Tuesday, February 1, 2011

Re: some comments + >I suggest Interested owner's leave their info...

Following up on just some comments from readers, i strongly suggest that people leave a way to get in touch. I know this may be obvious, but i've noticed people wanting to get in touch but then not leaving their info.

If you are concerned with being anonymous, it's easy to set up an email account just for this purpose and keep your private info concealed.

i thought my email address WAS included here. if you are having trouble finding it, always feel free contact me at:
phila8736@yahoo.com

re: any attorney's who have responded or "work out" companies – i'm sure owners would mainly be interested in a contingency basis which we've not been able to secure – since MOST of us have lost our investment monies and don't have extra money laying around. But again, you also feel free to contact me!

also, at this point, we are figuring statute of limitations has run it's course. perhaps we are wrong.

I will again revisit the comments and reply best i can.

thank you & good luck to us.

Still Tough, but some signs of hope on the Horizon?

As many of us know, there have been foreclosures aplenty in real estate in the past two years. Some who bought their TIC's through Sun 1031 have witnessed this firsthand.

Commercial RE didn't dodge the Residential RE effect because to a point they go hand in hand. Commercial tends to lag Residential, but since the overall RE drop and economic recession have been prolonged, they've had the time to catch up to each others' misery. There's been at least a 40% average decline in commercial property values since August 2007.

Many small business owners use(d) their homes as collateral or credit lines when they needed cash flow or business improvements. This helped the economy as a whole. As that source of funding has dissipated, new business cannot start up and present businesses may not continue to weather the storm. Especially the "mom and pops".

You also have the economic recession effecting businesses who are leasing. Business is down and they are looking to cut costs, IF they can stay in business. More businesses are looking at competing vacant properties at sometimes half the price.

If that competition is a big company with a lot of operating cushion, those large corporations will squeeze and steal tenants from small property owners – while driving down leasing rates for all.

I've seen this first hand when a tenant's lease is up. At one property, a large business was able to move at half the price PLUS get TI from the large corporation.

The business wanted the small owner to give major concessions to stay, including caps on all CAM expenses plus that aforementioned half price lease – at a non escalating 5 yr. term.
Often time, owners are loathe to agree to such a deal, which is a risk. Nimble and constant communication between your PM and leasing broker are very important in such matters.

In later years, this can be a risk for the business moving as big corporations won't consider "cam caps", or flat leasing terms, etc. They just may find themselves moving again in 3-5 years.

Finally we are into 2011. For the most part, properties have to be able to last well thru the end of 2012 for any potential recouping of investment dollars. We are hoping the worst is behind us.

Some properties were hurt by maxed out equity for their mortgage which benefited only the TIC sponsor; and properties without a mortgage were bought at a steep price. Throw in poor/high property management fees and you have a problem at the beginning of an economic downturn that = catastrophe.

The downward lease-pricing trends see many of us having trouble supporting the mortgages that MANY TIC properties were encumbered with when they were bought.

As many of us have learned, an honest, hard working, lean property manager/leasing agent is integral for a property's (and your tenant's) success. In the years that have passed from the first PM we were saddled with, we are STILL finding errors that cost us $$.

I think many of us have learned some hard lessons these past few years.