All Forum Posts by: Jay H.

Hello @Brandon Turner, (was that proper use of @ lol)

Basically, a bank workout is a all encompassing way of saying deed in lieu, short sale, modification, or friendly foreclosure. Florida is a judicial, and recourse state. So, we are hired by borrowers that are what most would consider collectible. Our approach to a particular loan work out is different than most, since our clients are high net worth individuals we must find something within the loan file that is either a reg error, or a violation against the guarantors. With this, we can leverage a settlement with the lender.

The bulk of the dollars above were working out large land banking and vertical lines for developers.

Jay

Here is my situation,

I have assembled a group of properties within a block of FSU campus, and am in the process of bringing in an out of town developer to turn the project/contracts over to. My goal is to stay in the deal as the exclusive broker, and all around gopher/student of the out of town developer to learn the process and gain exposure from the marketing.

My question is, what is a reasonable fee/% to request from the deal. Since I am not bringing any capital to the deal, I don't expect a large % of the profit, but I also don't want to leave money on the table either.

Thanks for the input...

Jay

Hello Joel,

It depends on if we are attempting to liquidate or restructure. For restructures we typically have to bring new capital in order to thin the jr. bond holders. Then the Sr. Bond holder will restructure based on actual liquidated value. The more seasoned the servicer, the more options they provide. It also depends on the quality of the asset. When dealing with CMBS you also have to contend with SEC regs.

Jay

Short Sales will continue for years to come. Every week we speak to someone whose property doesn't show up on any distressed list, because they are still current on their payments. And they haven't hit the proverbial wall. The call goes like this with Doctor Soandso:

me: Hello, how can I be of assistance?

Doc : I was referred to you by another doctor in my practice. I have a property that is 50% under water and I have 6 months in reserves. So now I need to do some thing.

me: ok up to this point what has been your exit strategy?

Doc: well I hoped the market would come back.

me: so your 50% underwater, and you were hoping the market would rise 100% from current value, simply to sell the property for payoff?

doc: umm I guess.

me: did you buy all the comparable properties in you area,

Doc: No way!

me: Hmmmmm for one to believe the market will return 100% over a short period of time would take advantage of the great return.

doc: oh i see...

me: so you really didn't believe your property would appreciate enough to payoff the loan, if you did you would have taken advantage of the opportunity on comparable properties.

Doc: I guess that makes sense. But what about all the money I have put into the property; I don't want to just walk away from that.

me: sir that horse has left the stable. its gone.... if you don't actually believe the property will appreciate to a point to payoff the loan, how will it appreciate to a point... to not only pay off the debt... but also return all your carrying cost?

Doc: well...let me think about all of this and get back to you.

me: I will start a file and put it on the corner of my desk, for when you call back.

The point here is, everyone hits the wall at different points in time. Because of this there are properties that haven't been identified as distressed, but will hit the market as distressed at some point.

Its simply the three stages of property grief:

Denial: I hope the market comes back.

Anger: I will call the bank and see if they will work with me.

Acceptance: I have to do what ever it takes to free myself from this nightmare.

Hello all, I recently found BP. Up until now I have sat back and observed/ absorbed all the useful information.

My experience (10 years) revolves around commercial real estate finance. Since 2007 I have been engulfed with bank workouts on the borrower side. To date we have been involved in just north of $460,000,000.00 in bank workouts. Our focus has been the Florida market.

Please feel free to ask me anything regarding short sales, deed in lieu, friendly foreclosure, or modifications.

Jay Hill