Short Sale, Note and Bank Sales

Whether you are a property owner, potential investor or financial institution, the process of short sale, note sale and OREO disposition can be frustrating and at times confusing.

For Property Owners: If your multifamily property is no longer able to make positive cash flow or make debt service, you have options. You can use additional capital (from your own reserves or investors) to shore up the property investment or you can enroll the assistance of a professional in guiding you through negotiating a possible short sale or write down of the property. In many cases, your lender may already understand the situation you are in and be willing to work with you on a disposition. But beware: Personal guarantees must be addressed and cross collateralized properties identified and a compromise reached as how to move forward.

For Investors: Investors in cash heavy position have been able to take advantage of lenders in need to move properties off their books quickly. But pitfalls exist in this world as lenders may have strings attached. Often times these deals require no or very short due diligence periods, limited financial records and no warranty as to the tenants you are assuming.

For Financial Institutions: If your institution is faced with multifamily OREO, notes or multifamily maturing debt, National Multifamily Group consultants can help. From working with receivers on asset sales, sale of notes or unpackaging properties secured by purchased notes and analysis of income and expenses of properties you are considering extending credit to, our professionals are able to provide objective analysis, quick turn around and international marketing reach for property resale.

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Turn Around and Value Adds

While “value add” may be the buzz word in multifamily acquisition right now, the Multifamily group understands that the only measure of success is in the after tax yeild of your investment. A “bargain” is only a bargain if it can be made to properly perform.

While the allure of making quick money in your investment may be strong, please be advised; Many times, a distressed property is distressed for a reason. It takes time and money to correct problems with properties and looking at the yeild of the property of your desired holding period may not deliver the long term results you want to achieve.

Compare the investment opportunity carefully to ensure it matches your level of comfort in risk as well as return.

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Development and Construction

The National Multifamily Group supports the development and construction activities of our clients in many ways. From market trend analysis, site selection, rental rate polls and syndication, to construction cost integrity audits, the National Multifamily Group has unrivaled expertise in all aspects of multifamily development and construction.

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Management Consultation

With so much of the value of your multifamily property riding on the income and expenses generated by each property, it is important for the investor to periodically and objectively review the financial results and verify that the integrity of the investment has been maintained.

When investments are made up of limited partnerships, an objective voice also serves as a way to give confidence to individual investors and strengthen the relationship with those syndicating multifamily deals.

Our consultation services include periodic audits which may range from review and performance evaluations to full forensic audits. Because our organization consists of members across the world, we have the ability to guarantee an objective voice in every circumstance.

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The RE/MAX Commercial Michigan Multifamily Housing Group is comprised of commercial practitioners that have demonstrated a core competency for understanding the financial, structural and investment aspects of multifamily property. Part of the National RE/MAX Multifamily Group, our reach includes all of North America,  South America,  Europe and the Middle East.

If you are looking to purchase, sell, complete due diligence or just get another opinion through an apartment specialist, our multifamily team can assist you in a professional and confidential consultation.

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Financial Goals:

Holding Period:

Due Diligence Services:

Management Consultation:

Development and Construction:

Turn Around and Value Adds:

Short Sale, Note and Bank Sales:

Due Diligence Services

The due diligence phase of a multifamily investment is one of the most critical times of your transaction. With values made and destroyed by income and expense statements, property owners could have a vested interest in not disclosing material facts that will impact your future earning. We recommend you avoid taking chances with your investment and complete a forensic analysis of all documents pertaining to the operation of the acquisition. Some of the items that could hide potential problems include:

• Leases: Review each individual lease for deferred rent concessions, renewals at below market rates and non market rate perks.
• Contracts and Services: Review each contract and individual invoices for the previous 12 months. Match invoices to income and expense statement line items
• Randomly audit 4 months of the previous 24 months of expenses. Look for expense reciepts that have not been accounted for in the income and expense report.
• Compare rent rolls and income and expense reports in 4 time periods over the past 24 months to ensure income matches on both documents.
• Ensure all expenses are accounted for. A building in a Northern climate will normally have snow removal charges. Look for missing line items

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Holding Period

When looking at multifamily property investments, holding period is an often overlooked investment objective. Often times, investors are looking at the relative short term goals of cash flow and Cap Rate and not at the long term tax implications such as cost recovery from deprecation or capital gains. When these factors are weighed in your investment decision, you can make the best decision possible for today and the future, without creating unknown problems for the time of resale. With a fundamental understanding of the principals and outstanding financial projection software, our consultants can project long term costs and savings in the holding times of your investment and compare different strategies to maximize your yield on that investment.

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Financial Goals

When we talk about financial goals, most investors immediately think of cash flow and Cap Rate. If you are making decisions on your investments based solely on these factors, you may be missing the bigger picture.

Taxation:

The issue of taxation is an ever changing one however, when partnering with your accounting professionals we are able to plan for long term saving in your marginal tax rate through depreciation. While most investors understand the concept of depreciation, the cost recovery calculations and resale implications to your investment yield may be an area that our professionals can show how a little planning now can add to your investment performance in the years to come.

Cap Rate Versus Internal Rate of Return:

Cap Rate is an effective gauge of performance of a real estate invest today. The problem with Cap Rate is that it is only a snapshot and does not take into account the full term of your investment. When we look at an investment from a Internal Rate of Return aspect, we will see the long term rate on your investment over the entire term.

Managing Income and Expenses:

Income and expenses are the basis for your investment value. If your management of these expenses is not managed well, your property resale value, appraisals and potential refinance opportunities could be at risk. Our consultants can perform periodic reviews of your operations that can save you from costly mistakes at the time of disposition.

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