Ch. 6 Complete Ownership Records Flashcards
Why do the Research for Ownership Records?
Research is the first step in the Brokerage Continuum .. It sets you up for success for the rest of your career if done properly
What will the COR information give you?
It will allow us to have credible conversations and ask relevant questions of clients because you will have learned your market in the process of building the database ..
What Property Information should be in your Database?
- Address
- Owner Entity
- Management Company
- Year Built
- Land Size
- Building/Land SF
- # of Units
- Purchase Price
- Purchase Date
- Assessors Parcel #
- Prior Owner
- Prior Owner Purchase Price
- Notes about Property
- Major Tenants
- Loan Amount
- Lender, Bank, etc.
- Refinance or Acquisition Loan
What Investor Information should you have in the COR?
- Name
- Address
- Phone Number
- Google Search INFO
- Reverse Lookup
- Age
- Emails
- Relatives (if appropriate)
What are the Client Types/Ownership Structure?
- Individual Owners (T3)
- Professional Owners (T2)
- Institutions (T1)
- Partnerships (General Partnership, Limited Partnership (private syndicators/Private limited partnerships) or (Public syndicators)
- Merchant Buildiers
- Developers
- Lenders (Real Estate Owned “REO” and Trust Departments)
- Corporations
- Foreign Investors
What are important aspects of Tier 3 owners? (Mom & Pops)
- Real estate is usually their second occupation, they may not be as savvy as tier 2, etc.
- Motivations: Provides a second income, Invest excess cash, Build net worth, Prepare for Retirement, Create income streams for children, and Satisfy a need for cash to support primary business.
- Challenges: Lack of sophistication about ownership, sales, brokering, etc. Requires more hand holding (explanations). Often rely on third party advisors who are not specialists i.e. accountants, lawyers. Lack understanding of the market and may mistrust “agents”. Many people may be making the decision to buy or sell, not just one.
What are important aspects of Understanding Professional Owners/Tier 2?
- Professionals usually use real estate as primary income, purchase, manage, etc. Ownership equity can from from $1 Mill to Multi Millions of dollar companies.
- Owners have a better understanding of the Real Estate market, and are MORE sophisticated than the tier 3 owners.
Professional Owners:
- Motivations: Property is primary source of income. Make profit by taking advantage of knowledge and market cycles. Pyramid cash flow and wealth.
- Challenges: Accustomed to making their own decisions. Associate must have more knowledge and sophistication than owner to establish credibility. Know and have experience with wide range of brokers. Frequently asked to buy and sell. May be a licensed RE broker and may expect to take fees to supplement their income.
- Suggestions: Associate must provide a source of reliable info. Focus must be on the value of our systems, and Associates credibility and value can be strengthened through innovative approaches to negotiations, problem solving, etc.
What to know about Partnerships
General Partnerships: Two or more individuals taking title as general partners or joint tenants or tenants in common. Usually active in the 1-10 million dollar range. Different professional backgrounds and decision making responsibilities.
Limited Partnership/Private Syndicators: One or more GP and up to 35 limited partners. They are generally active in 1-10 Million dollar price range.
Limited Partnerships: Important in the $10 million and over market.
LP Syndicators:
Motivations: Front end acquisition and organization fees. Property management fees. Back end disposition fees. Performance rewards such as cash flow etc.
Challenges: Syndicators desire to share commissions, may generate numerous offers while closing on few. Syndicators are adept at negotiating and selling. May use acquisition specialists who are not the decision makers
What are Merchant Builders?
They build and immediately sell the building
What are developers?
Build usually for businesses or in conjunction with outside investors.
Usually develop strategies to hold for long periods of time.
LLCs
Offer limited liability, as corporations do
Allow the owners the advantage of being taxed as individuals
What are Lenders?
REO and trust departments are clients that range from lenders who want to liquidate REO properties quickly to lenders who will actively manage and position properties to minimize losses.
Lenders Motivations: Liquidate the property at a higher than book value. Will sometimes manage activity and position properties to minimize loss. Manage their portfolio to maximize the financial performance of the lender. Motivated by quarterly and annual deadlines.
Lender Challenges: Frequently receive unsolicited offers from brokers and principals. Often lack knowledge of the details of our industry. Decision making is multi tiered. Require extensive documentation.
What are Institutions?
NEVER CALL, not now at least. Biggest players, they have huge deals, and they are like the Blackrocks, etc.
What is a REIT?
Funded REITS: Have completed their initial public offering (IPO)
Non Funded REITS: Currently forming their IPO, may not succeed in going public.
Basically they pull other peoples money and invest in properties, usually there are a few decision makers in what they do with others money/properties they own.
What are Corporations (Tier 2)
Range from small, to private firms, or larger publicly traded.
Their decisions must always consider the risk and benefit to the shareholders.
