Friday Surprise!

I received a great market analysis put together by the really smart guys in the home office. I've created a link to the market summary. I hope you like me, can take some useful information from the report. I have read the document which takes a national perspective and already see some factors that don't quite match up with our local economy in Birmingham, Alabama, but overall the facts are very handy to have and continue to watch.

I guess there's no second best for good local knowledge! That's why I still have a job!

Bank Appears to Bail Out Their Own Interest

In a recent article published by the Birmingham Business Journal, the lender for the Capri Condominum project claims to have settled their debt from the borrowers who have filed bankruptcy. After reviewing documents filed with the Alabama Secretary of State, it appears like the filing members of the new owners, Capri Real Estate, LLC, is in fact the lender itself and one other bank. I am not sure if the other bank has been involved all along or not.

Anyway, it's never good news to have to go through the settlement process, but maybe the bank's new equity position will allow them to complete the deal and "truly" close the matters at hand. While they likely don't wish to be developers and prefer the position of comfort as the lender, the unfinished building is a worst-case-scenario. Think of it this way, the building fails to produce ANYTHING if it doesn't reach the stage of an issued C.O.

All in all, this is probably a common practice among lenders who have the misfortune of facing bankruptcy threatened deals and actually the better of few available options.

Hey guys, I'm just digging a little deeper than what was reported in the BBJ article. I hope you, like me, can have a little more knowledge to use in your projects.

Here's Lookin' at You Kid!

Wow! I am amazed the blog is getting around. I just looked up on a stats page and people from 16 of our 50 states are looking at the information I publish. Obviously, there is room for growth, but I am blown away about the support from all you guys and gals. Thank you, thank you, thank you!

The map below shows who's looking:

Hot Property Downtown

We are offering about 2/3's of a city block between the 5th and 6th Avenues South. The location is well established and offers excellent access to all parts of Birmingham and its surrounding cities and well as other areas of the State of Alabama.

Most of the property is warehouse, but there is also some office and a showroom.

I have more information at the following web link:

LIGHTING AND LAMP INFORMATION

Return From an Alternate View

Sure a 13% year-one return in a good, growing, location would be awesome. However, these days, that's not a readily available product. For a few years now, investors have been challenged to think a little more about positioning their investments. One strategy, I encourage is to look at a property's rental rate position.

Is the rental rate above the market? If so, it might be hard to demand equal or more rent in the near future. Is the rental rate below market? If so, you might have a good opportunity to raise rent in the near future for a lease renewal or new lease.

Okay guys and girls, this is not a trick question. Generally speaking, if expenses stay constant, for this example, and rents increase, what happens to the bottomline? Net income goes up, therefore, return increases as well.

The idea is not to merely look at rents, however, that is generally a reasonably easy factor. I want to encourage you (and myself), to find alternate views to uncover value in properties. Find your niche. Is it rental rates? Traffic counts? Population density? Starbucks with in a certian distance? You would probably be surprised how some high-level executives approve properties.

Should I Form an Investment LLC Group?

I get this question a lot as I help "investors" in real estate. You see, I believe whether you are a user of real estate or a hands-length investor, if you are buying real estate, it is an investment -- therefore, you're an "investor". Some transactions could use more capital than what one party has or desires to use for the purchase. If more capital is needed, then the options are more leverage or more equity.

Sometimes even if the deal is leveraged to the max, one single investor just cannot come up with the required equity. Then his or her option is to raise more money through additional owner/members.

When dealing with other investors you might want to consider the following:

• How much do I know about my partner?
• Do they have experience in dealing with real estate?
• Does he have the financial strength to back up his obligations?
• Are our goals in alignment?
• Who makes decisions? How are they made?
• What if there is a conflict? How is it resolved?

That is not a conclusive list of questions, and frankly in most cases you and the partnership will draft a business operating agreement. The operating agreement spells out in some detail the processes that the partnership should follow as they own the investment.

Basically, it is important to not enter into a partnership relationship lightly. Partnerships have opportunities for conflict. However, if operated properly, partnerships offer a way to buy larger properties or diversify a portfolio.

Update: Green Building

Update to a post earlier this month.

Alabama-based construction firm is developing "green" buildings. An article published by the Birmingham Business Journal states that BL Harbert International constructed $260 million in green buildings.