All Forum Posts by: Mark Creason

Amanda,

How big are you planning to build?  If large enough, I would consider drawing up condo docs for the retail and the res portion.  In urban areas, sometimes you see a large institution tenant take the retail space which can be advantageous for financing that portion of the project.  

Mark

Nicholas

The longer you hold, the more likely you may have tax implications.  I have recently worked on several commercial deals where the borrower was concerned with Phantom Income.  Phantom Income happens when your depreciation and after debt service income is less than your taxable income.  This occurs when your principal is significantly larger than the interest be paid on a project.  Typically you see this happen many years into a project but can have significant consequences for a deal.  You can resolve this issue in a couple of ways.  Putting down a significant down payment when you purchase, refinance the property as you pay down the loan to extend out the amortization, or sell the property.

Mark

Joel,

Always a good read.  

I recently saw an investor who wanted to build a large scale spec office building in Santa Monica.  This investor believes the property will be worth a 4 cap in the Santa Monica market, because of a lack of supply and ability to add future supply.  New York is a similar market in that you have a high point of entry to new product.  I would ask what you mean by high net worth individual?

Mark

David R,

They say 20 percent of the agents do 80% of the business. Sounds like you got one of the other 80%. As for listingbook, it may be a good resource, but the reason to work with a local agent from the 20% is for the intangibles. A good agent may know of a property before it hits the MLS. They may also know if a subsection of the market is changing for the better or the worse.

Good luck.

Mark

Lori,

Are the out structures old barns?  If so, you may be able to sell off the wood to someone wanting seasoned lumber.  I sold the wood on a barn structure in Bonsall CA and got the buyer to dismantle the entire building which saved me the cost to demo.

Mark

Oscar,

What type of commercial loan are you looking for? I am surprised that the loan has to be in your name? Can the property be in an LLC with you guarantying the loan? I have seen loans that are non recourse, but are usually larger loans with institutional tenants.

Mark

Philip,

With residential, you will most likely be working 7 days a week and 24 hours a day.  With commercial, leases are more complicated, but usually work is 9-5 with weekends off.

Mark

Soj,

What is the property zoned?  How big is the parcel?  Do you have a development strategy?

Mark

William A,

You might consider shorter term lending if you know you will be selling the property in a short term hold.  In commercial lending, we see a significant price increase to go from a 10 year term to a 30 year term.  I recently saw a price difference of about 125 Bps (1.25% of rate) between 10 year term and 30 year term.

Mark

Robert,

I went to grad school at the University of Denver.  Denver is a great place to live and work.  Let me know if you need any help as I have bought and sold residential properties and currently work in commercial as a lender.

Mark Creason