The last two days the rental activity has dropped off a lot. Could be end of the month activity. Interesting fact the penske activity at our corporate office has been very buszy. It might be all the fist time home buyers moving to get in
Dan S posted a comment about me thinking investors needing fourty percent down and the answer is —–you are going to have to get close to this
Rob H a former partner of mine said my comments may be a little pessimistic—– Rob is right so here is some good news. I have not posted in a while because the rental maeket is on fire We are renting several things a day. So much so that we are taking ten applications a day. We are getting twice as many hits on our web site than in march.
If you want to borrow money these are the five things you will need
1. Have the amount of money you need to borrow in cash or liquid assets
2. Dave a LTV of 60% or less. If you are using an appraised value it needs to be reasonable. Plan on the appraisal being done by the banks ultra conservative appraiser
3. Have a debt coverage ratio of 1.5 this means you need to have a lot of excess cash each month. Also your expense ratios have to be beefed up. In residential you need at least a 50% expense ration
4. You need to have borrowed a lot of money from the bank you are borrowing. By this I mean that you need to be a performer. You need to have borrowed several times and paid them back over a long period of time.
5. You need to have a personal relationship with the loan officer. By this the loan officer needs to know you personally. He needs to of been to your house, his kids need to of played with your kids, you need of played golf with him more than once.
You do not need just one of these you need all of them.
Ok the real estate market is just about to implode. One of the reason that properties are not worth as much is because we cannot get financing. I talk to a variety of bankers every day. I sell for them, I manage for them, I help them place loans, I borrow for them, two of them are on my board of directors, one is in my forum, heck my brother is even a banker. At the end of the day, banks are simply not lending. I am of the opinion that you will see the prices for rental houses continue to erode. To the point that there will be lots more land contracts and houses going for $5,000 that need $5,000 in work and rent for $600 a month. I heard someplace that there is not a present or future there is just the past repeating itself. There was an extended period of time where my clients and I were buying houses for $2,000 to $5,000 and renting them for $800. These days are back. Every single day I have a client or associate saying they are throwing in the towel. If I have never said this before, I will say it again. If you have the money you should be buying like crazy. Start by offering 10% of the sales price. I am sure you will get some takers.
This is one apartment complex in new yourk that is 11,000 units. This property is worth half what its owners paid for it. Look it all the big name owners. The problems that we are having in our business in Omaha is not the only place
http://online.wsj.com/article/SB125547827547583747.html
I have not seen this movie, but from the review in the WSJ I think I am going to agree with alot of it. Along those lines, here is an article in the wall street journal that discribes exactly how I feel about banks and thier willingness to lend money.
http://online.wsj.com/article/SB125511860883676713.html?mod=WSJ_hpp_LEFTWhatsNewsCollection
Almost two years ago we invested in a Dodge/MB/ Freightliner Sprinter. Its actually made by MB in Germany and shipped to the states as a couple of large components and the final assembly is done here. The reason I that I bring this up is that it is just flat out a great vehicle. It costs what a Suburban does but it has an unlimited amount of versatility. We use it for hauling employs around to different events we go to(but it could just as easy be used as an family van). We have it set up in the 12 passenger van version. It is more likely to be seen as the cargo version. It is very popular with plumbers and electricians. I am not exactly the biggest fan of MB products. I am more of a Toyota and Honda follower. I think someday the sprinter will be expensive to maintain, I have an uncle that owns a lot of MB products and everytime you take it in it s $1,000. But for now this is a great vehicle. It allows us to take large amounts of people and gear anywhere. Although it is a little under powered, it’s incredibly easy to drive for such a large vehicle. It has a shorter turning radius than our Tundra’s on top of that my 6 foot 3 inch employees cab stand up in it. It seats 12 plus there is 7 feet of cargo room behind the fourth row of seats. This year Dinos Storage sponsored a Market to market relay team and of all the vans at the race we were the only one that had a Sprinter. Someone even came up to us and asked to see the inside of vehicle because they have never seen a Sprinter before. We have ours wrapped, which makes it even better because he get a lot of stares. If you need a people or cargo hauler for your business, there is not currently a vehicle on the market in the states that can match it. The one vehicle that I think comes close is the Toyota Hiace. It is not sold in the US or Canada. But it is sold in Mexico
I am in the process of redoing one of our lines of credits and the properties that are collateral are perfoming better than they ever have yet the banker wants to cut back thew size of the loc significatly. When I inquire as to why. The banker says they are moving away from asset based lending which was the norm in the past. He further stated they are now relying on cashflow based lending. So if you are an investor forget raising capital from banks. It is now up to you to get it from operations. You can do this by either spending less money or raising rents
I took a video of Jim Posey, Landmarks Resident Condo expert. But it was too large to post. His comments were summarized around the fact that he feels the reason we have had this increase in vacancies is because there has been such a large increase in unemployment. Its low compared to the national average. But unemployment is high compared to what we are used to.
Have you ever thought about the amount of waste in an organization? It can be any organization-a branch of the government, a non profit or a business. We are faced with a new world order. Because of the meltdown in the credit markets, most organizations cannot raise money as easy as they used to. Now organizations must look at cashflow to raise capital. One way to do this is cut out waste. The biggest source of waste is human capital. How many functions in your organization could be change to eliminate waste. I challange each one of you to come up with one thing this week that you do but does not really need to be done
