Years ago, a New Orleans lawyer sought an FHA loan for a client. He was told the loan would be granted IF he could prove satisfactory title to a parcel of property being offered as collateral. No big deal; customary request.

The title of the property dated back to 1803. Instead of tracing title back 50 years, the customary amount, the lawyer traced it all the way back to 1803. This took him three months.

After sending the information to the FHA, he received the following reply (actual letter):

“Upon review of your letter adjoining your client’s loan application, we note that the request is supported by an Abstract of Title. While we compliment the able manner in which you have prepared and presented the application, we must point out that you have only cleared title to the proposed collateral property back to 1803. Before final approval can be accorded, it will be necessary to clear the title back to its origin.”

Peeved, the attorney sent back the following (actual letter):

“Your letter regarding title in Case No. 189156 has been received. I note that you wish to have title extended further than the 194 years covered by the present application.

I was unaware that any educated person in this country, particularly those working in the property area, would not know that Louisiana was purchased, by the U.S., from France in 1803, the year of origin identified in our application.

For the edification of uninformed FHA bureaucrats, the title to the land prior to U.S. ownership was obtained from France, which had acquired it by right of conquest from Spain. The land came into possession of Spain by right of conquest made in the year 1492 by a sea captain named Christopher Columbus, who had been granted the privilege of seeking a new route to India by the Spanish monarch, Isabella. The good queen Isabella, being a pious woman and almost as careful about titles as the FHA, took the precaution of securing the blessing of the Pope before she sold her jewels to finance Columbus’ expedition.

Now the Pope, as I’m sure you may know, is the emissary of Jesus Christ, the Son of God, and God, it is commonly accepted, created this world. Therefore, I believe it is safe to presume that God also made that part of the world called Louisiana. God, therefore, would be the owner of origin and His origins date back to before the beginning of time and of the world as we AND the FHA know it. I hope to hell you find God’s original claim to be satisfactory.

Now, may we have our damn loan?”

The loan was approved soon thereafter.

About Investment Analytics Group
Established in December 2006, Investment Analytics Group (IAG) provides integrated commercial real estate advisory services to investors. Our core services include asset level due diligence, asset management, financial modeling, feasibility studies and other related advisory services.
For more information visit us at www.iagroupllc.com or contact us at 208.846.8476 or info@iagroupllc.com.

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In the commercial real estate investment world, an investor will more often than not make a mistake or two. They might be subtle errors, but over time the costs can be compounded and the entire real estate portfolio can be affected.

At Investment Analytics Group (IAG), we can help you see the big picture and we are your partner. We can help maximize the overall performance of properties by bringing knowledge and experience in property management, leasing, lease administration, acquisitions, and due diligence, enabling us to develop and implement ownership solutions to achieve the objectives in operating and leasing property. If you have a distressed commercial real estate investment property or just want us to look at the performance of your property please contact us at your earliest convenience.

Below are some common errors that in almost every case the cause can be traced to a lack of knowledge about a few simple precepts that form the ground rules of successful commercial investments.

1. Failure to mind the balance sheet – There are four ways to make money in real estate: cash flow, appreciation, equity growth, and tax benefits. The operating statement shows just one of those – the cash flow. The balance sheet shows the other three.

Just as one adjusts rents and expenses to improve operating performance, the balance sheet should be managed to best utilize the assets. The key measure, contrary to popular belief, is not ROI (return on investment); it’s ROE (return on equity). These decisions also affect the speed of wealth creation and tax efficiency.

That’s three of the four or 75% of the sources of profit! If you don’t understand your balance sheet, sit down with an accountant and get a lesson in the basics.

2. Bad deals and bad partners – It’s a given that we are not going to be right every time. We’re going to wind up with properties that don’t perform as expected, or that the market direction moved against, or ones we just don’t like. As Warren Buffet said, “the first rule of investing is to not lose.” Learn to spot a losing position quickly and get out.

This is not to advocate abandoning an investment plan because of minor setbacks. Every project has them, and that’s where perseverance is required. But a deal that goes sour on several fronts at once is a candidate for the “learning experience” pile. Don’t fall in the trap of being “married” to a position. The support payments will swallow you whole.

The problem may not be the property, but the people. When problems arise in partnerships, especially those that started as friendships, things can get sticky and uncomfortable. Pain may be required, but misery is optional. If your partners are driving you crazy, or if you’re all crazy, exercise a little civility and be willing to call it over.

If a good buy/sell arrangement was not included in your partnership agreement, make your own. One solution: You could write down a number that you will either pay for your partners’ interest or accept for your interest in the assets. That’s the same way my mom made my brother and me divide the last pieces of our favorite pie; one cuts the slices and the other gets to choose his piece. It instantly ends any haggling or jockeying for position.

Close the deal quickly and move on. Life is too short.

3. Over-reaching- Swinging for the bleachers in high-risk, home-run-type deals that require more capital or expertise than you have is a sure recipe for disappointment, frustration, and can end in disaster. Before you start “thinking outside the box” make sure you know how things work inside the box.

It takes hard work and perseverance to achieve success in any field, and real estate is no different. In addition to property-specific plans, it’s a good idea to also have a “big-picture” plan of your investments–where they need to take you, how, and when.

As you increase your knowledge and capacity, the big deals will come, and you’ll know you’re ready when you automatically focus on the pitfalls before the rewards.

4. “Dirt-rich, cash-poor” – This refers to the situation of having more land than cash to cover it and is a common outcome for an investor who accumulates a bunch of properties that have nothing in common but their owner.

If you have multiple properties and are using the gains from some to cover losses in others and losing the battle, it’s time to get off the treadmill, despite the temptation to hang on. Go through your portfolio in detail. Identify improvements that you can make immediately and do them. Dump losers and anything that has needs that can’t be funded in the next year.

Be merciless. Look at it like cutting diseased branches off of a tree: Serious cases may require aggressive pruning to save the core. Then focus your energy and resources on creating maximum value in the remaining properties that fit your big-picture investment goals.

5. Not using local market knowledge – We all read the national media and trade magazines and get a sense of what the “market” is doing. But in reality, all real estate is local. There is no national real estate market.

There isn’t a ticker at the bottom of the screen on CNBC that tells me what my buildings are worth. Their value is determined by local market conditions, for example: rental rates, occupancy levels, competitive space supply, demographic trends, etc.

Our existing investments provide a window on performance and needs of that market that is a competitive edge over other investors. But it is only an edge if it’s used.

By systematically collecting just a few local demographic statistics (job growth, population growth and income) and property performance fundamentals, we can get ahead of the curve. We see trends coming rather than trying to catch the last one; we create our own opportunities and reduce our vulnerability to competitive projects.

About Investment Analytics Group
Established in December 2006, Investment Analytics Group (IAG) provides integrated commercial real estate advisory services to investors. Our core services include asset level due diligence, asset management, financial modeling, feasibility studies and other related advisory services.
For more information visit us at www.iagroupllc.com or contact us at 208.846.8476 or info@iagroupllc.com.

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The ideal time to invest in commercial real estate is 2010 – that’s when commercial property prices will hit bottom, according to a recently published survey of industry experts, including investors, developers, lenders, brokers, and consultants.

The Emerging Trends in Real Estate 2010 study, released last week by PricewaterhouseCoopers LLP (PwC) and the Urban Land Institute (ULI), says commercial real estate (CRE) players predict vacancies to continue to increase and rents to decrease across all property sectors before the market hits bottom next year.

The consensus is that property values will ultimately drop 40 to 50 percent on average from 2007 market peaks, making 2010 and 2011 the opportune time for investors to buy at or near cyclical lows.

The survey data also indicates that investors believe capital will slowly begin to flow back into commercial real estate markets by the end of 2010, led by all-cash investors.

The research firm Real Capital Analytics, Inc. estimates that commercial real estate loans in default, foreclosure, or bankruptcy now total roughly $130 billion. By being selective on offers from both distressed sellers and banks that are clearing out bad loans and real estate owned portfolios, investors will score bargains on premium properties, according to the study.

The CRE property market recovery will most likely begin to gain traction before 2012, and survey participants believe that the markets performing well before the crash should be the top-performers coming out of it, with investors continuing to favor global gateway markets on the East and West Coasts.

According to the survey, Washington, D.C. ranks number one as the “recession-proof” city. Value declines there have been less than other markets as employment is buffered by the federal government.

Long-term confidence holds for New York and Boston despite financial industry downsizing. West Coast gateways – San Francisco, Seattle and Los Angeles – have all suffered ratings declines, but remain among the survey’s top major markets. Texas markets also continue to show strength, according to survey participants.

As prices hit their floor, the PwC and ULI study predicts that lending will be conservative, expensive, and extended only to the most-favored banking relationships. Real estate investment trusts (REITs), private equity funds, and even refashioned mortgage REITs will start to provide loans to battered borrowers but at a steep price, the companies said in their report.

About Investment Analytics Group
Established in December 2006, Investment Analytics Group (IAG) provides integrated commercial real estate advisory services to investors. Our core services include asset level due diligence, asset management, financial modeling, feasibility studies and other related advisory services.
For more information visit us at www.iagroupllc.com or contact us at 208.846.8476 or info@iagroupllc.com.

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A great commentary from National Real Estate Investor about how many investors in their elusive quest for the lowest price, are letting opportunities sail by.

Amid an avalanche of pessimistic commercial real estate forecasting, many investors continue to wait for a market bottom before buying distressed notes, properties and securities. Buyers are often grossly undershooting price targets, while sellers are overshooting. And the result has been the stalemate that — combined with the credit crunch — has gripped the industry for the past 15 months.

Rather than continue their elusive search for a market bottom while letting opportunities go by the wayside, investors should consider shifting their focus and identify viable real estate investment strategies tailored to meet their needs.

Case in point, Prudential Mortgage Capital launched a $1 billion commercial lending program in February, and since then has deployed about half that capital in its account. Prudential and the other active lenders today have little competition, allowing them to dictate underwriting terms and seize the best lending opportunities available. Such dominance was not possible in the previous real estate up cycle, due to an abundance of competing capital.

Prudential recently stated in its third-quarter earnings report that its return on capital from real estate lending activity is in excess of 7%, a rate of return that is quite superior to the safe bet of the 3.5% return on 10-year U.S. Treasury bonds.

In another case, S.K. Hart Properties based in Newport Beach, Calif. recently bought the Bayview Corporate Center office complex, the former headquarters of failed Downey Savings & Loan. S.K. Hart purchased the asset from the FDIC for $53 million in an all-cash deal.

Totaling about 332,000 sq. ft., the two, six-story towers represent the largest FDIC asset sale to date from its portfolio of failed bank assets. Bayview Corporate Center was only 23% occupied when the deal closed.

These transactions represent distinct real estate investment programs with distinct investment objectives. When other prudent investors find their ideal opportunities, the question of price discovery — which is keeping many buyers on the sidelines — will eventually become an irrelevant one.

To be sure, property sales and refinancing activity are still occurring, even though the pace has slowed significantly. The Mortgage Bankers Association reports that commercial and multifamily loan originations fell 12% in the third quarter compared with the second quarter. On a year-over-year basis, the drop in the third quarter was a whopping 54%. But be that as it may, a number of lenders and their loan intermediaries are beginning to announce that more deals are closing, particularly in the small- to mid-cap multifamily and credit-tenant markets.

Even though forecasts for further deterioration in commercial real estate fundamentals continue unabated, many investors are still in search of returns that are simply not realistic in today’s environment. Private equity funds and their participants have grown accustomed to returns in excess of 40%, with anything less than that viewed as disappointing. This group is among the greatest pool of potential distressed asset buyers, but to date it has spent more time on the sidelines than anything else.

Preqin, a London-based alternative asset investment firm, recently reported that fund raising and investment activity at 46 private equity real estate funds was suspended through the first three quarters of 2009. This number is running well ahead of 2008, when a total of 27 funds were put on hold for the entire year. The company expects this trend to continue well into the fourth quarter, and possibly into 2010.

This trend suggests that because high-yield investors are unable to easily meet their lofty investment objectives in today’s market, they are opting to wait for others to discover a market-clearing price before they will jump in and buy.

The problem with that strategy is most other investors share a similar view. They continue to hold out for a commercial real estate Armageddon — one that has yet to materialize.

Investors like Prudential and S.K. Hart Properties that have realistic expectations in place will reap the benefits of either above-average yields or a lease-up program that they can control. These are by far preferred investment objectives to the all-consuming task of chasing the absolute lowest price.

About Investment Analytics Group
Established in December 2006, Investment Analytics Group (IAG) provides integrated commercial real estate advisory services to investors. Our core services include asset level due diligence, asset management, financial modeling, feasibility studies and other related advisory services.
For more information visit us at www.iagroupllc.com or contact us at 208.846.8476 or info@iagroupllc.com.

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When it comes to due diligence, commercial real estate properties are a completely different animal from residential properties in regards to assessing value. That may seem like stating the obvious, but it is easy to overlook the many details that come into play.

For commercial real estate, value is determined in an inverse proportion to the degree of risk inherent to the continuance and stability of the income stream from the property. And of all the commercial property types, perhaps none is more complex in evaluation than a multi-tenant property, either office or retail.

The function of due diligence is to verify, verify, verify.
One of the first steps in your due diligence checklist should be the tenants of your potential investment real estate property.

Comprehensive due diligence services are Investment Analytic Group’s specialty. The IAG team has performed due diligence on commercial real estate valued at more than $1.2 billion including retail, office, industrial, and multi-family properties across the United States. We guide the process, keep clients involved as much as they prefer and, most importantly, communicate with you every step of the way. Due diligence is a way of preventing unnecessary harm to either party involved in a transaction and quality due diligence contributes to superior returns. Whether analyzing office, retail, flex, industrial or multi-family properties, a thorough evaluation in the beginning helps the investor realize projected returns.

Tenants
Review and confirm the terms of all leases, paying particular attention to co-tenancy clauses, which are common in retail properties. These allow retailers to reduce the base rent, eliminate base rent and pay percentage rent based on sales, or terminate a lease when an anchor tenant or another identified tenant exits the property. Other items to take note of include “early outs,” which permit tenants to terminate leases in advance of normal termination dates, downsizing rights that allow tenants to reduce the size of the leased premises, tenant bankruptcies, and claims by a tenant against the landlord.

Require estoppel certificates from each tenant. This item usually is subject to negotiation between the seller and buyer as to the number of estoppel certificates required and, if less than all, from which tenants (anchors, occupants of more than a certain number of square feet). It also will indicate whether the seller is in default.

About Investment Analytics Group
Established in December 2006, Investment Analytics Group (IAG) provides integrated commercial real estate advisory services to investors. Our core services include asset level due diligence, asset management, financial modeling, feasibility studies and other related advisory services.
For more information visit us at www.iagroupllc.com or contact us at 208.846.8476 or info@iagroupllc.com.

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Clients new to the world of commercial investment real estate may be salivating at the thought of a market filled with undervalued properties that can be had for amazing prices. Do them a favor and inject a little reality into their dreams of market domination. Remind them that distressed properties are called distressed for a reason: Although the term may fit the seller’s frame of mind and circumstance, buyers should realize that such properties often have tenancy and deferred maintenance problems. Fully occupied, class A assets rarely come on the market — even if the owner has financial problems. And if they do, well, take a number and join the other buyers who are probably willing to offer the asking price, if not more.

While today’s market offers plenty of opportunities in distressed properties, buyers must conduct in-depth due diligence to determine what a property is worth. Before clients agree to a purchase price they think reflects a property’s distressed condition, offer them this checklist of items to consider along with an appreciation of what can happen once the acquisition has closed.

Commercial real estate should be approached like any other business in that you need create a clear vision, a sound strategy, and demand precise execution to come out on top. Examine any successful commercial real estate investor and to the one you’ll find that they have surrounded themselves with professional advisers whose sound counsel they rely upon to avoid the ever increasing number of mistakes that can be made in this market.

About Investment Analytics Group
Established in December 2006, Investment Analytics Group (IAG) provides integrated commercial real estate advisory services to investors. Our core services include asset level due diligence, asset management, financial modeling, feasibility studies and other related advisory services.
For more information visit us at www.iagroupllc.com or contact us at 208.846.8476 or info@iagroupllc.com.

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Investment Analytics Group (IAG) is committed to registered representatives and financial advisors – and to the established relationship you have with your clients. We believe that mitigating an investment’s downside and seeking the best possible solution through a proactive approach, rather than a reactive approach is the key to a successful outcome. At IAG we can help by offering the following services:

* Lease administration/audits
* Financial modeling and repositioning strategies
* Property operations/asset management
* Accurate budgeting and budget reviews
* Continuous communication and efficient operations
* Disposition services
* Lease, ground lease, rent roll and operating analysis
* Post acquisition value creation and revenue/NOI maximization strategies
* Optimization of capital structure to include debt equity and hybrid financing
* Ownership structure analysis for all types of transactions including REIT, Tenant in Common (TIC), joint venture, and other single purpose entity structures

We see the big picture and we are your partner. At IAG, we can help maximize the overall performance of properties by bringing knowledge and experience in property management, leasing, lease administration, acquisitions, and due diligence, enabling us to develop and implement ownership solutions to achieve the objectives in operating and leasing property.

If you have a distressed real estate investment property or just want us to look at the performance of your property please contact us at your earliest convenience.

About Investment Analytics Group
Established in December 2006, Investment Analytics Group (IAG) provides integrated commercial real estate advisory services to investors. Our core services include asset level due diligence, asset management, financial modeling, feasibility studies and other related advisory services.
For more information visit us at www.iagroupllc.com or contact us at 208.846.8476 or info@iagroupllc.com.

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The goal at Investment Analytics Group (IAG) is to provide the best professional services available for the sophisticated real property buyer. Every day we set out to build trust, nurture relationships, and give our clients a tangible benefit as they seek real property investment. IAG exists largely because our values and skills form a foundation for exceptional team work and results. In what we do every day, our business philosophy rests upon four critical elements:

Vision – We pride ourselves on pioneering creative, customized solutions and product offerings. We will strive to be the very best at what we do, everyday, while maximizing investor returns.

Dedication – Understanding the complex needs of the customer and staying true to the investor’s objectives is paramount. IAG is committed to building client wealth, trust, and long term relationships.

Integrity – Staying true to ourselves and serving our clients’ needs with the utmost in honesty, professionalism, and reliability.

Results – Delivering an unwavering and inspiring solution that yields tangible benefits and lasting value for our clients and investors.

About Investment Analytics Group
Established in December 2006, Investment Analytics Group (IAG) provides integrated commercial real estate advisory services to investors. Our core services include asset level due diligence, asset management, financial modeling, feasibility studies and other related advisory services.
For more information visit us at www.iagroupllc.com or contact us at 208.846.8476 or info@iagroupllc.com.

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The weakness of the U.S. economy has given rise to the largest epidemic of foreclosures in American history. But challenge always gives rise to opportunity, and opportunistic real estate investors are rising to the challenge.

The new opportunity is known as ‘Bulk REO Investing’ or ‘REO Package Investing’ and it’s a huge opportunity. Consider the fundamentals of the Bulk REO business. To understand investing in Bulk REO, you have to understand the foreclosure process.

A home owner who misses one or more mortgage payments is faced with an ever-increasing volume of threatening correspondence from their lender. The formal process of foreclosure begins at the lender’s discretion. From that time through public auction is called ‘preforeclosure’.

To complete the foreclosure process, the property is auction to the public. Ownership of the property is returned to the lender if the property is not sold at auction. Such a property is then classified as an ‘REO’ (Real Estate Owned) by the lender.

Lenders usually try to unload their REO properties at close to retail price by listing their REO’s with a real estate broker. However, REO properties are now frequently sold for far less than their ‘book value’. But the price of receiving such great pricing is the need to purchase multiple REO properties (a ‘package’) rather than individual properties.

There is huge profit potential in these REO packages for qualified real estate investors. One of the best ways to take advantage of Bulk REO Investing opportunities is to partner with a well-regarded source of funding. Some sources of funding for these transactions are: personal funds, hard money lenders, commercial lenders and non-conventional sources such as private investors and hedge funds.

About Investment Analytics Group
Established in December 2006, Investment Analytics Group (IAG) provides integrated commercial real estate advisory services to investors. Our core services include asset level due diligence, asset management, financial modeling, feasibility studies and other related advisory services.
For more information visit us at www.iagroupllc.com or contact us at 208.846.8476 or info@iagroupllc.com.

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Rhonda Garland, a founder and managing principal of Boise-based commercial real estate service and advisory firm Investment Analytics Group (IAG), was awarded the Certified Commercial Investment Member (CCIM) designation by the CCIM Institute, one of the leading commercial real estate associations in the world. The designation was awarded in late August following examinations held in Chicago.

Ms. Garland was among the 199 commercial real estate professionals from across the nation who earned the designation by passing the Institute’s Comprehensive Examination, the final component in the designation process. More than 15,000 commercial real estate professionals from the United States, Canada, Mexico, Asia and Europe have earned the CCIM designation since the program was founded in 1969.

The CCIM designation is awarded to commercial real estate professionals upon successful completion of a graduate-level education curriculum and presentation of a portfolio of qualifying industry experience. The curriculum addresses: financial analysis, market analysis, user decision analysis and investment analysis – the cornerstones of commercial investment real estate. CCIMs are recognized experts in commercial real estate brokerage, leasing, asset management, valuation, and investment analysis.

CCIMs have access to unparalleled level of valuable online tools, including the Site To Do Business, a suite of mapping, demographic and other analytical resources. And, all CCIMs can market properties for sale or lease through CCIMNet, a leading national commercial property exchange.

The CCIM business network encompasses 1,000 markets throughout North America, Asia, Europe and the Caribbean. Of the estimated 125,000 commercial real estate practitioners in North America, more than 9,000 currently hold the CCIM designation. CCIM Designees include professionals who work in brokerage, investment and development, the corporate environment, property management, appraisal and related segments of commercial real estate. An additional 8,000 professionals are pursuing the designation as Institute candidates.

The CCIM Institute is a leading commercial real estate association that confers the Certified Commercial Investment Member (CCIM) designation through an extensive curriculum of 200 classroom hours, in addition to industry experience. An affiliate of the National Association of Realtors®, CCIM Institute is the largest brokerage network in the world. Headquartered in Chicago, CCIM Institute has a growing international membership of 1,000 professionals in more than 30 nations overseas. Visit www.ccim.com or call 312-321-4460.

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