How To Fight an Eviction During the Coronavirus Pandemic

EvictionPeter Dazeley / Getty Images

Eviction may soon become a reality for millions of American renters.

In March, the Coronavirus Aid, Relief, and Economic Security (CARES) Act prohibited landlords from evicting tenants for nonpayment of rent in homes with federally backed mortgages. But this program ended on July 24.

As a result, an estimated 20% of the 110 million Americans who rent their homes are at risk for eviction by Sept. 30, according to a report by the COVID-19 Eviction Defense Project, a group of economic researchers and legal experts working to better understand the housing, homeless, and community recovery during the pandemic.

“We anticipate a flood of evictions because many tenants won’t be able to pay the back rent, and it will be due,” says Deborah Thrope, deputy director at the National Housing Law Project, a housing and legal advocacy nonprofit.

“The eviction moratorium is simply a pause. It’s not rent cancelation,” Thrope says.

But even if you’re struggling to pay rent, this doesn’t mean an eviction is your only choice. Here’s an overview of some of the steps you can take to fight an eviction.

Talk to your landlord ASAP

“The best advice I can give tenants when their financial situation starts to deteriorate is to communicate with your landlord,” says Marina Vaamonde, a real estate investor in Houston and founder of HouseCashin. “Their willingness to have a discussion is the only way tenants can come to a resolution without going to court.”

According to a recent survey of landlords by the American Apartment Owners Association, 67% said they would be willing to offer tenants a rent deferment if they needed it.

So if you know you can’t make your next rent payment, reach out to your landlord as soon as possible. Waiting until after you get an eviction notice may be too late, and your landlord may be less likely to work with you. Your landlord could also already be in the process of filing the eviction with the court, and have paid fees to do so, which may make him more likely to follow through.

“There are a number of things you can negotiate with your landlord,” Thrope says. Some options to consider include a rent repayment agreement, shortening the terms of your lease, or possibly getting out of your lease altogether.

Learn how COVID-19 moratoriums apply to you

Eviction laws vary drastically across the country at the state and even city level, and the COVID-19 pandemic has made it all even more complicated. Along with the CARES Act eviction moratorium, states and municipalities issued their own mandates to pause evictions. So make sure to read up on the eviction laws in your area specifically to better understand what your landlord is legally allowed and not allowed to do.

“Once you understand your legal rights, you’ll know your options,” Thrope says. “We have this patchwork of policy all across the country right now, so it’s important to know the local law and tenant protections.”

One resource for finding out the statutes of local eviction laws is the Eviction Lab at Princeton University, which created a nationwide database. The group has also developed a state-by-state COVID-19 Housing Policy Scorecard, tracking states’ responses to evictions and during the pandemic.

NHLP also has local and national online resources for renters and homeowners during the pandemic.

Make sure your landlord gives you adequate notice

Landlords usually have the legal right to evict tenants for not paying rent, violating a lease, causing damage to the property, or engaging in illegal activity at the home.

Most states require landlords to give an adequate notice of eviction with a deadline to pay rent or move out and the amount owed. If you don’t meet the deadline, the landlord can file a lawsuit to evict you.

But if landlords don’t provide adequate notice of eviction, Vaamonde says a judge will often throw out the case.

In Texas, for example, landlords must provide an official three-day notice to vacate the property with the reason for the eviction, and can file an eviction hearing with the court if the tenant doesn’t respond or move out.

Landlords are also prohibited from taking extreme actions during the eviction process, like changing the locks or cutting off utilities.

Attend your eviction hearing

After being closed because of the pandemic, eviction courts are beginning to reopen across the country, and are moving cases through quickly to clear up the backlog of evictions.

If your landlord files for an eviction in court, you will receive a notice to appear for the hearing. It’s important to show up, especially if you hope to fight the case. You have the right to examine and present evidence and bring witnesses, Thrope says.

“Showing up to the eviction hearing at the courthouse is the only way to receive some form of leniency,” Vaamonde says. “If the landlord wants you out of his property, the judge is the only one with the authority to defer your eviction.”

Since the pandemic has made showing up to court more difficult and dangerous, many proceedings are being held virtually, with tenants expected to appear by phone or videoconference. This may be easier for some tenants, but Thrope says in other cases, it can interfere with due process for some tenants who may not have access to the technology. It also makes it more difficult to look over evidence or converse with attorneys. Make sure you know when, where, and how you’re supposed to show up in court to make sure you do what you can to present your case.

“We hope that courts understand that this is a public health crisis, and that people sheltering in their homes is one of the remedies,” Thrope says. “To put people on the street right now is only going to exacerbate this crisis, so we hope courts will do the right thing.”

Consult an attorney

Fighting an eviction alone is overwhelming for many tenants since the process is so complex. Thrope urges tenants facing eviction to hire an attorney or contact local legal aid organizations.

“Reach out for legal assistance,” she says. “That’s really important because you need to understand what protections you can avail yourself locally.”

A lawyer can help explain whether you’re protected by the CARES Act or other local mandate, as well as how regular eviction laws apply in your situation and what exactly you need to do to fight an eviction.

A lawyer will also help you gather documentation to use as evidence, such as proof of past rent payments or that you lost your job, and any communication that you had with your landlord.

“Most tenants are not represented,” she says. “Some tenants may be savvy enough to [represent themselves], but it’s a legal process. We have the right to counsel, and it’s really critical here.”

The post How To Fight an Eviction During the Coronavirus Pandemic appeared first on Real Estate News & Insights | realtor.com®.

Source: realtor.com

Should You Schedule a Pest and Termite Inspection for the Home You’re Buying?

Whether you’re an aspiring first-time homebuyer and about to make your first offer or you have just purchased your second or third home, you’re probably excited to enjoy your new space. But wait, is that a little critter by the backdoor? Maybe it’s just an ant… nothing to worry about, right? Just to be sure there aren’t any other pests lurking about your new house, you might want to consider getting a pest and termite inspection. Here are five reasons you should schedule a termite and pest inspection before any unwanted visitors wreak havoc on your dream home.

house-pest-termite-inspection

Why should you get a pest and termite inspection?

As a new homeowner, it’s always a good idea to cover all your bases and have a pest and termite inspection performed. Homes in more humid climates – think homes in Miami, FL or houses in Houston, TX – are more susceptible to termite infestations due to the increased moisture in the surrounding environment. If you’ve seen any signs of a termite infestation, it might be a good idea to have a termite inspection. These signs can include buckling floorboards, creaky floors, or damaged wood.

For those still in the homebuying process, if you see signs of termite damage in the house, you should consider adding a termite contingency when making an offer on a home. A termite contingency may give you the option to back out of the sale if there’s been significant damage found. Otherwise, you can try to negotiate with the seller to pay for the repairs. 

What if you’re planning on just getting a regular home inspection? Your home inspector likely won’t look for specific types of pest or termite damage. However, if your home inspector does find damage, contacting a pest or termite inspector should be your next step. A pest or termite control specialist can help you determine what the best course of action is, likely scheduling an inspection to determine the extent of the damage.

Is a pest and termite inspection required before closing on a home?

If you’ve already purchased your home, then you didn’t miss out on any required inspections. For most homebuyers, termite and pest inspections are not required before closing on a home. However, certain types of loans such as FHA and VA loans may require you to pay for a pest inspection before your mortgage approval, so it’s best to check with your mortgage lender or real estate agent. Your real estate agent will also know if your particular state or county requires a pest inspection before purchasing a home.

patio-pest-inspection

5 benefits of having a termite or pest inspection

There are several benefits of having your home inspected for termites or pests.

1) Negotiating power. If the home you’re looking to buy ends up having damage from termites or pests, you’ll likely have better negotiating power. Your real estate agent can help you decide what negotiations to make. These negotiations may include asking the seller to reduce the price so you can pay for pest control services or asking the seller to pay for any repairs or fumigation services before you close on the home.

2) Peace of mind. These inspections will be able to tell you if there’s any structural damage from pests or termites. Your inspector will disclose any issues they find. Then you’ll have an idea of what kind of maintenance you might need as the home’s future owner. 

3) Save money. Moving into a new home can feel like the dream, but it’s always a good idea to know what you’re getting yourself into. Without a pest or termite inspection, you may be foregoing a critical type of home inspection that may end up costing you more money down the road if a problem is left untreated.

4) Prepare for future expenses. If your pest or termite inspector finds certain types of pests in the home you’ll have a better idea of what to look out for as a homeowner. That way, you will know if your new home or the area you’ve moved to is susceptible to specific pests. It will also help you to plan ahead for any costs associated with keeping these pests away.

5) Find a local pest control company. Say your home is more susceptible to termites because you’re buying a house in a more humid area, or that spiders or mice are more common in your county. The good news is you’ve found a local pest control company to help you schedule regular maintenance. You’ll know just who to call for help if any critters start appearing in your house.

What to expect during a pest inspection

The inspection will take roughly 30 minutes but can vary based on the size of the home and whether there’s a basement, crawl space, or any extra areas. The inspector will examine the interior and exterior of the home for any signs of damage, infestation, or specific areas that might be more susceptible to pests. They’ll check for any signs of moisture. Damaged wood or buckled paint indicate the presence of wood-destroying insects like termites. They are more likely to be found in these areas vulnerable areas.

The inspector will check for a variety of different bugs such as carpenter ants, fleas, mosquitos, and moths, among others. Where you are located may also play a role in the types of pests your inspector will look for. Some pests are more likely to be found in certain areas or are local to your region. If these types of local pests are found during the inspection, your pest inspector may recommend regular pest control to keep these critters at bay. 

The post Should You Schedule a Pest and Termite Inspection for the Home You’re Buying? appeared first on Redfin | Real Estate Tips for Home Buying, Selling & More.

Source: redfin.com

Zillow study illustrates home value disparity between races

Typical values for Black and Latinx-owned homes still lag behind overall U.S. home values, but the gap is narrowing.

A new Zillow analysis shows homes owned by Black and Latinx households are worth 16.2% and 10.2% less, respectively, than the typical U.S. home. Homes owned by non-Hispanic white and Asian families, meanwhile, have typical values 2.9% and 3.7% higher than the typical U.S. home.

While inequity in home values continues to persist, the data show them steadily, albeit slowly, converging. Since homeownership is the single largest driver of wealth for many households, the value and appreciation of a home is extremely impactful for families.

Before the Great Recession, the gap between Black-owned home values and all home values was about 15%, but grew to 20% by March 2014. Similarly, Latinx-owned homes saw the largest home value gap in May 2012 at 14% — 2 percentage points larger than before the housing bubble. Now, nearly a decade later, home values for Black- and Latinx-owned homes are back at pre-bubble levels, and continue to narrow despite the current economic crisis.

One reason for the wide gap is that the housing bust hit communities of color especially hard. Subprime loans were targeted to take advantage of the most vulnerable communities, and the ensuing wave of foreclosures hurt homeownership and home values disproportionately for Black and Latinx homeowners. Fast forward 12 years, and homeownership rates and home values are still recovering for these communities. While home value growth turned positive for U.S. homes in August 2012, it took an additional two years for Black and Latinx homes to see this same growth.

“It has taken nearly a decade for the home value gap to return to pre-recession levels, but still, the gap remains very large,” says Zillow economist Treh Manhertz. “With Black and brown communities and jobs hit disproportionately hard in the pandemic, there has been reason to worry another dip may be on the horizon that could slow or stop the progress. However, this is not the case, as the same factors that widened the gap in the Great Recession are not surfacing this time. Thanks to rock bottom rates on the most secure mortgages, extended forbearance programs, and rising home prices, there are no signs of another widening of the gap coming this year. However, through these turbulent times, continued vigilance and targeted intervention by policymakers is crucial to keep the progress going for communities of color.”

Home value inequality varies greatly in different states and metropolitan areas. Large metros with the smallest spread between Black-owned home values are Riverside (1% value gap), San Antonio (3%), Las Vegas (3%), and Portland (4%). Among the most unequal are Detroit (46% value gap), Buffalo (43%) Birmingham (43%), St. Louis (41%), and Milwaukee (40%).

Black homeownership rates are also on the rise since the Great Recession, despite challenges for Black homebuyers to secure a mortgage. Telework has the ability to expand the opportunity for homeownership even further for Black and Latinx renters, providing the flexibility to own a home in a less-expensive area.

The post Zillow study illustrates home value disparity between races appeared first on RealtyBizNews: Real Estate News.

Source: realtybiznews.com

The Commercial Space Post-COVID – With Cove CEO Adam Segal

A recent Q & A we had with Adam Segal, CEO + Founder of Washington D.C. based Cove offers a picture window into the future of business. What was intended to be a real estate technology informative, turned out to be a glimpse of what the post-COVID world of real estate may look like. Initially focused on creating a network of co-working spaces to foster efficiency and productivity in the digital age, Segal’s company’s ship may have just arrived in the form of a world cataclysm. 

Cove logo

The coronavirus pandemic is forcing a paradigm shift for every business and institution on Earth. The world is turned upsidedown, and the only sure thing people can cling to, for the moment, is uncertainty. The daily grind, the 9-5, in contrast to the homogenization of the digital and the physical world, is creating catastrophes and vast opportunities for the future. And Cove sits smack in the middle of what most experts think will be the transition of transitions not just in real estate, but for business in general. I exchanged emails with the Cove CEO this past week, since catching up with him via phone proved impossible. Here’s the brief interview, followed by some takeaway points. 

RealtyBiz: How do you see commercial property marketing shaping up in the post-COVID era?

Adam Segal: At Cove, we believe commercial real estate will still have a place in a post-COVID era. In fact, it will transform from a place for your dedicated desk into an absolute key business resource to define culture and engagement. Traditionally, there has been a strong emphasis on your everyday desk or office. Moving forward, companies will consider where and how people are most productive, thereby enabling employees greater flexibility to choose when and where they work. The office will morph into a place to come together as opposed to being the required 9-5, everyday solution. For employees, this is an incredibly exciting future — as soon as you are no longer tied to a single desk or office, you have the freedom to design your life without your employer’s office location and long commutes as the deciding factor. At Cove, we provide the technology and service to support that future world for companies, while empowering office building owners a partner to create modern experiences integral to the future of work.

RealtyBiz: Some experts see the negative pricing trend for commercial property continuing to spiral downward. What is your view on this trend, and how can owners/developers prepare?

Adam Segal: When there is an increase in demand, differentiation becomes the absolute key. For those assets that are able to capture the future of work and unlock a differentiated experience, there will not be a downward spiral — in fact, just the opposite.

RealtyBiz: How do you see your business at Cove changing to address this new landscape? 

Adam Segal: Cove implements a modern consumer approach to the future of work for companies and owners of office buildings. Our focus is on building an experience around the office by building robust tools to bring everything online — from scheduling and coordinating your team to reduce capacity, unlocking onsite services and delivery, real-time updates — really a gateway to a modern work experience. The post-pandemic office will look nothing like the office of yesterday. In the future, the office will no longer be a home for your desk. Instead, the office will be a resource to bring people together for meaningful engagement. As a result, every company will need more intentional and coordinated office days for collaboration. The future of work for any company will include a mix of working remotely, in office, on travel — but now a real focus on productivity as opposed to a default 9-5, Monday through Friday culture. 

The Takeaway

According to Crunchbase, Cove is funded by Early Light Ventures. My takeaway on their investment, given the current state of transformation in business, is that those investors are smiling great big about now. $8.4 million in total funding could well turn into 100 times that figure. Here’s why.

Whatever benefits the remote office had before COVID-19, those benefits have been multiplied by 10,000 now. Furthermore, whichever businesses chose to optimize their buildings using Cove services before the pandemic, those clients are the leading edge of what physical office space will be in the future. Think about the whole situation like this. Once corporations and smaller entities make the adjustments for distancing, access assurance, safety measures, and added efficiency, how many do you think will switch back to business as usual? I should not have to spell out Cove’s potential here. From custom virtual events to building access management, Cove had a finger on the pulse of office buildings to start with. The next generation of office space will be all about remote work and managing a new kind of physical space. Who better to help transform the work at home corporate synergy? So, Cove has one of those rare opportunities brought about by the cosmos.

The post The Commercial Space Post-COVID – With Cove CEO Adam Segal appeared first on RealtyBizNews: Real Estate News.

Source: realtybiznews.com

Orchard expands to Houston, East Coast

Orchard announced Tuesday its immediate availability to consumers in Houston, as well as future expansion into Charlotte, Raleigh-Durham, and the Washington, D.C. suburbs in the upcoming months.

Court Cunningham, chief executive officer and co-founder, said he’s excited for Orchard to help consumers in the new markets, where demand has outpaced inventory.

“We’ll make it easier for home buyers in these markets to secure their dream home as soon as they see it, while still selling their old home for top dollar,” he said.

Cunningham added that the Move First initiative, Orchard’s program allowing homeowners to buy their next home before selling their old one, proved popular during the COVID-19 pandemic because it let consumers avoid living in their old home while potential homebuyers toured it.

“Buying and selling homes the traditional way isn’t sufficient in today’s hyper-competitive market,” he said. “With demand at an all-time high, people need to make offers – ideally in cash – without contingencies.”

Houston, according to multiple listing service data, is selling homes above price at triple the rate of 2019, and Cunningham added that the number of homes going under contract within 30 days of listing has increased by 50%.

Orchard adds Houston to a service area that includes Austin, Dallas-Fort Worth, San Antonio, Denver, and Atlanta.

Originally called Perch, Orchard branched into the lending business in July. This followed the creation of a title and escrow unit, dubbed Orchard Title, in the fall of 2018. It also closed on a $69 million Series C round led by Revolution Growth in September.

In October, Orchard announced the launch of a digital platform that enables homeowners to manage the entire real estate transaction in one place.

The post Orchard expands to Houston, East Coast appeared first on HousingWire.

Source: housingwire.com

Meet The Real Estate Tech Entrepreneur: Annelies Powell from DreamSpace

We kick off our 2021 real estate tech entrepreneur interview series with Annelies Powell from Dreamspace, a New Zealand based startup.

Let’s get to it!

Who are you and what do you do?

I’m Annelies Powell, CEO and co-founder of DreamSpace, an accelerator of vertical housing through rapid, repeatable, permits.

Our startup is working on the crux of the supply and demand housing crisis. We focus on permits as these are the key to rapid scalability of what gets built and where, and ultimately the experience of the occupants.

What problem does your product/service solve?

The housing industry keeps giving us ‘solutions’, but the reality is we all need to recalibrate our expectations on a home. Downgrade, downsize or move out of the city you love. The future of housing won’t be better than the past.

Or, at least that is what we’ve all been told.

DreamSpace thinks differently.

Our B2B2C solution will not only fundamentally change the way we scale vertical housing in cities, but will also vastly improve the outcomes. Our repeatable design and permits give way to unparalleled efficiencies so that we can give all occupants an affordable, 2000ft², spacious, private, home in the sky. It’s the future you didn’t imagine possible.

What are you most excited about right now?

Right now I’m most excited about the sales leads coming in. New Zealand (our test market) has a property market which is booming right now. People want a more convenient life, which DreamSpace is all about. I talk directly to each lead which has been invaluable to hear what users want their dream homes to be all about, their pain points, and what has them looking in the first place.

What’s next for you?

Right now we’re focusing on an early-stage capital raise. This is for our first permit and partnership with a construction company to get things built. It’s a steep learning curve and of course insanely satisfying to work on something we’re so passionate about.

What’s a cause you’re passionate about and why?

Without a doubt the prosperity of humanity working in harmony with this planet. To me, there’s no priority. I try to read books that open up my world view of people who’ve implemented large scale change for both humanity and the environment. Education, technology and the climate are some obvious themes. Naturally, these themes slip into my work, which feels like a good way to have a practical channel in taking action on bigger causes for concern in the world too.

Meet The RE Tech EntrepreneurThanks to Annelies for sharing her story. If you’d like to connect, find her on LinkedIn here.

We’re constantly looking for great real estate tech entrepreneurs to feature. If that’s you, please read this post — then drop us a line (Community @ geekestatelabs dot com).

The post Meet The Real Estate Tech Entrepreneur: Annelies Powell from DreamSpace appeared first on GeekEstate Blog.

Source: geekestateblog.com

How is Working from Home Affecting the Office Sector

The office sector is experiencing unprecedented challenges due to COVID-19. As shelter-in-place orders rolled out earlier this year and companies allowed their employees to work from home, the need for physical office space declined. So, what will happen to the office sector?  

CoreNet Global, a nonprofit that represents over 11,000 corporate real estate executives, recently released a survey on the effects of the pandemic. Here are some key findings about the future of the office.

  • One-half of the survey respondents said it will be at least June 2021 before 50% of their workers return to work onsite.
  • Once workers do return, the office will be a place for collaboration and teamwork, rather than individual work, according to 86% of respondents.
  • 64% said that the typical 9-5 workday is a thing of the past.
  • Survey respondents expect their company’s employees to spend about half their time in a traditional office, 42% in a home-based office and 7% in a co-working space.
  • 70% of survey respondents say their corporate real estate footprint will shrink over the next two years.
  • 71% report that their company will not shy away from densely packed urban areas, but 66% say that pandemic readiness on the part of cities will be a factor in their company’s site-selection plans going forward.

The post How is Working from Home Affecting the Office Sector first appeared on Century 21®.

Source: century21.com

639: Get Great Referrals by Building a Professional Network with Mark Maiocca and Mark Stiles

Clients are a great source of real estate referrals, but they’re not the only one. On today’s podcast, Mark Maiocca and Mark Stiles of Core7 explain how agents can drastically boost business by building a referral network with professionals from related lines of work. Listen and learn who you need in your network and what it’ll take to make them permanent parts of your referral machine. Plus, hear how to generate referrals with a simple script, what to do when group members aren’t doing their part, and more!

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Thankful Investor – John Martinez

 

Hey, welcome back for another segment! This is the 3rd and final segment that I wanted to share with you from my recent live event called the Thankful Real Estate Investor. We hosted this live right before Thanksgiving and it was an interactive event. Our 3rd speaker is Mr. John Martinez, the top real estate investor sales trainer! Let’s get started!

If you’re not a member of the FlipNerd Private Facebook group yet, you can join here: www.flipnerd.com/pro-event, and get access to lots of upcoming live and interactive content like this going forward.

Resources and Links from this show:

  • Investor Fuel Real Estate Mastermind
  • FlipNerd Professional Real Estate Investor Network: Join for Free!
  • Investor Machine Real Estate Lead Generation

Listen to the Audio Version of this Episode

FlipNerd Show Transcript:

[00:00:00] Mike: [00:00:00] Professional real estate investors are a different breed. We’re not afraid to go all in and take educated risks to build stronger businesses and help our families live better lives.

This is the FlipNerd professional real estate investor show. And I’m your host Mike Hambright each week. I host a new episode live and bring you America’s top real estate investors as guests.

Let’s start today’s show. Hey everybody. Welcome back for another segment. This is the. The third segment of three that I wanted to share with you from my recent live events called the thankful real estate investor. We hosted this live right before Thanksgiving. It was an interactive segment. So, uh, hopefully if you weren’t there, you’ll join us on an upcoming events.

Uh, our third speaker is mr. John Martinez, by the way, I’d love for you to join us at our future live events. We’re going to be doing these several times a month, going forward events like this that are live and interactive, answering your questions in our private. FlipNerd Facebook group. The way you [00:01:00] get access to that group is you go to flipnerd.com/pro event has a hyphen there pro dash event flipnerd.com/pro-event.

Make sure you go there and register. We’ll get you in the group and you can join us if you didn’t this time on our next live and interactive, uh, event. Let’s go ahead and jump in with mr. John Martinez.

I’m going to bring my buddy John Martinez and. John, how are you? You’re a little bit cut off. I think.

John: [00:01:27] Let me adjust the camera here.

Mike: [00:01:30] We want to see your good side.

John: [00:01:34] So you have to just deal with it.

Mike: [00:01:37] Yeah. So how are you? My friend.

John: [00:01:38] I’m good. I’m good. How are you  doing? How are you doing Mike?

Mike: [00:01:41] Good. Good. So as we’re kind of getting started here, I’ll ask a really a couple of things. First is if you guys have questions for John, if you don’t know John.

That’d be kind of unusual. So if you know, John is, and you want to ask some questions about what’s working now from a sales technique standpoint, or an approach of how you handle your leads, start to chat those in I’d love to get to your [00:02:00] questions. In the meantime, John, while we’re waiting on some questions, maybe you can share a little bit about what you’re most thankful about.

We’ve got so much to be thankful for. What would you share that, uh, I know you probably have, might have a long list if we had time to talk about it, but what are one of the things that come to mind that you’re most thankful for?

Uh, my health, uh, man, I turned 40 this year. So it’s funny how I that’s like more and more of a top of mine topic.

Like, uh, every year you get older. So, uh, turning 40 every day. I’m thankful for my health. Uh, thankful for parts of me that don’t hurt when I was picked up. And then, I mean the same with my family. Yeah, me too. My kids and my wife are all healthy. And I think, um, as long as you have that, you can basically basically get through anything else.

So that’s gotta be what I’m most grateful for.

Awesome. Awesome. Well, that’s great. So, so John, while we’re kind of waiting on some more questions, or maybe you could kind of share a little bit about what’s what’s working now, like we’ve been through, I wish we were through the COVID, so I don’t know if we’re through it earlier.

Trevor said we’re kind of. In the middle of this [00:03:00] code. And I’m like, hopefully we’re at the tail end. I don’t know where we’re at, but it’s, it’s changed. The dynamic has a lot of people that are doing stuff virtually now, or certainly vetting more out on the phone than they used to. What are, what are some of the things that are, that are kind of working now that people have had to adapt to over the last six or eight months?

Yeah. So it’s, you know, in sales, what’s worked for forever was having a plan or we call sales process. But I think it’s more important now than ever because we’re not doing as much kind of face to face or belly to belly selling. Um, so a lot of people who could kind of get away with just their wit and their good looks inside of a house and really building rapport that way and going buddy, buddy, and, um, having really good conversations because of, of that ability.

It’s it’s a lot harder to do that on the phone. So you have to start to rely on your plan or your sales process. I think even more now than ever before. Right? Your plan about what I want to accomplish during this call, how do I want it to begin? What do I want to, uh, [00:04:00] what’s the agenda for the middle? How do I want this thing to end?

What will, what will the acceptable outcomes be? Um, you know, if I run up against hidden decision makers, influencers, Pushback resistance. How am I going to deal with that? So I think it’s always, you know, the cornerstone of any good sales organization or sales person is, is process or having a plan. But I just think it’s more important right now than it’s ever been since we’re so disconnected.

Yep. Yep. So we’ve got a question from Matt here. That’s talking about kind of, how are you negotiate remotely? And I think, you know, a lot, like we just talked about a lot of people who have transitioned to doing this over the phone. And you lose some things on the phone, right? You don’t get to see the facial expressions or exactly how they’re living.

You don’t really get any indication of what the house is like by just walking in the front door. Um, maybe, can you maybe share some tips on how to make that transition for those that have had to make that transition that we’re buying at the kitchen table, if you will, to doing more over the phone?

John: [00:04:57] Yeah, I, I can’t so great point.

So usually in [00:05:00] a negotiation, you know, by the time you get there, A negotiation. You’ve got to walk a pretty tight line because you want to negotiate aggressively to get yourself the best deal. But at the same time, you don’t want to put yourself in a position where you, you upset someone or offend them in such a way that you kill your own deal.

Now, when you’re face to face, you can basically just read it. Right. Do you know the body language, the tonality? Um, no one can really hang up on you when they’re face-to-face either. Quit and say, get out of my house now they can, but it’s harder. Right? So in order to do that over the phone, one best practice I found what’s working right now is always assume the worst during the negotiation.

And then I’ll tell you what I mean by that. Um, you’re always safe if you assume the worst, um, uh, in a, in a sales negotiation and when it comes to keeping the conversation going and not offending someone or, or losing rapport. So here’s what I mean by that. Um, if you’re, if you’re making offers, you know, always assume that they’re not going to take it.

So here’s, here’s some examples, [00:06:00] uh, listen, I’d love to offer you a 75,000 for the property, but you know, based on this phone call, I’m guessing that if I offered that and I’m way out of the ballpark. Um, so, so you tell me, am I, am I, am I right? Am I in my way out of there? So just always assuming the worst there, you won’t put your prospect or the seller back on their heels and, and start that kind of confrontational negotiation.

So even as you go through the negotiation and you’re going back and forth, you know, Hey, I think I could offer you more money, but that would require you to, um, help it to clean out a little bit, or certainly shorten the timeframe or commit, uh, you know, within the next 48 hours. And, you know, we haven’t had a chance to think about that.

So I’m not sure if that, you know, the more, the extra money would even be worth, you know, you. Cleaning out a little bit more or painting the living room or getting their old car out of the garage. So I think, um, in order to be safe with negotiations, just err, on the side of caution and what it’ll actually do is it’ll build a, and it’s more amount of rapport.

It’ll [00:07:00] keep the conversation going. It’ll keep you out of that kind of enemy, confrontational battling type of negotiation and extend the conversation. So you can actually get through the negotiation and not end it prematurely.

Mike: [00:07:11] Yep. Good, good. That’s good stuff. So we’ve got another question here. I’m going to, I can’t tell with who the user is, but they’re saying what’s the best way to start a renegotiation or price with sellers.

So I don’t know the context of that, but let’s just say when people are buying virtually more frequently, now that they are, you’re making assumptions on repairs and stuff. And sometimes, you know, you find out that, you know, you told me the kitchen was remodeled, but it turns out is remodeled 20 years ago.

Right. And, uh, that it’s going to cost more. And so I think we all. You know, some people have an approach and I know John believes the same way that I do. You really want to use renegotiate as, as a. As a last defense, like you just really miss something and not this approach of like, well, I’m gonna try to lock it up and then go back and renegotiate.

I think we’re in agreement with how we, how we believe that. Um, but let’s just say we made [00:08:00] our best effort. We put an offer forward, an offer that we thought was good and later we found out we totally missed something or were misled on something. Cause we did it over the phone and we have to renegotiate.

So maybe talk about how to best start to renegotiate a deal with it. Somebody after they’ve agreed to something else.

John: [00:08:17] Yeah. So good question. So it pops up all the time. Um, it just happens. It’s the nature of the business is real estate and buying houses that are in disrepair or, or distressed sellers. Um, it’s going to happen.

So when you do it, you just need to really put yourself in the seller’s shoes when you go into that conversation. So here’s what I mean. We already know. And if you got one with a renegotiation and you’ve agreed to applies, and it might’ve been a tight negotiation to get to the price you originally agreed on.

When you go in and say the deal’s off, or I need even less, you have to understand how they’re going to feel. They’re going to be a little bit shocked. Um, they’re going to probably be a little upset and disappointed. And so as you go into the negotiation, first and foremost, you have to [00:09:00] realize what that will do.

If it’s with a seller it’s going to, they’re going to react the same way as is Mike, or I would react if we got upset or maybe even, you know, in that situation, you might even feel like you’re taking advantage of, or someone trying to pull one over on ya. Um, so you’ve got to realize that that’s going to be met with some type of resistance.

And now resistance in sales really shows itself in two ways. It’s either it’s kind of a fight or flight, right? If you get upset or you feel like you’re being taken advantage of, you’re either going to just shut it down and say fine, it’s off whatever. And I’m sure people have experienced that, right. They go in with the renegotiation and they just say, well, deal’s off.

No. Uh, or if there’s going to be a tremendous amount of pushback aggression, right. Um, get into a, uh, you know, a yelling confrontation or something like that. And that neither of those is going to lead to a smooth negotiation. I think we can agree on that. Right. If they’re shutting it down or, or getting pretty aggressive.

That’s not where you want to start off. So first and foremost, you got to know where your prospect’s mind is going to [00:10:00] be an address mindset first, before you get into the nego renegotiation. So knowing they’re upset, I’m just going to be open and honest and say, listen, I’ve got some bad news. I’m really reluctant to even bring it to you.

I feel like a schmuck because I know I’m going to rain on your parade today. Um, but I’ve, I’ve exhausted every option looking into this, and then we’ve got to have a really tough conversation and I want to let you know, I apologize up front because, um, it’s not going to be a fun one. Right. Uh, so if you see what I saw there, I just, I called the situation what it was.

Um, I took the temperature down using what we call tactical empathy in our sales training. Bye I’m going not okay. Just kind of, you know, going down and, and feeling bad cause you’re about to give bad news and that’s what a normal human being would do. Right. Um, and there’s some science behind it, but anyways, that’s it.

You want to go into it smoothly. And then, uh, I’m going to borrow from the last tip I gave, um, about negotiating over the phone. We want to, we want to come at it from a position where we’re [00:11:00] assuming the worst. So when I renegotiate, I started out just like I said, on the call, and then I’d say, listen, I, there’s no way I can pay 110 grand for the house.

It’s just based on what we found and everything going on. I, I can’t do it and I feel horrible about it, but I assume that if I had to pay even a dollar less, you don’t want to do it. And then just be quiet. Now, the reason why I didn’t say the number that I actually need is we feel tested this quite a bit.

And we found that we just say, you probably don’t want to sell at this point, or I’m not even sure I could buy at this point. Oftentimes sellers renegotiate down lower than, than what you need. Uh, I, I have countless emails and messages from people who said, I need a 10 K off. I went in with that exact read negotiating strategy.

And they said, well, would you take it if I took 20 K off? Right. And then, okay. Uh, so, so that’s it just know their mindsets slide into it, knowing you’re going to upset them and addressing and being real about it. And, and if it doesn’t [00:12:00] feel good to give bad news and don’t hide it, um, and then kind of go negative and assume that.

They’re not going to consider it or not like it, or you might not be able to get the deal done and then just go silent

Mike: [00:12:11] and see what happens. Yep. Yep. And I think some of it too is if you’re, if you shifted your model to bind more virtually, is there some things you can do to pre-frame that upfront? Like here’s our offer.

If part of your processes, we’re going to have an inspector come out and look what I want to try to give you a price. Now you can kind of pre-frame frame that is, uh, like we’re based on what you’ve told me. You know, here’s what we’ve come up with for repairs. And we’re going to have somebody come out and double check this.

And so you can kind of slip in there that in the event that any of that, that I missed anything here, we’ll find out and I’ll let you know, or right. You can kind of pre-frame them.

John: [00:12:44] Absolutely. Um, you know, that, that was kind of the assumption I was running with. No one likes surprises, prizes, especially bad news surprises.

So covering that upfront is definitely a best practice.

Mike: [00:12:56] Yeah. Good. We got a question here from our buddy John Harker, who [00:13:00] says hello?

John: [00:13:00] Hey John,

Mike: [00:13:01] uh, what do you do when a seller just won’t give you a price and just keeps. Saying look online. I don’t know what he means by that. Like,

John: [00:13:10] yeah. Maybe he’s, he’s referring to Zilla or do your research.

Mike: [00:13:13] They’re kind of celebrates online. They just won’t give you a price. And uh, so talk a little bit about what do you do when they just won’t show you their cards and they’re just waiting for you to give an offer.

John: [00:13:23] Yeah. So there’s a lot of strategies to get the number, but I want to come at this question two different ways.

Um, the first way is, okay, how do we get the number again? You’re probably seeing a pattern here. We’re going to pull back a little bit. Um, there there’s two ways to get it. One is I usually just suggest they don’t know the number cause people like to argue and push back. So one way to ask is. Listen, I’m guessing you don’t even know what you’d even what you’d want for the house we contacted.

You probably haven’t had time to do research, to think about it. That’s one way, another way to do it is to ask about a similar property. Oftentimes people don’t want to talk about themselves, but they’ll talk about their neighbors or a member of house in the [00:14:00] neighborhood. So another way you can ask is, Hey, listen, um, Houses in this neighborhood.

Do you know any that have sold recently? What are they going for? Right. And when you have a hundred K 200, 300 and you can kind of whittle it down from there real simply like really were you expecting to get more or less for yours? And now we’re starting to bracket them in and kind of drilling down on.

I was actually expecting a bit more. Well, why is that? Well, it’s a bigger house. It’s a nicer condition we rehab. So you can start to get to it in that round about way now, now that I gave the two ways that you’ll have more success doing it than just asking straight out, um, kind of some caution I want to throw out there.

Um, Oftentimes, unless you’re qualifying, let’s say this makes sense. If you’re qualifying, let’s say you have a bunch of leads and you want to find that, who am I going to work with? Who am I going to send my acquisitions out to? Who am I going to talk to? Where am I going to spend my time? Then you might be asking that price.

You, it’s a, it’s a level of your qualification. Now, if it’s not a level of your qualification, I’ll want to [00:15:00] caution you on asking what their expectations are, because it actually does more harm than it does. Good. Number one, it could get into your head. Um, I’ve worked with plenty of sales reps. Who’ve gone into sales calls gone.

We’re at two 50 for this house. They want 500 why even go, right? And they’re talking themselves out about, out of even showing up. But then when we show up and we run through the sales process and uncover some things, and sometimes those people actually sell for what they need to, right? No, one’s going to.

Call you up and you say, Hey, what would you like to sell for? And they’d say, Oh, 50% of what I think I could sell it for. That’s insane. Right? So sometimes that can kind of get in your head and stop you from even taking the appointment or really going full force at the appointment. The other negative.

About getting their offer is they’re setting expectations. And whenever you come in under it, cause you will come in under whatever they expect, 99 or 999 out of a thousand times. They’re going to be disappointed. [00:16:00] So, because I don’t want to disappoint them. I want to set expectations. I want to come in instead of saying, what would you like?

I’d like a hundred and me saying, I could give you 50 that’s bad. I’d rather go in and say, I’d love to give you 40, but with this, I think if we did it quickly, I could do 50. So then I’m setting, setting expectations. And then, uh, my comparison, it actually sounds a little sweeter. Um, so, so that’s my take on it.

So be careful asking, asking for asking price only do it. If you need it. Because of mindset and the expectations that sets, and then kind of the psychology that goes along with what’s called price anchoring. It could actually have a negative effect. So if you don’t need that information, you might not want to get it.

Mike: [00:16:36] Yep. Good stuff. Good stuff. So, John, we’ve got a really long question. I don’t want to put up on the screen cause I think it’ll block the whole screen, but effectively says, uh, you know, what kind of techniques are working well with speaking to homeowners or landlords? There’s a lot of trouble landlords out there these days because of all the rents, deferments and all this stuff, um, about.

COVID w on the value of their property versus kind of the future. So I think that there’s a couple of ways [00:17:00] I could translate that. I think, um, you know, there’s a, there’s probably a lot more landlords that are hurting now than there were before. COVID. And then on the other side yeah, for home owners and even, I guess for landlords is property values have gone up pretty substantially during, since COVID started because there’s just very little inventory, so prices have shot up.

So we’re, we’re kind of dealing with this whole COVID mess, but at the same time, knowing that prices just feel kind of artificially high right now because of what’s been going on. And so, uh, that’s like a huge loaded question ultimately, but kind of how do you integrate those things into. Talking about value when you’re talking to a seller.

John: [00:17:39] Yeah. So, uh, interesting questions. Um, we can break those

Mike: [00:17:44] down into a couple of smaller questions if

John: [00:17:45] you don’t know. It’s okay. It’s okay. I’m just thinking through it. So, uh, really I think having that conversation unless it needs to happen is kind of a trap. So I’m going into that question with the premise of, we’re [00:18:00] trying to convince someone that their house is worth a, when they’re trying to convince us that it’s worth B.

Yeah. And if you are in the real estate investment business, that’s, that’s not the conversation you want to be having. That’s a retail conversation, right? Um, that conversation is, is not going to do a lot for you as far as increasing your conversion rates. What you want to do is pivot that value conversation, not the price isn’t worth more because of COVID or is it worth less?

Two, what’s it worth to you right now? Uh, here is what I can offer. Let’s have a conversation about, is it worth even considering that offer? So shifting the conversation is where I’d want to take the answer to that question. If you’re having that conversation of, I think it’s worth 50. Well, I think it’s worth 60.

I think if we’re  that’s not a winning strategy and sales, you have to pivot the conversation. To listen, I’m going to give you an offer and I’m not sure it’s going to be more or less than, than what you were expecting, but let’s chat a little bit about what you want to accomplish. [00:19:00] And, um, so I know how to structure it and make sure I can maximize my offer.

And then you can just figure out at the end of this, Hey, with what I want to accomplish does accepting this offer makes sense or not make sense. And that’d be a pretty easy, easy answer for you. And then I’m shifting the conversation to, you know, what even got you started thinking about selling. Is there a, you know, is it, is it kind of a situation you want to get away from, or is there, do you want to use the money for something else?

Do you want to move across the country? What’s going on? And I want to redefine it and read it and just pivot that conversation to what’s your problem? What do you want to accomplish? And, and I’m going to ultimately give you an offer and then your only decision is in order to accomplish that. Is it going, is it worth it?

Is it worth taking the offer? And doing that you can, you can really stroke a tremendous amount of motivation. You can bring a lot of motivations to surface that your prospect may not have been thinking of. You can understand their situation a lot better. You’re going to build a lot more rapport, their urgency to take action.

The more they talk about their situation is going to increase. So I don’t know if I’m giving the right answer, but, but my answer [00:20:00] is that’s probably the wrong conversation to have, and we need to pivot.

Mike: [00:20:03] Yeah. Don’t look at the underlying issue of COVID it’s just the situation of what you think the value is versus what you can pay.

Right, right. Yeah. Yeah. I think there’s a lot of, there’s a lot of landlords that are hurting. Right. And I mean, there’s, let’s be honest. There’s a lot of landlords that didn’t buy, like. For me, all my rentals were bought at wholesale prices. And in fact, most of them were from many, many years ago. So like prices that are inconceivable now, uh, cause I’m actually older than John.

Uh, I was talking about age earlier, but, um, uh, but I think there’s a lot of landlords that, you know, they bought it off the MLS and they, in their mind, you know, or, or they bought a turnkey property at close to retail value and they never. Thought about like, well, what could go wrong? The house is newly renovated and like things go wrong, you know?

And of course, with, with COVID it’s even, uh, kind of unprecedented in terms of. You know, some States saying you don’t have to pay the rent and all that stuff. It’s just crazy. So I think what you really focus on there is that pain of like, you’re not even getting paid right now. When do you think you’re going to get paid again?

Right.

[00:21:00] John: [00:21:00] The reality of the situation is we all overpay for stuff happily because it’s worth it. Right. And we all take massive losses on things that we have when we sell them, because again, it’s worth it. So just think about any time in your life, where you said, you know what? I probably could have gotten more.

But I’m just thankful it’s over. I’m thankful I got rid of it. Yeah. I know. I overpaid for that, but here’s the opportunity it opens up. I’m glad I did. Right. And you’re excited about overpaying for something. So if you start thinking those terms, that’s how your seller’s thinking, right? It’s not always about getting, you know, fair market value to them.

Is what it actually accomplishes to them, not, not what Zillow says or what your, your, your maximum allowable offer is, or whatever you calculate the ARV to be. It’s, it’s going to be what’s it worth to them. So again, just another way to rephrase my answer is you’ve got to figure out what, moving that property is worth to them and get away from the ARV conversation.

Mike: [00:21:54] Yep. Yep. Well, guys, we’ve got time for a couple more questions, so please chat them in here. Uh, John saw this, [00:22:00] I got a question for you. How do you use, or how can you utilize the end of the year? Beginning of the year kind of phenomenon. Uh, and I’ve always kind of explained it as it’s like a health club.

Like people want to, you know, January 1st, there’s this line in the sand, that’s really just in their mind. And now I want to start the year and lose 40 pounds or whatever. There’s also people that have had. Problem rental property or a house they inherited, or a fixer upper of some sort that they’re like, I don’t want to deal with that next year.

I just want to get rid of it. How do you kind of utilize that in the year? Phenomenon of people wanting to start fresh?

John: [00:22:33] Yeah. I mean, you can use it just like you said. I, I typically don’t care. What time of year. It’s a great time to use scarcity. I can use really use scarcity no matter what time of year it is, but it works really well at this time.

Um, I’ll tell you when I was out, uh, training salespeople and kind of men buying houses coast to coast. Whenever we didn’t get one at the kitchen table, we would drive two blocks away and I would call and say, listen, We could give you a little bit more money if we can walk this up in the [00:23:00] next 60 minutes and we would often lock them up then because that’s scarcity.

So having, having a cutoff, and I think it speaks really to the broader, uh, sales strategy of having an offer expiration or having, uh, making a, no one, no right Treme salespeople out there, 20 acquisition agents and real estate investors, I think because there’s a fear of losing a potential deal. They never make their prospects actually make a decision.

Right? Think about it. Think about it. I’ll continue to follow up with you. And there’s never any cutoff where a decision has to be made. So the prospect never feels a fear of loss, a fear of actually losing the deal. So, um, cause the investors

Mike: [00:23:40] is afraid to say, I’m never going to call you again, right?

John: [00:23:43] Yeah, absolutely.

Uh, so sorry, my Alexa just went on and off. I don’t know what happened to you guys

Mike: [00:23:52] are winding it down. Guys, ask the questions. Cause the lights are going

out

John: [00:23:56] probably in the other room it’s like in it, but yeah, no. [00:24:00] And anyways, I want to just, just go back to that and say, Hey, every time you make an offer, you just word of advice.

You need an exploration, whether it’s by the time I, you know, if it’s not a yes. You know, by the time we wrap up our conversation. Totally cool. It’s no, uh, you know, don’t be a jerk about it. Uh, or Hey, you know, offers you a stand for a week. Obviously I can’t make an offer on a property and let it hang out there for a year.

If things change, my situation will change. Number of houses. I need changes the real estate market’s going to change. So I can, I can let this offer stand for three days, seven days, whatever it is. So you’ll do yourself a favor. If you just start giving a cutoff to when your

Mike: [00:24:34] offer expires. Yeah. Yeah. I remember when I first started this a long time ago now.

Um, and I used to sit there like, how good, how good is the offer for? And I was like, Oh, you know, 30 days. But even then I’d still be interested in buying it. And I was like, well, would I in hindsight, you know, so stupid, what would you do? You’d like, you’d go shop at everywhere in town. And like, I’m like plan B if they need it, which they would never need it.

So then we, then we got better. [00:25:00] Yeah. Awesome. Well, John, what do you think differentiates, let me ask you a question. What differentiates you? You, you’re a member of investor fuel as well. You know, you surround yourself with a lot of amazing people, just like I do for Schwartz, I’ve run in some of the same circles.

What do you think differentiates those that are doing really well at crushing it from those that are good, doing some deals, but kind of just getting by and kind of stuck in the grind. What do you think differentiates those two people from a sales perspective,

John: [00:25:26] from a sales perspective, It’s gonna sound funny, but it’s, uh, getting out of the sales role.

Um, I think the, the more successful people in invest a fuel, um, and, uh, you know, just, just investors in general. Um, even if they’re really good at it, uh, sometimes even if they like it pulling themselves out so they can grow, right. If they can have three acquisition agents that are half as good. Uh, the numbers typically work where you can turn up lead flow and, you know, still, uh, grow them at, uh, in the business.

So I think it’s [00:26:00] getting out of the seal rule so you can focus more on actually growing the business. And I, I train sales people, so I love to train an investor. So I don’t want to talk anyone out of, uh, investors buying houses, but at the same time, getting out of the sales role, hiring others to do it.

Even if they can only do it a fraction as well as you will allow you to focus on the actual and pull the levers that will grow your business and then turn everything off because now you’ve got the bandwidth to handle, increase everything else. So that’s when you can do sales. If you’re an investor business owner, entrepreneur is get out of the sales role and get yourself a couple of people who can do it

Mike: [00:26:36] for you.

Yeah, you can even say that about your whole business. Like we’re we’re in our way, right? I, I just, uh, before today’s event here, I did, uh, I recorded an investor fuel show with clay Rockwood. They’re doing a hundred wholesale deals a year and adding a hundred rental doors a year to their business. They’ve been in business for three years.

These guys are crushing it. And that’s what he said. That’s what he said is like, we just. I’m not the best at [00:27:00] anything that our company has to do. And I just had to get out of the way. And so I can focus on, you know, being the visionary or God forbid living your life. Right.

John: [00:27:09] You know, I’ve, I’ve, I, um, we’ve got one client in York, Pennsylvania.

This guy is probably one of the best natural salespeople I’ve met in my life. Like just, just he’s got it right. He was born with it. Um, that being said he doesn’t train the sales team. Um, he outsources that to, to me. Um, and the reason is, is not because he can’t do it. Um, but he knows his, his focus is spent elsewhere.

Now he’s doing 70 deals a month consistently and half for the last year or so last year. So we’re talking about how do you hit that volume? Um, and he’s not involved in the business that much anymore. So I just wanted to kind of throw that out there. He’s probably one of the best sales people I’ve met in my life.

He’s not selling his, he’s not even training his team, let alone selling the deals or buying the houses that are just positioning him because he knows he needs to [00:28:00] keep stepping up and taking kind of a higher level view of what’s going to grow the business instead of just taking that micro view.

Mike: [00:28:08] Yeah.

Awesome. Well, John, appreciate you spending time with us today. Great. To great to see you. My friend.

John: [00:28:12] Yeah. Good to see you, Mike,

Mike: [00:28:13] have a great Thanksgiving and a, well I’m sure we’ll be talking again soon. Okay. Thanks for joining me. On today’s episode, there are three ways I help successful real estate investors take their businesses and their lives to the next level.

First, if you’re in search of a community of successful real estate investors that help one another, take their businesses to the next level and a life changing community of lifelong friends. Please learn more about my investor fuel real estate mastermind. By visiting investor, fuel.com. If you’d like a cutting edge solution for the very best done for you lead generation on the planet where we’re handling the lead-generation for many of America.

Top real estate [00:29:00] investors. Please learn more@theinvestormachine.com. And lastly, if you’re interested in a free online community of professional real estate investors that isn’t full of spam solicitations and newbie questions, please join my free professional real estate investor Facebook group by visiting flipnerd.com/professional.

 

Source: flipnerd.com

Podcast #13: Commercial Lending and Real Estate

podcast 13 commercial lending and real estate
For this podcast about commercial lending I sat down with Angie Hoffman at U.S. Bank.  During the podcast we discussed investing in real estate, commercial lending, and how commerceial mortgages can help investors.  If you want to learn more about commercial loans this is a great pdocast for you.
I hope you enjoy the podcast and find it informative.  Please consider sharing with those who also may benefit. Listen via YouTube: You can connect with Angie on LinkedIn.  You can reach out to Angie for more information on their lending products by emailing her at angela.hoffman@usbank.com.
You can connect with me on Facebook, Pinterest, Twitter, LinkedIn, YouTube and Instagram.
About the author: The above article “Podcast #12:  Hard Money Lending” was provided by Luxury Real Estate Specialist Paul Sian. Paul can be reached at paul@CinciNKYRealEstate.com or by phone at 513-560-8002. If you’re thinking of selling or buying your investment or commercial business property I would love to share my marketing knowledge and expertise to help you.  Contact me today!
I work in the following Greater Cincinnati, OH and Northern KY areas: Alexandria, Amberly, Amelia, Anderson Township, Cincinnati, Batavia, Blue Ash, Covington, Edgewood, Florence, Fort Mitchell, Fort Thomas, Hebron, Hyde Park, Indian Hill, Kenwood, Madeira, Mariemont, Milford, Montgomery, Mt. Washington, Newport, Newtown, Norwood, Taylor Mill, Terrace Park, Union Township, and Villa Hills.
TRANSCRIPT
Commercial Lending Podcast
 
Paul Sian: Hello everybody. This is Paul Sian, Realtor with United Real Estate Home Connections, licensed in the State of Ohio and Kentucky. With me today is Angie Hoffman with US Bank. Angie how are you today?
Angie Hoffman: I’m doing great Paul. How are you?
Paul Sian:  Great. Thank you for being on my podcast. We’re gonna start off. Today’s topic is ‘Commercial Lending’. Angie is a commercial lender with US Bank, as I mentioned. Angie, why don’t you tell us a little bit by your background. What you do with the US bank, and how did you get started in that field?
Angie Hoffman: Sure. So, I am a Cincinnati resident, have been my entire life. Was previously with a company called the ‘Conner group’, which is located out of Dayton, Ohio. They’re a private investment real estate firm. I was with him for about five plus years, just learned a ton of information, really loved the financing portion of their group. So, that turned me to the banking portion, which I ended up going with US Bank just because of the knowledge and the breadth of what they can do as well. Just the culture within US Bank has been phenomenal. I’ve actually been with us Bank now for five years; in the last three years I’ve been within the commercial real estate side as well as the business banking side.
Paul Sian: Okay. Your primary focus is commercial loans.
Angie Hoffman: Correct. Yes, both investment real estate as well as owner-occupied and small to medium businesses. 
Paul Sian:  Okay. The investment side, I represent a lot of buyers of multifamily. I know with the form below we do, the conventional space generally, and then when you’re in the five units and above. You go into the commercial space, which is your space. I have also heard it being covered with mixed-use buildings, industrial properties, is there something else that commercial loans would cover?
Angie Hoffman: Correct. I mean it can really be quite an array of properties, office is one that we see pretty often, and can tend to be either hot in certain areas, whether it’s office Class B or Office Class A. Retail strip centers, we’ll look at Triple Net properties, and absolute not properties. We are very popular, if you’re looking at diversifying a multi-family portfolio and adding in some triple net properties. We also do, obviously owner-occupied properties too. When you have that small business or medium business owner who wants to own their own real estate. We do that as well, and that’s again part of what my position entails, and then we will also look at portfolios will do single-family homes. 
I’m actually working with somebody now who has a portfolio of several single-family homes, that were looking to kind of restructure and refinance for him. We can even utilize current equity and properties to purchase additional properties to help you grow your portfolio. We do try to have a full understanding of your portfolio or a full understanding of what your strategy is. How partner with you, as you continue to grow that portfolio short- and long-term goals.
Paul Sian: For our listeners, who don’t know. What Triple Net means, do you mind explaining that.
Angie Hoffman:  Sure. So, Triple Net is gonna tend to be your properties that have the tenant itself is paying the taxes, the insurance, you may have some pretty minimal depending upon the property, responsibilities that are usually restricted to the exterior of the building. It may be like a roof or a parking lot. Type of maintenance but generally speaking the great thing about the triple net is that for some clients, it’s a property that you can basically own, and you have to do pretty much nothing with. So, you’re gaining that income without having to do a very minimal type of responsibility or maintenance. 
The downfall of that is that typically they’re gonna be somebody, who is gonna be a longer-term lease, which is great. However, you still have the issue that it’s a bigger square footage generally. So, five, ten, twenty thousand plus square feet. If you lose a tenant obviously, that can be very impactful. It just depends upon your, again your focus of your portfolio, and if you want to add in that. But it can be great opportunity, but tends to again be a little bit less of a return. Because of the minimal responsibilities.
Paul Sian: Going back to single family. That is similar, I am using the same term your bank use but to ‘wrap mortgage’. Is that what you use for single families?
Angie Hoffman:  We do have the ability, from the perspective of what you say wrap mortgage.  We’re typically calling that like an umbrella, if you’re grouping all, let’s call it, if there’s ten single family homes. You’re grouping this all into one, it lies together. We have the ability to do that depending again on the structure that the client is looking for. 
We also have the ability to separate out those facilities, and do a simultaneous closing for each one of them to have them separated out from each other. Obviously, there’s some contingencies but that the properties itself have to be able to cash flow by themselves, things along those lines that we would underwrite to. But we do have ability to look at it from both perspectives.
Paul Sian: Okay. The biggest advantage of that if someone has reached the maximum ten convention mortgage loanlimit. They can step into your space there and you could cover them, and they can either restart that or. With something like that, let’s say somebody does get ten properties, and are they able to finance in additional properties into that same loan or is that has to re-finance each time?
Angie Hoffman: No. We would be able to add in. I mean, if you’re asking like if they want to refinance these properties, and they’re also looking to maybe either use some of the equity in them or they’re also buying at the same time. We can do all of that together, so that’s not an issue at all.
Paul Sian: Let’s say to somebody new coming to investment. What is the typical down payment on commercial loans? That are looking to buy in the mixed-use space or multifamily space?
Angie Hoffman: So, generally speaking. We’ll go up to 80% loan-to-value. The biggest factor within that is gonna be how much the capability of the property to hold that debt. We’re gonna have, we have a pretty. I don’t want to say complex but we do have  multiple factors that go within our cash flow, and net operating, income calculation, that we’re gonna want to see. It balanced to a certain point for it to be able to hold the debt at an 80% loan to value. Again, we tend to partner with our clients. I have several clients who will send me properties on a daily basis, that they’re interested in. We will let them know what the debt capacity would be on that property.
Paul Sian: Okay. Income from the rents per sale, let’s say, something’s got a ten-unit building. Then you’re looking at the rents that are coming in. You’re also considering the buyers income level, income to debt ratio, all that as well.
Angie Hoffman: Yes. When I talk about the capacity, the debt for the property is being the one of the first things we look at is. In order to get to that 80% LTV, if you’re looking at the actual depth, they’re wanting the property to take on. Compared to other rent they’re taking in and the expenses, as well as some vacancy factors, things like that. That’s what we’re looking at to have a certain ratio, then on top of that. When we get to the next step would be look at the client globally, and their personal debt to income, and that factor too.
Paul Sian: Looking at that commercial mortgages, can buyer use the mortgage to upgrade property, to build in some equity in the property. Does the building of the equity get taken into account, and do you have a loan that allows them to do that?
Angie Hoffman: That question is kind of twofold. If you have a property, let’s say, it’s multiple unit, and you’re continuing to kind of do some improvements and renovations. If the property has the equity, we can look at small lines of credit to help with that renovation cost. Then once everything’s complete to be able to wrap that together. If you’re looking at a property that’s completely distressed, and doesn’t have any type of income. Then that’s gonna be something that generally we’re gonna have a harder time with. Because it’s a speculative type of scenario, and we want to typically see the actual income.
Paul Sian: How about converting something, I am interested in buying warehouse, either in retail space or multifamily. Do you offer products for that, or is that a similar situation when you’re looking at the risk as being a little high?
Angie Hoffman: Yes. So, that is gonna be a similar situation. Once the actual project would be completed again from a speculative standpoint, it just it becomes a little bit more difficult from a risk perspective. However, we’ve been in scenarios where we’ve worked with clients and partnered clients, people we know who work in that space more than we do. We can look to, guide them to what we would look at if we wanted to refinance that once it was completed, and there were leases in place.
Paul Sian: Okay. So, that is one of the benefits working with a big bank like US bank, is you can reach across departments there, and tap other resources within your organization.
Angie Hoffman:  Even if it’s within the organization, we have other resources whether it’s our private wealth or wealth group, have some capabilities that are different than what we have as well as from a CUI or network basis. It may be somebody just within my network that I know works within that space to introduce that way and hopefully can get that client taken care of.
Paul Sian: Are you able to comment on the underwriting process of commercial loans compared to residential. Is there a big difference in that process? 
Angie Hoffman: So, yes and no. I know we touch on it already a little bit. One of the biggest differences is obviously we’re gonna look at the actual collateral in a very different way, especially on the investment real estate side. When you’re looking at investment real estate, the factors that the net operating income as well as the cash flow of the property become factors. Whereas, when you’re buying a home, obviously it’s a lot more about the loan to value of the property. However on the other side of that, if we are looking at a property that’s gonna be owner occupied by a small to medium business. It becomes a lot more about the loan-to-value as well. So, it can depend upon the situation.
Paul Sian: Okay. How important is the person’s experience when they come to loan, get a loan for you. If it’s a new first-time investor looking at multi families versus somebody who’s already got five to ten units and then either self-managing or running it for a couple years.
Angie Hoffman: I mean, generally speaking, if you have somebody brand new, one of the biggest things is if you’re not familiar in the scope. You don’t have experience, you gonna be partnering  potentially with a property management company or somebody else who is maybe a partnership within the LLC or the property that you’re buying that has the experience. Just being able to show you may not have previous experience in this but you are partnering with a property management company that has historical success in these properties. You’re partnering with somebody, for instance, who has historical success in the properties.
Paul Sian: So, yeah boils down to your team then. What you’re bringing to the team. What kind of document requirements are there to start a commercial loan process with US bank?
Angie Hoffman: Generally speaking, in every situation is different, every request is different, client is different. But it’s typically going to be two to three years of taxes, personal and business, personal financial statements pretty standard as well. If it’s a purchase, we’re gonna want to see a purchase agreement or understand the purchase agreement as well. As you’re gonna want to have financials whether it’s profit loss or the rent rolls preferably a Schedule E or 8852 from the client. Showing what the historical trends of that property of have been. That’s where we really try and partner with our clients of understanding their portfolios, understanding what purchase they’re trying to make. So, that, does it fit, and is there anything we see because we see them on a very regular basis that. Maybe we need to discuss or let the client know that we are suggesting maybe prying a little bit more information.
Paul Sian: How important is ones credit score when they come to apply for loan with you?
Angie Hoffman: It is a factor, I mean. In any type of just like the traditional mortgage, it is gonna be a factor. But there are so many different factors that, it’s only one of many.
Paul Sian: One of the important things when it comes to purchasing real estate is I always tell the buyers that have a pre-approval letter ready. Is there something similar in the commercial loans place? A pre-approval letter, pre-qualification letter. Just something that says, somebody sat down with you, they started the initial process. They’ve got access to certain amount that they can borrow to purchase this property. Do you have something like that?
Angie Hoffman: We do. So, on the commercial side it’s gonna be called a letter of interest, and it basically lays out that we are working with a client. We have a price range or up to a price range that we’re looking for with the client, and depending upon the collateral. We are looking to work with him on the financing, again depending upon what the collateral is, and then we also have once we’ve actually maybe gone through a more official process of underwriting and submitted an actual financial package. We do have, depending again on what the financing contingency is for that client. 
We do have a letter of commitment, which lays out that there is an approval but it goes through all of the conditions as well like your appraisal certain things like that, that we’re gonna have to clear.
Paul Sian: Okay. How long does that process take? If you are writing an offer today for a client, and then usually you have to write in how many days we’re gonna close in. 30 days, 40 to 45 days. I know conventional, it’s usually a little quicker, a little easier. So, we can do it in 30 days or so. I mean, what would you recommend for a commercial loan?
Angie Hoffman: I think 45 days is very practical. One of the biggest things that I always talk about with my clients is that 45 days really is incumbent of me having a full financial package, meaning those two years of tax returns. The financials, I spoke about from the client that you’re purchasing, and or if you’re refinancing. To me, having that full financial package is really the key and then, again from there it’s gonna be some of the factors of the appraisal as well as the title work that would go along with it. But generally speaking, 45 days to close is pretty.
Paul Sian: Reasonable.
Angie Hoffman: Yes.
Paul Sian: You mentioned the documents that was my blog article documents for the conventional mortgage process. You mentioned W2s, 1040, tax returns, that is pretty similar the document requirements for commercial loans that it is for residential space?
Angie Hoffman: Yes. It’s very similar. With the PFS is gonna be one of the biggest as well as the two years of tax returns. Potentially three years depending upon, again the request size. Like you said, I mean, if they’re a W2 income type of employee, then we may need additional pay stubs. like I said, for any client, it could be very different depending again on what their history is. If they’re a business owner, then we may mean some more details but generally speaking, again it would be two to three years of personal business has returns, personal financial statement, and potentially obviously purchase agreement or additional documentation from that side.
Paul Sian: Okay. When it comes to partnership, people coming together, those documents from everybody. Correct?
Angie Hoffman: Correct. So, depending on what the ownership structure is. Generally, if somebody’s over 20% ownership within the property, then we’re going to need that financial information from them as well.
Paul Sian: Okay. I know with the conventional space. Lending into an LLC is generally impossible. Most lenders will not allow conventional borrowers to use an LLC. How does that work on the commercial side?
Angie Hoffman: The vast majority of the lending that I do is going to be through an LLC in a holding company. The clients are still a personal guarantor but the lending itself in the title is all within the LLC.
Paul Sian: Is it a requirement in LLC or is it an option for the buyer?
Angie Hoffman: It’s an option. I mean, one that again depending from an attorney’s perspective, if you’re talking about liability. It may be a best-case scenario to have an LLC with that property. But we always reference stuff talk to your attorney about what makes sense for you.
Paul Sian: How much, do you have any minimum loan requirements and your maximum loan requirement?  
Angie Hoffman: Up to ten million on the investment real estate side, and then once it’s beyond that, we do have a commercial group that we would work with a real estate group as well as our middle marker group that would potentially be involved. As far as minimum typically, again if it’s under 2,50,000. It’s still something that we would do. It just, we pull in a different partner to work with us on that too, because it kind of goes into a little bit different of a space.
Paul Sian: Is there, under 250,000$ or is there a lower minimum. I know some conventional lenders won’t touch anything fifty thousand and under.
Angie Hoffman: It’s pretty common. Yes, under fifty thousand is gonna be a little bit more difficult. 
Paul Sian: 50,000 to 2,50,000, and above that.
Angie Hoffman: But keep in mind too. I mean, if you have properties itself. It may be again, you see this more with the single-family home portfolios. You may have multiple properties that are under fifty thousand. But we’re looking at the entirety of the portfolio, makes a little bit different of a scenario. I would caution that anything that somebody is looking at from the perspective of either total lending amount or even individual property. We’re happy to take a look at it, have an understanding of what you’re looking to do, and if for some reason it’s not something that is in our world necessarily. Again, from an internal and external standpoint. We typically have somebody who I can contact.
Paul Sian: Discussing interest rates from general perspective, everybody’s situation is different and unique. But in terms of paying more, having a lower LTV, 60% LTV rather than 80%. People get themselves a better interest rate or is it generally, can we same and more just depending on credit and history.
Angie Hoffman: So, from an interest rate standpoint, the commercial side is a little bit different. Then maybe the mortgage or lines of credit side, then you then you generally see. Ours is based off of what banks cost the funds are, and then there is a spread that is on top of that. That’s where you get the percent from. Right now, cost of funds are pretty minimal. So, interest rates are extremely competitive. But from that perspective, it doesn’t necessarily factor in the actual loan it saw or the guarantor itself or the property itself.
Paul Sian: So, there’s some risk-based consideration towards interest rates. I guess a little higher risk project is that something you would price a little higher in the interest rate or generally that it’s not considered as much?
Angie Hoffman: No. That’s not considered as much, generally.
Paul Sian: Okay. Great. That’s all the questions I have for you today Angie. Did you have any final thoughts to share with the group?
Angie Hoffman: Sure. One thing I would say is if anybody has any questions about property specific, cash flow, if this property may fit into their portfolio or something that we would look to land up to 80%.I’m happy to partner with anybody on that side as well, and be resource for them. On top of that, I did want to mention that obviously US Bank is across the country. That gives us the ability even, if I’m your contact in Cincinnati to lend out-of-state borrowers.
I’ve worked with quite a few clients obviously from California that are buying in Cincinnati as well Chicago. So, those are people that I’ve worked with quite frequently as well.
Paul Sian: That is perfect. I’ve got a number of out of state clients to. That is one of the biggest challenges that I’ve faced with some local lenders is that they don’t lend to out of state. That’s a great ability to have.
Angie Hoffman: So, the key with in that too is just as I want to mention too. I mean, anytime that scenario comes up. We are happy to discuss it. One of the biggest factors with out-of-state lenders is that we do look for them to be within US bank footprint. So, we are very much on the west coast and Portland, all of those areas. If they’re somewhere you’re not familiar, if we’re within that area, please reach out. Let me know, and I’m happy to take a look.
Paul Sian: Great. Thank you again. I will leave your contact information on my blog post once it gets published live. Thanks again for being on the podcast.
Angie Hoffman: Thanks for having me. 

Source: cincinkyrealestate.com