• About Frank

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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.

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Energy-You should be concerned.

How Will Updated California Energy Standards Affect
Multi-Family and Commercial Real Estate?

The Energy Efficiency Standards for Residential and Nonresidential Buildings were established in 1978 in response to a legislative mandate to reduce California’s energy consumption. The standards are updated periodically to allow consideration and possible incorporation of new energy efficiency technologies and methods.
According to the California Energy Commission, the 2008 Standards went into effect January 1, 2010, and supersede the 2005 Standards. Projects that apply for a building permit on or after this date must comply with the 2008 Standards.
California’s building efficiency standards (along with those for energy efficient appliances) have saved more than $56 billion in electricity and natural gas costs since 1978. It is estimated these standards will save an additional $23 billion by 2013.
Okay, what does all this mean to the Commercial Real Estate field?  It means that buildings as they are remodeled and upgraded will need to meet much stronger energy efficiency requirements.  This will affect virtually all areas such as the type of windows that are installed, the types of Heating and AC units used, the type of light bulbs installed, the roofing materials used, the type of plumbing fixtures allowed and on and on.  The regulation delineating energy requirements alone is 176 pages long!
The most notable areas that will be affected are the Heating and Air and the roofing from a buyer’s standpoint.  These are the two systems that wear out the fastest and are the most costly.
The best roofing solution I have come across recently is the “cool roofing” methods.  There are many types and styles but all are much more energy efficient, keep the interior of the buildings cooler thus using less energy and usually cost roughly ½ of what a new traditional roof does. Many times this type of roof can be installed over existing roofing materials.
Unfortunately for Heating and AC, I have found the opposite to be true.  Just a few years ago a commonly used roof mounted unit cost approximately $1800 to buy plus the labor to install it.  Now this same unit is well over $3,000 just to purchase and will be more in the near future.  The reason for these costs all have to do with energy efficiency.  It is true they are much more efficient and over the long run, 7 – 10 years, usually will end up saving money but most commercial buyers want current costs to be the lowest and the units to last the longest.

We are starting to test windmill power on commercial setting.  They are fairly cheap to install. I will let you know how are experiment turns out.


HOA Reserves-Why its important to have enough.

According to the Sterling-Davis Act, Home Owner Associations are supposed to complete or update a reserve study every year. 90% do not. When we usually take over an association, and I ask for their latest reserve study, I either get something that is 5 years old, or they just do not have one.
About 6 months ago we started to manage an association, with a severe reserve problem. They had only $3500.00. This is an eight unit building that is over 30 years old, and things are starting to fall apart.
There first project they wanted to tackle was the repair/replacement of the patios and decks. The bids to do the work were between 12-17 thousand dollars. None of them included underlying wood replacement. The board decided to move forward with the $12,000 bid. They did a special assessment and raised $17,000.00, because it was obvious there was underlying wood damage.
The contractors started to remove the old Magnesite and damaged wood. They were only 25% done with the demo work when we asked them to stop. The damage to the patios was so extensive that only 20% of the area was salvageable, the rest of it had to be completely demolished and rebuilt. Total damages and cost will exceed $42,000.
The work has been partially completed, with all underlying wood replaced, iron work repaired, and new floor drain lines installed, for a little more than the $17,000.00 that was already raised. It was important to get to this level of the work to prevent injury, and prepare it for the installation of the Magnesite. The board now needs to go back to the homeowner’s and prepare another special assessment for the remaining $25,000.00 to complete the job.
We have since ordered a reserve study. Were waiting for the results, but my guess is the association will need to raise their HOA dues a minimum of 20% per year for the next five years, plus special assessments of at least $10,000.00 per unit, in order to save enough to perform termite damage remediation, painting, landscaping, fire-sprinkler repair, iron/fence work upgrades, and lighting replacement.
The previous board had never wanted to raise the HOA Dues which where half of comparable properties in the area. Because they never had any substantial money to perform any real improvements to the building, the current owners are stuck with a huge bill, tons of differed maintenance, and units that are difficult to sell.
My tip of the day for HOA’s: Get your reserve study current, and implement the findings. The ultimate cost may be a heck of a lot more if you do not keep your HOA dues inline.