How to Find Investor Partners and private Lenders For Your Real Estate Investing

Homes For Rent - How to Find Investor Partners and private Lenders For Your Real Estate Investing

Hello everybody. Now, I discovered Homes For Rent - How to Find Investor Partners and private Lenders For Your Real Estate Investing. Which is very helpful to me and you. How to Find Investor Partners and private Lenders For Your Real Estate Investing

Whether you have lots of money and great reputation beginning out, or no money and lousy reputation beginning out, either way, if you truly want to make a serious bid at construction a property empire then you cannot allowance the significance of studying how to find investor partners and equally how to find private lenders to help fund your real estate investing. As you go along in your real estate investing career, as long as you pay concentration and get educated about real estate investing, you will find that the skill you possess in spotting value and necessary money-making opportunities in real estate will far, Far, Far surpass your ability to get all the money you need to do all these many deals you come across- Unless...

What I said. It is not the conclusion that the true about Homes For Rent . You read this article for home elevators that need to know is Homes For Rent . Homes For Rent

You learn how to find investor partners and find private lenders and get your money sources in place As You Go Along and Before You Need Them.

How to Find Investor Partners and private Lenders

Creative investing techniques aside, sometimes you need real cold cash to do a deal. And sometimes it can be very frustrating not to have it to hand. For that reason, available financing money tends to be the biggest challenge for many real estate investors, new and experienced both. If you can't get the financing, sometimes there's just no deal.

John Wooden once said "Don't let what you can't do stop you from doing what you Can do". Keep that in mind now as I lay out what you should do, if for example you do have minuscule money or a poor reputation situation. And if you don't then you'll still find more access to money than you might have ever though you needed (yet) when you apply these strategies.

Now, I speak from caress (big time!) when I say that lack of money and/or a negative reputation situation can be one Heck of a hurdle to leap over but with sufficient tenacity and creativity and faith you will do it.

Before you get all disappointed that I'm not saying it's easy, I want you to reconsider a paradigm shift in your thinking. Today, I want you to see that it's not easy but it Is simple. I want you to reconsider that being reputation challenged is not all a negative. I want you to believe that this "negative" situation can have a powerfully sure silver lining, and that's this:

"As long as I Know I'm going to make it happen (a deal, this business, whatever), whatever holds me back (poor reputation and/or no money) is immaterial to accomplishing my goals. In fact, I am Blessed to have this challenge (poor reputation and/or no money) because since I Know I will follow that means I will have successfully defeated this challenge and developed skills and attributes (patience, tenacity, faith, creativity) that will take me far supplementary than man for whom this (credit/money) was not a problem. Nor will I, when I have bested this challenge (poor reputation and/or no money) ever take what I have gained (good credit, wealth, financial independence) for granted and lose it-- as some who never face challenges do."

Believe that and you cannot fail.

Now, as for the steps to help you right now getting your money sources in place to do even more real estate deals, let's talk about looking investor partners and private lenders for real estate investing.

Here are a few strategies many people can do immediately, and others as soon as is feasible with their time and money availability. If you do these concurrently, and Consistently, in less than a few years you can have access to more money to do deals than you might imagine:

1) Go to the court and look up mortgage documents. Go normally because you're researching. Creating the database that will get you paid. Ask around, these people (civil servants) can be extremely helpful if you are humble in your requests. Just don't expect to discuss real estate investing with them, they likely don't care. What are you looking for? You are looking for the mortgage lienholder. Take a tablet of paper with you and write down any (including mailing address) individual (i.e. Non- Wachovia, First Century Financial, Bank of America bank/finance institutions) names you find. These are one of two types of people, people who took back a mortgage on the sale of their own home (owner financing)- either it was their idea or not. You don't normally want these (not for gaining investors who will give you money to do deals anyway).

The second kind is a private lender, man that loans their money out secured by a property. These are the ones you want. How to find the good ones? Call them and introduce yourself, explicate that you are a real estate investor advent over a wealth of high-Roi collect low-Ltv real estate deals and in search of short-term mortgage financing from private individuals to get the deals done.

One of three things will happen, two of which will make you money potentially.

a. They know exactly what you're talking about because they hold a Lot of private mortgage notes-- not just the one you found that prompted you to call them-- and love the high safe returns they get. These types will ask what interest rate you're contribution or other savvy questions. These are the private lenders you want. Find out as much info as you can about them and add them to your database, promising to apprise them first when you have a deal in the works. Don't worry if you don't have answers to all their questions. At this point having their caress info and them knowing who you are, being "pre-pitched" is all we're concerned about.

b. They don't have any idea what you're talking about or think you're crazy or aren't curious or have no money to loan/invest.

c. They know what you're talking about because they have a seller-held mortgage on a house they sold and in fact Hate that they are receiving payments over time-- instead of the lump sump cash they wanted (but couldn't/didn't receive when they sold). Note: Two questions here could make you a nice chunk of cash: "Why?" and then "Oh, I see, well Mr. Jones that's positively my specialty. I can get you all the cash advent to you within a week, and you could __(insert their reply to Why? here)__ right away without waiting all those years and the headaches of collecting payments. Of course, because you're getting cash in your hand, it would be a discounted estimate from the face value you placed for when you took the mortgage. If I could get that set up for you with just a few questions and you'd have the cash within the week-- would that be something you'd now be curious in?"

Once you've done this it's a uncomplicated matter to connect them with a lender you contacted in #1 or find a buyer through an online private lender clearinghouse like http://www.cash4notes.com or calling man more experienced or getting a private mortgage broker involved- though they'll take much of the profit. Any of these is an easy way to cut yourself in the spread for a few thousand dollars or more, with just a minuscule paperwork and you're doing nothing unethical. If you do this be sure to consult a competent real estate attorney, however, because you're dealing with securities and complicated paperwork).

But again, the point isn't to find cash flow loans, it's to find lender investors for your own deals. Just think of #3 above as a lucrative sideline that costs you minuscule but the time it takes to ask 2 questions.

2) Place ads "Money wanted. Up to 16%. Short term and long term. Minimum speculation (insert here whatever 65% of the median value of a home in your area is) private investors needed. Secure, low-Ltv investments collateralized against income-producing properties. Free consultation. Call now.

Local people are best when it comes to developing investor partners for real estate investing. These people are going to want to meet you and see what you're about. Remember, professionals don't have to have all the answers. You just have to know you can get them! So use the local newspaper. Use bandit signs (these are the signs you see on the side of the road- just check your local county ordinances and attorney about possible penalties). Call the guys at 866-Sign-Guy and even if they're not available in your part of the country, they'll happily refer you to man who does it where you live I bet. Also, put the above ad on the back of your firm cards.

A no cost option is placing the above on http://www.craigslist.org, the world's largest online free classified ads exchange, and other classifieds online.

3) Attend a private money bootcamp seminar, even if you have to borrow or put it on a reputation card or convince a better-off friend who is like-minded to go halves on the cost for two to attend. There are some good options for this But it's pricey. Go to the training section of the His Real Estate website to learn more.

4) Go to your local Reias (real estate investor associations). Don't ask these people for guidance until you're experienced sufficient not to fall for the blind leading the blind phenomenon that prevails at many of these, or have seen proof of how prosperous they are and how many deals they've done. Get firm cards, hand out yours. Ask the organizer to address you from the front of the room and introduce yourself. Let people know you're looking for money investors, and that you are in search of investor partners for real estate investing.

5) heighten your own credit.

Here are some simple, easy, and mostly free ideas that won't work for everyone, but will work for many:

-Hire a reputation fix firm (be right there are some scams out there)

-Celebrate your successes and hold yourself accountable. Sign up for reputation monitoring at 14.95/mo through Truecredit.com or another.

-Get man in your family or a close friend with Great reputation to add you as an "authorized user" or good a "secondary user" to their high-limit, long-history reputation cards. Tell them it will not sway their reputation At All, and they can cut up the card in your name that is sent to them. You'll be surprised at how many points this can bump you up.

- Decrease your Dti and debt-to-credit limit ratios one of two ways. Pay down revolving (credit card) balances to Below 50% of the limits. Or, and some people never even think of this one...ask that your reputation Limits be increased so that the equilibrium owed is less than 50% of the new higher limit

- Remember, sometimes the best investor partner you can have is your own credit's ability to channel Opm

6) Call everybody who advertises "We Buy Houses" in your area. Many of these investors also lend on property as private lenders. It's a great way to find private lenders for real estate investing. With very minuscule turn in your program (just being Aware and writing it down when you see these walking or driving- pull over first!) I warrant you can create a database of Hundreds of these in your locality-- unless its extremely rural anyway-just by paying concentration to billboards and bandit signs on the side of the road. This is an example of the phenomenon that when you want to make money in real estate without your own money it's What You Know + Who You Know = What you Get.

7) comprehend that if you have the What You Know And the Who You Know handled, What You Have right now is Not Important. Do you follow me?

I hope you get new knowledge about Homes For Rent . Where you possibly can put to use within your everyday life. And above all, your reaction is passed about Homes For Rent .

Due Diligence Checklists - For industrial Real Estate Transactions

Homes For Rent - Due Diligence Checklists - For industrial Real Estate Transactions

Hello everybody. Yesterday, I learned all about Homes For Rent - Due Diligence Checklists - For industrial Real Estate Transactions. Which may be very helpful for me so you. Due Diligence Checklists - For industrial Real Estate Transactions

Planning to buy or finance market or market Real Estate? Shopping Center? Office Building? Restaurant/Banquet property? Parking Lot? Storefront? Gas Station? Manufacturing facility? Warehouse? Logistics Terminal? healing Building? Nursing Home? Hotel/Motel? Pharmacy? Bank facility? Sports and Entertainment Arena? Other?

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A Key to investing in market real estate is performing an adequate Due Diligence Investigation to assure you know all material facts to make a wise venture decision and to imagine your improbable venture yield.

The following checklists are designed to help you guide a focused and meaningful Due Diligence Investigation.

Basic Due Diligence Concepts:

Commercial Real Estate transactions are Not similar to large home purchases.

Caveat Emptor: Let the Buyer beware.

Consumer safety laws applicable to home purchases seldom apply to market real estate transactions. The rule that a Buyer must examine, judge, and test for himself, applies to the buy of market real estate.

Due Diligence: "Such a part of prudence, activity, or assiduity, as is proper to be improbable from, and generally exercised by, a reasonable and thrifty [person] under the particular circumstances; not measured by any absolute standard, but depending upon the relative facts of the special case." Black's Law Dictionary; West Publishing Company.

Contractual representations and warranties are Not a substitute for Due Diligence.

Breach of representations and warranties = Litigation, time and money.

What Diligence Is Due?

The scope, intensity and focus of any due diligence investigation of market or market real estate depends upon the objectives of the party for whom the investigation is conducted. These objectives may vary depending upon either the investigation is conducted for the benefit of (i) a Strategic Buyer (or long-term lessee); (ii) a Financial Buyer; (iii) a Developer; or (iv) a Lender.

If you are a Seller, understand that to close the transaction your Buyer (and its Lender) must address all issues material to its objective - some of which require information only you, as Owner, can adequately provide.

General Objectives:

(i) A "Strategic Buyer" (or long-term lessee) is acquiring the asset for its own use and must verify that the asset is convenient for that intended use.

(ii) A "Financial Buyer" is acquiring the asset for the improbable return on venture generated by the property's earnings stream, and must decide the amount, velocity and endurance of the earnings stream. A sophisticated Financial Buyer will likely imagine its yield based upon discounted cash-flows rather than the must less precise capitalization rate ("cap rate"), and will need adequate financial information to do so.

(iii) A "Developer" is seeking to add value by changing the character or use of the asset - regularly with a short-term to intermediate-term exit strategy to arrange of the property; although, a Developer might plan to hold the asset long term as Financial Buyer after improvement or redevelopment. The Developer must focus on either the planned turn is character or use can be accomplished in a cost-effective manner. A developer conducting due diligence will focus on issues interesting store demand, access, use and finances.

(iv) A "Lender" is seeking to develop two basic lending criteria:

1. "Ability to Repay" - The quality of the asset to originate adequate earnings to repay the loan on a timely basis; and

2. "Sufficiency of Collateral" - The objective disposal value of the collateral in the event of a loan default, to assure adequate funds to repay the loan, carrying costs and costs of variety in the event forced variety becomes necessary.

The whole of diligent inquiry due to be expended (i.e. "Due Diligence") to study any particular market or market real estate task is the whole of inquiry required to write back each of the following questions to the extent relevant to the objectives of the party conducting the investigation:

I. The Property:

1. Exactly what asset does Purchaser believe it is acquiring?

(a) Land?

(b) Building?

(d) Other Improvements?

(e) Other Rights?

(f) The whole fee title interest along with all air possession and subterranean rights?

(g) All improvement rights?

2. What is Purchaser's planned use of the Property?

3. Does the bodily health of the asset permit use as planned?

(a) Commercially adequate access to communal streets and ways?

(b) adequate parking?

(d) Environmental contamination?

(i) Innocent Purchaser defense vs. Exemption from liability

(ii) All standard Inquiry

4. Is there any legal restriction to Purchaser's use of the asset as planned?

(a) Zoning?

(b) hidden land use controls?

(d) Availability of licenses?

(i) Liquor license?

(ii) Entertainment license?

(iii) Outdoor dining license?

(iv) Drive straight through windows permitted?

(e) Other impediments?

5. How much does Purchaser expect to pay for the property?

6. Is there any health on or within the asset that is likely to growth Purchaser's sufficient cost to derive or use the Property?

(a) asset owner's assessments?

(b) Real estate tax in line with value?

(d) Required user fees for principal amenities?

(i) Drainage?

(ii) Access?

(iii) Parking?

(iv) Other?

7. Any encroachments onto the Property, or from the asset onto other lands?

8. Are there any encumbrances on the asset that will not be cleared at Closing?

(a) Easements?

(b) Covenants Running with the Land?

(d) Leases?

9. Leases?

(a) safety Deposits?

(b) Options to expand Term?

(d) possession of First Refusal?

(e) possession of First Offer?

(f) Maintenance Obligations?

(g) Duty on Landlord to supply utilities?

(h) Real estate tax or Cam escrows?

(i) Delinquent rent?

(j) Pre-Paid rent?

(k) Tenant mix/use controls?

(l) Tenant exclusives?

(m) Tenant parking requirements?

(n) automated subordination of Lease to time to come mortgages?

(o) Other material Lease terms?

10. New Construction?

(a) Availability of building permits?

(b) Utilities?

(i) Phase 2 sufficient March 2003 - Permit required if earth is disturbed on one acre or more of land.

(ii) If applicable, Storm Water Pollution prevention Plan (Swppp) is required.

Ii. The Seller:

1. Who is the Seller?

(a) Individual?

(b) Trust?

(d) Corporation?

(e) exiguous Liability Company?

(f) Other legally existing entity?

2. If other than natural person, does seeder validly exist and is seeder in good standing?

3. Does the seeder own the Property?

4. Does seeder have authority to convey the Property?

(a) Board of Director Approvals?

(b) Shareholder or Member approval?

(d) If foreign individual or entity, are any special requirements applicable?

(i) Qualification to do firm in jurisdiction of Property?

(ii) Federal Tax Withholding?

(iii) Us Patriot Act compliance?

5. Who has authority to bind Seller?

6. Are sale proceeds adequate to pay off all liens?

Iii. The Purchaser:

1. Who is the Purchaser?

2. What is the Purchaser/Grantee's exact legal name?

3. If Purchaser/Grantee is an entity, has it been validly created and is it in good standing?

(a) Articles or Incorporation - Articles of Organization

(b) Certificate of Good Standing

4. Is Purchaser/Grantee authorized to own and control the asset and, if applicable, finance acquisition of the Property?

(a) Board of Director Approvals?

(b) Shareholder or Member approval?

(i) Qualification to do firm in jurisdiction of the Property?

(ii) Us Patriot Act compliance?

(iii) Bank Secrecy Act/Anti-Money Laundering compliance?

5. Who is authorized to bind the Purchaser/Grantee?

Iv. Purchaser Financing:

A. firm Terms Of The Loan:

What loan terms have the Purchaser, as Borrower, and its Lender agreed to?

(a) What is the whole of the loan?

(b) What is the interest rate?

(d) What is the collateral?

(i) market real estate only?

(ii) Real estate and personal asset together?

(e) First lien? A junior lien?

(f) Is it a particular expand loan?

(g) A many expand loan?

(h) A building loan?

(i) If it is a many expand loan, can the principal be re-borrowed once repaid prior to maturity of the loan; making it, in effect, a revolving line of credit?

(j) Are there sustain requirements?

(i) Interest reserves?

(ii) heal reserves?

(iii) Real estate tax reserves?

(iv) insurance reserves?

(v) Environmental remediation reserves?

(vi) Other reserves?

(k) Are there requirements for Borrower to open firm operating accounts with the Lender? If so, is the Borrower obligated to claim minimum compensating balances?

(l) Is the Borrower required to pledge firm accounts as supplementary collateral?

(m) Are there early refund fees or yield maintenance requirements (each sometimes referred to as "pre-payment penalties")?

(n) Are there refund blackout periods during which Borrower is not permitted to repay the loan?

(o) Is there a Loan Commitment fee or "good faith deposit" due upon Borrower's acceptance of the Loan Commitment?

(p) Is there a loan funding fee or loan brokerage fee or other loan fee due Lender or a loan broker at closing?

(q) What are the Borrower's price refund obligations to Lender? When are they due? What is the Borrower's enforcement to pay Lender's expenses if the loan does not close?

B. Documenting The market Real Estate Loan

Does Purchaser have all information principal to comply with the Lender's loan closing requirements?

Not all loan documentation requirements may be known at the outset of a transaction, although most market real estate loan documentation requirements are fairly typical. Some required information can be obtained only from the Seller. Output of that information to Purchaser for delivery to its lender must be required in the buy contract.

As guidance to what a market real estate lender may require, the following sets forth a typical closing Checklist for a loan secured by market real estate.

Commercial Real Estate Loan closing Checklist

1. Promissory Note

2. Personal Guaranties (which may be full, partial, secured, unsecured, payment guaranties, variety guaranties or a variety of other types of guarantees as may be required by Lender).

3. Loan business agreement (often incorporated into the Promissory Note and/or Mortgage in lieu of being a separate document)

4. Mortgage [sometimes vast to be a Mortgage, safety business agreement and Fixture Filing]

5. Assignment of Rents and Leases

6. safety Agreement

7. Financing Statement (sometimes referred to as a "Ucc-1", or "Initial Filing")

8. Evidence of Borrower's Existence In Good Standing; including

(a) Certified copy of organizational documents of borrowing entity (including Articles of Incorporation, if Borrower is a corporation; Articles of assosication and written Operating Agreement, if Borrower is a exiguous liability company; Certified copy of trust business agreement with all amendments, if Borrower is a land trust or other trust; etc.)

(b) Certificate of Good Standing (if a corporation or Llc) or Certificate of Existence (if a exiguous partnership) or Certificate of Qualification to Transact firm (if Borrower is an entity doing firm in a State other than its State of formation)

9. Evidence of Borrower's Authority to Borrow; including

(a) a Borrower's Certificate;

(b) Certified Resolutions

10. Satisfactory Commitment for Title insurance (which will typically require, for determination by the Lender, copies of all documents of article appearing on program B of the title commitment which are to remain after closing), with required market title insurance endorsements, often including:

(a) Affirmative Creditors possession Endorsement (extending coverage over policy exclusion 7 and policy exclusions 3(a) and 3(d) as they recite to creditor's possession matters)

(b) Alta 3.1 Zoning Endorsement modified to consist of parking

(d) Location Endorsement (street address)

(e) access Endorsement (vehicular access to communal streets and ways)

(f) Contiguity Endorsement (the insured land comprises a particular parcel with no gaps or gores)

(g) Pin Endorsement (insuring that the identified real estate tax permanent index numbers are the only applicable Pin numbers affecting the collateral and that they recite solely to the real asset comprising the collateral)

(h) Usury Endorsement (insuring that the loan does not violate any prohibitions against excessive interest charges)

(i) other title insurance endorsements applicable to protect the intended use and value of the collateral, as may be carefully upon recite of the Commitment for Title insurance and study or arising from the existence of special issues pertaining to the transaction or the Borrower.

11. Current Alta study (3 sets), [typically ready in accordance with 2005 Minimum standard information for Alta/Acsm Land Title Surveys, certified to the lender, Buyer and the title insurer, along with items 1 straight through 4, 6, 7(a), 7(b)(1), 8 straight through 11(a) and 14 from the Surveyor's "Optional study Responsibilities and Specifications" referred to as "Table A"].

12. Current Rent Roll

13. Certified copy of all Leases (3 sets)

14. Lessee Estoppel Certificates

15. Lessee Subordination, Non-Disturbance and Attornment Agreements [sometimes referred to plainly as "Sndas"].

16. Ucc, Judgment, Pending Litigation, Bankruptcy and Tax Lien crusade Report

17. Assessment (must comply with Title Xi of Firrea (Financial Institutions Reform, salvage and enforcement Act of 1989, as amended)

18. Environmental Site Assessment article (sometimes referred to as Environmental Phase I and/or Phase 2 Audit Reports)

19. Environmental Indemnity business agreement (signed by Borrower and guarantors)

20. Site Improvements Inspection Report

21. Evidence of Hazard insurance naming Lender as the Mortgagee/Lender Loss Payee; and Liability insurance naming Lender as an "additional insured" (sometimes listed as plainly "Acord 27 and Acord 25, respectively)

22. Legal opinion of Borrower's Attorney

23. Credit Underwriting documents, such as signed tax returns, asset operating statements, etc. As may be specified by Lender

24. Yielding business agreement (sometimes also called an Errors and Omissions Agreement), whereby the Borrower agrees to correct, after closing, errors or omissions in loan documentation.

It is beneficial to become customary with the Lender's loan documentation requirements as early in the transaction as practical. The requirements will likely be set forth with some information in the lender's Loan Commitment - which is typically much more detailed than most loan commitments issued in residential transactions.

Conducting the Due Diligence Investigation in a market real estate transaction can be time interesting and costly in all events.

If the loan requirements cannot be satisfied, it is good to make that estimation during the contractual "due diligence period" - which typically provides for a so-called "free out" - rather than at a later date when the earnest money may be at risk of forfeiture or when other liability for failure to close may attach.

Conclusion

Conducting an sufficient due diligence investigation in a market real estate transaction to study all material facts and conditions affecting the asset and the transaction is of principal importance.

Unlike owner busy residential real estate, when a house can nearly all the time be busy as the purchaser's home, market real estate acquired for firm use or for venture is impacted by numerous factors that may influence its use and value.

The existence of these factors and their influence on a Purchaser's quality to use the asset for its intended use and on the Purchaser's projected venture yield can only be discovered straight through diligent investigation and concentration to detail.

The circumstances of each transaction will decide what degree of diligence is required. The level of diligence required under the circumstances is the diligence that is due.

Exercise Due Diligence.

I hope you have new knowledge about Homes For Rent . Where you possibly can offer used in your daily life. And most of all, your reaction is passed about Homes For Rent .

How to Find Investor Partners and underground Lenders For Your Real Estate Investing

Homes For Rent - How to Find Investor Partners and underground Lenders For Your Real Estate Investing

Hello everybody. Now, I learned about Homes For Rent - How to Find Investor Partners and underground Lenders For Your Real Estate Investing. Which may be very helpful if you ask me and also you. How to Find Investor Partners and underground Lenders For Your Real Estate Investing

Whether you have lots of money and great prestige beginning out, or no money and lousy prestige beginning out, either way, if you truly want to make a serious bid at construction a property empire then you cannot discount the point of studying how to find investor partners and equally how to find private lenders to help fund your real estate investing. As you go along in your real estate investing career, as long as you pay attention and get educated about real estate investing, you will find that the skill you possess in spotting value and essential money-making opportunities in real estate will far, Far, Far surpass your quality to get all the money you need to do all these many deals you come across- Unless...

What I said. It is not the actual final outcome that the actual about Homes For Rent . You read this article for info on a person want to know is Homes For Rent . Homes For Rent

You learn how to find investor partners and find private lenders and get your money sources in place As You Go Along and Before You Need Them.

How to Find Investor Partners and private Lenders

John Wooden once said "Don't let what you can't do stop you from doing what you Can do". Keep that in mind now as I lay out what you should do, if for example you do have minute money or a poor prestige situation. And if you don't then you'll still find more way to money than you might have ever though you needed (yet) when you apply these strategies.

Now, I speak from feel (big time!) when I say that lack of money and/or a negative prestige situation can be one Heck of a hurdle to leap over but with sufficient tenacity and creativity and faith you will do it.

Before you get all disappointed that I'm not saying it's easy, I want you to think a paradigm shift in your thinking. Today, I want you to see that it's not easy but it Is simple. I want you to think that being prestige challenged is not all a negative. I want you to believe that this "negative" situation can have a powerfully confident silver lining, and that's this:

"As long as I Know I'm going to make it happen (a deal, this business, whatever), anyone holds me back (poor prestige and/or no money) is immaterial to accomplishing my goals. In fact, I am Blessed to have this challenge (poor prestige and/or no money) because since I Know I will ensue that means I will have successfully defeated this challenge and developed skills and attributes (patience, tenacity, faith, creativity) that will take me far further than man for whom this (credit/money) was not a problem. Nor will I, when I have bested this challenge (poor prestige and/or no money) ever take what I have gained (good credit, wealth, financial independence) for granted and lose it-- as some who never face challenges do."

Believe that and you cannot fail.

Here are a few strategies many population can do immediately, and others as soon as is feasible with their time and money availability. If you do these concurrently, and Consistently, in less than a few years you can have way to more money to do deals than you might imagine:

1) Go to the courthouse and look up mortgage documents. Go commonly because you're researching. Creating the database that will get you paid. Ask around, these population (civil servants) can be very helpful if you are humble in your requests. Just don't expect to discuss real estate investing with them, they likely don't care. What are you looking for? You are looking for the mortgage lienholder. Take a tablet of paper with you and write down any (including mailing address) private (i.e. Non- Wachovia, First Century Financial, Bank of America bank/finance institutions) names you find. These are one of two types of people, population who took back a mortgage on the sale of their own home (owner financing)- either it was their idea or not. You don't commonly want these (not for gaining investors who will give you money to do deals anyway).

The second kind is a private lender, man that loans their money out secured by a property. These are the ones you want. How to find the good ones? Call them and introduce yourself, by comparison that you are a real estate investor arrival across a wealth of high-Roi obtain low-Ltv real estate deals and in search of short-term mortgage financing from private individuals to get the deals done.

One of three things will happen, two of which will make you money potentially.

a. They know exactly what you're talking about because they hold a Lot of private mortgage notes-- not just the one you found that prompted you to call them-- and love the high safe returns they get. These types will ask what interest rate you're contribution or other savvy questions. These are the private lenders you want. Find out as much info as you can about them and add them to your database, promising to forewarn them first when you have a deal in the works. Don't worry if you don't have answers to all their questions. At this point having their feel info and them knowing who you are, being "pre-pitched" is all we're involved about.

b. They don't have any idea what you're talking about or think you're crazy or aren't concerned or have no money to loan/invest.

c. They know what you're talking about because they have a seller-held mortgage on a house they sold and in fact Hate that they are receiving payments over time-- instead of the lump sump cash they wanted (but couldn't/didn't receive when they sold). Note: Two questions here could make you a nice chunk of cash: "Why?" and then "Oh, I see, well Mr. Jones that's genuinely my specialty. I can get you all the cash arrival to you within a week, and you could __(insert their riposte to Why? here)__ right away without waiting all those years and the headaches of collecting payments. Of course, because you're getting cash in your hand, it would be a discounted amount from the face value you settled for when you took the mortgage. If I could get that set up for you with just a few questions and you'd have the cash within the week-- would that be something you'd now be concerned in?"

Once you've done this it's a uncomplicated matter to join together them with a lender you contacted in #1 or find a buyer through an online private lender clearinghouse like http://www.cash4notes.com or calling man more experienced or getting a private mortgage broker involved- though they'll take much of the profit. Any of these is an easy way to cut yourself in the spread for a few thousand dollars or more, with just a minute paperwork and you're doing nothing unethical. If you do this be sure to consult a competent real estate attorney, however, because you're dealing with securities and complicated paperwork).

But again, the point isn't to find cash flow loans, it's to find lender investors for your own deals. Just think of #3 above as a lucrative sideline that costs you minute but the time it takes to ask 2 questions.

2) Place ads "Money wanted. Up to 16%. Short term and long term. Minimum investment (insert here anyone 65% of the midpoint value of a home in your area is) private investors needed. Secure, low-Ltv investments collateralized against income-producing properties. Free consultation. Call now.

Local population are best when it comes to developing investor partners for real estate investing. These population are going to want to meet you and see what you're about. Remember, professionals don't have to have all the answers. You just have to know you can get them! So use the local newspaper. Use bandit signs (these are the signs you see on the side of the road- just check your local county ordinances and attorney about possible penalties). Call the guys at 866-Sign-Guy and even if they're not available in your part of the country, they'll happily refer you to man who does it where you live I bet. Also, put the above ad on the back of your company cards.

A no cost option is placing the above on http://www.craigslist.org, the world's largest online free classified ads exchange, and other classifieds online.

3) Attend a private money bootcamp seminar, even if you have to borrow or put it on a prestige card or convince a better-off friend who is like-minded to go halves on the cost for two to attend. There are some good options for this But it's pricey. Go to the training section of the His Real Estate website to learn more.

4) Go to your local Reias (real estate investor associations). Don't ask these population for advice until you're experienced sufficient not to fall for the blind leading the blind phenomenon that prevails at many of these, or have seen proof of how prosperous they are and how many deals they've done. Get company cards, hand out yours. Ask the organizer to address you from the front of the room and introduce yourself. Let population know you're looking for money investors, and that you are in search of investor partners for real estate investing.

5) heighten your own credit.

Here are some simple, easy, and mostly free ideas that won't work for everyone, but will work for many:

-Hire a prestige fix company (be faithful there are some scams out there)

-Celebrate your successes and hold yourself accountable. Sign up for prestige monitoring at 14.95/mo through Truecredit.com or another.

-Get man in your family or a close friend with Great prestige to add you as an "authorized user" or great a "secondary user" to their high-limit, long-history prestige cards. Tell them it will not work on their prestige At All, and they can cut up the card in your name that is sent to them. You'll be surprised at how many points this can bump you up.

- Decrease your Dti and debt-to-credit limit ratios one of two ways. Pay down revolving (credit card) balances to Below 50% of the limits. Or, and some population never even think of this one...ask that your prestige Limits be increased so that the balance owed is less than 50% of the new higher limit

- Remember, sometimes the best investor partner you can have is your own credit's quality to channel Opm

6) Call everyone who advertises "We Buy Houses" in your area. Many of these investors also lend on property as private lenders. It's a great way to find private lenders for real estate investing. With very minute convert in your schedule (just being Aware and writing it down when you see these walking or driving- pull over first!) I certify you can generate a database of Hundreds of these in your locality-- unless its very rural anyway-just by paying attention to billboards and bandit signs on the side of the road. This is an example of the phenomenon that when you want to make money in real estate without your own money it's What You Know + Who You Know = What you Get.

7) realize that if you have the What You Know And the Who You Know handled, What You Have right now is Not Important. Do you ensue me?

I hope you have new knowledge about Homes For Rent . Where you'll be able to put to used in your day-to-day life. And most of all, your reaction is passed about Homes For Rent .

No prestige Check Apartments - Tips On How To Rent An Apartment When Your prestige Is Not The Best

Homes For Rent - No prestige Check Apartments - Tips On How To Rent An Apartment When Your prestige Is Not The Best

Hello everybody. Yesterday, I discovered Homes For Rent - No prestige Check Apartments - Tips On How To Rent An Apartment When Your prestige Is Not The Best. Which is very helpful in my opinion so you. No prestige Check Apartments - Tips On How To Rent An Apartment When Your prestige Is Not The Best

No credit check apartments seem like a dream to some citizen who have spent days on end searching for a place to rent, only to be turned down once the landlord checks out their credit rating. It's easy to get discouraged when looking for an apartment when this keeps happening to you, but take heart. There are ways to rent an apartment without having your credit be the only determining factor in the landlord or owner's decision.

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There Is A Way

When you even think you might be interested in moving, get a copy of your credit article so you can see exactly what you are up against. If you spot any errors, take the steps needed to have them erased from your file, if possible. Once you have cleaned up your credit article as best you can, it is a good idea to put in order an open letter explaining the circumstances that caused you to have poor credit. This can be given to any of your potential landlords when you began to seriously hunt for a new place to live.

Landlords and leasing agents are people, too. You will assuredly be able to find several who can understand how you might have had a difficult duration in life which negatively affected your credit. Most of them will be impressed with you because you took the time to try to patch up your credit and produce a plan of operation before looking for an apartment. Your letter of explanation will be well received, too.

Basically, a landlord or asset owner is interested in either or not you are going to be able to pay the rent each month. They would also prefer that you did not own a 150 pound dog and throw loud parties every weekend, but let's face it... They are in the rental enterprise for the money they can make. It's a good idea to have ready any sort of proof of your revenue you can come up with, as evidence that you will have no issue paying the rent on time.

You can also get a letter of suggestion from your gift landlord stating that your rent was always paid on time and in full each month to added plead your case. It wouldn't hurt if your landlord or asset manager also mentioned that you took good care of his asset while you were renting from him.

If all else fails, you can normally make points with the landlord if you offer to pay a few month's rent in advance. Also, make sure you are dressed appropriately when you go to look at the apartment. If you look neat and sincere, chances are you will walk out with the lease to your new apartment in hand. There assuredly is such a thing as no credit check apartments, and one can be yours if you take the time to plan your advent so that you appear in a favorable light.

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Real Estate Math - Do You Know These straightforward Formulas?

Homes For Rent - Real Estate Math - Do You Know These straightforward Formulas?

Hello everybody. Yesterday, I learned all about Homes For Rent - Real Estate Math - Do You Know These straightforward Formulas?. Which could be very helpful to me so you. Real Estate Math - Do You Know These straightforward Formulas?

How much real estate math do you need to know if you are investing in real estate? There are computers and calculators for calculating interest rates or amortizing loans. What you need to know is a few simple formulas for determining if a property is a good investment or not.

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The Real Estate Math You Don't Need

The gross rent multiplier is one formula you don't need. I bring it up because habitancy are sometimes still using it, and there are good ways to estimation value. A gross rent multiplier is a crude way to put a value on a property. You settle that properties are worth 10 times yearly rent or less, for example, and simply multiply the gross yearly rent a construction collects by ten to get your value.

There are confident problems with this formula. You need to constantly convert it to reflect interest rates, because a property might be profitable at 12 times rent when interest rates are low, but a money loser at eight times rent if the financing is expensive. Also, there are just plain different expenses for different properties, especially when some include utilities in the rent, for example. Gross rent doesn't say much about the factor that makes a property valuable: the net income.

Real Estate Math You Need

Rental properties are bought for the revenue they produce, so this is what your real estate valuation should be based on. That is why your real estate math study needs to start with the how to use a capitalization rate, or "cap rate" to settle value. A cap rate is the rate of return startling by investors in a given area, or the rate of return on a property at a given price.

An example might make this clear. Take the gross revenue of a property and subtract all expenses, but not the loan payments. If the gross revenue is ,000 per year, and the expenses are ,000, you have net revenue before debt-service of ,000. Now, to arrive at an estimation of value, you simply apply the capitalization rate to this figure.

If the normal capitalization rate is .10 (ask a real estate professional what is normal in your area), meaning investors expect a 10% return on the value of their investment, you would divide the net revenue of ,000 by .10. You get 0,000 - the estimated value of the building. If the tasteless rate is .08, meaning investors in the area expect only an 8% return, the value would be 0,000.

Simple Real Estate Math

Estimated value equals net revenue before debt-service divided by cap rate - this precisely is simple real estate math, but the tough part is getting spoton revenue figures. Is the distributor is showing you All the normal expenses, and not exaggerating income? If he stopped repairing things for a year, and is showing "projected" rents, instead of actual rents collected, the revenue figure could be ,000 too high. That would mean you would estimation the value at 7,000 more (.08 cap rate).

Besides verifying the figures, smart investors sometimes separate out revenue from vending machines and laundry machines. Suppose these sources furnish ,000 of the income. That would add ,000 to the appraised value (.08 cap rate). Instead, you can do the estimation without this revenue included, then add back the transfer cost of the machines (probably much less than ,000).

No real estate formula is perfect, and all are only as good as the figures you plug into them. Used carefully, though, real estate estimation using capitalization rates is the most spoton formula for estimating the value of revenue properties. For putting a value on a singular family home, you need other approach. Yes this means more real estate math to learn, but we'll save that for other time.

I hope you will get new knowledge about Homes For Rent . Where you may offer used in your day-to-day life. And just remember, your reaction is passed about Homes For Rent .

Derelict Houses For Sale

Homes For Rent - Derelict Houses For Sale

Hello everybody. Today, I learned all about Homes For Rent - Derelict Houses For Sale. Which may be very helpful to me therefore you. Derelict Houses For Sale

There are ordinarily a estimate of derelict houses for sale at any one time. Though they may not seem like the best choice in terms of investing, they can often make the buyer a great profit once they are ready to resell. These kinds of homes are great for any individuals seeing for a cheap home - with a bit of work they can soon be turned into a comfortable place to live.

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A great way to find derelict homes is to drive nearby and see what is ready in your area. Some derelict homes will be in a worse state of repair than others, but you do have the choice of request for a surveyors article if you wish to get more details on the state of the property. You might even find that population from the area are willing to give you information, as improving derelict homes is a great way of improving the neighborhood as a whole.

Your local real estate agencies should also have an idea of what's available, and can give you any relevant details as well as show you nearby if necessary. There might not be any derelict houses ready at the time of the cause, so you can select to keep updated with the newest properties that are added to their list.

Also the internet is a great place to find out details of derelict homes for sale. It might take a minute effort, but keep researching and you will at last come over a home that suits you. When you do make sure you know how much work will be complex in fixing it up. The chances are that you'll be able to make a profit once you've fixed it up to sell on, or it could just contribute you with a comfortable home for years to come!

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Homeowners insurance For movable Homes In Arizona

Homes For Rent - Homeowners insurance For movable Homes In Arizona

Good morning. Yesterday, I learned about Homes For Rent - Homeowners insurance For movable Homes In Arizona. Which may be very helpful to me and you. Homeowners insurance For movable Homes In Arizona

Every year the Arizona group of guarnatee publishes a study that is truly invaluable to movable home owners in the state. Although homeowner's guarnatee for a movable home in Arizona is very similar to a customary home owner guarnatee policy, there are a few differences. The study provides facts linked to the average cost to insure both a single wide and double wide movable home in the state. This gives the consumer a starting point to correlate to when they begin shopping for insurance.

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One of the first things to consider when shopping for homeowner's guarnatee for a movable home is either you own or rent the unit. If you are the homeowner you will need to insure both the movable home and the contents. For person renting the home, they'll just need adequate guarnatee to cover the loss of their personal belongings.

If you are unsure of what level of coverage you will need to enable you to replace all your belongings should you lose them in a fire, theft or if your movable home is hit by lightning or damaged in a storm, consider production a list. This list will help you rule the value of your possessions and will also aid the guarnatee business if you need to make a claim.

For individuals in need of homeowner's guarnatee that does cover asset damage it's important to be aware that there are sure limitations on these types of policies in the state. If you suffer a fire in your movable home, your Arizona homeowner's guarnatee course won't cover the fire group aid charge. There is also a approved limit of 0 on the exchange cost of glass. They will however cover your movable home for a month if you are forced to move it from its customary location. In addition, most policies will also cover the expenses complicated in emergency discharge of your movable home. Just to be certain, it's wise to question about this before you agree to buy any policy.

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A complete Guide For restaurant Real Estate Investments

Homes For Rent - A complete Guide For restaurant Real Estate Investments

Good afternoon. Today, I learned all about Homes For Rent - A complete Guide For restaurant Real Estate Investments. Which is very helpful to me so you. A complete Guide For restaurant Real Estate Investments

Restaurants are a favorite market asset for many investors because:

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Tenants often sign a very long term, e.g. 20 years absolute triple net (Nnn) leases. This means, besides the rent, tenants also pay for asset taxes, insurance and all maintenance expenses. The only thing the investor has to pay is the mortgage, which in turn offers very predictable cash flow. There are whether no or few landlord responsibilities because the tenant is responsible for maintenance. This allows the investor more time to do foremost thing in life, e.g. Retire. All you do is take the rent check to the bank. This is one of the key benefits in investing in a restaurant or single-tenant property.
Whether rich or poor, citizen need to eat. Americans are eating out more often as they are too busy to cook and cleanup the pots & pans afterwards which often is the worst part! according to the National restaurant Association, the nation's restaurant commerce currently involves 937,000 restaurants and is improbable to reach 7 billion in sales in 2007, compared to just 2 billion in 1997 and 0 billion in 1987 (in current dollars). In 2006, for every dollar Americans spend on foods, 48 cents were spent in restaurants. As long as there is civilization on earth, there will be restaurants and the investor will feel comfortable that the asset is always in high demand.
You know your tenants will take very good care of your asset because it's in their best interest to do so. Few customers, if any, want to go to a restaurant that has a filthy bathroom and/or trash in the parking lot.

However, restaurants are not created equal, from an venture viewpoint.

Franchised versus Independent

One often hears that 9 out of 10 new restaurants will fail in the first year; however, this is just an urban myth as there are no conclusive studies on this. There is only a study by join together Professor of Hospitality, Dr. H.G. Parsa of Ohio State University who tracked new restaurants located in the city Columbus, Ohio while the period from 1996 to 1999 (Note: you should not draw the end that the results are the same in any place else in the Us or while any other time periods.) Dr. Parsa observed that seafood restaurants were the safest ventures and that Mexican restaurants perceive the top rate of failure in Columbus, Oh. His study also found 26% of new restaurants complete in the first year in Columbus, Oh while 1996 to 1999. besides economic failure, the reasons for restaurants end consist of divorce, poor health, and unwillingness to commit heavy time toward performance of the business. Based on this study, it may be safe to predict that the longer the restaurant has been in business, the more likely it will be operating the following year so that the landlord will continue to receive the rent.

For franchised restaurants, a franchisee has to have a clear minimal number of non-borrowed cash/capital, e.g. 0,000 for McDonald's, to qualify. The franchisee has to pay a one-time franchisee fee about ,000 to ,000. In addition, the franchisee has lead royalty and advertising fees equal to about 4% and 3% of sales revenue, respectively. In turn, the franchisee receives training on how to set up and operate a proven and flourishing firm without worrying about the marketing part. As a result, a franchised restaurant gets customers as soon as the open sign is put up. Should the franchisee fail to run the firm at the location, the franchise may replace the current franchisee with a new one. The king of franchised hamburger restaurants is the fast-food chain McDonald's with over 32000 locations in 118 countries (about 14,000 in the Us) as of 2010. It has .2B in sales in 2011 with an median of .4M in wage per Us location. McDonald's currently captures over 50% market share of the billion Us hamburger restaurant market. Its sales are up 26% in the last 5 years. Distant behind is Wendy's (average sales of .5M) with .5B in sales and 5904 stores. Burger King ranks third (average sales of .2M) with .4B in sale, 7264 stores and 13% of the hamburger restaurant market share (among all restaurant chains, Subway is ranked number two with .4B in sales, 23,850 stores, and Starbucks number 3 with .8B in sales and 11,158 stores). McDonald's success apparently is not the consequent of how tasty its Big Mac tastes but something else more complex. Per a scrutinize of 28,000 online subscribers of buyer record magazine, McDonald's hamburgers rank last among 18 national and regional fast food chains. It received a score of 5.6 on a scale of 1 to 10 with 10 being the best, behind Jack In the Box (6.3), Burger King (6.3), Wendy's (6.6), Sonic Drive In (6.6), Carl's Jr (6.9), Back Yard Burgers (7.6), Five Guys Burgers (7.9), and In-N-Out Burgers (7.9).

Fast-food chains tend to detect new trends faster. For example, they are open as early as 5Am as Americans are increasingly buying their breakfasts earlier. They are also selling more cafe; latte; fruit smoothies to compete with Starbucks and Jumba Juice. You also see more salads on the menu. This gives customers more reasons to stop by at fast-food restaurants and make them more exciting to separate customers.

With independent restaurants, it often takes a while to for customers to come nearby and try the food. These establishments are especially tough in the first 12 months of opening, especially with owners of minimal or no proven track record. So in general, "mom and pop" restaurants are risky venture due to preliminary weak revenue. If you choose to spend in a non-brand name restaurant, make sure the return is proportional to the risks that you will be taking.

Sometimes it is not easy for you to tell if a restaurant is a brand name or non-brand name. Some restaurant chains only operate, or are favorite in a clear region. For example, WhatAburger restaurant chain with over 700 locations in 10 states is a very favorite fast-food restaurant chain in Texas and Georgia. However, it is still unknown on the West Coast as of 2012. Brand name chains tend to have a website listing all the locations plus other information. So if you can find a restaurant website from Google or Yahoo you can speedily watch if an unfamiliar name is a brand name or not. You can also procure basic buyer information about almost any chain restaurants in the Us on Wikipedia.

The Ten Fastest-Growing Chains in 2011 with Sales Over 0 Million
According to Technomic, the following is the 10 fastest growing restaurant chains in terms of wage change from 2010 to 2011:

Five Guys Burgers and Fries with 1M in sales and 32.8% change. Chipotle Mexican Grill with .261B in sales and 23.4% change. Jimmy John's glutton Sandwich Shop with 5M in sales and 21.8% change. Yard House with 2M in sales and 21.5% change. Firehouse Subs with 5M in sales and 21.1% change. Bj's restaurant & Brewhouse with 1M in sales and 20.9% change. Buffalo Wild Wings Grill & Bar with .045B in sales and 20.1% change. Raising Cane's Chicken Fingers with 6M in sales and 18.2% change. Noodles & firm with 0M in sales and 14.9% change from. Wingstop with 2M in sales and 22.1% change.

Lease & Rent Guaranty

The tenants often sign a long term absolute triple net (Nnn) lease. This means, besides the base rent, they also pay for all operating expenses: asset taxes, insurance and maintenance expenses. For investors, the risk of maintenance expenses uncertainty is eliminated and their cash flow is predictable. The tenants may also warrant the rent with their own or corporate assets. Therefore, in case they have to close down the business, they will continue paying rent for the life of the lease. Below are a few things that you need to know about the lease guaranty:

In general, the stronger the guaranty the lower the return of your investment. The guaranty by McDonald's Corporation with a strong "A" S&P corporate rating of a social firm is much better than a small corporation owned by a franchisee with a few restaurants. Consequently, a restaurant with a McDonald's corporate lease normally offers low 4.5-5% cap (return of venture in the 1st year of ownership) while McDonald's with a franchisee guaranty (over 75% of McDonalds restaurants are owned by franchisees) may offer 5-6% cap. So outline out the number of risks you are willing to take as you won't get both low risks and high returns in an investment.
Sometimes a multi-location franchise will form a parent firm to own all the restaurants. Each restaurant in turn is owned by a single-entity little Liabilities firm (Llc) to shield the parent firm from liabilities. So the rent guaranty by the single-entity Llc does not mean much since it does not have much assets.
A good, long guaranty does not make a lemon a good car. Similarly, a strong guaranty does not make a lousy restaurant a good investment. It only means the tenant will make every attempt to pay you the rent. So don't judge a asset primarily on the guaranty.
The guaranty is good until the corporation that guarantees it declares bankruptcy. At that time, the corporation reorganizes its operations by end locations with low wage and retention the good locations, (i.e. Ones with strong sales). So it's more valuable for you to choose a asset at a good location. If it happens to have a weak guaranty, (e.g. From a small, hidden company), you will get duplicate benefits: on time rent payment and high return.
If you happen to spend in a "mom & pop" restaurant, make sure all the principals, e.g. Both mom and pop, warrant the lease with their assets. The guaranty should be reviewed by an attorney to make sure you are well protected.

Location, Location, Location

A lousy restaurant may do well at a good location while those with a good menu may fail at a bad location. A good location will generate strong wage for the operator and is primarily foremost to you as an investor. It should have these characteristics:

High traffic volume: this will draw more customers to the restaurant and as a consequent high revenue. So a restaurant at the entry to a regional mall or Disney World, a major shopping mall, or colleges is always desirable.
Good visibility & signage: high traffic volume must be accompanied by good visibility from the street. This will minimize advertising expenses and is a constant reminder for diners to come in.
Ease of ingress and egress: a restaurant located on a one-way aid road running parallel to a freeway will get a lot of traffic and has great visibility but is not at a great location. It's hard for possible customers to get back if they miss the entrance. In addition, it's not possible to make a left turn. On the other hand, the restaurant just off freeway exit is more suitable for customers.
Excellent demographics: a restaurant should do well in an area with a large, growing citizen and high incomes as it has more citizen with money to spend. Its firm should generate more and more wage to pay for addition higher rents.
Lots of parking spaces: most chained restaurants have their own parking lot to accommodate customers at peak hours. If buyer cannot find a parking space within a few minutes, there is a good chance they will skip it and/or won't come back as often. A typical fast food restaurant will need about 10 to 20 parking spaces per 1000 quadrilateral feet of space. Fast food restaurants, e.g. McDonald's will need more parking spaces than sit down restaurants, e.g. Olive Garden.
High sales revenue: the yearly gross wage alone does not tell you much since larger--in term of quadrilateral footage--restaurant tends to have higher revenue. So the rent to wage ratio is a better gauge of success. Please refer to rent to wage ratio in the due diligence section for supplementary discussion.
High barriers to entry: this naturally means that it's not easy to replicate this location nearby for various reasons: the area naturally does not have any more developable land, or the specialist plan does not allow any more construction of market properties, or it's more high-priced to build a similar asset due to high cost of land and construction materials. For these reasons, the tenant is likely to renew the lease if the firm is profitable.

Financing Considerations

In general, the interest rate is a bit higher than median for restaurants due to the fact that they are single-tenant properties. To the lenders, there is a perceived risk because if the restaurant is complete down, you could potentially lose 100% of your wage from that restaurant. Lenders also prefer national brand name restaurants. In addition, some lenders will not loan to out-of-state investors especially if the restaurants are located in smaller cities. So it may be a good idea for you to spend in a franchised restaurant in major metro areas, e.g. Atlanta, Dallas. In 2009 it's quite a challenge to get financing for sit-down restaurant acquisitions, especially for mom and pop and regional restaurants due to the tight reputation market. However, things seem to have improved a bit in 2010. If you want to get the best rate and terms for the loan, you should stick to national franchised restaurants in major metros.

When the cap rate is higher than the interest rate of the loan, e.g. Cap rate is 7.5% while interest rate is 6.5%, then you should consider borrowing as much as possible. You will get 7.5% return on your down payment plus 1% return for the money you borrow. Hence your total return (cash on cash) will be higher than the cap rate. Additionally, since the inflation in the near future is improbable to be higher due to rising costs of fuel, the money which you borrow to finance your purchase will be worth less. So it's even more useful to maximize leverage now.

Due Diligence Investigation

You may want to consider these factors before choosing to go forward with the purchase:

Tenant's financial information: The restaurant firm is labor intensive. The median worker generates only about ,000 in wage annually. The cost of goods, e.g. Foods and supplies should be nearby 30-35% of revenue; labor and operating expenses 45-50%; rent about 7-12%. So do chronicle the profits and loss (P&L) statements, if available, with your accountant. In the P&L statement, you may see the acronym Ebitdar. It stands for wage Before wage Taxes, Depreciation (of equipment), Amortization (of capital improvement), and Rent. If you don't see royalty fees in P&L of a franchised restaurant or advertising expenses in the P&L of an independent restaurant, you may want to understand the reason why. Of course, we will want to make sure that the restaurant is profitable after paying the rent. Ideally, you would like to see net profits equal to 10-20% of the gross revenue. In the last few years the cheaper has taken a beating. As a result, restaurants have experienced a decrease in gross wage of nearby 3-4%. This seems to have impacted most, if not all, restaurants everywhere. In addition, it may take a new restaurant some years to reach possible wage target. So don't expect new locations to be profitable right away even for chained restaurants.
Tenant's reputation history: if the tenant is a hidden corporation, you may be able to procure the tenant's reputation history from Dun & Bradstreet (D&B). D&B provides Paydex score, the firm equivalent of Fico, i.e. Personal reputation history score. This score ranges from 1 to 100, with higher scores indicating better payment performance. A Paydex score of 75 is equivalent to Fico score of 700. So if your tenant has a Paydex score of 80, you are likely to receive the rent checks promptly.
Rent to wage ratio: this is the ratio of base rent over the yearly gross sales of the store. It is a quick way to resolve if the restaurant is profitable, i.e. The lower the ratio, the better the location. As a rule of thumb you will want to keep this ratio less than 10% which indicates that the location has strong revenue. If the ratio is less than 7%, the operator will very likely make a lot of money after paying the rent. The rent guaranty is probably not foremost in this case. However, the rent to wage ratio is not a definite way to resolve if the tenant is manufacture a behalf or not. It does not take into account the asset taxes expense as part of the rent. asset taxes--computed as a division of assessed value--vary from states to states. For example, in California it's about 1.25% of the assessed value, 3% in Texas, and as high as 10% in Illinois. And so a restaurant with rent to wage ratio of 8% could be profitable in one state and yet be losing money in another.
Parking spaces: restaurants tend to need a higher number of parking spaces because most diners tend to stop by within a small time window. You will need at least 8 parking spaces per 1000 quadrilateral Feet (Sf) of restaurant space. Fast food restaurants may need about 15 to 18 spaces per 1000 Sf.
Termination Clause: some of the long term leases give the tenant an option to terminate the lease should there be a fire destroying a clear division of the property. Of course, this is not desirable to you if that division is too low, e.g. 10%. So make sure you read the lease. You also want to make sure the insurance procedure also covers rental wage loss for 12-24 months in case the asset is damaged by fire or natural disasters.
Price per Sf: you should pay about 0 to 0 per Sf. In California you have to pay a premium, e.g. 00 per Sf for Starbucks restaurants which are normally sold at very high price per Sf. If you pay more than 0 per Sf for the restaurant, make sure you have justification for doing so.
Rent per Sf: ideally you should spend in a asset in which the rent per Sf is low, e.g. to per Sf per month. This gives you room to raise the rent in the future. Besides, the low rent ensures the tenant's firm is profitable, so he will be nearby to keep paying the rent. Starbucks tend to pay a selected rent to 4 per Sf monthly since they are often located at a selected location with lots of traffic and high visibility. If you plan to spend in a restaurant in which the tenant pays more than per Sf monthly, make sure you could justify your decision because it's hard to make a behalf in the restaurant firm when the tenant is paying higher rent. Some restaurants may have a division clause. This means besides the minimum base rent, the operator also pays you a division of his wage when it reaches a clear threshold.
Rent increase: A restaurant landlord will normally receive whether a 2% yearly rent growth or a 10% growth every 5 years. As an investor you should prefer 2% yearly rent growth because 5 years is a long time to wait for a raise. You will also receive more rent with 2% yearly growth than 10% growth every 5 years. Besides, as the rent increases every year so does the value of your investment. The value of restaurant is often based on the rent it generates. If the rent is increased while the market cap remains the same, your venture will appreciate in value. So there is no key advantage for investing in a restaurant in a clear area, e.g. California. It's more foremost to choose a restaurant at a great location.
Lease term: in general investors favor long term, e.g. 20 year lease so they don't have to worry about seeing new tenants. while a period with low inflation, e.g. 1% to 2%, this is fine. However, when the inflation is high, e.g. 4%, this means you will technically get less rent if the rent growth is only 2%. So don't rule out properties with a few years left of the lease as there may be strong upside potential. When the lease expires without options, the tenant may have to pay much higher market rent.
Risks versus venture Returns: as an investor, you like properties that offer very high return, e.g. 8% to 9% cap rate. And so you may be attracted to a brand new franchised restaurant offered for sale by a developer. In this case, the developer builds the restaurants wholly with Furniture, Fixtures and equipment (Ffes) for the franchisee based on the franchise specifications. The franchisee signs a 20 years absolute Nnn lease paying very compassionate rent per Sf, e.g. to per Sf monthly. The new franchisee is willing to do so because he does not need to come up with any cash to open a business. Investors are excited about the high return; however, this may be a very risky investment. The one who is guaranteed to make money is the developer. The franchisee may not be willing to hold on while tough times as he does not have any equity in the property. Should the franchisee's firm fails, you may not be able to find a tenant willing to pay such high rent, and you may end up with a vacant restaurant.
Track records of the operator: the restaurant being run by an operator with 1 or 2 recently-open restaurants will probably be a riskier investment. On the other hand, an operator with 20 years in the firm and 30 locations may be more likely to be nearby next year to pay you the rent.
Trade fixtures: some restaurants are sold with trade fixtures so make sure you document in writing what is included in the sale.
Fast-food versus Sit-down: while fast-food restaurants, e.g. McDonalds do well while the downturn, sit-down house restaurants tend to be more sensitive to the recession due to higher prices and high expenses. These restaurants may perceive double-digit drop in year-to-year revenue. As a result, many sit-down restaurants were shut down while the recession. If you consider investing in a sit-down restaurant, you should choose one in an area with high wage and large population.

Sale & Lease Back

Sometimes the restaurant operator may sell the real estate part and then lease back the asset for a long time, e.g. 20 years. A typical investor would wonder if the operator is in financial trouble so that he has to sell the asset to pay for his debts. It may or may not be the case; however, this is a quick and easy way for the restaurant operator to get cash out of the equities for good reason: firm expansion. Of course, the operator could refinance the asset with cash out but that may not be the best option because:

He cannot maximize the cash out as lenders often lend only 65% of the asset value in a refinance situation. The loan will show as long term debt in the equilibrium sheet which is often not viewed in a clear light. The interest rates may not be as suitable if the restaurant operator does not have a strong equilibrium sheet. He may not be able to find any lenders due to the tight reputation market.

You will often see 2 separate cash out strategies when you look at the rent paid by the restaurant operator:

Conservative market rent: the operator wants to make sure he pays a low rent so his restaurant firm has a good chance of being profitable. He also offers conservative cap rate to investors, e.g. 7% cap. As a result, his cash out number is small to moderate. This may be a low risk venture for an investor because the tenant is more likely to be able to afford the rent.
Significantly higher than market rent: the operator wants to maximize his cash out by pricing the asset much higher than its market value, e.g. M for a M property. Investors are sometimes offered high cap rate, e.g. 10%. The operator may pay of rent per quadrilateral foot in an area where the rent for comparable properties is per quadrilateral foot. As a result, the restaurant firm at this location may suffer a loss due to higher rents. However, the operator gets as much money as possible. This asset could be very risky for you. If the tenant's firm does not make it and he declares bankruptcy, you will have to offer lower rent to other tenant to lease your building.

Ground Lease

Occasionally you see a restaurant on ground lease for sale. The term ground lease may be confusing as it could mean

You buy the construction and lease the land owned by other investor on a long-term, e.g. 50 years, ground lease.
You buy the land in which the tenant owns the building. This is the most likely scenario. The tenant builds the restaurant with its own money and then typically signs a 20 years Nnn lease to lease the lot. If the tenant does not renew the lease then the construction is reverted to the landowner. The cap rate is often 1% lower, e.g. 6 to 7.25 percent, compared to restaurants in which you buy both land and building.

Since the tenant has to spend a colossal number of money (whether its own or borrowed funds) for the construction of the building, it has to be duplicate sure that this is the right location for its business. In addition, should the tenant fail to make the rent payment or fail to renew the lease, the construction with colossal value will revert to you as the landowner. So the tenant will lose a lot more, both firm and building, if it does not fulfill its obligation. And thus it thinks twice about not sending in the rent checks. In that sense, this is a bit safer venture than a restaurant which you own both the land and improvements. besides the lower cap rate, the major drawbacks for ground lease are

There are no tax write-offs as the Irs does not allow you to depreciate its land value. So your tax liabilities are higher. The tenants, on the other hand, can depreciate 100% the value of the buildings and equipments to offset the profits from the business.
If the asset is damaged by fire or natural disasters, e.g. Tornados, some leases may allow the tenants to procure insurance proceeds and terminate the lease without rebuilding the properties in the last few years of the lease. Unfortunately, this author is not aware of any insurance associates that would sell fire insurance to you since you don't own the building. So the risk is colossal as you may end up owning a very high-priced vacant lot with no wage and a huge asset taxes bill.
Some of the leases allow the tenants not having to make any structure, e.g. Roof, repairs in the last few years of the lease. This may want investors to spend money on deferred maintenance expenses and thus will have negative impact on the cash flow of the property.

I hope you will get new knowledge about Homes For Rent . Where you can offer utilization in your everyday life. And most significantly, your reaction is passed about Homes For Rent .

Homeowners guarnatee For mobile Homes In Arizona

Homes For Rent - Homeowners guarnatee For mobile Homes In Arizona

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Every year the Arizona branch of assurance publishes a study that is truly invaluable to movable home owners in the state. Although homeowner's assurance for a movable home in Arizona is very similar to a customary home owner assurance policy, there are a few differences. The study provides information connected to the midpoint cost to insure both a singular wide and double wide movable home in the state. This gives the buyer a starting point to assess to when they begin shopping for insurance.

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One of the first things to reconsider when shopping for homeowner's assurance for a movable home is whether you own or rent the unit. If you are the homeowner you will need to insure both the movable home and the contents. For person renting the home, they'll just need adequate assurance to cover the loss of their personal belongings.

If you are unsure of what level of coverage you will need to enable you to replace all your belongings should you lose them in a fire, theft or if your movable home is hit by lightning or damaged in a storm, reconsider manufacture a list. This list will help you resolve the value of your possessions and will also aid the assurance business if you need to make a claim.

For individuals in need of homeowner's assurance that does cover asset damage it's prominent to be aware that there are clear limitations on these types of policies in the state. If you suffer a fire in your movable home, your Arizona homeowner's assurance policy won't cover the fire branch aid charge. There is also a thorough limit of 0 on the replacement cost of glass. They will however cover your movable home for a month if you are forced to move it from its customary location. In addition, most policies will also cover the expenses involved in crisis extraction of your movable home. Just to be certain, it's wise to query about this before you agree to purchase any policy.

I hope you obtain new knowledge about Homes For Rent . Where you'll be able to offer use in your evryday life. And above all, your reaction is passed about Homes For Rent .

A faultless Guide For bistro Real Estate Investments

Homes For Rent - A faultless Guide For bistro Real Estate Investments

Hello everybody. Now, I learned all about Homes For Rent - A faultless Guide For bistro Real Estate Investments. Which could be very helpful to me therefore you. A faultless Guide For bistro Real Estate Investments

Restaurants are a favorite commercial asset for many investors because:

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Tenants often sign a very long term, e.g. 20 years absolute triple net (Nnn) leases. This means, also the rent, tenants also pay for asset taxes, insurance and all maintenance expenses. The only thing the investor has to pay is the mortgage, which in turn offers very predictable cash flow. There are whether no or few landlord responsibilities because the tenant is responsible for maintenance. This allows the investor more time to do leading thing in life, e.g. Retire. All you do is take the rent check to the bank. This is one of the key benefits in investing in a restaurant or single-tenant property.
Whether rich or poor, people need to eat. Americans are eating out more often as they are too busy to cook and cleanup the pots & pans afterwards which often is the worst part! according to the National restaurant Association, the nation's restaurant industry currently involves 937,000 restaurants and is incredible to reach 7 billion in sales in 2007, compared to just 2 billion in 1997 and 0 billion in 1987 (in current dollars). In 2006, for every dollar Americans spend on foods, 48 cents were spent in restaurants. As long as there is civilization on earth, there will be restaurants and the investor will feel comfortable that the asset is always in high demand.
You know your tenants will take very good care of your asset because it's in their best interest to do so. Few customers, if any, want to go to a restaurant that has a filthy bathroom and/or trash in the parking lot.

However, restaurants are not created equal, from an speculation viewpoint.

Franchised versus Independent

One often hears that 9 out of 10 new restaurants will fail in the first year; however, this is just an urban myth as there are no conclusive studies on this. There is only a study by join together Professor of Hospitality, Dr. H.G. Parsa of Ohio State University who tracked new restaurants placed in the city Columbus, Ohio during the duration from 1996 to 1999 (Note: you should not draw the windup that the results are the same anywhere else in the Us or during any other time periods.) Dr. Parsa observed that seafood restaurants were the safest ventures and that Mexican restaurants touch the top rate of failure in Columbus, Oh. His study also found 26% of new restaurants closed in the first year in Columbus, Oh during 1996 to 1999. also economic failure, the reasons for restaurants windup include divorce, poor health, and unwillingness to commit heavy time toward operation of the business. Based on this study, it may be safe to predict that the longer the restaurant has been in business, the more likely it will be operating the following year so that the landlord will continue to receive the rent.

For franchised restaurants, a franchisee has to have a determined minimal number of non-borrowed cash/capital, e.g. 0,000 for McDonald's, to qualify. The franchisee has to pay a one-time franchisee fee about ,000 to ,000. In addition, the franchisee has lead royalty and advertising fees equal to about 4% and 3% of sales revenue, respectively. In turn, the franchisee receives training on how to set up and operate a proven and successful business without worrying about the marketing part. As a result, a franchised restaurant gets customers as soon as the open sign is put up. Should the franchisee fail to run the business at the location, the franchise may replace the current franchisee with a new one. The king of franchised hamburger restaurants is the fast-food chain McDonald's with over 32000 locations in 118 countries (about 14,000 in the Us) as of 2010. It has .2B in sales in 2011 with an midpoint of .4M in revenue per Us location. McDonald's currently captures over 50% shop share of the billion Us hamburger restaurant market. Its sales are up 26% in the last 5 years. Distant behind is Wendy's (average sales of .5M) with .5B in sales and 5904 stores. Burger King ranks third (average sales of .2M) with .4B in sale, 7264 shop and 13% of the hamburger restaurant shop share (among all restaurant chains, Subway is ranked number two with .4B in sales, 23,850 stores, and Starbucks number 3 with .8B in sales and 11,158 stores). McDonald's success apparently is not the follow of how tasty its Big Mac tastes but something else more complex. Per a recognize of 28,000 online subscribers of consumer record magazine, McDonald's hamburgers rank last among 18 national and regional fast food chains. It received a score of 5.6 on a scale of 1 to 10 with 10 being the best, behind Jack In the Box (6.3), Burger King (6.3), Wendy's (6.6), Sonic Drive In (6.6), Carl's Jr (6.9), Back Yard Burgers (7.6), Five Guys Burgers (7.9), and In-N-Out Burgers (7.9).

With independent restaurants, it often takes a while to for customers to come nearby and try the food. These establishments are especially tough in the first 12 months of opening, especially with owners of minimal or no proven track record. So in general, "mom and pop" restaurants are risky speculation due to preliminary weak revenue. If you pick to spend in a non-brand name restaurant, make sure the return is proportional to the risks that you will be taking.

Sometimes it is not easy for you to tell if a restaurant is a brand name or non-brand name. Some restaurant chains only operate, or are favorite in a determined region. For example, WhatAburger restaurant chain with over 700 locations in 10 states is a very favorite fast-food restaurant chain in Texas and Georgia. However, it is still unknown on the West Coast as of 2012. Brand name chains tend to have a website listing all the locations plus other information. So if you can find a restaurant website from Google or Yahoo you can fast glance if an unfamiliar name is a brand name or not. You can also gather basic consumer data about roughly any chain restaurants in the Us on Wikipedia.

The Ten Fastest-Growing Chains in 2011 with Sales Over 0 Million
According to Technomic, the following is the 10 fastest growing restaurant chains in terms of revenue change from 2010 to 2011:

Five Guys Burgers and Fries with 1M in sales and 32.8% change. Chipotle Mexican Grill with .261B in sales and 23.4% change. Jimmy John's connoisseur Sandwich Shop with 5M in sales and 21.8% change. Yard House with 2M in sales and 21.5% change. Firehouse Subs with 5M in sales and 21.1% change. Bj's restaurant & Brewhouse with 1M in sales and 20.9% change. Buffalo Wild Wings Grill & Bar with .045B in sales and 20.1% change. Raising Cane's Chicken Fingers with 6M in sales and 18.2% change. Noodles & business with 0M in sales and 14.9% change from. Wingstop with 2M in sales and 22.1% change.

Lease & Rent Guaranty

The tenants often sign a long term absolute triple net (Nnn) lease. This means, also the base rent, they also pay for all operating expenses: asset taxes, insurance and maintenance expenses. For investors, the risk of maintenance expenses uncertainty is eliminated and their cash flow is predictable. The tenants may also certify the rent with their own or corporate assets. Therefore, in case they have to close down the business, they will continue paying rent for the life of the lease. Below are a few things that you need to know about the lease guaranty:

In general, the stronger the guaranty the lower the return of your investment. The guaranty by McDonald's Corporation with a strong "A" S&P corporate rating of a public business is much best than a small corporation owned by a franchisee with a few restaurants. Consequently, a restaurant with a McDonald's corporate lease normally offers low 4.5-5% cap (return of speculation in the 1st year of ownership) while McDonald's with a franchisee guaranty (over 75% of McDonalds restaurants are owned by franchisees) may offer 5-6% cap. So shape out the number of risks you are willing to take as you won't get both low risks and high returns in an investment.
Sometimes a multi-location franchise will form a parent business to own all the restaurants. Each restaurant in turn is owned by a single-entity small Liabilities business (Llc) to shield the parent business from liabilities. So the rent guaranty by the single-entity Llc does not mean much since it does not have much assets.
A good, long guaranty does not make a lemon a good car. Similarly, a strong guaranty does not make a lousy restaurant a good investment. It only means the tenant will make every exertion to pay you the rent. So don't judge a asset primarily on the guaranty.
The guaranty is good until the corporation that guarantees it declares bankruptcy. At that time, the corporation reorganizes its operations by windup locations with low revenue and keeping the good locations, (i.e. Ones with strong sales). So it's more vital for you to pick a asset at a good location. If it happens to have a weak guaranty, (e.g. From a small, inexpressive company), you will get duplicate benefits: on time rent payment and high return.
If you happen to spend in a "mom & pop" restaurant, make sure all the principals, e.g. Both mom and pop, certify the lease with their assets. The guaranty should be reviewed by an attorney to make sure you are well protected.

Location, Location, Location

A lousy restaurant may do well at a good location while those with a good menu may fail at a bad location. A good location will generate strong revenue for the operator and is primarily leading to you as an investor. It should have these characteristics:

High traffic volume: this will draw more customers to the restaurant and as a follow high revenue. So a restaurant at the entrance to a regional mall or Disney World, a major shopping mall, or colleges is always desirable.
Good visibility & signage: high traffic volume must be accompanied by good visibility from the street. This will minimize advertising expenses and is a constant reminder for diners to come in.
Ease of ingress and egress: a restaurant placed on a one-way assistance road running parallel to a freeway will get a lot of traffic and has great visibility but is not at a great location. It's hard for potential customers to get back if they miss the entrance. In addition, it's not potential to make a left turn. On the other hand, the restaurant just off freeway exit is more convenient for customers.
Excellent demographics: a restaurant should do well in an area with a large, growing people and high incomes as it has more people with money to spend. Its business should generate more and more revenue to pay for expanding higher rents.
Lots of parking spaces: most chained restaurants have their own parking lot to accommodate customers at peak hours. If buyer cannot find a parking space within a few minutes, there is a good chance they will skip it and/or won't come back as often. A typical fast food restaurant will need about 10 to 20 parking spaces per 1000 quadrate feet of space. Fast food restaurants, e.g. McDonald's will need more parking spaces than sit down restaurants, e.g. Olive Garden.
High sales revenue: the yearly gross revenue alone does not tell you much since larger--in term of quadrate footage--restaurant tends to have higher revenue. So the rent to revenue ratio is a best gauge of success. Please refer to rent to revenue ratio in the due diligence section for supplementary discussion.
High barriers to entry: this simply means that it's not easy to replicate this location nearby for assorted reasons: the area simply does not have any more developable land, or the expert plan does not allow any more construction of commercial properties, or it's more high-priced to build a similar asset due to high cost of land and construction materials. For these reasons, the tenant is likely to renew the lease if the business is profitable.

Financing Considerations

In general, the interest rate is a bit higher than midpoint for restaurants due to the fact that they are single-tenant properties. To the lenders, there is a perceived risk because if the restaurant is closed down, you could potentially lose 100% of your revenue from that restaurant. Lenders also prefer national brand name restaurants. In addition, some lenders will not loan to out-of-state investors especially if the restaurants are placed in smaller cities. So it may be a good idea for you to spend in a franchised restaurant in major metro areas, e.g. Atlanta, Dallas. In 2009 it's quite a challenge to get financing for sit-down restaurant acquisitions, especially for mom and pop and regional restaurants due to the tight reputation market. However, things seem to have improved a bit in 2010. If you want to get the best rate and terms for the loan, you should stick to national franchised restaurants in major metros.

When the cap rate is higher than the interest rate of the loan, e.g. Cap rate is 7.5% while interest rate is 6.5%, then you should reconsider borrowing as much as possible. You will get 7.5% return on your down payment plus 1% return for the money you borrow. Hence your total return (cash on cash) will be higher than the cap rate. Additionally, since the inflation in the near hereafter is incredible to be higher due to rising costs of fuel, the money which you borrow to finance your purchase will be worth less. So it's even more useful to maximize leverage now.

Due Diligence Investigation

You may want to reconsider these factors before choosing to go send with the purchase:

Tenant's financial information: The restaurant business is labor intensive. The midpoint laborer generates only about ,000 in revenue annually. The cost of goods, e.g. Foods and supplies should be nearby 30-35% of revenue; labor and operating expenses 45-50%; rent about 7-12%. So do enumerate the profits and loss (P&L) statements, if available, with your accountant. In the P&L statement, you may see the acronym Ebitdar. It stands for revenue Before revenue Taxes, Depreciation (of equipment), Amortization (of capital improvement), and Rent. If you don't see royalty fees in P&L of a franchised restaurant or advertising expenses in the P&L of an independent restaurant, you may want to understand the think why. Of course, we will want to make sure that the restaurant is profitable after paying the rent. Ideally, you would like to see net profits equal to 10-20% of the gross revenue. In the last few years the economy has taken a beating. As a result, restaurants have experienced a decrease in gross revenue of nearby 3-4%. This seems to have impacted most, if not all, restaurants everywhere. In addition, it may take a new restaurant some years to reach potential revenue target. So don't expect new locations to be profitable right away even for chained restaurants.
Tenant's reputation history: if the tenant is a inexpressive corporation, you may be able to gather the tenant's reputation history from Dun & Bradstreet (D&B). D&B provides Paydex score, the business equivalent of Fico, i.e. Personal reputation history score. This score ranges from 1 to 100, with higher scores indicating best payment performance. A Paydex score of 75 is equivalent to Fico score of 700. So if your tenant has a Paydex score of 80, you are likely to receive the rent checks promptly.
Rent to revenue ratio: this is the ratio of base rent over the yearly gross sales of the store. It is a quick way to determine if the restaurant is profitable, i.e. The lower the ratio, the best the location. As a rule of thumb you will want to keep this ratio less than 10% which indicates that the location has strong revenue. If the ratio is less than 7%, the operator will very likely make a lot of money after paying the rent. The rent guaranty is probably not leading in this case. However, the rent to revenue ratio is not a spoton way to determine if the tenant is production a profit or not. It does not take into inventory the asset taxes expense as part of the rent. asset taxes--computed as a percentage of assessed value--vary from states to states. For example, in California it's about 1.25% of the assessed value, 3% in Texas, and as high as 10% in Illinois. And so a restaurant with rent to revenue ratio of 8% could be profitable in one state and yet be losing money in another.
Parking spaces: restaurants tend to need a higher number of parking spaces because most diners tend to stop by within a small time window. You will need at least 8 parking spaces per 1000 quadrate Feet (Sf) of restaurant space. Fast food restaurants may need about 15 to 18 spaces per 1000 Sf.
Termination Clause: some of the long term leases give the tenant an choice to halt the lease should there be a fire destroying a determined percentage of the property. Of course, this is not desirable to you if that percentage is too low, e.g. 10%. So make sure you read the lease. You also want to make sure the insurance policy also covers rental revenue loss for 12-24 months in case the asset is damaged by fire or natural disasters.
Price per Sf: you should pay about 0 to 0 per Sf. In California you have to pay a premium, e.g. 00 per Sf for Starbucks restaurants which are normally sold at very high price per Sf. If you pay more than 0 per Sf for the restaurant, make sure you have justification for doing so.
Rent per Sf: ideally you should spend in a asset in which the rent per Sf is low, e.g. to per Sf per month. This gives you room to raise the rent in the future. Besides, the low rent ensures the tenant's business is profitable, so he will be nearby to keep paying the rent. Starbucks tend to pay a premium rent to 4 per Sf monthly since they are often placed at a premium location with lots of traffic and high visibility. If you plan to spend in a restaurant in which the tenant pays more than per Sf monthly, make sure you could explain your decision because it's hard to make a profit in the restaurant business when the tenant is paying higher rent. Some restaurants may have a percentage clause. This means also the minimum base rent, the operator also pays you a percentage of his revenue when it reaches a determined threshold.
Rent increase: A restaurant landlord will normally receive whether a 2% yearly rent increase or a 10% increase every 5 years. As an investor you should prefer 2% yearly rent increase because 5 years is a long time to wait for a raise. You will also receive more rent with 2% yearly increase than 10% increase every 5 years. Besides, as the rent increases every year so does the value of your investment. The value of restaurant is often based on the rent it generates. If the rent is increased while the shop cap remains the same, your speculation will appreciate in value. So there is no key benefit for investing in a restaurant in a determined area, e.g. California. It's more leading to pick a restaurant at a great location.
Lease term: in general investors favor long term, e.g. 20 year lease so they don't have to worry about looking new tenants. during a duration with low inflation, e.g. 1% to 2%, this is fine. However, when the inflation is high, e.g. 4%, this means you will technically get less rent if the rent increase is only 2%. So don't rule out properties with a few years left of the lease as there may be strong upside potential. When the lease expires without options, the tenant may have to pay much higher shop rent.
Risks versus speculation Returns: as an investor, you like properties that offer very high return, e.g. 8% to 9% cap rate. And so you may be attracted to a brand new franchised restaurant offered for sale by a developer. In this case, the developer builds the restaurants thoroughly with Furniture, Fixtures and equipment (Ffes) for the franchisee based on the franchise specifications. The franchisee signs a 20 years absolute Nnn lease paying very kind rent per Sf, e.g. to per Sf monthly. The new franchisee is willing to do so because he does not need to come up with any cash to open a business. Investors are excited about the high return; however, this may be a very risky investment. The one who is guaranteed to make money is the developer. The franchisee may not be willing to hold on during tough times as he does not have any equity in the property. Should the franchisee's business fails, you may not be able to find a tenant willing to pay such high rent, and you may end up with a vacant restaurant.
Track records of the operator: the restaurant being run by an operator with 1 or 2 recently-open restaurants will probably be a riskier investment. On the other hand, an operator with 20 years in the business and 30 locations may be more likely to be nearby next year to pay you the rent.
Trade fixtures: some restaurants are sold with trade fixtures so make sure you document in writing what is included in the sale.
Fast-food versus Sit-down: while fast-food restaurants, e.g. McDonalds do well during the downturn, sit-down family restaurants tend to be more sensitive to the recession due to higher prices and high expenses. These restaurants may touch double-digit drop in year-to-year revenue. As a result, many sit-down restaurants were shut down during the recession. If you reconsider investing in a sit-down restaurant, you should pick one in an area with high revenue and large population.

Sale & Lease Back

Sometimes the restaurant operator may sell the real estate part and then lease back the asset for a long time, e.g. 20 years. A typical investor would wonder if the operator is in financial problem so that he has to sell the asset to pay for his debts. It may or may not be the case; however, this is a quick and easy way for the restaurant operator to get cash out of the equities for good reason: business expansion. Of course, the operator could refinance the asset with cash out but that may not be the best choice because:

He cannot maximize the cash out as lenders often lend only 65% of the asset value in a refinance situation. The loan will show as long term debt in the equilibrium sheet which is often not viewed in a determined light. The interest rates may not be as convenient if the restaurant operator does not have a strong equilibrium sheet. He may not be able to find any lenders due to the tight reputation market.

You will often see 2 different cash out strategies when you look at the rent paid by the restaurant operator:

Conservative shop rent: the operator wants to make sure he pays a low rent so his restaurant business has a good chance of being profitable. He also offers conservative cap rate to investors, e.g. 7% cap. As a result, his cash out number is small to moderate. This may be a low risk speculation for an investor because the tenant is more likely to be able to afford the rent.
Significantly higher than shop rent: the operator wants to maximize his cash out by pricing the asset much higher than its shop value, e.g. M for a M property. Investors are sometimes offered high cap rate, e.g. 10%. The operator may pay of rent per quadrate foot in an area where the rent for comparable properties is per quadrate foot. As a result, the restaurant business at this location may suffer a loss due to higher rents. However, the operator gets as much money as possible. This asset could be very risky for you. If the tenant's business does not make it and he declares bankruptcy, you will have to offer lower rent to an additional one tenant to lease your building.

Ground Lease

Occasionally you see a restaurant on ground lease for sale. The term ground lease may be confusing as it could mean

You buy the construction and lease the land owned by an additional one investor on a long-term, e.g. 50 years, ground lease.
You buy the land in which the tenant owns the building. This is the most likely scenario. The tenant builds the restaurant with its own money and then typically signs a 20 years Nnn lease to lease the lot. If the tenant does not renew the lease then the construction is reverted to the landowner. The cap rate is often 1% lower, e.g. 6 to 7.25 percent, compared to restaurants in which you buy both land and building.

Since the tenant has to spend a vast number of money (whether its own or borrowed funds) for the construction of the building, it has to be duplicate sure that this is the right location for its business. In addition, should the tenant fail to make the rent payment or fail to renew the lease, the construction with vast value will revert to you as the landowner. So the tenant will lose a lot more, both business and building, if it does not fulfill its obligation. And thus it thinks twice about not sending in the rent checks. In that sense, this is a bit safer speculation than a restaurant which you own both the land and improvements. also the lower cap rate, the major drawbacks for ground lease are

There are no tax write-offs as the Irs does not allow you to depreciate its land value. So your tax liabilities are higher. The tenants, on the other hand, can depreciate 100% the value of the structure and equipments to offset the profits from the business.
If the asset is damaged by fire or natural disasters, e.g. Tornados, some leases may allow the tenants to gather insurance proceeds and halt the lease without rebuilding the properties in the last few years of the lease. Unfortunately, this author is not aware of any insurance fellowships that would sell fire insurance to you since you don't own the building. So the risk is vast as you may end up owning a very high-priced vacant lot with no revenue and a huge asset taxes bill.
Some of the leases allow the tenants not having to make any structure, e.g. Roof, repairs in the last few years of the lease. This may wish investors to spend money on deferred maintenance expenses and thus will have negative impact on the cash flow of the property.

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