As I am approaching the end of my first month as an intern at Gabhart Investments, I’d like to reflect on what I’ve learned, and what has changed thus far.
What I’ve Been Doing
Over the past few weeks, I have been spending a lot of time reading the material Curtis has provided me on Property Valuation & Investment Analysis. Although it is mainly an overview of the subject, it has proved to be some highly valuable content. This material essentially picked up where I left off in my Real Estate Investment Analysis class that I took last semester at San Diego State. I have been brushing up on subjects like tax benefits, 1031 exchanges, expenses, leverage, returns, evaluating cash flow, and much more. I still have a great deal of learning to do on these subjects, but it is exciting to see how what I’ve learned in the classroom correlates to real world applications. It is my intention to continue to read up on these subjects and ask as many questions as I can.
I’ve also been observing how Curtis and his team assemble marketing packages for commercial properties they are listing. I was doing things similar to this at my last internship at Realty National, so I’ve enjoyed seeing how this translates in the commercial arena
Commercial Real Estate Blog Posts
Another task I have taken on is the editing of Curtis’s blog posts. My first edit was a post on property walkthroughs. One tremendous benefit of doing this has been the information I’m learning is sticking much deeper than if I just glanced over it. It’s proved to be a great learning tool for me and I’ve even taken on the task of researching some of the topics I was curious about. Writing has always been a passion of mine, so getting the opportunity to revise and write some stuff has been great. I’m excited that I will get to continue to edit blog posts during my time here.
This past week I had a great learning opportunity with Curtis to do a walkthrough of a 13-unit apartment building in Fallbrook. I was able to learn about some of the things you should be looking for in a property, both on the interior and exterior. This was a neat real life application after reading Curtis’s article on property walkthroughs. This is certainly the kind of stuff you’d never learn in a class room.
13-Unit Apartment Building In Fallbrook
La Jolla Multi-Family Building
Another property we looked at was a 5 unit multi-family building in La Jolla. This was a very intriguing property because it had great bones, was less than a block to the beach and offered several routes for renovation. When walking the property, we looked at things like the condition of the floors, the bathrooms, kitchens, balconies, electrical, etc… It was far from move-in-ready, however, at the right price this could prove to be a great deal.
Curtis and Abe inspecting the condition of the upstairs balcony
the interior of the detached studio
Co-Star Lunch & Learns
In addition to the property walkthrough, I’ve also attended two Co-Star lunch and learns with Curtis and his assistant Dianne. The one that stood out to me was on the housing forecast over the next few years in San Diego County. I enjoyed this meeting because this is a real problem we will be tasked with fixing over the next decade. This past semester in my investment analysis class I did a great deal of research on this subject, so it was neat to hear the industry take on the issue.
Lastly, I have very much enjoyed the opportunity to pick Curtis’s brain. He’s always offering me valuable tips and knowledge about real estate and just life in general. Whether it be tips on client relations, listing properties, or even just financial management, I’ve been trying to act like a sponge of knowledge. He’s always honest about things and I respect that.
My views on real estate are growing stronger than ever and I’m excited all the learning opportunities that lie ahead. I am finding that the San Diego Commercial Real Estate Market contains more possibilities than I ever could have expected. Stay posted for my final update in August!
Blake Imperl – 22 Year Old Aspiring Commercial Real Estate Professional
I moved from Milwaukee to Scottsdale, Arizona when I was 5 years old. Spending my formidable years in the desert climate, I always had dreams of moving to the beach. As the son of a former real estate developer, I was exposed to real estate from a young age. My dad specialized in multi-family and student housing developments in and around the Milwaukee area. Upon graduating high school at 18, I moved to San Diego to study marine biology at San Diego State University. I quickly realized I wasn’t cut out for the science world and changed my focus to pre-business. It wasn’t until my sophomore year that I decided I wanted to be a management major with a real estate minor. I accredit this route to the all inspiring business professors I had at SDSU and to my involvement with The Real Estate Society. As a person who thrives on leadership and entrepreneurial opportunities, the knowledge and values I acquired during my time at SDSU will serve me for the rest of my career. Outside of real estate, I am an avid musician who plays in a local indie rock band called Stray Monroe. We’ve had the fortune of playing at some great venues around San Diego including The Casbah and Soda Bar and have also been played on 91X and 94.9FM. I also enjoy traveling, spending time with my girlfriend, and practicing Portuguese.
Why did you choose to intern with Gabhart Investments?
I chose to intern with Gabhart investments for several reasons. First, Curtis seems to have an amazing drive and motivation to succeed. From the first time we met, I could sense that he carries himself to a high level of professionalism with an immense entrepreneurial spirit. Though I had been exposed to commercial real estate before meeting with him, I never entertained the idea of making it into a possible career. He definitely opened up my eyes to all the opportunities that could be had in commercial. Second, Curtis is a very generous person who gives back to the real estate community. His involvement with past interns, students, and aspiring professionals, really spoke volumes to me. I sensed that if I gave it my all during this internship that I would get a lot back. Lastly, I really liked the opportunity to learn in a small team environment. I felt that I would get a great deal of hands-on experience and intangible knowledge.
How did you hear about the internship?
I heard about this internship through my former boss, Randy Zimnoch, who is the owner of Realty National. Realty National is an investor-friendly and full-service brokerage based out of Pacific Beach. They’ve developed a stellar team of over 30 agents since their inception in 2011. Randy was crucial in setting me on the career path that I am on now. Without his guidance, I think my focus in real estate would have been entirely different.
Why would you work for free?
Knowledge is invaluable. What I will be learning over the course of this internship far outweighs any minute compensation I could currently earn elsewhere. I realized early on in my college education that you can’t monetize the value of experience, because it’s that very experience which will make you more money down the line. In my initial meeting with Curtis, he asked me about my professional goals. One of the things I told him was that it was a personal goal to be a millionaire by the time I’m 30. He told me through hard work, smart decisions, determination, and a bit of luck that it could be possible. This isn’t to say I anticipate real estate being a get-rich-quick process; I fully understand you need to be in for the long-haul. Judging by how successful he has been thus far, I think it’s safe to say I’m learning from somehow who could teach me some things on how to make that possible.
What are you trying to accomplish?
It is my goal to walk out this internship a much stronger professional that I was before. I will achieve this by applying myself and acting like a sponge of knowledge. I want to understand the commercial arena better and pick up on some things that have made Curtis so successful. I’d like to also understand how I can hit the ground running upon graduation in December of this year. It is my hope that I can add many invaluable tools to my real estate belt that I will be able to utilize for years to come. Lastly, and most importantly, I want to add as much value as I can to Gabhart Investments.
Why is it you are interested in Real Estate?
I touched on this early, but I attribute my interest in real estate to my father and The Real Estate Society at SDSU. From a young age, I remember walking properties with my dad, doing napkin math, and talking real estate. Though I may not have realized it at the time, he was planting the seeds that would eventually grow into a profound interest. Once I got involved with The Real Estate Society in my sophomore year, I began to apply a lot of those concepts my dad and I initially discussed. I went to every guest speaker event, every case study, networked, took notes, and constantly worked on my professional development. I also served as Director of Marketing during my third year and this past year I was Vice President on the executive board. Lastly, I need to thank my many mentors who have helped me along the way; David Smith, Sean Bascom, Kris Kopensky, Mark Goldman, Mike Wolfe, Cody Zindroski, Jessica Barber, and many others. Their support and knowledge have proved to be invaluable.
I will be making monthly posts on my progress here at Gabhart Investments, how my views are changing in regards to real estate, and any other new updates. Stay posted!
Winner of the San Diego Business Journal Top Real Estate Deals of 2014
“My team represented the owner and closed the deal from multiple offers, at the full asking price of $4.7 million. That selling point was one of the highest recorded price-per-unit sales in Golden Hill.”
I was honored and humbled when I recently won the prestigious San Diego Business Journals Deal Maker of the Year Award for best Multi-Family with the sale of El Dorado Manor in Golden Hill and also won for the top Retail Deal of the Year for the sale of the San Ysidro Swap Meet.
I wanted to take few moments to share with you the details of the apartment transaction in hopes that it will provide you with some ideas for transactions you may be involved in.The deal presented was the successful sale of a 22 unit multi-family property located just east of downtown San Diego in the Golden Hill neighborhood. My team represented the owner and closed the deal from multiple offers, at the full asking price of $4.7 million. That selling point was one of the highest recorded price-per-unit sales in Golden Hill.
This story began in 2005 when I originally teamed up with the Seller for a project to put a subdivision tract map on the property.The Seller’s original plan was to either develop the property himself or sell it as a package to a condo conversion specialist. That plan was dealt a challenge when the City of San Diego was served with a lawsuit by a private group whose aim was to stop Condo Conversion projects.
Front shot of the 22 unit golden hill apartment building for sale
With over 180 projects across the city paralyzed by pending litigation, I swiftly assembled the team necessary to start a non-profit foundation providing legal leadership to all the affected property owners.The Foundation’s actions soon gathered many of the Owners together and successfully removed them from the lawsuit.However, the larger issue was a lack of defined and realistic civic regulation covering this type of real estate transaction.
logo that was created as part of the marketing campaign
I employed the resources of the foundation to continue its mission beyond this first success. The involvement of all parties – City, Owners, Realtors, and Citizens – was the key to the creation of new condominium conversion regulations for the City of San Diego.My continued involvement in the lawsuit conversations and its successful resolution meant that condominium conversion would continue to be one of many sources of affordable home ownership for San Diegans.
Unfortunately, the delays encountered in addressing the lawsuit prevented the owner of the Golden Hill property from selling at the most opportune time, at the peak of the market for this property type.Not to be dissuaded, I continued to meet regularly over the years with the Owner, analyzing market trends and data. Incorporated into this strategy was attention to the existing tentative condominium map so that it did not lose value through expiration.
In 2012 and 2013 the meetings included a new, thorough financial analysis. The Owner and I focused on three viable scenarios for the property:
Owner to proceed with the Condominium Conversion himself
Owner and Agent (Myself) to enter into a joint venture to complete the Condominium Conversion
Owner to sell the property as it existed (multi-family apartments).
Additionally, my research addressed these issues:
Tax basis and tax consequences for the Owner
The potential tax liabilities of the Owner doing the Conversion directly
The value of the property in a 1031 exchange ascondominiums or as apartments
After 10 + years of ownership, trading out this property in the Owner’s portfolio would require a very attractive replacement and the confidence that I would be able to locate it.Our carefully considered conclusion was to list the property as an apartment building with the still-viable tentative condominium map included in the transaction.
With the Owner’s blessing, I selected an ambitious price point, which was the highest per unit price of any listing in Golden Hill.This created a fresh challenge – overcoming resistance to the number by clearly illustrating the supporting values.
Through my research of current and historic rents in the desirable neighborhood, I revealed support for aggressive pricing, indicating viable prospects for the property.A detailed list and photographs of comparable buildings in the area was compiled to show buyers what was being offered to apartment seekers at that price point.Additionally, I invested in large-scale, photo-realistic renderings of the property, illustrating its potential for renovation as a condominium project able to compete with pricier options in nearby Downtown San Diego. Packaged into a video format, the information was easily communicated to potential Buyers and their Realtors. This action enlarged the pool of potential buyers, with more agents and clients able to understand in visual terms the scope of possibilities and value being presented.
a rendering that was made for the marketing of the apartment building
The historic high price point per unit was supported and accepted, evidenced by the reception of multiple offers on the property.My persistence throughout a 10-year relationship and innovation created value and resulted in a successful transaction at full asking price for the Seller. My understanding of all facets of the transaction was invaluable in assisting the Buyer’s agent in compilation of the multitude of documents into a comprehensible format for the Buyer.
A final level of complexity had to be negotiated. The transaction needed to be completed within a specific one-week window of opportunity.The ability to do this in coordination with the Buyer’s Broker allowed the Buyer to fulfill the requirements of their 1031 exchange at the same time the Seller did the same for their 1031 transaction. Additionally the sale was carefully timed so that the Seller avoided a significant pre-payment penalty.
SAN DIEGO, Release Date â€“ Gabhart Investments Inc. sold the last property in its first micro fund, Gabhart Real Estate Opportunity Fund Series 1, LLC. The fund was invested in the purchase, rehabilitation and sale of multiple single-family homes over a 13-month period.
The homes were located throughout San Diego County with resale prices ranging from $250,000 to $500,000. All of the properties were bank-owned or short sale purchases with rehabilitation costs ranging from $30,000 to $100,000.
Gabhart Investments is currently managing three active funds focused entirely on 1-4 unit residential properties. â€œOur strategy with the funds is to minimize risk for our investors by purchasing multiple properties in each fund located in different sub-markets throughout Southern California. Investors benefit from an average of profits from several projects and they are also insulated from a lapse in one sub-marketâ€, says Curtis Gabhart, CEO.
The investor partners in Fund 1 achieved a 22% to 26% (24% average) annual internal rate of return on their capital depending on their investment date. One of the many unique features of the fund is that as each property sells, investors receive a portion of their capital allocated to that project along with estimated profits. â€œThis structure is attractive to our investor partners as it provides short-term cash flow and allows them to reinvest back into another fund or invest elsewhere,â€ says Nick Walsh, investment manager.
Gabhart Investments is currently partnering with multiple investors in their Series 5 fund. â€œWeâ€™re interested in working with partners that understand our current business plan and share our longer-term goal of expanding into new markets and investments. For example, we are in the process of creating a new fund to invest in first trust deeds within our niche market to provide investors with monthly cash flow and an alternative to our equity partnerships,â€ says Gabhart.
About Gabhart Investments Inc.
Gabhart Investments Inc., headquartered in San Diego, Calif., is a real estate investment and advisory firm specializing in the fundraising of micro funds for the investments of distressed single & multi-family residences in Southern California.Â www.gabhartinvestments.com
***The information within this site does not constitute an offer to sell or a solicitation of an offer to buy any securities. Financial results are un-audited company estimates only and are not necessarily indicative of future results which may vary substantially from those set forth herein.
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Here is a list to use that should help you with your due diligence when buying apartment buildings. Below are some of the things to request from the seller of a multifamily property.
I decided to post this list because of a comment I received on a previous posting. I did named data collection and income & expense analysis of apartment buildings (click here to read that post).
Here is an excerpt from his comment
Remember that the SELLER always LIES so NEVER ever rely on the seller to give you accurate numbers. Do your own research that way you only have your self to pat on the back!!!
Below is a list of items I use (in San Diego) that you will want to request from the apartment buildings seller and/or broker listing the property.
Due Diligence Request List
1. Annual profit and loss statements (P&Ls) past 3 years; one year of monthly P&Ls
2. Rent roll and leases including term, deposit, and payment history, Section-8 housing documents, if any
3. Tax returns (last 2 years)
4. Receipts of utility bills (water, gas, trash, sewer, electric, etc for last 12 months) or recap report from provider showing usage and cost
5. Any service or advertising contracts: (Trash, extermination, maintenance, management, commission agreements, union agreements, vending, billboard, pay telephone, etc. and any instrument or contract to be assumed by Purchaser)
6. Copies of all appraisals, engineering reports, termite reports, environmental reports
7. Insurance claims history for last 5 years (can be obtained from insurance agent)
8. List and receipts of any major repairs done in the last 5 years (paint, fence, remodel, roof, water heater, etc)
9. Insurance policy including all riders, risk assessments, and disclosure affidavit for carrier
10. Architectural and engineering plans and specifications (if available)
11. Payroll register: List of employees including name, position, wage rate, and entitled benefits
12. Business license
13. Litigation History: details of any past or pending litigation (if none, then affidavit from owner)
14. Environmental Inspection and Survey, if readily available: Key Issues: Asbestos, Lead Paint, underground tanks, wetlands
15. Warranties: existing warranties from roofers, contractors, etc. (passed to the new owner if possible).