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Creating Value in Today's Value-Add Properties

Creating Value in Today's Value-Add Properties
It's the goal of many multifamily owners and investors: Buy an apartment community in need of upgrading, perform the needed renovations, boost rents accordingly and drive impressive returns. But just because apartment companies frequently undertake value-add projects, it doesn't mean success in these endeavors is easy. On the contrary, a value-add community that attracts residents and produces the targeted returns is the end product of an almost never-ending amount of diligent research and careful strategic planning.  Below are some of my general tips for success in the value-add arena. Dig into submarket data. This may seem obvious, but it's such a critical step that it merits placement here. A successful value-add project depends on a submarket that can support the rents and the investment returns you're seeking. Once you know what metro you're looking to invest in, thoroughly research the area's submarkets to pinpoint where your best investment opportunity may be. What are the submarkets where the population is increasing, employment opportunities are growing and rents are rising? Be prepared to go through all the data sources you need to make this vital, fundamental determination. Visit a property you're considering buying. Statistics, spreadsheets and databases are of course indispensable when evaluating a value-add opportunity. But don't ever underestimate the value of setting foot on a property and seeing it in person. As the great and wise Yogi Berra once said, "You can observe a lot by just watching."On a personal note, I was recently tempted – because of an extremely hectic s......
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HOW TO BUY YOUR 1st COMMERCIAL PROPERTY

HOW TO BUY YOUR 1st COMMERCIAL PROPERTY
Commercial property is an asset that is real estate referred to use as business activities. It serves as land for rental purposes and generates profit. Commercial property can be malls, industrial estate, manufacturing stores, grocery stores, and many more. Investing in commercial property sound always healthy, but the cost of such property is far higher than residential property. But it can aid in getting a long-term source of income. Buying a commercial property is always a tough row to hoe. And some serious points need to be considered while investing an enormous amount in commercial property. There are five primary types of commercial investments, which are as follows. OFFICE The office building can be small or big in a different commercial zone. INDUSTRIAL A commercialized industrial area can be a storehouse or a manufacturing site. RETAIL It includes shop around the corner of your house to any regional shopping center. HOSPITALITY It includes hotels that attract tourists and earn you a rental payment. MULTIFAMILY It includes apartments that can be used for several desired purposes. After deciding on the commercial property that attracts you, you Have to build up a strategy to invest in it. Some important points that need to be considered are as follows.   LEARN SOME COMMERCIAL REAL STATE VOCABULARY There are a lot of learning things that are required by a person to be familiar with. Some major terms are as follows. DEBT SERVICE COVERAGE RATIO It tells how much income will help you in covering the......
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How to Use Digital Communication to Keep On-Site Teams Successful, Residents Informed, and Traffic Volume High During Times of Crises

All industries are increasingly embracing and investing in crisis management planning in case of emergencies (i.e. disasters, crimes, health issues, etc.). It can be hard for on-site teams to know what to do for residents during a crisis. It’s challenging not to get caught up in the what-ifs and what to-dos. While I’m sure you have a crisis communication plan in place, think about the overall tone, flow, and timing for how each message will be perceived and delivered. How can you emphasize and ensure your message is communicated properly? One way is to double down on digital communication efforts - it's the safest, most convenient way to keep on-site staff, current and prospective residents informed and safe. It’s nothing you haven’t heard before that in times of crisis, leasing teams should over-communicate updates to residents. And, video, email, resident portals and a wide range of other CRM/marketing technologies can help communicate information quickly and safely to employees, prospective and current residents so they can fully grasp your message when you need it to be heard. How to Incorporate Video and Email Into Your Crisis Management Plan When preparing how to provide updates and instructions to employees and residents, below are suggestions to make your communication efforts more efficient through video. Communication efforts should be transparent: While preparing communication efforts, be honest with employees and your residents about the situation. This ensures everyone has the most up-to-date information regarding the crisis and what protocols should be followed. Leasing teams can create a video saying ......
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Is This Assistance Animal Legit?

Is This Assistance Animal Legit?
As more and more communities allow pets onsite, most operators are seeing an uptick in assistance animal accommodation requests. It’s no secret that there are bad actors trying to pass their pets off as assistance animals to circumvent pet fees and restrictions. This is why having a thorough and consistent review process of each accommodation request is paramount. In over 100,000 reasonable accommodations requests already reviewed by PetScreening, nearly 60% were returned to the animal owner as insufficient. In other words, the accommodation request did not meet HUD’s 2020 Assistance Animal Notice guidelines. This is often due to documentation that is missing or contains incomplete information, is lacking specificity, has out-dated documentation and a variety of less common factors.  It’s important to note that when a request is deemed insufficient, that definitely doesn’t always equate to fraud -- although there are a few tell-tale signs to look for when determining the legitimacy of such requests. For instance: If a healthcare provider questions the validity of his/her signature If the date on the supporting documentation appears to have been altered If a name in the supporting documentation appears to have inconsistencies  In the event that you encounter any of these “ifs” or other indicators that seem questionable during your review of an assistance animal request, additional expertise and diligence during the review process is likely warranted. Fraud is a very serious matter and, if suspected, you should navigate this cautiously and carefully. It is well within your rights to seek additional information during the ......
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What is the Michael Jordan effect in real estate investing?


Michael Jordan is arguably the greatest basketball player to have ever lived who consistently got referee calls to go his way. Some thought it was unfair. If you want the unfair advantage in real estate investing, take a listen to this video. Andy Andrews (https://www.andyandrews.com/), is an in-demand speaker, coach, and consultant for the world’s largest organizations. Andy once wrote about the Jordan Effect (https://www.andyandrews.com/the-jordan-effect/) on this website in a blog. Jordan put in meaningful time developing relationships with referees because he liked them. In turn, those referees would sometimes give Michael Jordan the benefit of the doubt on close calls during a game as opposed to the NBA players that would cuss, yell at the referee, and generally be unpleasant. Michael Jordan is arguably the greatest basketball player to have ever lived who consistently got referee calls to go his way. Some thought it was unfair. If you want the unfair advantage in real estate investing, take a listen to this video. For other helpful tips on how to buy more multifamily assets, visit https://www.beaubeery.com/book. Andy Andrews (https://www.andyandrews.com/), is an in-demand speaker, coach, and consultant for the world’s largest organizations. Andy once wrote about the Jordan Effect (https://www.andyandrews.com/the-jordan-effect/) on this website in a blog. Jordan put in meaningful time developing relationships with referees because he liked them. In turn, those referees would sometimes give Michael Jordan the benefit of the doubt on close calls during a game as opposed to the NBA players that would cuss, yell at the referee, and......
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What Challenges Can I Expect When Buying CRE?

What Challenges Can I Expect When Buying CRE?
Buying commercial real estate can be an exciting opportunity if you are venturing into the CRE scene. There are a few challenges that you may encounter, such as qualifications for a loan, financing issues like amortizations, down payments, and interest rates. We will be discussing these challenges below.   Qualifications for a Loan Start with making sure that you have a good credit score before venturing out into any business. Though there are cases where many choose not to loan from a bank, you may still need to go through some bank assistance if the property owner requires that the payment goes through bank financing. It is also always best to be prepared in case you may need a loan in the future. If you decide to get a loan, you will need to make sure it is clear what it is for and how it will be used -- the bank will ask these questions. It is also advisable to do as much research as you can moving forward and due diligence on the area where the property is standing. Besides a good credit score, you will also need to convince the leader that you will pay back the CRE loan.  The next step is to have the requirements to qualify for a commercial real estate loan. You will need different applications and supporting documents such as a business plan, personal tax returns, and other legal documents. If you already have other businesses, they may ask to see your business......
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Why You Should Market for Your Property

All too often I receive inquiries from a potential seller that is looking to “Get the Highest Price” for their property, but does not want to list it, or market the property.  This seems counter intuitive as the basic law of economics is supply and demand.    Although there is not much an average seller can do to affect the supply line, they can create demand by using a good agent.  I started my career in real estate auctions in the late 80’s through the mid 90’s.  During that time, I was at first surprised when properties we took to auction (a method that was deemed as a “fire sale”) consistently sold for higher prices than neighboring properties, and in many cases sold at higher prices than what they were previously listed before going to auction.  As I thought about it, it really did make sense, my economics classes in college explained exactly what was going on.  The supply chain didn’t change, but by marketing the property, and creating a pent up demand the chances for a sale greatly increased.  We’ve seen this over and over the last few years in this current “Sellers” market.  Almost to the point where we now receive as many calls from investors saying they only want to look at “off market” deals, believing they will get a better price without other competing investors.  So it seems pretty easy… If a seller wants the highest price, they need to make sure the property is actively exposed to as many people as might be intere......
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Difference between Commercial and Residential Real Estate Management

Difference between Commercial and Residential Real Estate Management
If you have ever owned a house or duplex that you have rented out and you feel like you are ready to move to the next level I have a few guidelines to help you get started. First and foremost, you’ll need to decide what asset class you would like your next investment to be in. Here are a few different types of assets that you can focus on:   1. Office  2. Industrial  3. Retail  4. Multifamily  5. Hospitality   The Commercial Leases  You will find the commercial lease is a lot longer and much more detailed than your residential lease and it will spell out common area maintenance fees, increases in rental amounts at certain dates, concessions, tenant improvement work, and just about everything else. Even in the same building, the terms negotiated on a commercial lease can substantially vary from one tenant to the next. There is a good chance that your tenant will have an attorney review all lease documents and you will have a few revisions before the lease is actually executed. Commercial leases are either a gross lease (the owner pays all the utilities, taxes, and insurance), a net lease, or a modified gross lease. There are several types of net lease, but the one you’ll hear about most often is a triple-net lease where the tenant pays their proportional share for everything (taxes, insurance,utilities maintenance, repairs and capital improvements) on the building. A modified gross lease is where a tenant may pay their share of ......
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Multifamily Assault & Battery: Coverage Challenges in the Insurance Market

As any property & casualty insurance broker can tell you these days, commercial insurance rates are on the rise, with double-digit increases not uncommon.  A number of factors are contributing to growing premiums for insureds, among which are the following:  costly repairs from recent natural disasters, the increasing frequency and severity of auto claims due to distracted driving, economic uncertainty surrounding the Covid-19 pandemic, and nuclear jury verdicts where the awarded damages are multiples of what they used to average even a few years ago. Unfortunately the multifamily industry has not avoided these rising insurance costs.  Like all real-estate-centric companies, multifamily property coverage costs more today than it did even a year ago, particularly for those with a portfolio heavily exposed to wind, flood, and earthquake risks.  On the casualty side, rate hikes for general liability and umbrella liability (which sits over general liability and auto liability policies, providing higher limits of coverage) are also a reality facing multifamily businesses.  But there’s one facet of general liability insurance that is affecting the multifamily (and other habitational markets) in an unexpected way:  coverage for assault and battery.  Let me take you back to October of 2019.  At that time one of my clients, a large multifamily development and property management company, had advised that they’d just sign a contract to manage a third-party apartment complex.  We informed the client’s general liability carrier, Philadelphia Insurance Company, so that they could endorse the client’s policy to add the location, as we had done for all of ......
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Things a Successful Commercial Real Estate Agent Should Keep in Mind

Things a Successful Commercial Real Estate Agent Should Keep in Mind
In the past, the main role of a CRE Agent was to help their client find a property. This sounds quite straight forward and it typically was.  An agent would first utilize their market knowledge to see if they knew of any spaces/properties that might meet the criteria of their client, and if not, begin to reach out to all of their contacts to see if they had anything, or if there was anything new coming out. If all else failed, they would resort to sign chasing, driving the areas their clients were interested in, and call on the signs on buildings to see what, if anything, was available.  Along came the internet which dramatically changed how this works now.  The control of information no longer flowed just through the agent. Unfortunately, many agents didn’t adapt to the change and continued to see their role as just finding a property for their client. Many clients also kept this mentality, thinking that an agent's role was just to find a property. This, of course, led to many clients thinking they only needed an agent to find a property and if they could find one then they wouldn’t need an agent and could get a better deal on their own.  Good agents realize that finding a property for their clients is just a small part of what they do. Finding the right property is a bigger role, and their most value lies in negotiating the best deal for their client.  Finding the right pro......
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