VALLEJO, CALIF. — Newport Beach, Calif.-based Yacoel Properties has purchased Glen Cove Shopping Center, a retail property located in the Glen Cove section of Vallejo along Interstate 780. The 66,000-square-foot property sold for $12.9 million, which equated to a 7.71 percent cap rate. A 50,360-square-foot Safeway supermarket anchors the center. The seller is a joint venture between Kimco Realty Corp. and Prudential Real Estate Investors.
-Western Real Estate Business
NAPA, CALIF. — Sunstone Hotel Investors Inc. has completed the disposition of the 274-room Marriott hotel in Napa. The property sold for $36 million. Sunstone estimates that the hotel would require approximately $6 million in near-term renovations to comply with Marriott brand standards. The gross proceeds of $36 million, plus the $6 million of renovations that Sunstone will not have to spend, equates to a 10.5x 2009 EBITDA multiple. The buyer was not disclosed.
-Western Real Estate Business, July 2009
The Department of Real Estate has a list on their website of loan modification and foreclosure rescue companies who received a desist and refrain order from the Department of Real Estate:
http://www.dre.ca.gov/cons_drs.asp
-Burt
This is the most current info and changes often:
Is there an advantage to doing a short sale vs. a foreclosure?
Yes. With a short sale some lenders allow a person to buy again after 24 months, but on a foreclosure it’s generally 36 months.
How long does a borrower have to wait to purchase a home after a BK?
On FHA and VA: Chapter 13 = 1 year from filing date as long as payment history is satisfactory. Chapter 7 = 24 months after discharge date. Conventional = Generally 4 years
Can a borrower with no credit score or “thin” credit get a home loan?
Yes, using alternative credit, such as utility bills, cell phone bills, cable TV bills, or rental history.
Chain of Title: Are bank-owned properties an exception to the 90 day chain of title rule on FHA loans?
Yes, www.fha.gov # 4155 will cover this topic.
FHA 203k fixer upper loans: What items can NOT be repaired under the 203k program?
Structural and Pool. What is the maximum repair amount? $35,000.
How many financed properties can an individual borrower own?
Fannie Mae allows up to 10.
If there is pending litigation on a specific condo complex, can a borrower still get a loan?
It depends. If it’s a structural issue, then generally not. If other issues, then possibly.
Can a borrower get a loan on "manufactured home” or “double wide”?
Yes, as long as it was converted to “real property” and manufactured after 1976.
What are the minimum down payments in today’s market?
HUD homes: $100 down, VA: $0 down, FHA 3.5% down; second home and investment properties: 10% down
What is the minimum credit score nowadays?
600 middle score.
What’s the deal with the $8000 tax credit for first-time buyers, and what is a "first-time buyer?”
In short, what this new announcement seems to indicate, is the $8000 tax credit can NOT be used for the minimum 3.5% FHA down payment, BUT it can be used for: additional down payment, interest rate buy down, or closing costs, which will help buyers qualify for a more expensive home OR it will help borderline buyers qualify for something, rather than nothing at all. This tax credit expires on December 1, 2009 http://www.hud.gov/news/release.cfm?content=pr09-072.cfm. The law defines "first-time home buyer" as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse. For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit. However, unmarried joint purchasers may allocate the credit amount to any buyer who qualifies as a first-time buyer, such as may occur if a parent jointly purchases a home with a son or daughter. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.
How do I find out if a specific condo project is Fannie or FHA approved?
https://www.efanniemae.com/sf/refmaterials/approvedprojects/index.jsp?from=hp
https://entp.hud.gov/idapp/html/condlook.cfm?CFID=1318400&CFTOKEN=9c57314bac1b7ef7-DD1133B5-B1F5-2C90-75FF9D8F2543C965
By Dan Sherbondy of Direct Access Lending
Great opportunity for ownership of a landmark property on Sonoma Blvd. in Vallejo. 5,200 SF building is suitable for a wide-range of uses including: retail, office, medical or restaurant. Ample parking, great visibility with the potential for a drive-through.
$1,195,000 or $0.99 psf NNN
For more details see the website.
-Burt
New Listing…awesome location on Silverado Trail in Napa. Multiple private rooms, large/conference room, reception area, parking. Plus, an added bonus of a shop/garage with a roll-up door for storage, vehicle, shop, etc.
Wide variety of uses possible: office, service, retail, dog grooming, beauty salon, spa, interior design, commercial food/bakery, upholstery business, gym, auto electronics, etc.
$2,400/month.
For more information please check out our website.
-Burt
Good brokers can make money in any market, but fewer tenants and more concessions means you have to market and negotiate like never before.
If you’re lucky enough to be on the tenant side of the commercial leasing equation these days, you and your client are sitting pretty. Even smaller tenants are in a position to ask for—and get—some of the best leasing deals seen for two decades.
"Everything is on the table in a lease negotiation today. It’s easy for an office tenant to grab two to four months’ free rent," even in New Orleans, relatively insulated by the oil economy, says Richard Juge, CCIM, SIOR, owner of RE/MAX Commercial Brokers there.
If you’re sitting on the owner’s side of the table, the view’s not quite so appealing. "Sometimes, it seems as if prospective tenants have brought out their Christmas wish lists," jokes Bill Gladstone, CCIM, SIOR, an office leasing broker with NAI CIR in Harrisburg, Pa. "People get a certain perception of the market and think they can get anything."
Even in a market with a 96 percent occupancy, like medical office buildings in Seattle, tenants are asking for rent concessions, says Paul Carr of CB Richard Ellis.
"It’s the psychology of watching news reports and expecting the market to get worse. It’s required some re-education of tenants on our part." Other owners are going with the concession tide. One is even giving away a new Smart car to brokers when a tenant signs a substantial lease.
Many multifamily properties, too, are moving into free rent territory, says Greg Martin, CPM®, with Draper and Kramer in Chicago. A glut of unsold condos, and renters and former home owners doubling up or moving in with family, add up to higher vacancies in markets like Chicago. And higher vacancies translate into one or two months of free rent for prospective tenants as well as free utilities and parking, says Draper and Kramer’s marketing and leasing director Lynette Vander Heyden.
Of course, the size of the lease and the creditworthiness of the tenant, as well as the owner’s financial position, affect what sort of deal can be offered. In many cases, loan documents prohibit owners from letting a property’s cash flow drop below a certain level, says Greg Schenk, SIOR, who exclusively represents tenants at The Schenk Co. Inc. in Columbus, Ohio. Owners with significant equity interest in a building have more flexibility to negotiate. (See Commercial Outlook: National Leasing Projections chart)
Find the Strong Tenants
Rent concessions aren’t the only challenge. Finding tenants in this era of downsizing requires brokers to work harder and market more aggressively than they have in a decade. "You have to get very aggressive and really pound the phones," says Ed Kearney, who specializes in industrial and warehouse space with Sperry Van Ness/Kearney Commercial Group in West Palm Beach, Fla. Like many practitioners, Kearney has ramped up his e-mail marketing with strategies like purchasing a list of top trucking companies that might need his warehouse properties.
Reaching out to brokers as well as tenants is also more critical than ever. To spark new marketing ideas for his leasing team and better assess the competition, Larry Culbertson, CCIM, who heads The C Group at Keller Williams Commercial in Atlanta, started a "visit the winners" program. It works like this: High-occupancy buildings in a marketplace hold an "open house" so leasing brokers can tour the facility, ask questions about amenities and incentives, and discover what the building is doing right. "Commercial brokers often have a reputation for not wanting to share information, but we’ve had a great response," he says.
You can also be proactive by working with city development authorities to reduce permit costs or allow new uses for vacant space. "Maybe you think your retail center could increase traffic with an ice cream shop, for example. Work with city officials to waive fees and make the move more attractive to tenants," suggests Mahnaz Khazen, CCIM, owner of Coldwell Banker Commercial Bay in San Jose, Calif.
To ensure that deals get done, target tenants with the cash or the business model to weather the downturn. On the office side, look for businesses such as accountants, bankruptcy lawyers, and outplacement agencies that will do well in tough times. In retail, focus on retailers with cash reserves such as Forever 21 and Kohl’s, says Khazen. She is also finding that retail strip owners are more willing to lease to smaller mom-and-pop retailers, especially if they’re able to pay a few months’ rent up front as a security deposit.
Be Cagey on Concessions
"Price is still the best way to attract or keep at tenant," says Kearney, but you can make concessions less onerous for owners. Spread any free rent over the term of the lease rather than offering it up front. "At least that way, the tenant is paying some rent," he says. Spreading out free rent also makes it less likely the tenant will just use up the free rent and move on.
Another option is to offer free rent up front, but add on the extra months to the end of the lease, extending the overall lease term, says Gladstone. Using up free rent early may do less damage to a building’s cash flow and value when it’s time to sell, he notes.
Another way to minimize the long-term damage of concessions is to offer a shorter lease term to tenants. "We suggest that owners who have a stronger tolerance for risk offer a two- or three-year lease instead of a five-year one so that they can get the benefits when the economy recovers," suggests Neil Shupak, a Philadelphia-based broker with GVA Smith Mack. Other options are to build in a rent increase after three years or to charge retail tenants a higher percentage rent.
Owners can get another boost to cash flow by spreading out leasing commissions over several quarters, notes Culbertson. "We’ve been offering that option to a few owners for about a year; now we’re doing it more broadly," he says.
Keep the Tenants You Have
While landlords will offer a lot to find new tenants, "the biggest challenge today is actually keeping the tenants you already have," says Culbertson. Start by approaching office tenants with good credit a year or more in advance of lease expiration and offering the opportunity to extend a lease, suggests Bill Finnegan, an office broker representing owners for GVA Smith Mack.
"Tenants don’t want to spend a nickel on moving and they don’t want to rewire," so if you make a reasonable offer, they’ll often stay, he says. In some cases, the deal will also let tenants reduce their overall square footage. To offset lost revenues from this returned space, Finnegan has been offering these small parcels as temporary "plug and play" spaces.
Educating tenants about the cost of relocation is another way to make staying put seem like a sound financial decision, says Schenk. "It can cost $25,000 to move even a moderately sized office tenant, plus another $2 to $4 per square foot to remove cabling for phones and computers." Retail tenants face the significant added risk that their customers may not follow them to a new location, even a nearby one, he adds. And all tenants that move face business disruption and lost productivity.
It also pays to be proactive if you think your tenant may be facing financial troubles that could lead to the inability to pay rent. "Get into their businesses a little bit. Check to see if retail and office parking lots are full, and stores have inventory," says Culbertson. If you see signs of trouble, consult with your owners and then "open a dialogue with the tenant about taking a smaller space or temporarily lower rent."
Make It Work
While it may be painful to give out concessions and watch owners’ cash flows fall, "skilled commercial brokers can make money when the market is moving up or moving down," says Juge. "It’s all a matter of getting educated and adjusting to the times." For the next few years at least, negotiating and the ability to understand and respond to tenants’ needs and challenges will be the skill sets in demand.
It’s also important in all lease deals to work on building a relationship rather than take a single-transaction approach, says Schenk. "Owners and tenants want someone they can trust long term." Combine that with a lot of hard work, and watch your buildings fill.
Mariwyn Evans is the commercial real estate editor for REALTOR® Magazine. You can reach her at mevans@realtors.org.
For California homebuyers, tax time is now tax relief time too. Thanks to two recent laws, a California homebuyer may qualify for $18,000 in tax credits for buying his or her piece of the
American dream. The two tax credits are a first-time homebuyer credit up to $8,000 under federal law, and a new home credit up to $10,000 under California law. Here’s a quick summary of the two tax credit laws:
With all the dubious assistance programs and out-right scams preying on home owners facing foreclosure, it can be difficult to find legitimate help.
Here’s a list of programs that are either operated by the U.S. government or have its seal of approval:
By Barbara Ballinger | REALTOR Magazine | April 2009
Here are some of the factors that appraisers Joni L. Herndon of Real Property Analysts/Gulf Coast in Tampa, Fla., and John A. Hillas of Hulbert & Associates Inc. in Modesto, Calif., say they consider when determining value.
AB 2025 went into effect Jan. 1, 2009. This law assists commercial property landlords with the disposition of personal property remaining on the premises at the termination of a tenancy. If the landlord reasonably believes that the total resale value of the personal property is the lesser of $750 or $1 per square foot of the premises occupied by the tenant, the landlord may retain the property for his or her own use or dispose of it in any manner; otherwise, it must be sold at a public sale. The law requires that a “Notice of Right to Reclaim Abandoned Property” be sent to the person the landlord reasonably believes to be the owner of the personal property (other than the former tenant).
-Burt
The good news! Homeowners will be getting some relief on their taxes this year and the years to come. The Mortgage Debt Forgiveness Law allows a homeowner to not have to claim the debt forgiven from a short sale or foreclosure as income.
The bad news! The State of California lost the exemption January 1, 2009. The Federal exemption continues to December 31, 2012.
Check out the summary below and more details at Franchise Tax 
Board Article. More information on the options available you.
-Burt
California law, SB 1055, which went into effect Sept. 25, 2008, conforms California Revenue and Tax Code Section 17144.5 to the federal Mortgage Forgiveness Debt Relief Act of 2007 with the following exceptions:
(1) The maximum amount of acquisition indebtedness is $800,000 for couples filing jointly and $400,000 for individual filers;
(2) The maximum amount of debt relief income that can be forgiven is $250,000 for couples filing jointly and $125,000 for individual filers; and
(3) California’s debt relief statute applies to property sold on or after Jan. 1, 2007, and before Jan. 1, 2009.
There is a plethora of information available regarding foreclosures, short sales and deed-in-lieu of foreclosures. Where does someone start? My recommendation is to speak with a qualified tax accountant or CPA, of which I am not. However, here is start of some good information regarding the tax implications of debt forgiveness from the disposition of your personal residence.
Please keep in mind you could have a taxable event if your home sells in a short sale or foreclosure for less than the outstanding loan amount. There is a possibility the lender could even pursue a deficiency judgment from you in satisfying the difference between the two. This is a possibility, but it does depend on whether you refinanced or have a second mortgage (see blog entry Refinancing and Recourse vs. Non-Recourse Loans). There is also the chance a lender would not pursue a deficiency judgment because of the fact they have a lack of resources in doing so.
When you speak with your tax accountant ask him or her about IRS Form 982: Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment). You may be able to file this form with your tax return and relieve yourself of the tax implications.
With that said here are a few sites that may be helpful in your quest:
The Mortgage Forgiveness Debt Relief Act and Debt Cancellation
Tax Implications of Debt Forgiveness
Debt Settlement and Income Taxes
-Burt
Mortgage Workout Programs for Homeowners
On Wednesday, February 18, 2009, President Obama announced his new Homeowner Affordability and Stability Plan to help troubled homeowners avoid foreclosure. This plan will offer assistance up to 9 million homeowners and applies only to primary residences. The first component of the plan allows homeowners who are current to refinance an existing Fannie Mae or Freddie Mac conforming loan with a loan-to-value ratio up to 105 percent. The second component addresses homeowners who are at risk of foreclosure on their mortgages, but they do not have to be delinquent. The government will work with the lenders to ensure that monthly mortgages do not exceed 31 percent debt-to-income ratio. Furthermore, the government will seek to create clear and consistent guidelines for loan modifications.
The details of the Homeowner Affordability and Stability Plan were released on Wednesday, March 4, with the introduction of the Making Home Affordable plan. Please look at the appropriate charts below to read about the summary of these new programs.
For more information about the Making Home Affordable Program, click here.
The following information is intended for REALTORS® and homeowners seeking information on existing mortgage workout programs. In general, the loan modification programs on the chart (see link below) and consumer information sheets (see links below) are intended for primary residences only.
For a lender comparison chart on existing mortgage workout programs (revised 3/09), click here. The chart is a compilation of programs offered by the larger lenders and government entities. If a specific lender or loan servicer is not on the chart, homeowners may wish to contact the lender or loan servicer to determine if a workout program is available.
For consumer information sheets containing detailed information on specific programs that REALTORS® can share with their clients, please click on the appropriate link below.
. Making Home Affordable Refinance
. Making Home Affordable Modification
. HOPE For Homeowners (H4H)
. Countrywide Financial (Bank of America)
. Citigroup, CitiMortgage
. JP Morgan Chase & Co.
. IndyMac Federal Bank, FDIC
. Federal Government Loan Modification
Mortgage loan modifications typically are handled on a case-by-case basis. Homeowners having difficulty meeting their mortgage obligation or interested in finding out more about a loan modification program should start by contacting their lender. Prior to calling a lender or loan servicer, homeowners should have the following information available:
. Loan number
. Income information and documentation
. Most recent mortgage statement
. Bank statements
. Letter demonstrating financial hardship
REALTORS® who wish to assist their clients in seeking loan modifications should ensure they are in compliance with California law. For further information, please visit the California DRE Web site at http://www.dre.ca.gov/mlb_adv_fees.html . REALTORS® also may direct clients to work with a U.S. Dept. of Housing and Urban Development (HUD)-approved counselor. For a list of HUD-approved counselors in California, visit the HUD Web site at http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm?webListAction=search&searchstate=CA .
Some helpful links:
Obama Housing Plan: What You Need to Know
Home Refinance and Loan Modification Plan
Ambitious Foreclosure Plan Revealed - How Will it Help?
Obama Plan Aims to Help "Responsible" Homeowners
Home Buyers in California Could Enjoy Up To $18,000 in Tax Credits
How to Help Homeowner's Understand Obama's Foreclosure Plan March 4, 2009
Courtesy of: Jake Baker, Pacific Mortgage Consultants, (415) 847-2670
Making Home Affordable Programs
Key Refinancing Qualification Guidelines:
Key Loan Modification Details:
Understanding the credit crises can be difficult. I stumbled across a very enlightening video that simply takes you through the credit market and what happened to lead to our current crises. It is amazing to think one of the strongest forces that led to where we are today is the terrorists attacks on 9/11. Watch the video below.
Burt
The CCIM and IREM Institute Legislative Staff released today their review of the economic stimulus package and its impact it will have on the commercial real estate industry.
Click below for a thorough and brief summary of the package:
In commercial real estate lending the term DSCR is commonly used by lenders to determine if an investment property can service the loan.
This ratio should ideally be over 1 while most lenders require a DSCR of about 1.25. That would mean the property is generating enough income to pay its debt obligations plus other expenses.
In general, the DSCR is calculated as follows (annualized amounts):
DSCR = Net Operating Income/Total Debt Service
In a nutshell, here is what you could expect to pay in taxes on the sale of an investment property. Please keep in mind that taxes could be delayed if a seller elected an 1031 tax-deferred exchange. Also, I am not a tax advisor nor claim to be one so please be sure to consult your tax advisor or CPA as each taxpayer's circumstances could be different.
Investment Property Held <1 Year
Investment Property Held >1 Year
Watch this video for seven sure fire steps to happiness.
Have a happy and prosperous New Year!
Burt
