demographics reports come from.

good luck.

-Craig

For newbie investors reading this thread please understand that there are real estate scam artists all over the place and they have gotten the better of many experienced investors.

Make sure to do as much diligence as possible, and always run contracts and legal paperwork by a qualified and competent attorney.

Remember to check this site, and others like it, for more information about anyone you might be doing business with, certainly on those "too good to be true" deals.

Everyday i review valuations on properties for banks and servicing companies, specifically those that have already been taken back by the bank and are just sitting on their balance sheets. There are thousands of these properties across the country in virtually every market from wall street to main street.

These properties have not yet been assigned to brokers for re-entry onto the market, which may spell danger for, or at the very least slow down, any future recovery in our housing market.

I'm not sure how that all related to any bubble we may have seen recently, but before the markets can truly recover, we need to see some price stabilization and normalcy throughout the lending institutions.

I think the latter has already begun, as evidenced by quarterly profits of some of the major banks in the US.

The highest leverage we've seen in recent months on apartment buildings with that loan amount is 85%, that includes a 15% seller carry, which means the lender's loan is at 70% LTV. You'd still need to bring 15% cash down payment, which means you need to find 10%from outside equity players.

Equity for apartments is still readily available if you have a good business plan including all the property particulars. The equity providers are looking for a return between 10-15% on their money per year. If those figures work in your model and still allow you to make a decent return on your end it might be worth looking into.

-Craig

There are very few cities now that don't allow many types of business to be operated out of the homes. Certainly those with few, if any, registered employees.
Make sure you check the local city code to be sure.

To answer your poll:
I keep separate space in my house, and rent space downtown. The home office was new construction, so it was designed as an office. The downtown space is a lease. We have about 300 sf per office, but we started out three years ago with about half that per person.
I keep separate liability insurance for business purposes, though rarely have clients at my home office space.

For more information about startups and business finance read my column at: http://www.examiner.com/x-22012-Seattle-Small-Business-Examiner

Good luck.

-Craig

I've always found that when asking people for money, it helps to show them that you're already successful. If this is the first job you're doing, you might consider adding someone to your team who has done this successfully in the past.

That way, in your business plan, you can point to that person's success with particular numbers and metrics.

Then investors can make that leap of faith, hoping that your team's experience will bring them the same success you saw before.

Success breeds success and investors know that.

Good luck.

View additional small business and real estate finance articles at http://www.examiner.com/x-22012-Seattle-Small-Business-Examiner.

-Craig