Due Diligence Checklists - For commercial Real Estate Transactions

Homes For Rent - Due Diligence Checklists - For commercial Real Estate Transactions

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Planning to buy or finance industrial or industrial Real Estate? Shopping Center? Office Building? Restaurant/Banquet property? Parking Lot? Storefront? Gas Station? Manufacturing facility? Warehouse? Logistics Terminal? healing Building? Nursing Home? Hotel/Motel? Pharmacy? Bank facility? Sports and Entertainment Arena? Other?

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A Key to investing in industrial real estate is performing an adequate Due Diligence Investigation to assure you know all material facts to make a wise investment decision and to infer your startling investment yield.

The following checklists are designed to help you escort a focused and meaningful Due Diligence Investigation.

Basic Due Diligence Concepts:

Commercial Real Estate transactions are Not similar to large home purchases.

Caveat Emptor: Let the Buyer beware.

Consumer safety laws applicable to home purchases seldom apply to industrial real estate transactions. The rule that a Buyer must examine, judge, and test for himself, applies to the buy of industrial real estate.

Due Diligence: "Such a quantum of prudence, activity, or assiduity, as is permissible to be startling from, and ordinarily exercised by, a uncostly and economical [person] under the particular circumstances; not measured by any absolute standard, but depending upon the relative facts of the extra case." Black's Law Dictionary; West Publishing Company.

Contractual representations and warranties are Not a substitute for Due Diligence.

Breach of representations and warranties = Litigation, time and money.

What Diligence Is Due?

The scope, intensity and focus of any due diligence investigation of industrial or industrial real estate depends upon the objectives of the party for whom the investigation is conducted. These objectives may vary depending upon whether the investigation is conducted for the advantage of (i) a Strategic Buyer (or long-term lessee); (ii) a Financial Buyer; (iii) a Developer; or (iv) a Lender.

If you are a Seller, understand that to close the transaction your Buyer (and its Lender) must address all issues material to its objective - some of which require data only you, as Owner, can adequately provide.

General Objectives:

(i) A "Strategic Buyer" (or long-term lessee) is acquiring the asset for its own use and must verify that the asset is favorable for that intended use.

(ii) A "Financial Buyer" is acquiring the asset for the startling return on investment generated by the property's revenue stream, and must conclude the amount, velocity and durability of the revenue stream. A sophisticated Financial Buyer will likely infer its yield based upon discounted cash-flows rather than the must less accurate capitalization rate ("cap rate"), and will need adequate financial data to do so.

(iii) A "Developer" is seeking to add value by changing the character or use of the asset - normally with a short-term to intermediate-term exit strategy to dispose of the property; although, a Developer might plan to hold the asset long term as Financial Buyer after amelioration or redevelopment. The Developer must focus on whether the planned convert is character or use can be closed in a cost-effective manner. A developer conducting due diligence will focus on issues lively store demand, access, use and finances.

(iv) A "Lender" is seeking to produce two basic lending criteria:

1. "Ability to Repay" - The potential of the asset to create adequate revenue to repay the loan on a timely basis; and

2. "Sufficiency of Collateral" - The objective disposal value of the collateral in the event of a loan default, to assure adequate funds to repay the loan, carrying costs and costs of variety in the event forced variety becomes necessary.

The number of diligent inquiry due to be expended (i.e. "Due Diligence") to research any particular industrial or industrial real estate scheme is the number of inquiry required to acknowledge each of the following questions to the extent relevant to the objectives of the party conducting the investigation:

I. The Property:

1. Exactly what asset does Purchaser believe it is acquiring?

(a) Land?

(b) Building?

(d) Other Improvements?

(e) Other Rights?

(f) The entire fee title interest along with all air ownership and subterranean rights?

(g) All amelioration rights?

2. What is Purchaser's planned use of the Property?

3. Does the physical condition of the asset permit use as planned?

(a) Commercially adequate access to public streets and ways?

(b) adequate parking?

(d) Environmental contamination?

(i) Innocent Purchaser defense vs. Exemption from liability

(ii) All suitable Inquiry

4. Is there any legal restriction to Purchaser's use of the asset as planned?

(a) Zoning?

(b) hidden land use controls?

(d) Availability of licenses?

(i) Liquor license?

(ii) Entertainment license?

(iii) Outdoor dining license?

(iv) Drive straight through windows permitted?

(e) Other impediments?

5. How much does Purchaser expect to pay for the property?

6. Is there any condition on or within the asset that is likely to growth Purchaser's effective cost to fetch or use the Property?

(a) asset owner's assessments?

(b) Real estate tax in line with value?

(d) Required user fees for important amenities?

(i) Drainage?

(ii) Access?

(iii) Parking?

(iv) Other?

7. Any encroachments onto the Property, or from the asset onto other lands?

8. Are there any encumbrances on the asset that will not be cleared at Closing?

(a) Easements?

(b) Covenants Running with the Land?

(d) Leases?

9. Leases?

(a) safety Deposits?

(b) Options to enlarge Term?

(d) ownership of First Refusal?

(e) ownership of First Offer?

(f) Maintenance Obligations?

(g) Duty on Landlord to furnish utilities?

(h) Real estate tax or Cam escrows?

(i) Delinquent rent?

(j) Pre-Paid rent?

(k) Tenant mix/use controls?

(l) Tenant exclusives?

(m) Tenant parking requirements?

(n) self-acting subordination of Lease to hereafter mortgages?

(o) Other material Lease terms?

10. New Construction?

(a) Availability of construction permits?

(b) Utilities?

(i) Phase 2 effective March 2003 - Permit required if earth is disturbed on one acre or more of land.

(ii) If applicable, Storm Water Pollution arresting Plan (Swppp) is required.

Ii. The Seller:

1. Who is the Seller?

(a) Individual?

(b) Trust?

(d) Corporation?

(e) limited Liability Company?

(f) Other legally existing entity?

2. If other than natural person, does seller validly exist and is seller in good standing?

3. Does the seller own the Property?

4. Does seller have authority to carry the Property?

(a) Board of Director Approvals?

(b) Shareholder or Member approval?

(d) If foreign private or entity, are any extra requirements applicable?

(i) Qualification to do enterprise in jurisdiction of Property?

(ii) Federal Tax Withholding?

(iii) Us Patriot Act compliance?

5. Who has authority to bind Seller?

6. Are sale proceeds adequate to pay off all liens?

Iii. The Purchaser:

1. Who is the Purchaser?

2. What is the Purchaser/Grantee's exact legal name?

3. If Purchaser/Grantee is an entity, has it been validly created and is it in good standing?

(a) Articles or Incorporation - Articles of Organization

(b) Certificate of Good Standing

4. Is Purchaser/Grantee authorized to own and control the asset and, if applicable, finance acquisition of the Property?

(a) Board of Director Approvals?

(b) Shareholder or Member approval?

(i) Qualification to do enterprise in jurisdiction of the Property?

(ii) Us Patriot Act compliance?

(iii) Bank Secrecy Act/Anti-Money Laundering compliance?

5. Who is authorized to bind the Purchaser/Grantee?

Iv. Purchaser Financing:

A. enterprise Terms Of The Loan:

What loan terms have the Purchaser, as Borrower, and its Lender agreed to?

(a) What is the number of the loan?

(b) What is the interest rate?

(d) What is the collateral?

(i) industrial real estate only?

(ii) Real estate and personal asset together?

(e) First lien? A junior lien?

(f) Is it a particular advance loan?

(g) A many advance loan?

(h) A construction loan?

(i) If it is a many advance loan, can the important be re-borrowed once repaid prior to maturity of the loan; manufacture it, in effect, a revolving line of credit?

(j) Are there keep requirements?

(i) Interest reserves?

(ii) heal reserves?

(iii) Real estate tax reserves?

(iv) insurance reserves?

(v) Environmental remediation reserves?

(vi) Other reserves?

(k) Are there requirements for Borrower to open enterprise operating accounts with the Lender? If so, is the Borrower obligated to allege minimum compensating balances?

(l) Is the Borrower required to pledge enterprise accounts as supplementary collateral?

(m) Are there early refund fees or yield maintenance requirements (each sometimes referred to as "pre-payment penalties")?

(n) Are there refund blackout periods while which Borrower is not permitted to repay the loan?

(o) Is there a Loan Commitment fee or "good faith deposit" due upon Borrower's acceptance of the Loan Commitment?

(p) Is there a loan funding fee or loan brokerage fee or other loan fee due Lender or a loan broker at closing?

(q) What are the Borrower's expense refund obligations to Lender? When are they due? What is the Borrower's obligation to pay Lender's expenses if the loan does not close?

B. Documenting The industrial Real Estate Loan

Does Purchaser have all data important to comply with the Lender's loan closing requirements?

Not all loan documentation requirements may be known at the outset of a transaction, although most industrial real estate loan documentation requirements are fairly typical. Some required data can be obtained only from the Seller. Production of that data to Purchaser for delivery to its lender must be required in the buy contract.

As advice to what a industrial real estate lender may require, the following sets forth a typical closing Checklist for a loan secured by industrial real estate.

Commercial Real Estate Loan closing Checklist

1. Promissory Note

2. Personal Guaranties (which may be full, partial, secured, unsecured, cost guaranties, variety guaranties or a variety of other types of guarantees as may be required by Lender).

3. Loan agreement (often incorporated into the Promissory Note and/or Mortgage in lieu of being a detach document)

4. Mortgage [sometimes expanded to be a Mortgage, safety agreement and Fixture Filing]

5. Assignment of Rents and Leases

6. safety Agreement

7. Financing Statement (sometimes referred to as a "Ucc-1", or "Initial Filing")

8. Evidence of Borrower's Existence In Good Standing; including

(a) Certified copy of organizational documents of borrowing entity (including Articles of Incorporation, if Borrower is a corporation; Articles of organization and written Operating Agreement, if Borrower is a limited liability company; Certified copy of trust agreement with all amendments, if Borrower is a land trust or other trust; etc.)

(b) Certificate of Good Standing (if a corporation or Llc) or Certificate of Existence (if a limited partnership) or Certificate of Qualification to Transact enterprise (if Borrower is an entity doing enterprise in a State other than its State of formation)

9. Evidence of Borrower's Authority to Borrow; including

(a) a Borrower's Certificate;

(b) Certified Resolutions

10. Satisfactory Commitment for Title insurance (which will typically require, for pathology by the Lender, copies of all documents of report appearing on agenda B of the title commitment which are to remain after closing), with required industrial title insurance endorsements, often including:

(a) Affirmative Creditors ownership Endorsement (extending coverage over course exclusion 7 and course exclusions 3(a) and 3(d) as they report to creditor's ownership matters)

(b) Alta 3.1 Zoning Endorsement modified to include parking

(d) Location Endorsement (street address)

(e) access Endorsement (vehicular access to public streets and ways)

(f) Contiguity Endorsement (the insured land comprises a particular parcel with no gaps or gores)

(g) Pin Endorsement (insuring that the identified real estate tax permanent index numbers are the only applicable Pin numbers affecting the collateral and that they report solely to the real asset comprising the collateral)

(h) Usury Endorsement (insuring that the loan does not violate any prohibitions against immoderate interest charges)

(i) other title insurance endorsements applicable to safe the intended use and value of the collateral, as may be considered upon report of the Commitment for Title insurance and survey or arising from the existence of extra issues pertaining to the transaction or the Borrower.

11. Current Alta survey (3 sets), [typically ready in accordance with 2005 Minimum suitable information for Alta/Acsm Land Title Surveys, certified to the lender, Buyer and the title insurer, along with items 1 straight through 4, 6, 7(a), 7(b)(1), 8 straight through 11(a) and 14 from the Surveyor's "Optional survey Responsibilities and Specifications" referred to as "Table A"].

12. Current Rent Roll

13. Certified copy of all Leases (3 sets)

14. Lessee Estoppel Certificates

15. Lessee Subordination, Non-Disturbance and Attornment Agreements [sometimes referred to plainly as "Sndas"].

16. Ucc, Judgment, Pending Litigation, Bankruptcy and Tax Lien hunt Report

17. Evaluation (must comply with Title Xi of Firrea (Financial Institutions Reform, salvage and obligation Act of 1989, as amended)

18. Environmental Site Evaluation report (sometimes referred to as Environmental Phase I and/or Phase 2 Audit Reports)

19. Environmental Indemnity agreement (signed by Borrower and guarantors)

20. Site Improvements Inspection Report

21. Evidence of Hazard insurance naming Lender as the Mortgagee/Lender Loss Payee; and Liability insurance naming Lender as an "additional insured" (sometimes listed as plainly "Acord 27 and Acord 25, respectively)

22. Legal belief of Borrower's Attorney

23. Prestige Underwriting documents, such as signed tax returns, asset operating statements, etc. As may be specified by Lender

24. Compliance agreement (sometimes also called an Errors and Omissions Agreement), whereby the Borrower agrees to correct, after closing, errors or omissions in loan documentation.

It is beneficial to become well-known with the Lender's loan documentation requirements as early in the transaction as practical. The requirements will likely be set forth with some information in the lender's Loan Commitment - which is typically much more detailed than most loan commitments issued in residential transactions.

Conducting the Due Diligence Investigation in a industrial real estate transaction can be time lively and costly in all events.

If the loan requirements cannot be satisfied, it is better to make that measurement while the contractual "due diligence period" - which typically provides for a so-called "free out" - rather than at a later date when the earnest money may be at risk of forfeiture or when other liability for failure to close may attach.

Conclusion

Conducting an effective due diligence investigation in a industrial real estate transaction to survey all material facts and conditions affecting the asset and the transaction is of important importance.

Unlike owner occupied residential real estate, when a house can nearly all the time be occupied as the purchaser's home, industrial real estate acquired for enterprise use or for investment is impacted by numerous factors that may work on its use and value.

The existence of these factors and their work on on a Purchaser's potential to use the asset for its intended use and on the Purchaser's projected investment yield can only be discovered straight through diligent investigation and concentration to detail.

The circumstances of each transaction will conclude what degree of diligence is required. The level of diligence required under the circumstances is the diligence that is due.

Exercise Due Diligence.

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2010 Largest Assisted Living Providers

Homes For Rent In Springfield Mo - 2010 Largest Assisted Living Providers

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While stormy economic conditions buffeted the enterprise last year, indicators now point to smoother sailing ahead. As businesses in nearly every U.S. Sector struggled to stay afloat last year, assisted living was the buoy in the choppy waters. Steady ask for ability services helped keep associates stable-even if accompanied by a hiatus from major mergers and acquisitions.

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As businesses in nearly every U.S. Sector struggled to stay afloat last year, assisted living was the buoy in the choppy waters. Steady ask for ability services helped keep associates stable-even if accompanied by a hiatus from major mergers and acquisitions.

Now, as economic forecasters allude to the end of the "Great Recession," associates like this year's Largest Providers are poised for growth, some of which is already underway. Forty-two of those associates (60%) that made the 2010 list description increases in licensed assisted living resident capacity-though much of that increase was in single-digit percentages. Another 16 of the top 70 associates maintained their size, while just 12 reported losses.

Here's a look at Assisted Living Executive's 2010 Largest Providers, and the enterprise environment, transactions, and trends that landed each enterprise a spot.

Top Players Hold Steady

In 2009, no assisted living providers merged nor acquired any other complete company. However, while most deals were small, the year did produce a few large portfolio acquisitions and requisite reshuffling. The biggest gains and losses were among the biggest players and occurred straight through uncomplicated sales and acquisitions.

For the first time since Assisted Living administrative began compiling this every year Largest Providers list, Sunrise Senior Living, based in McLean, Virginia, no longer sits at No. 1. The company, now No. 2, had no new construction starts and sold off about 9 percent of its assisted living capacity (about 2,896 units) last year. Its biggest transaction was a portfolio of 21 communities in 11 states to Milwaukee, Wisconsin-based Brookdale Senior Living for 4 million, but Sunrise also sold smaller portfolios to regional providers, such as Baltimore-based Brightview Senior Living (The security Group), which purchased two of Sunrise's New Jersey communities.

The Sunrise downsize has made Seattle-based Emeritus Senior Living the nation's largest assisted living provider. Emeritus acquired 2,221 new licensed assisted living units and grew by 7 percent in the past year, and it's very likely that Emeritus will not only utter the top spot next year, but expand significantly in 2011. The company's partner, Blackstone Real Estate Advisors, is pursuing the purchase of 134 communities operated by Sunwest Management, which is in chapter 11 bankruptcy. Under a first agreement, Emeritus would carry on the properties with the option to invest up to 10 percent of the equity in a joint speculation with Blackstone and Columbia Pacific Management, an entity controlled by Dan Baty, Emeritus chairman and co-Ceo.

Brookdale Senior Living maintained its No. 3 ranking, but also grew by 3,808 residents, or 15 percent, in 2009. Sunwest Management, last year's No. 4 company, comes in at No. 7 this year with 9,186 assisted living residents, a 43 percent drop. The enterprise will disappear completely from the 2011 list if Blackstone or Another entity receives court approval to buy the remainder of Sunwest's portfolio.

In terms of division growth, the clear winner is Solana Beach, California-based Senior reserved supply Group, Another beneficiary of Sunwest's financial woes. The enterprise picked up supervision contracts for 41 properties in 11 states, under the name LaVida Communities, when institutional investor Lone Star Funds of Dallas acquired the properties in the first big deal of 2009. Senior reserved supply Group catapults from No. 55 to No. 11, having grown its assisted living resident capacity more than 500 percent, to 4,897.

Big Movers

For the next Largest Providers division spike, look to Crl Senior Living Communities, which enters the list at No. 57, thanks to more than doubling its assisted living capacity from 502 to 1,019. Also on the increase path, Frontier supervision expanded by 64 percent, from 828 to 1,358 licensed assisted living units, thanks to seven new supervision contracts and two new buildings. Frontier supervision jumps 15 spots from No. 57 to No. 42. Watch this Western regional provider to grow further next year as some more new buildings open.

The fourth-largest list jumper is Carmichael, California-based Eskaton Senior Residences and Services, rising 12 spots to No. 56. The enterprise reports 1,036 licensed assisted living units (up from 732 last year) due to either expansions or applications for further assisted living licensing.

Only seven other providers description gains of 20 percent or more in the past year, and among them is Bradley, Illinois- based Bma Management. Because of its focus on the affordable market, the enterprise continues to benefit from accessible financing sources not ready to former providers. Bma Management's assisted living resident capacity jumped 27 percent in the past year as the enterprise opened six new communities. In 2010, the enterprise moves up the list by three spots, coming in at No. 21.

Other associates that increased their licensed assisted living capacity contain Capital Senior Living Corporation (No. 20), which grew by 25 percent, and Bonaventure Senior Living (No. 23), whose assisted living capacity surged by 21 percent to 2,595. Assisted living capacity for Carlsbad, California-based Integral Senior Living (No. 24) rose 24 percent. Benedictine condition principles (No. 41) grew by 20 percent, and Brightview Senior Living (No. 52, up from No. 62 last year) expanded by 29 percent, thanks to the Sunrise deal, which added 240 residents. Another chart-jumper was relaxation Living Management, which vaulted nine places from No. 58 in 2009 to No. 49 this year simply by adding 200 residents (22 percent).

The vast majority of addition providers, however, had gains of less than 10 percent. But a small increase can go a long way when nearly 60 percent of associates on the Largest Providers list have fewer than 2,000 assisted living residents.

In Another indication of assisted living growth, Independent Healthcare Properties, the smallest enterprise on the list at No. 70, only kept its 2009 rank thanks to an 18 percent capacity gain from 706 to 833. Most of the 2009-ranked associates that did not make this year's list either maintained capacity or had very small gains. Another presume for higher numbers at the bottom of the list is attributed to data from five providers not previously listed-Spectrum seclusion Communities (No. 28), Mountain View seclusion (No. 50), Crl Senior Living Communities (No. 57), Welcome Home supervision enterprise (No. 64), and Elder Care Alliance (No. 66).

Other than Sunwest, the enterprise with the most dramatic drop in licensed assisted living capacity was Northstar Senior Living, which shed 1,068 residents, or 55 percent of its 2009 capacity, falling from No. 28 to No. 67. Again, because of modest broad numbers, decreases were most predominant toward the bottom of the top 70 list. Grace supervision saw a 30 percent decline from 1,399 to 979 and dropped from No. 37 in 2009 to No. 61 this year. Carillon Assisted Living, No. 49 in 2009, decreased its capacity by 24 percent from 1,024 to 775, removing it from the list altogether.

Several associates that didn't make this year's list but may show up in 2011 contain Trinity Lifestyles Management, which nearly doubled in size to 480 assisted living residents after picking up three Atlanta-area EdenCare properties, formerly operated by Sunrise Senior Living. Wichita, Kansas-based Legend Senior Living has been raising its assisted living component steadily with new construction, addition Another 18 percent to 692 in 2010. And finally, AdCare condition Systems, based in Springfield, Ohio, remains a smaller provider at 231, but that reflects a 38 percent increase over the prior year, and the enterprise recently announced raising .5 million to fund acquisitions.

More garage Times Ahead

"The fact that we'll be able to point to this time period-the worst economic downturn in our lifetimes-and say that our commerce weathered it pretty well and even prolonged to grow is significant," says Granger Cobb, president and co- Ceo of Emeritus Senior Living.

The past two recessions hit assisted living hard, and many providers at the start of 2009 were involved that the stalled housing market, depleted stock market earnings, and high unemployment among the adult children of potential residents could cause occupancy rates to plummet. Instead, after modest 2008 rate declines and a rent increase slowdown to 2 percent from 2.9 percent in 2008 and 4 percent in 2007, the needs-based component of assisted living seemed to trump economic concerns. Move-ins could be postponed but only for so long.

By second quarter 2009, signs of stabilization began to emerge, followed by a slow but upward trend, says Robert G. Kramer, president of the Annapolis, Maryland-based National speculation town for the Seniors Housing & Care commerce (Nic). While national unemployment still hovered at a troubling 10 percent in January, Kramer says he's cautiously optimistic about the future, especially since the commerce saw its largest absorption rate in the third quarter of 2009 since the first quarter of 2006- 1,400 assisted living units in the top 30 urban markets and slightly stronger in the top 100 markets.

Those statistics recommend that the broad photo is much rosier for assisted living than for other real estate sectors, including multifamily, hotels, and offices, Kramer notes. "Basically, we are seeing operators keeping the line with regard to rates," he adds. "We undoubtedly are seeing more concessions out there, but at the same time, those concessions tend to be very much market-specific, property-specific, or even unit-specific."

Still, move-in delays due to economic factors have amplified a trend already developing pre-recession-residents tend to be older and frailer, says Jim Moore, president of Moore Diversified Services and author of "Strategic Forecast," published in Assisted Living Executive's January/February 2010 issue. The ensue is heightened opportunity in dementia care, which is even more needs-based than assisted living, he adds. Indeed, a whole of top 70 operators reported having converted independent units to assisted living or assisted living to memory care.

As for new construction, buildings already in the pipeline prolonged to open, but few associates launched new developments, and by January 2010, the whole of new construction starts had fallen to the bottom point since Nic started tracking senior housing trends. No associates went public in 2009.

Forecast for 2010

Access to capital will remain the former challenge for development in 2010, although new properties financed before the stepping back will continue to open straight through the third quarter of 2010. But the lack of new properties isn't necessarily bad news for assisted living.

"We're going to go straight through a duration of very small new product coming online, but if that coincides with pent-up ask and a recovery in the economy, all should bode well for occupancies and rent increase in assisted living," Kramer says. "Outside of external economic factors that we don't have any control over, the most risk to assisted living is overbuilding."

Fannie Mae and Freddie Mac will continue to be trustworthy sources of permanent 10-year financing, but when it comes to construction loans, developers have few options. Some very small Hud 232 financing will be available, but more likely, the few projects that get underway will do so because of relationships with local lenders.

Indeed, The Arbor Company, based in Atlanta, lacks the cash to institute properties on its own, but thanks to a partnership with Formation Capital, Arbor will carry on two new properties scheduled to break ground this fall, says Coo Judd Harper. "We feel much stronger and more optimistic about the assisted living occupancies in today's gently recovering economy, but are optimistic about independent living's rebound in the future," he adds. "As citizen get jobs, they no longer are going to be able to care for a parent at home."

A captivating spot in the acquisitions arena, private equity entities are starting to eye assisted living as a desirable sector again, and the major Reits in senior housing are well-positioned to invest again, Kramer notes. Emeritus will be a enterprise to watch thanks to the Blackstone deal, and while it only plans one new construction in 2010, the enterprise actively will be seeing for other acquisition opportunities at captivating prices.

"If a enterprise has liquidity, cash flow, and a reasonably salutary balance sheet, it will be in a great position because there are opportunities right now," Cobb says. That benefit isn't just for big associates like Emeritus, but also for regional and even small mom-and-pop players with targeted expansion plans, he adds, noting that "interest rates have not changed that much over the last merge of years, but the whole of equity and coverage ratios you have to have in place has become more stringent, as well as the underwriting."

Fanwood, New Jersey-based Chelsea Senior Living leveraged a strong association with a local lender to purchase a previous Sunwest asset in New Jersey last fall and is actively seeing for more deals, says Roger Bernier, president and Coo. "Some citizen are likely to see their debt maturing and be unable to refinance," he forecasts. "Ultimately we'd like to grow by two communities per year, but it has to be the right deal for us to take a look."

Much of the acquisitions performance in 2010 is likely to remain with distressed properties, however, and no one expects lots of high-end properties to come on the market this year, says Steve Monroe of Senior Care Investor. "High-performing properties are only going to sell if owners can get a good price, although that may start to change later in 2010."

Still, wise operators should not be blinded by captivating price tags so much that they forget to consider how well the acquisition fits into their existing portfolio and evolving demands of seniors and their families, Moore cautions. "Senior psychographics are changing," he adds. "It's not so much the World War Ii homemaker widow as 80-year-olds who have been in the pro workforce."

Another area of opportunity in 2010 may be new supervision contracts for owners and lenders who may be unhappy with their current management, Moore suggests. And for many companies, the wisest move in 2010 may be just to sharpen internal operations, he says.

Although Greensboro, North Carolina- based Bell Senior Living is open to the right deal within the mid-Atlantic states in which it already operates, the latter strategy will be the company's prime priority this year, says President Steve Morton. "I'd say it's a time to focus on operations, heighten operating results including supervision and wage streams, and put together the requisite tools to maximize and run communities in the most sufficient manner possible," he says. "This is something we can do because we don't have five acquisitions or development deals."

Finally, unstable financial markets still make it unlikely that any enterprise will go public in 2010, but if conditions improve, Moore says, the two associates to watch continue to be Atria Senior Living Group (No. 4) and Hcr ManorCare (No. 10).

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Derelict Houses For Sale

Homes For Rent - Derelict Houses For Sale

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There are usually a amount of derelict houses for sale at any one time. Though they may not seem like the best choice in terms of investing, they can often make the buyer a great behalf once they are ready to resell. These kinds of homes are great for any individuals seeing for a cheap home - with a bit of work they can soon be turned into a comfortable place to live.

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A great way to find derelict homes is to drive around and see what is available in your area. Some derelict homes will be in a worse state of mend than others, but you do have the choice of asking for a surveyors record if you wish to get more details on the state of the property. You might even find that habitancy from the area are willing to give you information, as enhancing derelict homes is a great way of enhancing the neighborhood as a whole.

Your local real estate agencies should also have an idea of what's available, and can give you any relevant details as well as show you around if necessary. There might not be any derelict houses available at the time of the cause, so you can choose to keep updated with the most recent properties that are added to their list.

Also the internet is a great place to find out details of derelict homes for sale. It might take a itsybitsy effort, but keep researching and you will finally come over a home that suits you. When you do make sure you know how much work will be complicated in fixing it up. The chances are that you'll be able to make a behalf once you've fixed it up to sell on, or it could just supply you with a comfortable home for years to come!

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How to regain Title For Abandoned Real Estate straight through Adverse rights in the State of California

Homes For Rent - How to regain Title For Abandoned Real Estate straight through Adverse rights in the State of California

Good morning. Yesterday, I learned about Homes For Rent - How to regain Title For Abandoned Real Estate straight through Adverse rights in the State of California. Which may be very helpful to me and you. How to regain Title For Abandoned Real Estate straight through Adverse rights in the State of California

What is Adverse Possession? How can I gain title to real estate?

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In a nutshell adverse ownership is a process where a person or an investor can gain the ownership or title of real property from another person because the owner has abandoned the property. This is done by naturally taking ownership of that property in the manner prescribed by state law.

In doing so, you can, no ifs ands or buts gain ownership or title of the real property for just paying the back delinquent real estate taxes and the cost to file a quiet title lawsuit establishing that you obtained title to the property through adverse possession. In other words, you can take title of needful property for a thinkable, discount.

The Law of Adverse Possession

The laws governing adverse ownership is local state (or, in Canada, territorial law); consequently an Abandoned property investor must look into the specific laws of a specific state or Canadian territory where the real property is located. Since the laws are different dramatically from jurisdiction to jurisdiction and can often be confusing, anyone wishing to take title to real property through adverse ownership should perceive a knowledgeable attorney before attempting to do so.

In order for you to begin comprehension the requirements of Adverse ownership let's look at a specific example. Below is a closer look at th California Adverse ownership law. We will use this law to recognize and account for some of the more tasteless terms used in Adverse Possession.

California Adverse ownership Law

Briefly, California state law states that Real Estate investors wanting to gain title to another person's real property through adverse ownership Must satisfy all the following Requirements:

1.That the Abandoned property investor's ownership was held under either (1) a claim of right or (2) under color of title:

2.That the Abandoned property investor's ownership was actual, open and notorious;

3.That the Abandoned property investor's ownership was hostile, adverse an exclusive;

4.That the Abandoned property investor's ownership was continuous and uninterrupted for a period of five years;

5.That the Abandoned property investor paid th real property taxes during that five-year period.

Possession must be held under either (1) a claim of right or (2) under color of title.

The California statutes governing adverse ownership and as well as the statutes of most other states make a dissimilarity in the middle of claiming adverse ownership based upon a "claim of title founded upon a written instrument or judgment or decree" (often referred to as a claim under color title) and claiming adverse ownership based upon "a claim of title exclusive of any other right, but not founded upon a written instrument, judgement, or decree" (often referred to as a claim as either a claim of right, see California Code of civil procedures Section 322 and 323. As to such claim under claim o right, see Code of Civil Procedures Section 324 and 325.

Basically a claim of adverse ownership based upon color color of title is one where the claimant(Abandoned property Investor) took in good faith ownership under a deed (or some other written instrument) or judicial conclude that appeared to transfer good title, but was defective. For example, a tax sale investor might take adverse ownership through color of title for real estate bought at a California county tax-defaulted sale where the sale was conducted improperly and, consequently, the deed was void.

"Claim of Right" or "Claim of Title"

Abandoned property investors attempting to take title to real estate through the religious doctrine of adverse ownership are generally more curious in taking such title through "claim of right" or "claim of title". Under this doctrine, an investor merely needs to take actual ownership of the property and hold that ownership as required by appropriate jurisdictional law.

As might be expected, the requirements to create adverse ownership under a claim of right are (under California law and under the law of most all other states) are more strenuous than those linked with claiming under color of title.

In order to be strict as the specific requirements for a claim of right refer to the specific state statutes. Again, to be safe consult with a knowledgeable attorney in the county where the property is located.

Possession must be actual

As will be seen below, an abandoned property investor claiming ownership under the religious doctrine of adverse ownership does not have to personally occupy or live on the real estate to be in actual ownership of the property. However, no ifs ands or buts living on the real estate is probably the strongest and clearest evidence that ownership is actual.

Possession by tenant as actual possession

Real property can be occupied, lived on, and no ifs ands or buts possessed by a tenant under a tenancy agreement. Take, for instance, if you look at the California appellate case of Traeger v. Friedman (1947) 79 Ca 2d 151. In that case, the adverse ownership claimant took ownership of a apartment construction through tenants and, then, managed and rented for five years. She evn paid the real property taxes out of the rent. The California court held that she had met the actual ownership requirement needed to perfect title under adverce possession.

Possession is deemed actual if lands is "protected by a huge enclosure", "usually cultivated or improved"

If the adverse ownership is claimed based on a claim of right, then California Code of Civil policy Sections 324 and 325 apply.

A abandoned property investor's ownership is deemed to be in actual, open and notorious ownership of specific real property under a claim of right when that person has either

1."protected" that property "by a huge inclosure" Or
2.That person has "usually cultivated" Or
3.Has "improved" tht property.
If the real property being taken through adverse ownership is a lot and acreage and cannot be no ifs ands or buts possessed (i.e., lived on) then that property must be either "protected...by a huge inclosure", "usually cultivated", or "usually improved".

If the property is protected by a huge inclosure, then the inclosure must be "substantial" adequate to give the true owner notice of the investor's Claim of adverse ownership during the whole prescriptive period. Older Cases hold that the inclosure must be huge adequate and remain so throughout the prescriptive period of five years and protect all sides of the property claimed from intrusion by cattle or other animals. If the inclosure is so damaged as not to be able to protect all sides of the property from such intrusion, then the Abandoned property investor or claimant must abruptly fix that damage inclosure or risk being found by the court to have not met this requirement.

Meeting Any one of the three alternative, meets the actual ownership requirements for adverse ownership even though the Abandoned property investor or claimant does not live on the property.

Additionally, California cases have held that although "grazing" or "pasturage" is not mentioned in the Code of Civil policy Section 325 reproduced above, it is a method whereby an investor can take actual possession.

Possession Must Be Open And Notorious

Basically, an owner of real estate will not lose that real estate through the religious doctrine of adverse ownership unless the manner in which the investor holds actual ownership would contribute reasonable notice of that ownership if the owner inspected the property. Repairs and improvements made to houses such as painting the ouside of the house, keeping up the exterior ground, etc. Are examples of such actions.

However, an owner can lose title to real estate through adverse ownership even through he or she is never no ifs ands or buts aware of the ownership because the owner never visited the real estate to explore the improvements made by the abandoned property investor.

Possession Was Hostile, Adverse And Exclusive.

Basically, if the abandoned property investor or claimant is in ownership under color of title, then that ownership is deemed to be adverse and hostile to the true owner and it is not needful to offer any further proof.

However if the Abandoned property investor or claimant is in ownership under claim of title, then the claimant must prove that the ownership was hostile and adverse. The word "hostile" does not mean that the ownership was "overtly antagonistic" to the owner; it means naturally that such ownership is "inconsistent" with that of the true owner.)

It must be shown that the ownership was in violation of the true owner's property ownership and that it should give rise in the owner a presume to begin an activity to halt the Abandoned property investor or claimant's ownership or use.

Possession of the property with the owner's permission is not hostile or adverse. See California Civil Code Section 813 which provides a great legal explanation of this process.

Basically what the California Civil Code Section 813 means that the owner of the property can give permission for the use of that property by the general communal or specific individuals. The statute further states that: "In the event of use by other than the general public, any such notices, to be effective, shall also be served by registered mail on the user.

The claimant's use must also be exclusive, use of that property by the legal owner or any other person except the claimant or abandoned property investor or a tenant of the claimant or abandoned property investor keeping ownership on behalf of that person will probably defeat a claim of title through adverse possession.

Possession Was Continuous And Uninterrupted For Five Years.

This requirement can be found in Civil Code Section 1007 when read together with Code of Civil policy Sections 318, 319, 321, 322, and 325. Most specifically, Code of Civil policy Sections 325 provides:

"provided, however, that in no case shall adverse ownership be thought about established under the provisions of any section or sections of this code, unless it shall be shown that the land has been occupied and claimed for the period of five years continuosly, and the party or persons, their predecessors and grantor's, have paid all the taxes, state, county, or municipal, which have been levied and assessed upon such land."

The requirement does not mean, however, that the investor must be physically on the land every day for five years. For instance, if actual ownership of a home or other rental real estate is held by tenants on behalf of the adverse holder or abandoned property investor, then lowly vacancies will not disrupt the continuity of the possession.

So, if an investor were to take ownership of rental property, for example, and there were general vacancies that occur, these vacancies would not be thought about a violation if the five year occupancy requirement. It also means that the investor does not have to live on the property to make this claim. That means you can claim adverse ownership at many properties as long as the property is safe and liveable for tenants. That means a certain cash flow while waiting in the prescribed period and also without your physical stay at your property.

Claimant Paid The Real property Taxes during That Five Year Period.

See Code of Civil policy Section 325 which governs this requirement

The Abandoned property investor or claimant must prove that he or she has paid all taxes that have been levied and assessed against the real property claimed during the whole five year period. A failure to pay taxes assessed for any one year will defeat a claim for adverse possession. Then the claimant must also pay any delinquent taxes outstanding for years prior to the start of the claim for adverse possession. For more details please refer to the case of Los Angeles v. Coffey (1963) 243 Ca 2d 121,125.

Under the law of the state of California, if a Abandoned property investor meets all the requirements of the law of adverse ownership under claim of title, then that person becomes the true legal owner of the real estate that has been abandoned. If the legal title of the real property was held by the former owner with no outstanding liens that superceeds the tax lien, then the investor will have acquired the real estate for, basically, just five or more years worth of back delinquent real property taxes or for just a small investment.

So, What Should A Abandoned Real property Investor Look For?

The two most leading theory of the law of adverse ownership is that a Abandoned real property investor wants to see are the following:

1.The quality to take adverse ownership under Claim of right or claim of title as opposed to color of title and
2.A relatively short prescriptive period. The period of time the Abandoned property investor must adversely possess the real property before that investor can gain title to the real property.
You are probably request yourself, Why?

Because in the state of California, the period or prescriptive period is five years based upon the California Code of Civil Procedure. Any way in some states the period can last from 10, 15 or 20 years until you get title through adverse possession.

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Real Estate Math - Do You Know These simple Formulas?

Homes For Rent - Real Estate Math - Do You Know These simple Formulas?

Hi friends. Now, I learned about Homes For Rent - Real Estate Math - Do You Know These simple Formulas?. Which is very helpful to me therefore you. Real Estate Math - Do You Know These simple Formulas?

How much real estate math do you need to know if you are investing in real estate? There are computers and calculators for calculating interest rates or amortizing loans. What you need to know is a few easy formulas for determining if a asset is a good venture or not.

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The Real Estate Math You Don't Need

The gross rent multiplier is one formula you don't need. I bring it up because citizen are sometimes still using it, and there are better ways to estimate value. A gross rent multiplier is a crude way to put a value on a property. You resolve that properties are worth 10 times annual rent or less, for example, and simply multiply the gross annual rent a building collects by ten to get your value.

There are inevitable problems with this formula. You need to permanently change it to reflect interest rates, because a asset might be profitable at 12 times rent when interest rates are low, but a money loser at eight times rent if the financing is expensive. Also, there are just plain different expenses for different properties, especially when some contain utilities in the rent, for example. Gross rent doesn't say much about the factor that makes a asset valuable: the net income.

Real Estate Math You Need

Rental properties are bought for the revenue they produce, so this is what your real estate valuation should be based on. That is why your real estate math study needs to start with the how to use a capitalization rate, or "cap rate" to resolve value. A cap rate is the rate of return startling by investors in a given area, or the rate of return on a asset at a given price.

An example might make this clear. Take the gross revenue of a asset and subtract all expenses, but not the loan payments. If the gross revenue is ,000 per year, and the expenses are ,000, you have net revenue before debt-service of ,000. Now, to arrive at an estimate of value, you simply apply the capitalization rate to this figure.

If the normal capitalization rate is .10 (ask a real estate professional what is normal in your area), meaning investors expect a 10% return on the value of their investment, you would divide the net revenue of ,000 by .10. You get 0,000 - the estimated value of the building. If the base rate is .08, meaning investors in the area expect only an 8% return, the value would be 0,000.

Simple Real Estate Math

Estimated value equals net revenue before debt-service divided by cap rate - this certainly is easy real estate math, but the tough part is getting definite revenue figures. Is the wholesaler is showing you All the normal expenses, and not exaggerating income? If he stopped repairing things for a year, and is showing "projected" rents, instead of actual rents collected, the revenue frame could be ,000 too high. That would mean you would estimate the value at 7,000 more (.08 cap rate).

Besides verifying the figures, smart investors sometimes cut off out revenue from vending machines and laundry machines. Suppose these sources supply ,000 of the income. That would add ,000 to the appraised value (.08 cap rate). Instead, you can do the estimate without this revenue included, then add back the change cost of the machines (probably much less than ,000).

No real estate formula is perfect, and all are only as good as the figures you plug into them. Used carefully, though, real estate estimate using capitalization rates is the most definite formula for estimating the value of revenue properties. For putting a value on a singular house home, you need another approach. Yes this means more real estate math to learn, but we'll save that for another time.

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A perfect Guide For bistro Real Estate Investments

Homes For Rent - A perfect Guide For bistro Real Estate Investments

Hello everybody. Today, I discovered Homes For Rent - A perfect Guide For bistro Real Estate Investments. Which could be very helpful to me so you. A perfect Guide For bistro Real Estate Investments

Restaurants are a popular market asset for many investors because:

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Tenants often sign a very long term, e.g. 20 years absolute triple net (Nnn) leases. This means, besides the rent, tenants also pay for asset taxes, insurance and all maintenance expenses. The only thing the investor has to pay is the mortgage, which in turn offers very predictable cash flow. There are whether no or few landlord responsibilities because the tenant is responsible for maintenance. This allows the investor more time to do prominent thing in life, e.g. Retire. All you do is take the rent check to the bank. This is one of the key benefits in investing in a restaurant or single-tenant property.
Whether rich or poor, people need to eat. Americans are eating out more often as they are too busy to cook and cleanup the pots & pans afterwards which often is the worst part! agreeing to the National restaurant Association, the nation's restaurant industry currently involves 937,000 restaurants and is thinkable, to reach 7 billion in sales in 2007, compared to just 2 billion in 1997 and 0 billion in 1987 (in current dollars). In 2006, for every dollar Americans spend on foods, 48 cents were spent in restaurants. As long as there is civilization on earth, there will be restaurants and the investor will feel comfortable that the asset is all the time in high demand.
You know your tenants will take very good care of your asset because it's in their best interest to do so. Few customers, if any, want to go to a restaurant that has a filthy bathroom and/or trash in the parking lot.

However, restaurants are not created equal, from an investment viewpoint.

Franchised versus Independent

One often hears that 9 out of 10 new restaurants will fail in the first year; however, this is just an urban myth as there are no conclusive studies on this. There is only a study by join together Professor of Hospitality, Dr. H.G. Parsa of Ohio State University who tracked new restaurants placed in the city Columbus, Ohio while the duration from 1996 to 1999 (Note: you should not draw the closing that the results are the same everywhere else in the Us or while any other time periods.) Dr. Parsa observed that seafood restaurants were the safest ventures and that Mexican restaurants feel the highest rate of failure in Columbus, Oh. His study also found 26% of new restaurants terminated in the first year in Columbus, Oh while 1996 to 1999. besides economic failure, the reasons for restaurants closing include divorce, poor health, and unwillingness to commit heavy time toward doing of the business. Based on this study, it may be safe to predict that the longer the restaurant has been in business, the more likely it will be operating the following year so that the landlord will continue to receive the rent.

For franchised restaurants, a franchisee has to have a certain minimal estimate of non-borrowed cash/capital, e.g. 0,000 for McDonald's, to qualify. The franchisee has to pay a one-time franchisee fee about ,000 to ,000. In addition, the franchisee has conduce royalty and advertising fees equal to about 4% and 3% of sales revenue, respectively. In turn, the franchisee receives training on how to set up and operate a proven and flourishing business without worrying about the marketing part. As a result, a franchised restaurant gets customers as soon as the open sign is put up. Should the franchisee fail to run the business at the location, the franchise may replace the current franchisee with a new one. The king of franchised hamburger restaurants is the fast-food chain McDonald's with over 32000 locations in 118 countries (about 14,000 in the Us) as of 2010. It has .2B in sales in 2011 with an midpoint of .4M in earnings per Us location. McDonald's currently captures over 50% shop share of the billion Us hamburger restaurant market. Its sales are up 26% in the last 5 years. Distant behind is Wendy's (average sales of .5M) with .5B in sales and 5904 stores. Burger King ranks third (average sales of .2M) with .4B in sale, 7264 shop and 13% of the hamburger restaurant shop share (among all restaurant chains, Subway is ranked estimate two with .4B in sales, 23,850 stores, and Starbucks estimate 3 with .8B in sales and 11,158 stores). McDonald's success apparently is not the supervene of how yummy its Big Mac tastes but something else more complex. Per a observe of 28,000 online subscribers of buyer article magazine, McDonald's hamburgers rank last among 18 national and regional fast food chains. It received a score of 5.6 on a scale of 1 to 10 with 10 being the best, behind Jack In the Box (6.3), Burger King (6.3), Wendy's (6.6), Sonic Drive In (6.6), Carl's Jr (6.9), Back Yard Burgers (7.6), Five Guys Burgers (7.9), and In-N-Out Burgers (7.9).

Fast-food chains tend to detect new trends faster. For example, they are open as early as 5Am as Americans are increasingly buying their breakfasts earlier. They are also selling more cafe; latte; fruit smoothies to compete with Starbucks and Jumba Juice. You also see more salads on the menu. This gives customers more reasons to stop by at fast-food restaurants and make them more thoughprovoking to distinct customers.

With independent restaurants, it often takes a while to for customers to come around and try the food. These establishments are especially tough in the first 12 months of opening, especially with owners of minimal or no proven track record. So in general, "mom and pop" restaurants are risky investment due to first weak revenue. If you select to invest in a non-brand name restaurant, make sure the return is proportional to the risks that you will be taking.

Sometimes it is not easy for you to tell if a restaurant is a brand name or non-brand name. Some restaurant chains only operate, or are popular in a certain region. For example, WhatAburger restaurant chain with over 700 locations in 10 states is a very popular fast-food restaurant chain in Texas and Georgia. However, it is still unknown on the West Coast as of 2012. Brand name chains tend to have a website listing all the locations plus other information. So if you can find a restaurant website from Google or Yahoo you can speedily watch if an unfamiliar name is a brand name or not. You can also gain basic buyer data about almost any chain restaurants in the Us on Wikipedia.

The Ten Fastest-Growing Chains in 2011 with Sales Over 0 Million
According to Technomic, the following is the 10 fastest growing restaurant chains in terms of earnings change from 2010 to 2011:

Five Guys Burgers and Fries with 1M in sales and 32.8% change. Chipotle Mexican Grill with .261B in sales and 23.4% change. Jimmy John's epicurean Sandwich Shop with 5M in sales and 21.8% change. Yard House with 2M in sales and 21.5% change. Firehouse Subs with 5M in sales and 21.1% change. Bj's restaurant & Brewhouse with 1M in sales and 20.9% change. Buffalo Wild Wings Grill & Bar with .045B in sales and 20.1% change. Raising Cane's Chicken Fingers with 6M in sales and 18.2% change. Noodles & business with 0M in sales and 14.9% change from. Wingstop with 2M in sales and 22.1% change.

Lease & Rent Guaranty

The tenants often sign a long term absolute triple net (Nnn) lease. This means, besides the base rent, they also pay for all operating expenses: asset taxes, insurance and maintenance expenses. For investors, the risk of maintenance expenses uncertainty is eliminated and their cash flow is predictable. The tenants may also warrant the rent with their own or corporate assets. Therefore, in case they have to close down the business, they will continue paying rent for the life of the lease. Below are a few things that you need to know about the lease guaranty:

In general, the stronger the guaranty the lower the return of your investment. The guaranty by McDonald's Corporation with a strong "A" S&P corporate rating of a public business is much best than a small corporation owned by a franchisee with a few restaurants. Consequently, a restaurant with a McDonald's corporate lease commonly offers low 4.5-5% cap (return of investment in the 1st year of ownership) while McDonald's with a franchisee guaranty (over 75% of McDonalds restaurants are owned by franchisees) may offer 5-6% cap. So outline out the estimate of risks you are willing to take as you won't get both low risks and high returns in an investment.
Sometimes a multi-location franchise will form a parent business to own all the restaurants. Each restaurant in turn is owned by a single-entity tiny Liabilities business (Llc) to shield the parent business from liabilities. So the rent guaranty by the single-entity Llc does not mean much since it does not have much assets.
A good, long guaranty does not make a lemon a good car. Similarly, a strong guaranty does not make a lousy restaurant a good investment. It only means the tenant will make every effort to pay you the rent. So don't judge a asset primarily on the guaranty.
The guaranty is good until the corporation that guarantees it declares bankruptcy. At that time, the corporation reorganizes its operations by closing locations with low earnings and retention the good locations, (i.e. Ones with strong sales). So it's more primary for you to select a asset at a good location. If it happens to have a weak guaranty, (e.g. From a small, incommunicable company), you will get duplicate benefits: on time rent payment and high return.
If you happen to invest in a "mom & pop" restaurant, make sure all the principals, e.g. Both mom and pop, warrant the lease with their assets. The guaranty should be reviewed by an attorney to make sure you are well protected.

Location, Location, Location

A lousy restaurant may do well at a good location while those with a good menu may fail at a bad location. A good location will originate strong earnings for the operator and is primarily prominent to you as an investor. It should have these characteristics:

High traffic volume: this will draw more customers to the restaurant and as a supervene high revenue. So a restaurant at the entry to a regional mall or Disney World, a major shopping mall, or colleges is all the time desirable.
Good visibility & signage: high traffic volume must be accompanied by good visibility from the street. This will minimize advertising expenses and is a constant reminder for diners to come in.
Ease of ingress and egress: a restaurant placed on a one-way aid road running parallel to a freeway will get a lot of traffic and has great visibility but is not at a great location. It's hard for inherent customers to get back if they miss the entrance. In addition, it's not inherent to make a left turn. On the other hand, the restaurant just off freeway exit is more convenient for customers.
Excellent demographics: a restaurant should do well in an area with a large, growing people and high incomes as it has more people with money to spend. Its business should originate more and more earnings to pay for increasing higher rents.
Lots of parking spaces: most chained restaurants have their own parking lot to adapt customers at peak hours. If customer cannot find a parking space within a few minutes, there is a good occasion they will skip it and/or won't come back as often. A typical fast food restaurant will need about 10 to 20 parking spaces per 1000 quadrate feet of space. Fast food restaurants, e.g. McDonald's will need more parking spaces than sit down restaurants, e.g. Olive Garden.
High sales revenue: the yearly gross earnings alone does not tell you much since larger--in term of quadrate footage--restaurant tends to have higher revenue. So the rent to earnings ratio is a best gauge of success. Please refer to rent to earnings ratio in the due diligence section for added discussion.
High barriers to entry: this plainly means that it's not easy to replicate this location around for various reasons: the area plainly does not have any more developable land, or the master plan does not allow any more construction of market properties, or it's more expensive to build a similar asset due to high cost of land and construction materials. For these reasons, the tenant is likely to renew the lease if the business is profitable.

Financing Considerations

In general, the interest rate is a bit higher than midpoint for restaurants due to the fact that they are single-tenant properties. To the lenders, there is a perceived risk because if the restaurant is terminated down, you could potentially lose 100% of your earnings from that restaurant. Lenders also prefer national brand name restaurants. In addition, some lenders will not loan to out-of-state investors especially if the restaurants are placed in smaller cities. So it may be a good idea for you to invest in a franchised restaurant in major metro areas, e.g. Atlanta, Dallas. In 2009 it's quite a challenge to get financing for sit-down restaurant acquisitions, especially for mom and pop and regional restaurants due to the tight credit market. However, things seem to have improved a bit in 2010. If you want to get the best rate and terms for the loan, you should stick to national franchised restaurants in major metros.

When the cap rate is higher than the interest rate of the loan, e.g. Cap rate is 7.5% while interest rate is 6.5%, then you should reconsider borrowing as much as possible. You will get 7.5% return on your down payment plus 1% return for the money you borrow. Hence your total return (cash on cash) will be higher than the cap rate. Additionally, since the inflation in the near time to come is thinkable, to be higher due to rising costs of fuel, the money which you borrow to finance your purchase will be worth less. So it's even more beneficial to maximize leverage now.

Due Diligence Investigation

You may want to reconsider these factors before deciding to go forward with the purchase:

Tenant's financial information: The restaurant business is labor intensive. The midpoint worker generates only about ,000 in earnings annually. The cost of goods, e.g. Foods and supplies should be around 30-35% of revenue; labor and operating expenses 45-50%; rent about 7-12%. So do retell the profits and loss (P&L) statements, if available, with your accountant. In the P&L statement, you may see the acronym Ebitdar. It stands for earnings Before earnings Taxes, Depreciation (of equipment), Amortization (of capital improvement), and Rent. If you don't see royalty fees in P&L of a franchised restaurant or advertising expenses in the P&L of an independent restaurant, you may want to understand the hypothesize why. Of course, we will want to make sure that the restaurant is profitable after paying the rent. Ideally, you would like to see net profits equal to 10-20% of the gross revenue. In the last few years the cheaper has taken a beating. As a result, restaurants have experienced a decrease in gross earnings of around 3-4%. This seems to have impacted most, if not all, restaurants everywhere. In addition, it may take a new restaurant several years to reach inherent earnings target. So don't expect new locations to be profitable right away even for chained restaurants.
Tenant's credit history: if the tenant is a incommunicable corporation, you may be able to gain the tenant's credit history from Dun & Bradstreet (D&B). D&B provides Paydex score, the business equivalent of Fico, i.e. Personal credit history score. This score ranges from 1 to 100, with higher scores indicating best payment performance. A Paydex score of 75 is equivalent to Fico score of 700. So if your tenant has a Paydex score of 80, you are likely to receive the rent checks promptly.
Rent to earnings ratio: this is the ratio of base rent over the yearly gross sales of the store. It is a quick way to conclude if the restaurant is profitable, i.e. The lower the ratio, the best the location. As a rule of thumb you will want to keep this ratio less than 10% which indicates that the location has strong revenue. If the ratio is less than 7%, the operator will very likely make a lot of money after paying the rent. The rent guaranty is probably not prominent in this case. However, the rent to earnings ratio is not a precise way to conclude if the tenant is development a behalf or not. It does not take into account the asset taxes cost as part of the rent. asset taxes--computed as a percentage of assessed value--vary from states to states. For example, in California it's about 1.25% of the assessed value, 3% in Texas, and as high as 10% in Illinois. And so a restaurant with rent to earnings ratio of 8% could be profitable in one state and yet be losing money in another.
Parking spaces: restaurants tend to need a higher estimate of parking spaces because most diners tend to stop by within a small time window. You will need at least 8 parking spaces per 1000 quadrate Feet (Sf) of restaurant space. Fast food restaurants may need about 15 to 18 spaces per 1000 Sf.
Termination Clause: some of the long term leases give the tenant an selection to conclude the lease should there be a fire destroying a certain percentage of the property. Of course, this is not desirable to you if that percentage is too low, e.g. 10%. So make sure you read the lease. You also want to make sure the insurance policy also covers rental earnings loss for 12-24 months in case the asset is damaged by fire or natural disasters.
Price per Sf: you should pay about 0 to 0 per Sf. In California you have to pay a premium, e.g. 00 per Sf for Starbucks restaurants which are commonly sold at very high price per Sf. If you pay more than 0 per Sf for the restaurant, make sure you have justification for doing so.
Rent per Sf: ideally you should invest in a asset in which the rent per Sf is low, e.g. to per Sf per month. This gives you room to raise the rent in the future. Besides, the low rent ensures the tenant's business is profitable, so he will be around to keep paying the rent. Starbucks tend to pay a prime rent to 4 per Sf monthly since they are often placed at a prime location with lots of traffic and high visibility. If you plan to invest in a restaurant in which the tenant pays more than per Sf monthly, make sure you could construe your decision because it's hard to make a behalf in the restaurant business when the tenant is paying higher rent. Some restaurants may have a percentage clause. This means besides the minimum base rent, the operator also pays you a percentage of his earnings when it reaches a certain threshold.
Rent increase: A restaurant landlord will commonly receive whether a 2% yearly rent increase or a 10% increase every 5 years. As an investor you should prefer 2% yearly rent increase because 5 years is a long time to wait for a raise. You will also receive more rent with 2% yearly increase than 10% increase every 5 years. Besides, as the rent increases every year so does the value of your investment. The value of restaurant is often based on the rent it generates. If the rent is increased while the shop cap remains the same, your investment will appreciate in value. So there is no key advantage for investing in a restaurant in a certain area, e.g. California. It's more prominent to select a restaurant at a great location.
Lease term: in normal investors favor long term, e.g. 20 year lease so they don't have to worry about looking new tenants. while a duration with low inflation, e.g. 1% to 2%, this is fine. However, when the inflation is high, e.g. 4%, this means you will technically get less rent if the rent increase is only 2%. So don't rule out properties with a few years left of the lease as there may be strong upside potential. When the lease expires without options, the tenant may have to pay much higher shop rent.
Risks versus investment Returns: as an investor, you like properties that offer very high return, e.g. 8% to 9% cap rate. And so you may be attracted to a brand new franchised restaurant offered for sale by a developer. In this case, the developer builds the restaurants thoroughly with Furniture, Fixtures and equipment (Ffes) for the franchisee based on the franchise specifications. The franchisee signs a 20 years absolute Nnn lease paying very generous rent per Sf, e.g. to per Sf monthly. The new franchisee is willing to do so because he does not need to come up with any cash to open a business. Investors are excited about the high return; however, this may be a very risky investment. The one who is guaranteed to make money is the developer. The franchisee may not be willing to hold on while tough times as he does not have any equity in the property. Should the franchisee's business fails, you may not be able to find a tenant willing to pay such high rent, and you may end up with a vacant restaurant.
Track records of the operator: the restaurant being run by an operator with 1 or 2 recently-open restaurants will probably be a riskier investment. On the other hand, an operator with 20 years in the business and 30 locations may be more likely to be around next year to pay you the rent.
Trade fixtures: some restaurants are sold with trade fixtures so make sure you document in writing what is included in the sale.
Fast-food versus Sit-down: while fast-food restaurants, e.g. McDonalds do well while the downturn, sit-down house restaurants tend to be more sensitive to the retreat due to higher prices and high expenses. These restaurants may feel double-digit drop in year-to-year revenue. As a result, many sit-down restaurants were shut down while the recession. If you reconsider investing in a sit-down restaurant, you should select one in an area with high earnings and large population.

Sale & Lease Back

Sometimes the restaurant operator may sell the real estate part and then lease back the asset for a long time, e.g. 20 years. A typical investor would wonder if the operator is in financial issue so that he has to sell the asset to pay for his debts. It may or may not be the case; however, this is a quick and easy way for the restaurant operator to get cash out of the equities for good reason: business expansion. Of course, the operator could refinance the asset with cash out but that may not be the best selection because:

He cannot maximize the cash out as lenders often lend only 65% of the asset value in a refinance situation. The loan will show as long term debt in the balance sheet which is often not viewed in a certain light. The interest rates may not be as convenient if the restaurant operator does not have a strong balance sheet. He may not be able to find any lenders due to the tight credit market.

You will often see 2 distinct cash out strategies when you look at the rent paid by the restaurant operator:

Conservative shop rent: the operator wants to make sure he pays a low rent so his restaurant business has a good occasion of being profitable. He also offers conservative cap rate to investors, e.g. 7% cap. As a result, his cash out estimate is small to moderate. This may be a low risk investment for an investor because the tenant is more likely to be able to afford the rent.
Significantly higher than shop rent: the operator wants to maximize his cash out by pricing the asset much higher than its shop value, e.g. M for a M property. Investors are sometimes offered high cap rate, e.g. 10%. The operator may pay of rent per quadrate foot in an area where the rent for comparable properties is per quadrate foot. As a result, the restaurant business at this location may suffer a loss due to higher rents. However, the operator gets as much money as possible. This asset could be very risky for you. If the tenant's business does not make it and he declares bankruptcy, you will have to offer lower rent to another tenant to lease your building.

Ground Lease

Occasionally you see a restaurant on ground lease for sale. The term ground lease may be confusing as it could mean

You buy the construction and lease the land owned by another investor on a long-term, e.g. 50 years, ground lease.
You buy the land in which the tenant owns the building. This is the most likely scenario. The tenant builds the restaurant with its own money and then typically signs a 20 years Nnn lease to lease the lot. If the tenant does not renew the lease then the construction is reverted to the landowner. The cap rate is often 1% lower, e.g. 6 to 7.25 percent, compared to restaurants in which you buy both land and building.

Since the tenant has to invest a large estimate of money (whether its own or borrowed funds) for the construction of the building, it has to be duplicate sure that this is the right location for its business. In addition, should the tenant fail to make the rent payment or fail to renew the lease, the construction with large value will revert to you as the landowner. So the tenant will lose a lot more, both business and building, if it does not fulfill its obligation. And thus it thinks twice about not sending in the rent checks. In that sense, this is a bit safer investment than a restaurant which you own both the land and improvements. besides the lower cap rate, the major drawbacks for ground lease are

There are no tax write-offs as the Irs does not allow you to depreciate its land value. So your tax liabilities are higher. The tenants, on the other hand, can depreciate 100% the value of the structure and equipments to offset the profits from the business.
If the asset is damaged by fire or natural disasters, e.g. Tornados, some leases may allow the tenants to gain insurance proceeds and conclude the lease without rebuilding the properties in the last few years of the lease. Unfortunately, this author is not aware of any insurance clubs that would sell fire insurance to you since you don't own the building. So the risk is large as you may end up owning a very expensive vacant lot with no earnings and a huge asset taxes bill.
Some of the leases allow the tenants not having to make any structure, e.g. Roof, repairs in the last few years of the lease. This may wish investors to spend money on deferred maintenance expenses and thus will have negative impact on the cash flow of the property.

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Homeowners insurance For mobile Homes In Arizona

Homes For Rent - Homeowners insurance For mobile Homes In Arizona

Good evening. Now, I discovered Homes For Rent - Homeowners insurance For mobile Homes In Arizona. Which is very helpful if you ask me so you. Homeowners insurance For mobile Homes In Arizona

Every year the Arizona branch of insurance publishes a study that is truly invaluable to movable home owners in the state. Although homeowner's insurance for a movable home in Arizona is very similar to a traditional home owner insurance policy, there are a few differences. The study provides facts related to the average cost to insure both a particular wide and double wide movable home in the state. This gives the buyer a starting point to compare to when they begin shopping for insurance.

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One of the first things to reconsider when shopping for homeowner's insurance for a movable home is either you own or rent the unit. If you are the homeowner you will need to insure both the movable home and the contents. For person renting the home, they'll just need adequate insurance to cover the loss of their personal belongings.

If you are unsure of what level of coverage you will need to enable you to replace all your belongings should you lose them in a fire, theft or if your movable home is hit by lightning or damaged in a storm, reconsider making a list. This list will help you decree the value of your possessions and will also aid the insurance business if you need to make a claim.

For individuals in need of homeowner's insurance that does cover asset damage it's leading to be aware that there are distinct limitations on these types of policies in the state. If you suffer a fire in your movable home, your Arizona homeowner's insurance procedure won't cover the fire branch assistance charge. There is also a appropriate limit of 0 on the exchange cost of glass. They will however cover your movable home for a month if you are forced to move it from its traditional location. In addition, most policies will also cover the expenses complicated in accident discharge of your movable home. Just to be certain, it's wise to demand about this before you agree to purchase any policy.

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Real Estate Notes For Sale

Homes For Rent - Real Estate Notes For Sale

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Over the past few years, more and more people in the United States have been gift real estate notes for sale. Selling real estate is an easy way to turn one's monthly receivable cost into an immediate and large sum of cash. A real estate note for sale can be a mortgage note, a compact for sale or a land contract.

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The best way to find real estate notes for sale is to look for real estate note listings. Any websites contribute facts on real estate notes for sale. They regularly list real estate notes from distinct states. These websites also contribute facts on various categories of real estate notes. You can advent real estate note brokers who ordinarily have recent facts on the real estate note market. They can also simplify the process of transaction. Local newspapers and magazines are other places to look for real estate notes for sale. Real estate venture clubs are a good forum to discuss matters linked to real estate notes.

Competition in this field is very high. Earlier, it was easy to buy real estate notes for huge margins of profit. With Any financial institutions and clubs hunting for real estate notes, personel buyers often find it hard to buy and sell real estate notes. Most real estate note sellers do not sell their whole lot of real estate notes at once. This can place personel buyers in confident tricky situations. Generally, real estate notes sold partially would not create immediate income. It is best you go for professional help, as the transaction can sometimes be confusing.

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Rental Grants to Help You Pay Rent

Homes For Rent - Rental Grants to Help You Pay Rent

Good evening. Now, I found out about Homes For Rent - Rental Grants to Help You Pay Rent. Which is very helpful for me therefore you. Rental Grants to Help You Pay Rent

When citizen face financial hardship, all becomes a problem. Rental grants help citizen who are having problem paying their rent in order to keep them from being evicted. There are also rental grants that will pay to help you with thoughprovoking expenses to move into a new housing unit. Best of all, grants for rent are not loans. These funds are provided to those who need financial aid and they never have to be repaid.

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These programs are often provided by the department of housing and other local government agencies. Rental grants may also be provided by private foundations that help individuals and families who are facing financial difficulty. Depending on the definite grant schedule that you apply for, there are dissimilar qualification and eligibility requirements.

To find out if you can qualify to receive government rental grants, quest for the grants that you want to apply for and are likely to qualify for. When you see the list of available grants, quote the application process and eligibility requirements carefully. If there are more than one schedule that you feel you qualify for, submit your application to as many as you feel fit.

As you quest the grant database for your rental grants, you may find many additional grants that you could use for your personal use. For instance, you can find grants to help you pay off your debt, grants to pay your tuition, and grants to help you start a small business. With hundreds of government and private foundation grants, there are plentifulness of ways to procure free money that you never have to pay back.

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property management Fees Explained

Homes For Rent In Springfield Mo - property management Fees Explained

Hello everybody. Now, I learned about Homes For Rent In Springfield Mo - property management Fees Explained. Which may be very helpful to me so you. property management Fees Explained

When you hire a property administration company to serve as the liaison in the middle of yourself and your tenants, you want to be sure you're getting the best possible property administration services for the money. The services a property administration company provides can range from ala carte to an all-in-one inclusive package. Along with that comes an array of fees for each. There is no set in stone fee structure we can supply you. But we can educate you on what base fees to expect and what each is commonly for. In the end it will be up to you to compare company fee structures and pick the best one that fits within your budget. Below are some of the most base fees and what service they provide.

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Commission

This is an ongoing monthly fee expensed to the owner to compensate the property owner for the responsibilities of overseeing the administration of their property. This fee can vary from as petite as 3% to over 15% of the monthly gross rent. In place of a percentage some managers may fee a flat monthly number which again can vary from to over 0 per month. All property administration fellowships commonly fee this fee.

Lease-Up or Setup Fee

This fee is expensed to the owner to compensate the property owner for their preliminary time invested and resources used in setting up an owners account; showing property and/or other activities resulting in tenant placement. I guess you could look at it as a "finders fee" for placing a tenant in your property. Once a tenant has been placed and first rent wage comes in, the property owner will deduct this fee from the rent proceeds. Some property managers have been known to require this fee upfront prior to tenant procurement. Ordinarily this fee is non-refundable once the property owner has started the process of tenant procurement or any legwork has been initiated with the property. This fee can vary from none to as much as the first months rent, and Ordinarily is a one-time fee per tenant.

Lease reparation Fee

This fee is expensed to the owner when a property owner renews a current tenants lease and covers the costs of initiating paperwork or transportation complex in implementing the new lease document. A property owner may also justify this fee if they achieve a year end inspection of property. This fee can vary from none to 0 or higher, and may be expensed every time a lease reparation is implemented.

Advertising Costs

Depending upon the property administration company's contract, whether they will pay the advertising costs or the owner or they could split the costs. If the owner is willing to cover this cost, most likely they will fee the lease-up or setup fee as form above. If the administration company covers this cost make sure to find out what type advertising or marketing of your property is included. If it's placing your listing on their own web site and other free online classified sites you may not be getting your monies worth. They are many good rental or tenant reserved supply online web sites that bring in fine tenants for a uncostly fee and you will want to think these. And don't forget about print media, yard signs, listing on the Mls or even an open house. Nothing is worst than having your property vacant, bringing in no money only because you or your property owner skimped on advertising.

Maintenance Mark-up Charges

This is one of those costs you may never de facto of known about or had it disclosed to you. A "Mark-up" is a fee over and beyond the final bill on maintenance and/or fix work done to your property initiated by your property administration company when using their vendors or in-house maintenance staff. This should be disclosed in your Manager/Owner ageement which Ordinarily will state the markup as a percentage above the final invoice from vendor. For example, your owner had to call a plumber to replace the dishwasher in your rental property. Total charges for completing the job: 0. If your property owner ageement states you will incur a 10% markup on all maintenance work the actual cost to you will be 0. Just one of those things to be aware of as these all eat into your profits.

Early Cancellation Fee

The dreaded "3 months and no tenant". Your property owner insist he or she's doing everything they can to find you a tenant. But here it is 3 months and still no tenant; what do you do. Well, look at your Manager/Owner ageement and that might be your deciding factor. I am not a fan of this fee, and believe it to be an unnecessary fee and for you owner out there this could be the deal breaker. I'll tell you why; if a property owner is doing their due diligence and retention the owners in the loop as far as decision making, store conditions and transportation lines open an owner will not be second guessing his property managers abilities. The odds of this scenario happening is unlikely but you must be ready for it. A cancellation fee can range from none to over 0. To be fair, some managers de facto deserve this fee especially if they have pocketed advertising costs, incurred lots of legwork and time invested in your property.

"You've Got To Be Kidding Me" Fees - These are ones I have personally had the satisfaction of running into.
Your property is vacant, but we still will fee our monthly commission or a small flat fee. "A For-Rent Yard Sign Fee". I believe this was /mo. "Preventive Maintenance Fee". This was to cover the "just in case" and changing out A/C filters. If "just in case" never happens they still pocket the money. I believe this was /mo and I still was expensed for filters.
In overview

Read your Manager/Owner contract, understand what you are signing, ask lots of questions and know what the fees will buy you in services. A good real estate lawyer can help in negotiating the terms in a ageement that suit both parties. These contracts are not set in stone. If your property owner will not negotiate, there are other property administration fellowships that are eager to earn your business.

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