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  • Frank Rizzi manages Bos Commercial in West Covina and has been in real estate since 1988. Since then, he has made millions for his investors over the last decade.

    With his team of experts, he has built a solid reputation as a responsive expert with in-depth market perspective of a local firm coupled with the sophisticated capabilities of a national company.

    BOS Commercial has positioned itself to handle every aspect of your commercial property
    investment whether it be purchases, management, leasing, renovations, or sale of your property.

A Green Game Plan For Your Old Condo Building

Does your Condo Association have a strategy to go green? 

If you live in an older condo building the answer is most likely no, but that can change quickly after understanding a number of fairly easy to implement green initiatives found on the EPA’s Energy Star website.  No one expects the condo association an older residential building to go 100% green tomorrow, but there a many small steps that can make your building more energy efficient and a healthier place to live right now. Here are some ideas for condo associations boards and property managers.

A Condo Association Can Do a Energy Self-Audit On Their Condo Building

Energy Star has a self evaluation tool called the Home Energy Yardstick, which helps you determine the overall energy efficiency of your property.  It works well and actually only takes about 5 minutes, like the website claims.  Although it’s intended for a single family property, you can make it work for your condo building by calculating an average condo unit, then extrapolating the information to meet the size of your condo building.  

It’s a quick and useful calculation of your energy usage, and requires some knowledge of your energy usage over the past year (which will be on your monthly bill), so just make sure you have your energy bills for handy before you get started.

Install Energy Efficient Light Bulbs or Fixtures On Your HOA Property

Replacing old light bulbs with Energy Efficient Light Bulbs is a no-brainer.  There are a host of Energy Star rated light bulbs that are a little more expensive than your traditional light bulbs, but they should last for a very long time.  According to the EPA, “ENERGY STAR qualified lighting provides bright, warm light but uses about 75% less energy than standard lighting, produces 75% less heat, and lasts up to 10 times longer.” 

Seal the Windows and Doors In Your Condo Association’s Building

Energy Star estimates that a homeowners associations “….can save up to 20% on heating and cooling costs (or up to 10% on their total annual energy bill) by sealing and insulating.”  If you live in an older building, it can be much higher percentage than this.  Our building is over 80 years old and when I moved in the building, I could feel a breeze with the window shut.  We sealed the windows and felt an enormous difference.  The sealing of windows and doors should be high on your green priority list.  Here is a link to educate you to the impact of air leaks in the envelope of your condo building.

Switch Your Condo Association from Oil to a Gas Burner

We switched to a gas burner two years ago and our energy bill dropped about 15% per annum over the past two year.  Old oil burners are grossly inefficient – emitting more pollution because they don’t have modern controls standard today on new boilers.  Due to its size, our old oil burner needed its own room in the basement.  Our new gas boiler is smaller than a footlocker and was mounted to our wall, rendering the room pretty much empty.

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Buying Into a Condo Association? Take the Right Precautions First

When you think you’ve found the perfect unit, you have your down payment ready, your going to call the mortgage lender and you’re ready sign on the dotted line, hold off for a moment.  Are you sure you are completely prepared to buy into a community property?  Do you know everything there is to know about your future home?  Are you really ready to buy into a condo association?

Documented Problems

One of the best places to look for hidden dirt on your future home is in the minutes of the condo association board meetings.  Anyone with complaints will likely come before the board and if you notice several of the same complaints, you may be buying into a lemon or simply a property that is poorly managed.  You don’t want to be part of either one.

Condo Delinquencies

Has there been a history of missing payments from your future neighbors?  You should be able to find the delinquency records for the building.  High rates of delinquency, or even moderate ones, are a sign of bad things to come.  One problem is that the condo owners are having financial trouble which can lead to more distressed sales that bring down prices.  In addition, when the condo owners are delinquent less money is paid into the project for common area maintenance and expenses.

Condo Repair/Reserve Fund

Owners pay into a repair and reserve fund.  Research the fund to see how much it contains.  Older properties should have as much as 50% of the estimated costs of refurbishing the building and grounds in the fund for planned improvements, new fixtures or roofing, and emergencies.  Newer buildings should have at least 10-25%.  Make sure to carefully review the condition of the property, not just the unit you intend to buy but the exterior of the building and the common areas as well.

Condo Association Insurance

Make extra sure you take a look at the insurance on the property.  Find out if replacement costs and costs of rebuilding are correct and find out if the property has a building ordinance clause.  This pays for improvements to the building to bring it up to date as ordinances change.  You should also be sure you know how much of your unit and personal property is covered by the building insurance policy and be sure to make up the difference with your own insurance.

Legalities

Utilize the services of a real estate lawyer to work through all the paperwork and condo bylaws of the condo association to be sure everything is up to snuff.  The laws should not only make sense for the units, they should also be in line with state and local laws as well.  Your lawyer can also head over to the local courthouse to check and see if any suits have been brought against the property.

Common Areas in Condo Associations

Here is a question I recieved the other day: “What are Common Areas in Condo Associations?”

Common areas of the condo association or HOA property, such as stairwells, dividing and outer walls, fitness centers and rooftop gardens, are under shared ownership. Each unit owner holds an interest in these spaces.

In order to manage the maintenance and repair of the shared common areas, every condo development has a condominium association, also known as a unit-owners’ association. The association board of directors  is elected by condo owners and makes communal decisions in the interest of the community.

Commercial Real Estate Investing – What If the What If Happens?

One of the things that I see happen, a lot, is people get trapped in the “what if” mode – especially when looking at investment real estate. There are literally hundreds of variables that go into analyzing a commercial real estate property.

Many of these variables cannot simply be put into a spreadsheet or software program and pump out a “yes” or “no” answer as to whether to purchase a property, or not. What’s more, there is so much to think about that many get caught up in the dreaded “Analysis Paralysis” of just not being able to make a clear decision, and then take action.

For starters, it does makes sense to gather as much information as you can and analyze this information before doing anything – no question about that. As a matter of fact there are many people that DO NOT do enough of this.

However, after some have the required information to make a decision – some folks still pull the “what if” card – to their detriment.

What if the economy goes to heck?

What if the tenant trashes the place?

What if interest rates go up?

What if the owner is lying about…..?

Etc.

You have got to have the energy to get beyond these kinds of what ifs. If you do not and, Yes, stick you neck out there, you will look back on what you did not do with more regret that what you probably did do.

Especially when it comes to investment real estate.

If I had a dollar for every time I heard “Should have bought that property…” I would be Bill Gates’ neighbor on the Forbes 400 list.

Don’t get too analytical. This will hold your wealth back almost more than anything else

Avoiding Commercial Real Estate Losses

I am hearing from quite a few of our members about the losses that they have taken on many of their investments. Actually some of the losses have been in the world of real estate too so I know that real estate is NOT immune. Of course it always depends on what side of the fence you are sitting on, right? I mean if I was heavily into stocks I would probably be telling you to be in the stock market now, and so forth.

It is interesting though how many investment sectors have taken on losses AND how many investment sectors have actually gained money on investment over the last year or so.

For example, it is during times like these when the Gold Merchants come out of the woodwork and start selling or even buying Gold. I saw another ad in our local paper about a gold buyer that was in town “only for a few days” to buy your unwanted gold jewelry. You can be that these guys are doing well. Plus the are all over the TV, aren’t they, and those ad dollars are not cheap!

Knowing this now and realizing where everything is at the mantra for many has become How do we quickly recover from wall streets losses in our regular accounts or retirement accounts?

You see it’s not only getting you back to even it’s also starting to make money isn’t it? The one place where you will be able to recover fast from the Wall Street Mess is Well Located Apartment Properties!

I have been preaching about this for the last year and those that have listened have done extremely well. The good news is that the window of opportunity is still open, in my opinion.

The bottom line is that there will continue to be more demand than supply of well located apartment properties for tenants to live in. There will be pressure on demand. This will increase rents and therefore value. The current economy spells opportunity since even with government home buying assistance the waiting lists at our apartments grow longer every day.

I just got done inspecting almost all of our apartment property holdings over the last week and we are looking very good. The really interesting thing is I do not see the demand going down at all – especially here in the Heartland.

The main reason for the increase in apartment demand here is because of the conservative nature of most people. Right now it is considered among many of our tenants to be risky buying into any kind of real estate until the national economy improves. Locally the economy is doing just fine but that still does not make the news. It’s the bad news that does. Result? Many tenants are happy to pay a higher rent with no risk than paying a loan payment on a home that can carry some risk.

So what this spells is fast appreciation due to rising income streams and rise in demand due to the higher returns these properties will be producing. The smart investor will look at this area as a source of recovering from the losses they have had on Wall Street. I have been recommending to my top clients to not try to wait it out but to take SOME of that capital and get it into high appreciating and cash flowing apartments that are in locations and areas that tenants like and will be in for a long time.

Condo Association Fees: What Do They Actually Cover?

You have purchased a condominium, and in the closing you received a credit for condo fees owed. But, what do the condo fees cover?

Condo fees are created as part of the creation of the condo association, and are assessed based on the percentage of ownership that each unit within the condo holds. Fees are typically assessed either monthly, quarterly, or annually, dependent upon what services are provided as part of the dues.

Fees are assessed for the purpose of providing funding for common area expenses, and are set (at a minimum) on a monthly basis by the condo association board. At a minimum, common area expenses should include funding a reserve fund for a future roof replacement, and in a larger condo association, can be extremely complex condo association documents.

In a small condo association, the fees are generally a fixed amount, since there are few shared expenses. In a larger condo, involving hundreds of units, the budgeting process is detailed and complex, and fees can be assessed based on projected annual expenses, with variable amounts for such items as common area utilities.

Items usually included in condo fees are:

1. Reserve funds for large items. Basically a savings account, set to provide for the future replacement of major components such as roofs, driveways, boilers, and air conditioning systems.

2. Fixed annual expenses. Items such as common area real estate taxes, maintenance contracts, and planned improvements such as painting, lawn care, and payroll costs are generally included in this category. These amounts are generally fixed annually.

3. Variable costs. Many condo associations have opted out of charging a flat rate for utilities for the common areas for items such as heating and lighting, and instead charge these expenses on a monthly basis to the owners, based on the current billing. Other variable costs can include things such as valet services, parking fees and other services provided specifically to that condo owner.

Items not usually included in condo fees are maintenance to your individual condo unless the item being serviced could have a deleterious effect on other condo association owners. To truly understand what is included in the condo fees you are expected to pay, the answer is to obtain a copy of the annual budget from the Board or its manager. Failure to pay the dues can lead to foreclosure either by your lender or the condo association.

Apartment Investing – Closing Checklist

“Follow the 6 P’s – Prior Proper Planning Prevents Poor Performance.” – Unknown

Buying and selling an apartment or a commercial investment property can be a tough deal. Why? All of the things you must remember!

I just heard of a guy trying to close a 200 + unit apartment property and it fell through. Want to know why? I will make a long story short and just say he did not create, nor complete a closing checklist. He just basically showed up and hoped it would all work out.

It is amazing to me that even on a 200 + unit deal, this investor thought that the final loan approval was the last step in putting the deal together. In reality, that is when things can be the most busy of the entire purchase process. Thankfully most of us are smarter than that BUT it pays to be prepared.

I have put together a quick closing checklist that you can use for your next apartment property purchase. By no means does this cover everything, but is a good example of a real-life checklist that I have used in the past. Here is my closing list:

1. Call to switch over all utilities and trash removal services.

2. Re-check a current certified rent roll for the property.

3. Request a separate check at closing for rental deposits.

4. Ensure all negotiated items are completed and acceptable. (Any repair items, etc. that need to be done.)

5. Check that the property rents have been prorated and credited to me, or ensure that I am receiving a separate check at closing for it.

6. Purchase and make sure property insurance is ready to go on the closing date.

7. Work with bookkeeping and double check that any new accounts are set up.

8 If a new entity is being created for the purchase (and may I recommend you do so) ensure a new Federal Tax ID is retrieved, and that bank accounts and other vendors are set up for the new entity.

9. Obtain all partner and investor contact and account information.

10. Double check that all lender documents and closing documents are in order.

11. Ensure the property has clear title.

12. Obtain copies of all leases.

13. Obtain all keys to the property.

14. Perform final walk-through and inspection of all units.

Again, this list is by no means all-inclusive for your next apartment property closing. Every purchase has its own nuances and needs, but the lesson is this: have a list ready to go. Create and complete your closing checklist before you go to the closing table AND make sure that you have checked off your items before the closing date. Performing this simple step will help make one of the most busy times during the purchase go easier, and ensure a smooth transition to the new owner… you!