• About Frank

  • Enter your email address to subscribe to this blog and receive notifications of new posts by email.

    Join 613 other followers

  • 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.

4 Easy Ways to Max Profits

Screening tenants before you rent is half the battle when it comes to maintaining the profitability of your rental property.

But circumstances can change after your tenant moves in. If you’re not careful, your ideal tenant can wind up becoming a potential rent collection problem.

Maintaining a current and complete tenant file is the easiest way to protect your valuable investment, whether you need to provide updated information necessary to collect tenant debt,  win a tenant dispute, or bolster the sale price of your rental property.

Track Changes in Payment

If the tenant pays with a personal check, photocopy it each month. Note any name changes. Relationship changes are the single largest cause for failure to pay rent. Compare phone, bank or account information from the last payment and note those changes in the file, or make a copy of the check.

Track Changes in Employment

Require your tenant to update you when their employment status changes.  Note the new employer’s name and address.

Credit Report Updates

A basic credit report should be run every 12-24 months on each tenant. This is an inexpensive way to see if they have been paying bills on time, going into more debt, and may even indicate whether the tenant has been shopping for another apartment or even a mortgage for a home.

Run a tenant criminal background check periodically as well.

Repair Requests and Complaints

Don’t be blindsided by a tenant who complains about your slow repair record or problems with other neighbors for the first time as you try to evict the deadbeat.  Have a system in place for tenants to send written repair requests, or record and date phone communications as they happen.  That way, you’ll be prepared to counter any bogus claims a tenant may raise just to get out of paying rent.

Make More Money From Your Rental Property

You need more money. The rent roll doesn’t cut it and the banks won’t return your phone calls. Before the ulcers set in, there might be some ways to squeeze more juice from the lemon.

Billboards: Let’s start at the top. If your building is near a major thoroughfare, you roof is a source of valuable income for very low maintenance. By placing a sign atop your structure, you can generate a monthly rental without doing a thing. A sign company changes the advertising which you can market yourself or sub out to an agency.

Down at street level you might be able to place more signage that advertises local businesses. These signs are much smaller in nature and usually would be placed for longer periods of time.

With both these ideas, you must consult local zoning codes to make sure you can place these signs.

 Storage Lockers: Take a good look around your basement and the lightbulb might go off in your head signaling dollar signs. By turning dead rooms into paid storage space you can again invent money from nothing. For instance, placing private storage lockers in newly painted, well lit rooms will let your tenants keep more things without renting at outside facilities. Not only will this generate immediate income, it will also add another amenity to your building.

 Laundry Rooms: Everyone in your building at some time will be down in the laundry room. This audience is captive and bored with time to kill. You can exploit this by setting up a locked display board and charging local merchants for putting in their ads. Tenants with items to sell or meetings to announce can also use this vehicle to reach their neighbors.

 Roof Decks: Outside space! That’s all your hear from landlocked New Yorkers. If you can turn your roof into a patio area, a whole new area of revenue will open up. You can either subdivide the space and rent it out individually or make it a common area and adjust the rents accordingly. Here again, you’ve not only created more income, but you’ve added an amenity which will make your building more attractive to potential tenants.

 Air Rights: Look up. It’s a bird, it’s a plane, it’s money raining down into your lap. The space above your building might not mean anything to you, but to a developer, it may mean big bucks. Here, it’s a good idea to consult your attorney to find out exactly what air rights you do have and what is the best way to sell or lease them.

 Back Office Space: Sometimes all a business needs is space for a desk and a phone. A small storage closet or some dead space in a larger room could be converted into a commercial area for a small businessperson. As with some other ideas, this will have some upstart charges, but they will quickly recouped through you new rental income.

 Yard Space: The back alleys or rear yards are sitting idle just waiting for the right idea to spring them to life. Many businesses need storage areas for machinery and equipment they don’t use every day. If you have access which will not interfere with your other tenants and the hours that these areas are in use are limited, then you might have a workable solution.

Lobbies: Since essentially everyone who enters your building comes through the lobby, a display board similar to the one in your laundry room will generate income without costing you anything. It can be bright and cheerful and blend into your existing decor.

 Consult Your Professionals: Your team of dedicated advisers will help you discover which ideas work for you. Your Engineer and Architect will help find out what is technically feasible, while your Attorney can help explain which ideas are legal for your building. Your Building Manager can help market and sell these new spaces to tenants.

In these slim times, it takes new thinking to just stay in place. Anything which can make you money without causing you headaches is worth a closer look.

Where Do I Get The Money I Need To Get Started?

Getting Started In Real Estate Investing
It’s a common misconception that you need to have money to make money. Or you need tens of thousands of dollars to invest in real estate. That would be nice, and if you have it great! But if you don’t that’s fine too. Keep in mind, our goal is to generate cash flow quickly. So you don’t need a lot of money to get started. Do you have $1? Seriously, that’s all you may need.

In other cases, you may need more than just a dollar. If you have a home, credit cards, and banking relationships, then you have access to money. If you were to buy a car, where would you go to get financing? If you were to fix up your house and you need financing where would you go to?

Sometimes we make this much more complicated than it really is. Home equity lines of credit, 2nd and 3rd mortgages and advances on credit cards are some of the more common methods to get access to start-up capital, which maybe not the first choice, but definitely viable options.

Need Financing – Forget Traditional Banks!
Don’t rely on the bank. Remember, we’re looking for run-down, distressed properties and most banks won’t even touch these types of properties. That’s fine.

In many cases, you can use seller financing. This is a favorite strategy of mine in which I put down just 10% or less of the purchase price and seller would hold the financing.

You can also use land contracts, assignments, wrap-around contracts and many other strategies that don’t require you to come up with ALL the money to purchase a property. The key is to understand the circumstances of the seller as well as the market and apply the financing strategy that best fits the deal.

In the meantime, you’re looking for financing, right? No problem. Even though traditional banks may not be lending as much anymore, there are plenty of hard money lenders who are looking to fund deals. Just check with your local Real Estate Investment Association for a listing or Google “hard money lenders” for a list.

In just about all markets – even smaller markets – there are plenty of private lenders available who are looking to get a return on their money. Doctors and lawyers are some of the best sources for private money right now. Offer them a percentage of the profits and show them how you can generate a 20% or 30% return on their investment in a short period of time. They can’t get that same return anywhere else right now!

Need Financing – Build Relationships!
Another terrific way to find capital is to go to your local real estate investment club or association meetings and ask other investors who finances their deals. Find out who the title companies are using to finance their deals. Call the phone numbers on the “bandit signs” on the street corners that advertise “”We Buy Houses”. Ask them who they use to finance their deals.

There’s a ton of cash out there right now. Most of the foreclosures in our area, for example, are being bought by cash buyers. So there are many people who have the funds available, it’s simply a matter of finding them.

A great place to find those buyers is in the courthouse records. By law, buyers of foreclosures must be listed in the public records kept on file in the county or city courthouse. Since many of them are cash buyers, they may be willing to finance your deals – especially if they don’t have to do any work.

Show Me The Money!
Here are some of the best sources of funding we’re finding right now that are perfect for investors who are just starting out:

—–> Hard money lenders
—–> Home equity loans or lines of credit
—–> Private money lenders
—–> 401(k) plans
—–> CDs
—–> Credit cards
—–> Savings
—–> Friends
—–> Family 

Tight Lending Standards Hindering Commercial Real Estate Recovery

Although commercial real estate markets showed signs of recovery in 2011, commercial lending standards have tightened in the past year for small businesses and scuttled a major portion of contracted transactions for smaller properties, according to the National Association of Realtors® annual Commercial Real Estate 2012 Lending Survey.

Lawrence Yun, NAR chief economist, said there is a significant split in commercial lending depending on value. “This is very much a tale of two markets. There have been notable improvements in capital for large commercial transactions valued at $2.5 million or higher, but there remain significant challenges for small business,” he said.

“Our Realtor® members typically are involved in helping commercial clients with purchases under $2 million, where a lack of capital has caused two out of three respondents to report deals have fallen through. Given that most jobs are created through small business, the lack of capital is hurting small businesses and the overall economic recovery.”

According to Real Capital Analytics, more than 13,000 major properties valued at $2.5 million or higher traded hands in 2011. Sales volume increased 51 percent over 2010 to $205.8 billion, with the lion’s share of lending funds coming from big banks. Other funding sources include insurance companies and institutional investors.

By contrast, the NAR survey shows that small business transactions rely heavily on smaller regional and local banks, and small private investors, for lending capital.

Respondents indicate nearly 30 percent of smaller commercial properties are purchased with cash, reflecting the tight credit environment, and some are seller financed. “When credit is tight, cash is king,” Yun added.

The most common types of property transactions referenced in the survey were multifamily, land, warehouse, suburban office and retail strip centers. Other property types include industrial flex space, central business district office, freestanding retail, and restaurants.

Realtors® report the system is clogged with property that must be sold or refinanced, which is significantly impacting the recovery. Long-time investors who never had a problem getting a loan in the past are now being declined.

More than half of respondents say lending is just as stringent as a year ago, while 23 percent say it is more stringent; 20 percent say it is less stringent but not near historical averages. Members also complained about banks being over-regulated, and refinancing being denied due to stringent internal lender underwriting requirements or low appraisal valuations.

Thirty-six percent of Realtors® said clients used the Small Business Administration commercial refinance program, but of those who didn’t, 45 percent said it was due to burdensome application and reporting requirements.

The Commercial Real Estate 2012 Lending Survey is published by the NAR Research Division for the commercial community. In April 2012, a random sample of 32,459 Realtors® with an interest in commercial real estate was invited to complete an online survey. A total of 474 responses were received, for an overall response rate of 1.46 percent.

http://www.american-apartment-owners-association.org/blog/2012/05/07/tight-lending-standards-hindering-commercial-real-estate-recovery/

Rentals Continue to Outshine Purchase Market

Median rents rose 2 percent from February 2011 to February 2012, but home values continued to fall, declining 4.5 percent during that period, according to the February Zillow® Real Estate Market Reports.

The Zillow Rent Index (ZRI) showed year-over-year gains for nearly 68 percent of metropolitan areas covered by the ZRI. By contrast, only 8 percent of metro areas covered by the Zillow Home Value Index saw home values rise.

The rental market remains strong, especially in areas that continue to experience consistent home value declines. Chicago metro rents, for example, increased 8.6 percent over the past year, in comparison to an 11 percent fall in home values over the same period. In the Philadelphia metro, rents are up 14.8 percent annually while home values have fallen 5.4 percent year-over-year.

Foreclosures continue to be a key driver in keeping home values down. Foreclosure re-sales made up 20.3 percent of all sales in February, slightly higher than their previous peak of 20.2 percent of all sales in March 2011. Foreclosure re-sales made up 19.1 percent of all sales in February 2011.

Foreclosure re-sales are strongly affected by seasonality, and January and February are typically months with high percentages of foreclosure re-sales.

“We have made it through the worst of the housing recession with a bottom on the horizon, but the deep backlog of foreclosures, elevated negative equity and high unemployment are all still obstacles on the road to recovery,” said Zillow Senior Economist Svenja Gudell. “The rental market remains a bright spot in the housing market, where many markets, especially hard hit ones, are experiencing significant annual rent appreciation and drawing the attention of investors. Converting distressed and vacant properties into rental units will reduce the oversupply of homes and speed up the recovery process.”

In the short term, national monthly rents declined slightly from January to February, falling 0.5 percent to $1,212. Home values fell 0.5 percent during the same period to $145,400.

http://www.american-apartment-owners-association.org/blog/2012/04/30/rentals-continue-to-outshine-purchase-market/

Based on current Economic Indicators and very low interest rates now may be the best time to consider single family homes as an investment. As a property management company we recommend making single family homes a part of your real estate investment portfolio. But before you make any decision you should consider purchase price vs. rental value to make sure your investment will be a positive one.