Archive for May 2019
The Terry Hale Show Episode 7
5 Things You Need to Know Before Looking at the Deal Any Further
TRANSCRIPTION
Hey, this is Terry Hale commercial real estate trainer,
want to get with you here
and teach you something that is so very important.
I know that a lot of you have been looking around
for commercial projects,
taking your time; time is money.
If you’re out there and you’re looking for projects,
and you haven’t found anything yet,
it’s maybe because you’re looking at
the deal and dissecting it prematurely.
There are five things that you need to know
five things before you want to ever take your time.
And look at the deal any further.
Alright, so let’s go through the five things.
Number one is the asking price,
not what they listed at; what their bottom line is;
what they’re truly willing to take; what’s the realistic price point.
All right, that’s number one.
Number two is going to be the as-is value, what it’s worth today,
apples to apples to other comparable sales,
to current market rents to replacement value if it’s vacant,
meaning what it will take to rebuild it. What it’s truly worth as is today.
All right, we use the net operating income formula
To be able to determine what the true value is,
it’s all about the current net, not the gross, right.
The third thing is the after repaired value; after developing value,
meaning after you fill it, whatever you plan to do to it,
what it’s going to be worth in the future is important to make sure
that there’s enough meat on the bone.
So you can create that monthly passive income for that huge
windfall of capital to change your life.
All right, the fourth thing is going to be repairs.
Is it a huge repair job? Is it going to be new roofs?
Is it going to be, you know,
repainting a whole parking lot for multifamily?
What is the repair cost?
Is that how you’re realizing your upside is just for repairs?
Because if you’re going to be paying
an extra half a million dollars in repairs,
and you buy a property for, say, a half a million bucks,
you’re not really buying it for half a million.
You’re really putting a million dollars in the game there to realize
whatever the future value is,
so make sure that you understand your repairs.
Last thing is the current loan amount. How much do they owe?
You see, it’s important that
Understand what they owe on the property
because if you’re asking for using my techniques, seller financing,
and you want to get a five-year deal,
but their senior debt existing debt balloons in, say two years,
well, you’re doing the wrong negotiation,
you’re negotiating prematurely.
And obviously, they’re going to say no
and you don’t even know why.
So make sure you get the information first,
the five things that you need to know
before you want to determine anything else.
Alright, I hope you enjoyed this little segment here.
If you dig it, check out below.
Go ahead and look for the link. Look at the comments section.
Click it and I look forward to engaging with you again. Take care
The Terry Hale Show Episode 6
Tips on Pre-Screening Commercial Property
TRANSCRIPTION
Hey, this is Terry Hale,
commercial real estate trainer.
I want to give you a few tips on
prescreening commercial property.
This goes for all property types,
regardless of the one
that you’re interested in.
These tactics and strategies I’ve been
using for close to two decades.
First thing I wanna teach you here
is the capitalization rate formula.
It’s important because if you
buy too low of a cap rate,
you’re gonna be paying retail,
or you’re gonna be buying into what
I refer to as hope or speculation,
or the projection of future value,
meaning you’re gonna have to
wait a long time to make money.
If you wanna make money right away,
you wanna make money now, then you need to
be able to structure
the deal, and the terms,
and buy the property for the right price.
So here it is.
This is the cap rate formula.
You got your gross income,
that’s everything that the property makes.
You got your itemized expenses.
And then you end up with your net.
That’s your net operating income.
You take the NOI, you divide
it by the purchase price.
It equals either a single
or double digit number.
That’s referred to as
your capitalization rate.
That’s the “cap rate”, alright?
So we’re buying on a 10 cap formula.
10 cap formula, if the properties
pulling in $53,000 NOI,
you just add zeros.
It’s worth $530,000 on its end cap.
It pulls in $68,000 NOI,
it’s worth $680,000.
So forth, and so on.
See the simplistic nature to
this type of prescreening metric?
I’ve been using it for a long time,
building wealth for my clients.
Building financial security
for you and your family.
That’s what it’s about, okay?
A couple of other key identifiers.
We’re looking for, low
occupancy, a high vacancy.
The boxes are already built,
you don’t have to spend
money finishing ’em off,
doing rehab, doing additional
property expansion,
building anything. They’re already built.
All you do is fill the boxes.
Also, low rents.
When the rents haven’t
been raised in forever,
they’re not even at market
rents, we can do a nuisance rent,
for instance on self-storage,
couple hundred units across the board.
We raise it just five dollars each,
the NOI goes up tremendously.
You make money right away.
And that’s what it’s about,
making money right away.
So I hope you enjoyed this
little pre-screening video
and if you dig it, cool, look below.
Look for the link, click it.
I look forward to engaging
with you some more.
All right?
Take care and we’ll talk real soon.
The Terry Hale Show Episode 5
Borrowing Against the Property to Buy the Property
TRANSCRIPTION
Hey this is Terry Hale,
commercial real estate trainer.
I had just finished
this awesome negotiation
and I wanted to talk about
the strategy that I used
to be able to get in on this deal
and borrow against the
property, to buy the property.
Alright, so it’s an advanced tactic,
but I’ve been using these tactics
and they’ve been done in big
corporations for a long time
to buy businesses as well.
And I wanna share it with
you, on a smaller scale
of what I do.
So of course, I purchase all
types of commercial property.
This one happens to be
a multifamily, 42-unit,
and the property had some
vacancy so there was an upside,
which is great.
But here’s the strategy that I used.
It’s called a subordination tactic.
What I did, was I created
a seller financed note
on the property because it
was owned free and clear,
meaning no debt-encumbered
on the property whatsoever.
I created a seller-financed note,
minus 20% of the purchase
price, so I put some skin
in the game, 20%, and I borrowed
that from a private party.
So borrowing that from a private party
means I have none of my
own skin in the game,
it’s a non-recourse structure,
so there is no personal guarantee,
never had my credit checked,
but here’s where the tactic
comes into play on the
subordination clause.
The subordination clause states
in my seller-financed note,
the seller financed note
went into the first position.
It has a subordination clause that states
that when I bring in a
certain amount of capital,
which happened to be
capped out at $300,000,
I can put that capital in the first position
and their seller financed
note gets subordinated
to a second position. So they
slide into the second position,
to allow a new first.
This right here is the
golden key to success
on this advanced tactic that
I’m making simple for you here,
because it’s easy to get
a loan in the first position,
especially when it’s gonna be in front of
a significant dollar
amount, like $810,000.
So now I can borrow easily
against this property
and the way it works is,
I’m borrowing against
their property, to buy their
property. Awesome technique.
I hope you enjoyed this little segment
of Advanced Strategies
Made Easy. If you dig it,
check out the link below,
I look forward to engaging
with you again in the
future. Take care. Talk soon.
The Terry Hale Show Episode 4
How to Buy Time With Commercial Real Estate
TRANSCRIPTION
Hey, this is Terry Hale,
commercial real estate trainer.
How great would it be to have
the ability to buy more time?
Wouldn’t you go and buy an
extra 10, 20, 30, 50 years?
It’d be great! Unfortunately,
we can’t buy more time,
but we can change some things, right?
We can create financial security today,
so that way it’ll free your time
so you can stop swapping
hours for dollars.
That’s a really important point.
I wanna talk about how to buy time
with commercial real estate,
because I buy time with
commercial real estate deals
on each and every transaction.
Let me give you an
example of how to buy time
with commercial real estate.
There’s something to be
said about making money,
and people love to make money,
and when people get a little greedy,
when it comes to, say, interest rates,
when we’re creating seller financed notes,
what I do is I do something called
an escalation of interest clause.
What that means is if
I know that the seller
will only carry, say,
three years (36 months),
and I lock them in at a 5% interest rate,
I know that I can buy more time
if I play on the greed of them
wanting to make more money
with a higher interest rate.
So what I’ll do is an
escalation of interest.
What I’ll do is I’ll start off with, say,
if I want more of a seven-year deal,
obviously if I only had a three-year deal,
that means I’m buying four years.
How can I buy four years of time?
What I’ll do is an escalation of interest,
so the first three years is 5%.
On year four, it jumps to 6%.
And on year five, it’ll jump to, say, 8%.
Year six, 9%, and year seven, 10%.
By doing that escalation of interest,
they look at it and they
calculate all their money,
and they crunch all their numbers,
and they count all their beans,
and at the end of the day
they look at how much
money they’re gonna make,
and then they agree to a seven-year deal.
What they forget about is
the appreciation factor.
When you have a property and
you own it for seven years,
I can guarantee you 100%
with commercial property,
without a shadow of a doubt,
you hold something for seven years,
it is gonna go up significantly
with just appreciation.
So, this escalation of
interest, you can buy time.
I hope you enjoyed this segment.
If you like it, go ahead and
look below at all the comments
and click the link and
engage with me again.
I appreciate you. Take care
and we’ll talk real soon.
The Terry Hale Show Episode 3
Four Reasons to Keep Your Commercial Property
TRANSCRIPTION
Hey this is Terry Hale,
commercial real estate trainer.
I wanna talk about 4 reasons why we keep
commercial property and don’t fall victim
to selling your deal. Like you know,
on the residential deals,
what are you gonna do?
How do you make your money?
They say you make your money on the buy.
What does that mean…you
make your money on the buy?
That’s the equity spread,
your negotiation technique
to be able to buy it low enough,
then when you resell it,
the spread is where you make
your money and that’s why they say
you make your money on the buy.
But you know as well as I know
that the only way you make money
in residential house flipping
is when you sell the house,
and then your back to square one again.
Level of insanity. Stop it! Stop.
What I want you to do is
focus on reasons to keep
commercial real estate, so
just do one deal in commercial,
create financial security
for passive monthly income
for the rest of your life.
Four reasons to keep it:
Number one is appreciation.
If you had a time machine and
you could zip back 20 years
and buy commercial property,
and zip back today,
I guarantee you’ll be a
heck of a lot wealthier
than you were. So appreciation is key.
Number two is cash flow.
We wanna keep these
properties for cash flow,
for monthly passive income.
That’s financial security.
If you deplete your funds in
your bank account, guess what?
Next month people are
occupying the space, poof,
that money’s back in there again.
And that is powerful. That’s
the power of cash flow.
So appreciation, cash flow. The next one
is going to be depreciation.
Good old Uncle Sam, he
let’s you write it off,
which is great to create
these types of write-offs
in commercial. They’re heavy write-offs
and keep more cash in your pocket.
Last thing is cash out.
Now, this is the big one.
What we do is we use my
techniques to reposition property
that’s got high vacancy. We
fill it, we reposition it
with low interest permanent
debt, which is a non-recourse
structure, no credit check needed,
and all the deals we do we’re
bridging private capital.
And then we create all this value.
And then when we refinance,
we can do cash out refi.
We can take out a bunch of capital,
sometimes over six figures or more,
and you do not pay taxes on
that money. No, you do not.
You don’t pay taxes on that money until
you sell the property. But
then what you can do is
what all the wealthy people do.
You do a 1031 tax-deferred exchange.
You still don’t pay taxes on that money,
you’re rolling into a like
property that’s a little bigger,
in a better location, with
more meat on the bone,
and continue that snowball
of building wealth.
And that cash flow that you
took out on your cashout,
is net spendable cash.
I hope you liked this segment.
I look forward to engaging with you.
Go ahead and look for the link down below.
Check out the comments, leave a comment,
and I look forward to engaging with you
here again real soon. Take care.
The Terry Hale Show Episode 2
Are You Struggling To Find The Right Commercial Real Estate Deal
TRANSCRIPTION
Hey, it’s Terry Hale,
commercial real estate trainer.
So, are you sick and tired
of mediocre, broken systems
that don’t teach you anything?
I mean, if you’re struggling right now
with finding the right
commercial real estate deal,
understanding what it is
that you’re supposed to find,
maybe evaluating to understand the upside
or structuring the terms,
getting seller financing,
getting through to the broker
so they can actually put you
in touch with the seller,
bridging the money, you know?
Maybe credit is an issue.
All these concerns.
What I’m gonna do is create
a really cool video series
and solve all of these concerns.
All I ask you to do is continue to engage,
and I will deliver.
I look forward to it and talk real soon.
Take care.
The Terry Hale Show Episode 1
Can You Get Seller Financing In This Market?
TRANSCRIPTION
Hey, this is Terry Hale,
commercial real estate trainer.
I’ve been getting asked this
question over and over now.
what about seller financing?
Can you really get seller
financing in a market like this?
This market, current, today, right?
And the answer is, absolutely you can!
Regardless of the market conditions,
if it’s red smoking hot or
if it’s a cooled-off market,
because it is cyclical,
it goes up and down.
The reason why we get seller financing
is because we can justify the reason.
We get seller financing.
So, if there is a property
and it’s not bankable,
meaning a financial institution
will absolutely, 100% not finance it.
Maybe it’s got high vacancy.
Maybe it doesn’t have clean books,
a trailing 12-month
profit-loss statements.
Maybe it’s just in a condition
where it needs repairs.
All these reasons.
We can justify seller financing,
because we’re willing to pay the price,
and we’re buying the property right,
and we’re getting the right terms.
So, please don’t think that seller
financing is a difficult task,
because there are more people out there
willing to carry paper.
It eliminates banks.
You don’t ever have to walk
into a bank and get a loan.
And here’s a little secret
tip for you, alright?
Everything we’re doing is
non-recourse financing.
Non-recourse, meaning
no personal guarantees.
Not your personal credit.
Everything we do is non-recourse.
You can do as many of
these deals as you desire,
build millions of dollars in wealth
and have fun doing it!
So, join me if you like what you’ve heard.
Go ahead, look below
for the link, click it,
and come and watch and learn,
and let’s get together,
and let’s build some amazing wealth.
I look forward to engaging
with you again real soon.
Take care.