Rick M. Bean

By Robert H. Poe-

I have to admit that the current economic environment is producing some strange behavior by property owners. I talked to this gentleman the other day who had some substantial financial issues with his property, and his response to my thoughts was well, "bring me a buyer and I will take care of you". Uh-huh. So I am supposed to run myself and my team around like idiots, with no clear compensation package, and hope that by his grace he pays me for my time. Whoa!

Now I hope that my real estate sisters and brother agents are not desperate or dumb enough to fall for this line. Any distressed property agent who is worth their keep is too highly trained and frankly too busy is to spend one minute with a long shot like this. You would have better odds in Las Vegas to get paid. Without a formal listing contract in place, no reputable agent is going to deal with the stress and liability that comes with distressed property situations. The really sad part is this delusional seller is playing with danger, and no closer to getting his problem resolved.

I will admit that I had no idea what the hidden agenda was with this situation, if there was one at all, but I suspect that some owners in bad situations think that they can try to shave every dime off a sale of their property and what a better place to start than with the real estate agents. Bad news, distressed sellers, the market has turned and you need competent counsel. But a lot of you are still in denial and hoping the market will come back before the day or reckoning.

My team and I have no objections to working in a difficult selling situation, but we have to get paid for our efforts and that's what it is. We are not at fault because your property is in trouble, and we are willing to go to the mat for you. That said, we need that listing contract in place so we can LEGALLY market your property effectively and relieve you of your distressed property issues.

"Bring me a buyer" is dead...Time to move on and face reality!

Robert Poe is a co-founder and co-author of The Distressed Propety Insider Report. Contact him at: 503.351.5025 or rpoe@rpoe.com

One of the things that distinguishes FATCO is the quality of it's training...that's certainly exemplified here.

Hats off to Mike Sampson and Pam Edwards, First American Title's crack marketing group from the Portland Eastside Team. They (and their counterparts from FATCO's other area branches) are hosting a Certified Distressed Property Expert (CDPE) Mastermind Workshop Thursday, October 22nd. In addition to examining the view from the Escrow Officer's Desk, they have arranged for Roy Rogers, CPA to discuss the Seller's Tax implications. They are also providing introductions to Umpqua Bank's Loss Mitigators who will be in attendance. This is hard to beat: a high quality event you would gladly pay for...offered free by the good folks at First American.

Date: Thursday, October 22, 2009 from 9:30 - 11:30 am.

Location: FATCO; 222 SW Columbia, 4th Floor, Portland, OR 97201

Seating: Limited To 80.

RSVP: Linda@lindaeaton.com

To attend a great training, The Distressed Property Insider Report suggest you contact your FATCO marketing representative for prerequisites and details imediately! For a great deal on a distressed property use that same urgency and contact us at rick@rosecitycre.com, or rpoe@rpoe.com.

If you use a standard broker there's not much benefit to calling very far ahead of making a move. Of course, I suggest employing a full service wealth development specialist (WDS). I suggest that the initial conversations start 1-2 years prior to disposition and 6 months ahead of acquisition. I provide these consultations without charge...so do many other client centric investment brokers. Perhaps you should stop reading this and call.

Planning Improves Profits!

Dispositions

The primary reason for starting early is to prepare your Due Diligence Package formatting. A, well organized complete package will separate your property from others with similar revenues in similar condition. Buyers and Banks factor for risk. Key components of risk are items that are unclear or unknown. By starting your Due Diligence Disposition package early you can instruct your Professional Management company how you want expenses reported.

We want costs shown as Operational Expenses only if they are indeed directly related to operations. The same is true of revenues. Instruct your manager to keep all extraordinary and capital expenses accounted for separately. It's simple: building a new parking lot is cap-ex; stripping the old parking lot is operations. The reason that's important? Take the case of a 53 unit apartment that spent $68,000 switching out their single paned aluminum windows and sliders for Argon filled vinyl. The individual heat bills dropped by $15/month, the appearance was upgraded, and the units are less drafty...clearly improvements. But poor reporting of expenses would reduce the value when evaluated by Cap Rate because the expenses were overstated by $68,000:

Imagine improvements to your property reducing its value! A good broker would likely have figured this out during due diligence once the property was under contract...but it would not have become obvious until then. Prospective buyers wouldn't have stopped to give your (apparently) under-performing property a second look.

A free meeting saves a million bucks. Now that's what I call a high yield investment!

Want to increase your yields? Contact Rick Bean or Robert Poe at 503.577.1034 or rick@rosecitycre.com

There are no bang for the buck investments that exceed the return of employee training...and nobody does it as well as Grace Hill. This months session on resident retention should be seen by all of your multifamily staff. Best of all...its offered at no charge.

PRESENTED BY: Patty Morgan-Seager & Andrew Botieri
DATE/TIME: Wednesday, October 21, 2009 - 4pm ET, 3pm CT, 2pm MT, 1pm PT
SESSION DESCRIPTION: Showing clients that you appreciate their loyalty can make a tremendous difference in your resident retention efforts. But how, when your community's resident retention dollars have been reduced? Their panelists will share some great new ideas and proven techniques for "re-marketing" to your current residents. This topic is a crowd pleaser, so RSVP early to guarantee your spot!

COST: Gratis! Thank you to Spherexx.com, Welcome Home America and Multifamily Insiders for sponsoring October's chat event.

RSVP: Visit www.gracehill.com and look for the details of this event on their home page. Click the RSVP link to sign up and receive Chat Event Instructions. Then, login to Grace Hill about 10-15 minutes prior to the event and click on the Chat Room link, under the chat description, to be delivered to their Chat Room.
*Space is limited to 350 attendees in our chat room. Be sure to login to the chat room 10-15 minutes prior to the event.

Improve your profits!

Customer appreciation is the key to resident retention...and that's one of the keys to increasing NOI. The best way to increase profits is to buy right! Contact Rick Bean at: rick@rosecitycre.com or 503.577.1034 to develop an investment strategy that is customized to your needs.

One strategy of acquiring investment properties is to pool individual owner's equity stakes and take title as Tenants In Common, or a TIC. TICs feature an undivided unity of possession, but they may, or may not have unities of percentage of ownership, title, or time of acquisition and disposition. Upon the demise of a co-tenant their interest passes to their devisees/heirs, not the co-tenants. It is critical that an executed Operating Agreement be in place to define critical items including:

*Ownership percentage
*Conditions under which the property will be sold
*How distributions from operations will be made
*Rights and responsibilities of each investor
*How to handle cash calls, should they be required
*How individual TIC owners may dispose of their interest before the property is sold.

STRENGTHS INCLUDE: Pooling resources may permit the ownership of far larger assets than could be acquired individually, resulting in economies of scale for management and maintenance. The investor that owns a 10-plex can't afford MBO (Management By Others). 4 or 5 TIC investors that put that each contributed the same amount as the 10-ples owner could afford to have a live-in manager. Then the job becomes managing the manager...which is far less time consuming.

Overall flexibility. TICs permit owners to sell, encumber, or convey their interest without permission of their co-tenants. Depending on the structure of the Operating Agreement, TICs may permit General Partners to run the asset, allowing investors to have the benefits of owning an asset without having to be involved in routine operations.

WEAKNESSES INCLUDE: Litigation is more likely. Closings are more cumbersome. Coordinating items that require input from the co-tenants is more involved. People ask me if its really important to have a lawyer draw up docs for a TIC. I respond by telling them that, yes the first time they create a TIC they should consult an attorney...and every time thereafter. It is important to understand the actions you are required to take...and those you may not take...to avoid the creation of a security.

Note: The information contained herein is deemed accurate and reliable, but is not guaranteed. To assess applicability to individual situations please consult your legal professional. For the additional information about a highly respected Real Estate Law Practice contact me at: 503.577.1034 or rick@rosecitycre.com.