I wanted to throw out a word of caution to all would-be loan assumers.  With the markets tightening, alot of sellers are getting anxious to sell properties that they need to get out from under.  With this anxiousness comes the idea that a qualified buyer can simply assume the current loan on the property.

Well, take it from me, it’s not that simple.  With the tightening of credit, many banks, including national, are holding out on assumptions.  For example, over the past few months we have been working on a Walgreens deal where my buyer (who is very qualified) was going to assume the loan and pay cash for the rest. 

The seller had encouraged this without thought of the bank.  When the buyer made contact with the bank, the bank decided that they would not allow an assumption because they needed the cash.  Now, my buyer has to come up with new financing and extend the closing date and may have thrown the deal all out of whack due to contingencies in the contract. 

I believe that this could have been resolved before it went this far.  This is what should have happened:

The seller (whos loan it is anyway) should have consulted with the bank’s decision maker.  Just because you have a relationship with the underwriter, doesn’t mean the bank is going to allow you to “sell” your loan.  Had the seller had a conversation with the manager in charge of the loan, then the seller would have known beforehand that this loan was not assumable.

 All in all I’m hopeful that the deal won’t fall apart, however, when buying these types of properties make sure that the seller has gotten permission from their bank to make the loan assumable.

I have several friends who invest in residential real estate.  The other day, one of them told me about one of his investing nightmares.

He had a tenant who was to pay the rent on the first.  However, for some reason the tenant had to get a cashiers check to pay his rent.  That night, the tenant forgot that he put the rent check (cashiers checks are not easily replaced) in his pocket.

He washed his clothes with the rent check in his pants!!!

Can you imagine that scenario???

My friend had to wait two months to get his rent check.  That’s what I call a real estate investing nightmare.

Just another reason, commercial real estate investing is the way to go.  Walgreens and CVS usually don’t wash their rent checks!

I Don’t Have Time To Manage the Property

As we discussed earlier, not all commercial real estate is created equal. Some properties require more management than others. For example, multi-family, office, and retail, usually require some level of property management. Many times, investors will hire professional property management companies to help them manage the property for them.

However, you can also purchase a property like a national bookstore chain sale-lease back that is a NNN lease. In the NNN lease, the tenant is responsible for taxes, insurance, and property maintenance. Therefore, you just wait for a check in the mail every month. That doesn’t sound like a lot of property management does it?

I just posted an article on the Articles Page.  Learn about net lease properties and which kind of net lease investment is best for you.

Click Here to Download the Article

I Don’t Know Anything About Commercial Real Estate

Did you know anything about stocks before you bought your first stock portfolio or mutual fund? Maybe you did or maybe you did not. The point is, you either became educated before you started investing or you entrusted your finances to a professional. As a professional Investment Advisor, I work with investors who hire me to educate them and help them find the best real estate investment for their current situation.

You don’t have to be an expert investor to invest in commercial real estate. However, there are some things you should know, such as your investment criteria, long-term and short-term. But, as a professional Commercial Real Estate Investment Advisor, I can help you ascertain your investing criteria and buying power.

Call me at 770-325-1847

“Go from the presence of a foolish and self-confident man, for you will not find knowledge on his lips.” Proverbs 14:7

Commercial Real Estate Is Too Risky

To be honest, risk is relative. Most investors are risk averse and do not want to dump their money into something that will not pan out positively for them. Although some commercial property can be risky, not all commercial property is created equal.

For example, in the case of the national bookstore chain, the property has a triple net lease or NNN lease. These leases are known as some of the safest investments in the market because they are usually backed up by the corporation. Although, you need a down payment to purchase the property, the lesee (bookstore in this case) actually pays down your mortgage and gives you a positive cash flow. After X amount of years, you own the property outright.

In addition, many times these “credit” tenants can help you qualify for a non-recourse loan. Essentially, you’re not held liable for the debt on the property. It’s a win-win situation for everyone involved. The tenant gets to to cash out of the property, using the upfront money for operations and the investor gets a steady cash flow stream into retirement guaranteed by a major corporation.

Mark Santiago is an Investment Advisor with RE/MAX Suburban Atlanta. He specializes in providing turnkey real estate investment portfolios for Doctors, Lawyers, Dentists, and other professionals who have accumulated wealth in their IRA or 401k, or other cash bearing accounts.

You can also read his blog at: http://AeonInvesting.wordpress.com

Mr. Santiago can be reached at his office: 770-325-1847

Commercial Real Estate Is Too Expensive

This is probably the biggest misconception of commercial real estate investing. When investors hear the world commercial, they think Donald Trump and skyscrapers.  However, commercial means much more than that.

Many commercial properties have non-recourse loans attached to them that are assumable by a new investor.  These non-recourse loans sometimes require a minimal down payment and the tenant(s) pay off the mortgage, giving you a positive cash flow.

Currently, there is a national chain bookstore in the Atlanta area which is being sold for $2.5mm. However, you can assume the loan with a down payment of only $250,000. Sound too good to be true? Better yet, the loan is paid off by 2023 and you now own a national chain bookstore for a $250,000 down payment.

By the way, the property cash flows at $17,000 per year. If you took that same $250,000 and tried to buy some foreclosures houses, that still wouldn’t give you nearly the equity nor the monthly cash flow.

To make this strategy even better.  Let’s say that you have an IRA worth about $300,000.  You could pull it out of the market, make it a self-directed IRA, and then invest it into the national bookstore chain.

So you can turn your $300,000 IRA into a $2.5mm building for you to retire on.

Want to learn more…Call 770-325-1847

“One man considers himself rich, yet has nothing to keep permanently; another man considers himself poor, yet has great and indestructible riches.” Proverbs 13:7

Get A Higher Return Than Purchasing Foreclosures!!!

A Borders bookstore ground lease just came on the market for $2.5million. However, you only need a $250,000 down payment to get into the property and assume the current loan. It cash flows at $17,000 per month and is paid off in 14 years.

Call: 770-325-1847