How My Views on Commercial Real Estate Are Changing
By: Blake Imperl
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!
In a bit,
Intern, Gabhart Investments
Here is the fancy pants writing……
Over the past eight weeks, the interns at Gabhart Investments, Anthony Espinoza and Seth Struiksma, have learned the nuts and bolts of renovating residential properties in San Diego and have made valuable contributions to the development and growth of the business. In addition to interning at Gabhart Investments, both Anthony and Seth contribute much of their time on the Board of Directors for the Real Estate Society of San Diego State University. The main duties for the interns are to assist with acquisition research, frequently update the website blog, and ultimately create a personal business plan to use as a guide for the future. At the inception of the internship, both interns contributed their ideas and efforts towards writing the Gabhart Real Estate Opportunity Fund business plan. They were instrumental in finalizing a plan that would eventually be sent out to investors. Once the Fund was established, Seth and Anthony assisted with design ideas and materials for the property renovations. Throughout the entire internship, the interns documented the processes, procedures, and skills they learned on a daily basis. For more information on the Real Estate Society at SDSU, go to: https://www.realestatesocietyofsdsu.com
Ok enough with the fluffy crap, Here is the no BS Curtis version…..
Those two spent there summers with a fat grumpy dude learning how what it takes to buy properties in this market WITHOUT GETTING PAID (the fat grumpy guy is me). The fact that they were willing to put in all that work without getting paid to learn the business shows me that they are serious about making it in life.
Personally I know my greatest rewards have coming from putting my balls on the line with the understanding that I may not succeed but if I do the rewards will be great. Not everything has always worked out the way I wanted but in my opinion it’s not whether you fail that counts it’s whether you don’t give up and keep going until you succeed that makes you a success (it doesn’t have to be money. Do you have any idea how hard it was to land my wife??? Now I have her though and she’s stuck.)
I have had many ventures that have made me fall flat on my face.
When I was 6 I decided to sell used books door to door. This was my first lesson in keeping the overhead low. I hired this cute 6 year old girl as my secretary and paid her a dollar a day. I think she ended up making more money than me.
Also looking back at it I wonder what the fudge was my baby sitter thinking letting me sell books door to door when I was six???? Can you say Chester the Molester? I’d be kicking some babysitter ass if they let my daughters do that.
Over the years I mowed lawns, painted and even bought 12 coin operated alcohol breathalyzers from ebay that I thought would make some serious coin by putting them in bars.
Well the only thing I got out of the breathalyzer business was a video of me opening the boxes, plugging all the machines in and watching all the pretty lights flash on them… The best part was when I talked to the video camera saying “if these don’t work out my wife is going to KILL ME!”.
Well needless to say the first bar I brought them to (a biker bar in spring valley) a drunk came up and thought it was a game and started drinking shots and blowing into the machines to see how high he could get his alcohol level. Needless to say I figures the liability would outweigh the potential money.
There were many many more adventures like that which I won’t bore you with until I found a niche I could do well in. That niche was Real Estate and I busted my hump and worked for free for a long time (and a lot of nagging from the wife) until I finally made it.
It hasn’t been an easy journey and I can’t say I never lost any money because I have. I can say that I love what I do and if I didn’t do this I would probably be working in Taco Bell still (my first legal job).
Well in summary I think they learned a lot and even if they learned that they hated the business (which I don’t think happened) it’s better to find that out before you go and make a career out of it.
I just want to thank both of them and let them know that they have a lifetime of free advice and help (it’s probably worth what they are paying me for it).
From our last meeting together Seth is actually interested in getting into the commercial brokerage business which I highly recommend and Anthony is going to Spain for a semester to drink some sangria’s and decide on what he is doing.
So in summary – A+ (even though I never got an A or a B or really many C’s)….
BTW – if you enjoy these posts at all do me a favor and click the sharing button and share. If you don’t like it and think it’s crap share it and let them know my name is Jon Jerome.
For the most updated information & news on real estate & Gabhart Investments go to our facebook & twitter pages
Well, I might have been the only non-agent at the Agent Reboot event at Town and Country Resort here in San Diego last month. What I am though…is a guy trying to get and stay up to speed with the latest and greatest wireless apps and web based tools. I jotted down a few of the best ones from the event to help streamline our business:
Hopefully this helps you manage the mountain of media that seems to be growing faster than we can all climb.
For the most updated information & news on real estate & Gabhart Investments go to our Facebook & twitter pages
Below is a summary from my Twitter account from most recent back. Generally I will post articles that I think are relevant and interesting to my Real EstateÂ business or about what I am doing at that time. Most of the news I track is to help me understand the market so I can make better and more informed decisions.
When looking at news articles I like to find items that are relevant to apartment investing/ownership, the housing market and how it may affect the flipping and rental business. I place more importance on local rather than national if one were to conflict with the other since something that is happening in Florida may not be as important as events happening in West which may not be as important as California, which may not be as important to Southern California, which may not be as important as events that are happening in San Diego.
If you wonder why items are abbreviated it is because Twitter only allows 140 characters.
Just click on the links to go to the actual article or twitter post.
Twitter Weekly Updates for 2010-07-04
- Working from the greenbelt at our community for first time. I should do this more http://twitpic.com/2103xk #
- We have more ability than will power, & it is often an excuse 2 ourselves that we imagine things R impossible.~FranÃ§ois de la Rochefoucauld #
- We have more ability than will power, & it is often an excuse 2 ourselves that we imagine things R impossible -FranÃ§ois de la Rochefoucauld #
- Cold calling Realtors to hunt down deals to buy…. Who has something for sale they would ? #
- I am wondering should I use zoho or manymoons as a project management tool with google apps? #
- I uploaded a YouTube video — Bullrush Glen http://youtu.be/VQLoFCX71Rs?a #
Twitter Weekly Updates for 2010-06-27
Woke up WAY to early (3AM) so I figured I might as well head into the office and here I am 4AM. Let’s see what I can power through this AM #
On the way to the colorado river with the family. My littlest asks every 5 min. R we there yet? #
Twitter Weekly Updates for 2010-06-13
Twitter Weekly Updates for 2010-06-06
My secretary is back after a month off taking her CPA exam… YEAH!!! So much crap to organize… #
Twitter Weekly Updates for 2010-05-30
- Who uses skype business for their business? Can you transfer calls with it to other employees? Do you like it? #
- Foreclosures on the rise. http://bit.ly/b69qX8 #
Twitter Weekly Updates for 2010-05-16
- Top 25 Core-Based Statistical Areas–Combined REO + Short Sales
Interesting what do you think? http://bit.ly/9AGc0N #
- I uploaded a YouTube video — 30 Day Property Buying Challenge – pt 1 Intro Video.mp4 http://youtu.be/vsVfnyBdpmg?a #
- I uploaded a YouTube video — 30 Day Property Buying Challeng – pt 2 Realations with re… http://youtu.be/S8SU0aVD4sY?a #
- Ok just got back a counter on a deal I am chasing. If they accept I have to close this friday. This will be 1 of the 3 for this month. #
- I uploaded a YouTube video — 30 Day property buying challenge – Pt 3 Basics of finding… http://youtu.be/Byxn27VulMo?a #
- I uploaded a YouTube video — 30 Day property buying challenge Pt 4 Good Relationships.mp4 http://youtu.be/_nyQZ0jBjyk?a #
- You get paid a lot in the future from the costs of the lessons learned today. -cg. This is really true in Real Estate. #
- Just got down with my 1st newsletter which will help me purchase 3 properties by June 1st – http://eepurl.com/xvDh #
- *|FNAME|* I need to purchase 3 properties by June 1st – http://eepurl.com/xvZ1 #
Twitter Weekly Updates for 2010-05-23
Twitter Weekly Updates for 2010-05-09
- Cinco de mayo. In the office at 5 AM, can probably get more done in the next 3hrs than the rest of the day #
- Buying 3 properties here in San Diego this month. Call me if you have any GREAT deals. I am easy to work with and make quick decisions. #
- I want to say thank you 2 everyone who has been sending me good deals 4 sale in san diego. Been running around like a 1 arm paper hanger #
- says NNN properties R the best opportunities. First time I have heard anyone say this lately. What do U think? http://bit.ly/90CoBi #
- I am thinking apartments in certain markets and still SFH. #
- This may make it less attractive to syndicate real estate deals. They want to double the tax to the sponsors http://bit.ly/bhDSTB #
Twitter Weekly Updates for 2010-05-02
- 30 day challenge. I am going to buy 2 properties in the next 30 days. Just shot video that i am going to put up on my blog soon. Stand by… #
- Looking to sublease an office or 2 in the del mar vicinity closer to my house. Anyone have any extra space? #
- Watching the documentary helvetica. Its a movie about a font! A movie about a font. #
- Video interview with Harvey Green of M&M. Good points about the real estate market & a career in commercial RE. http://bit.ly/bufQ9n #
- Eating lunch with my daughters. Its daddy day at horizon prep. Its nice 2 b in a biz with flexibility. #
Twitter Weekly Updates for 2010-04-25
- Going to look at a property in scripps ranch to buy #
- California NOD’s fell 4 percent overall with the upper end increasing and lower end decreasing. Also many loan mods. http://bit.ly/aOmK7d #
- San Diego foreclosures down 39% YTD. Could that B A good sign B Cause last year had the moratoriums & there is still less this year?? #
- WOW San Diego wants to spend 31 MILLION to house 225 homeless. They should B able 2 do > for that $$$.. GVMNT waste http://bit.ly/bRCCTS #
- Just grtting to 4 hour lease option class. Hope it is worth the time. ill let you know #
Twitter Weekly Updates for 2010-04-18
- Borrower could stay underwater for years according to corelogic. What do you think? http://bit.ly/dxhXhi #
- u.s. unemployment: a historical view from 1948 to present. Interesting graph. Do U think we Rgoing higher or lower? http://bit.ly/di9RLv #
Twitter Weekly Updates for 2010-04-11
- Investors Look to Fund Property Owners’ Debt Purchases. This is what sam zell talked @ at the USD event he spoke at http://bit.ly/9xyLb6 #
- geithner: commercial real estate loans are problematic. http://bit.ly/9aTUns #
- Apartment Rents Will Slide, Mainly, in SoCal except in San Diego according to this article http://bit.ly/bVaj6a #
Twitter Weekly Updates for 2010-03-28
- Stall in housing market threatens economy
Fed ending program that has held mortgage rates down may also hurt. http://bit.ly/a4Gai8 #
- Rents rising..People Canâ€™t Afford to Buy. projects that 1/2 of housing built over nxt 10 yrs will need 2b rentals http://bit.ly/bOX5Ez #
Week of 3/21/2010
- 31 apartment units sell in El Cajon for . This was a condo conversion 3.2 million or $128 per sq. ft. Nice buy http://bit.ly/9PU5f6 #
- Interesting article about the major homebuilders starting to buy up land again. These guys are USUALLY pretty smart. http://bit.ly/aoXph9 #
- I uploaded a YouTube video — 719 Pennsylvania 3-17-2010 http://youtu.be/nXdi7xto5vo?a #
- Starting to see more people being cautiously optimistic about the real estate market. This is a good article @ it. http://bit.ly/90FYzM #
- Interesting views on what w/happen now that the gvmt is going 2 stop buying mortgages & the tax credit is expiring. http://bit.ly/bGwOy4 #
- According to PW Coopers apartment sector will lead sales in 2010 and the first to recover. I agree (after< housing) http://bit.ly/cYqbhH #
- Is there going to be a severe shortage in housing in the next few years? This article says so. http://bit.ly/cMUoiB #
Week of 3/7/2010
- Financial institutions converting mortgages 2 REO – good report from deloitte LLP – wonder how much is in san diego? http://bit.ly/akUCx2 #
- Today is going to be a great day #
- On the Radar: Nine Intriguing Multifamily Tech News Announcements of 2010 (So Far) http://bit.ly/9ZtfCg #
- adj 4 inflation, Jans mortg pmt w/50.1% below T spring 89 peak. &was 59.6%below June 06 San Diego http://bit.ly/aoetlK #
- Article about the new anti flipping rule for real estate I was quoted in. http://bit.ly/bb9NW2 #
Week of 2/28/2010
- good article telling you when its time to dump your agent. http://bit.ly/cEf1se #
- I uploaded a YouTube video — Pennsylvania Change Order http://youtu.be/jnODNV5VVFU?a #
- Spent the day setting up a new computer (got needed help from a friend), updated my latest san diego flip information. 645 pm sat going home #
- And to big bear with the family tomorrow and monday! #
Week of 2/21/2010
- Good article from Gary London here in San Diego. http://bit.ly/btZtgp #
- Pacifica Holding of San Diego crossed it’s 1sthurdle of developing the Chula Vista port.i think this will b grt 4 CV http://bit.ly/dAjKE0 #
- 12 mil seems 2ba lot of $ for an SRO. This is what happens when the gnmt tries 2getin biz. Pay >2 make it affrdble http://bit.ly/9WjMaE #
- all right I made it into the office by 6:00 am this morning. It is amazing what you get done before the phones explode. #
- Foreclosure victim bulldozed home. This guy needs to go to jail even though it is funny in a shocking way. http://bit.ly/bTwp19 #
- this is interesting it’s called a social media map and looks like a great resource for social media marketing. http://bit.ly/czAQgL #
- How to win friends and influence people by Dale Carnegie – Timeless.
Here are some bullet points http://bit.ly/zgn3C #
Week of 2/14/2010
- tenant maintenance addendum – add this to your apartment lease agreements. it will help reduce headaches http://bit.ly/dbcAr0 #
- updating my scope of work for my latest flip. #
- 7:53 pm & time 2 go home. Put together a 70 page scope of work 4 the construction of R newest flip.Not quite done but will b a good template #
- 6:40 am thursday back in the office 2 finish the revised contract & schedule for pennsylvania. Will be a great template 4future construction #
- Be careful when someone tries to get you to buy and flip a short sale in 24 hours. http://bit.ly/32e30q #
Week of 02/092010
- What the hell is up with the san diego tornado warning. Am I in kansas toto? #
- san diego median housing price on the rise according to the san diego union tribune http://bit.ly/4qz8xn #
- 28 million in multi familiy apartment deals in san diego. 2 were brokered by Allen Chitayat – way to go. http://bit.ly/4rMufj #
- County median housing price on upswingDecember report indicates stability http://tinyurl.com/y8zqoc5 #
- Renters are willing to pay more rent for additional security amenties according to multihousing news http://bit.ly/3o4ate #
- Multi-Housing News – October 2009 Magazine digital edition http://bit.ly/4qdKA6 #
- 14 hour day and I wonder what I got done? Always emergencies when it rains. #
- According to the FDIC Chief Commercial Real Estate Delinquencies & Bank Failures to Keep Rising http://bit.ly/5sJ3Qb #
- 16 unit multifamily sells for $2m at 526-528 Anderson Place in San Diego – 7 0bd/1ba 9 1/1 from 490-700 sq. ft http://bit.ly/8vKkfO #
- 25-unit multifamily community in San Diegoâ€™s Uptown , from Bank of America for $10.25 million, or $410,000 per unit. http://bit.ly/4IdC6x #
- Vista Multifamily Sells for $4M in San Diego – 39 units built in 89, 25,408 sqft & @ a 7.3 CAP on actual #’s http://bit.ly/5vZ2rz #
- 22 unit multifamily apartrment at 8th ave in san diego sells for 1.7m or 73k per door – 22 studios & 2 1/1’s http://bit.ly/8nmqLX #
- 2010 Housing Outlook according to forbes some markets still have a ways to go http://bit.ly/6960cm #
Week of 1/17/2010
Week of 1/102010
Week of 1/03/2010
- Foreclosure backlog estimated at 1.7M (shadow inventory) http://yoono.com/CcSc6m5 #
- Working on a construction project for a flip. Need to decide whether to do it myself or a quick flip for 30k #
- Playing around with my blog trying to understand how to use wordpress and use it for real estate blogging…. arghh #
Week of 12/27/2009
For the most updated information & news on real estate & Gabhart Investments go to our facebook & twitter pages
About two weeks ago I was contacted by Cindy Tullues the reporter for Crittenden who publishes numerous well respected reports including The Apartment Report TM .
Crittenden was interested in reporting on the growing number of small firms like ours who were putting together funds (syndications) and wanted to know what made them tick.
I was actually unaware the article came out until I received an email from an interested investor expressing interest in our venture this morning and it has only been one day since publication!
Below is a summary of the most recent article I was quoted in. The summary of the article talks about many of the big investors are on the sideline or only looking for Class-A assets leaving great opportunities for the smaller entrepreneurial companies putting together syndications.
New Funds Fuel Investment on Crittenden.
NEW FUNDS FUEL INVESTMENTS
Expect a growing number of investors starting to go on the offensive again this year by raising and utilizing fund resources to opportunistically shop for assets across the country. A large cluster of bigger institutional funds are taking a temporary hiatus, leaving the arena open for smaller investment vehicles priced below the $30M mark to make their move. Look for such firms including JVM Realty Corporation, JDT Holdings LLC,Gabhart Investments Inc. (GII) and KC Venture Groupto fish around for market-specific deals using discretionary cash coffers.
As the availability of for-sale product continues growing this year, bet on more capitalized entrepreneurial funds to pop up and take advantage of good pricing. Most will cash out or look for an exchange at the end of the hold period. Don’t be surprised to see the majority of smaller funds modus operandi jump on distressed plays that can yield tantalizing returns. On the other side, count on select larger funds from players like Bell Partners to remain active and shop for Class-A/B complexes, while Boston Capitalcloses on a mega tax-credit fund and is already hard at work on a succeeding fund of nearly $300M.
The article goes on to state that it is no surprise these funds are favoring apartments as a safe risk adjusted return. Because of this buyers are trying to raise money to take advantage of these opportunities. Especially with the Fannie Mae, Freddie Mac and FHA providing such attractive apartment financing at such low rates.
The discounts these funds are seeing are on average 15% to 25% and are focused on older Class-B and C products in historically good markets. Most of these deals are penciling out with IRR’s of at least 20% (we are shooting for 25% over a 5 year period).
The report also mentions that on the other side larger capitalized buyers typically chase after quality Class-A product. This is what I am seeing also.
We were the smallest fund on this list (for now).
Gabhart Investments looks to raise an aggregate $2M investment vehicle to acquire between 60 and 200 units in recession-beaten locales such as Arizona, Las Vegas and California’s Inland Empire. Expect the equity to be raised within six months and be fully committed over a 12-month period. The fund continues to look for JV partnerships and qualified investors putting in $50,000 – $500,000. President Curtis Gabhart hopes to pay cash for the deals and eventually refinance them and recycle the capital. He looks for an IRR in excess of 20% and a three- to five-year hold. Count on Class-B to -C distressed.
The ranges of these Real Estate funds were anywhere from 2-25 million in equity and were in many different markets throughout the U.S. including, Florida, Texas, Phoenix, Las Vegas and others.
Our apartment acquisitions will be primarily within a 3 hour drive or flight from San Diego which will include Phoenix, Las Vegas, and The Inland Empire. In addition we feel that San Diego will have some select opportunities towards the end of this year and through 2011 & 2012. In addition to apartments we will also seek other complimentary opportunities like 1-4 unit flips while we are in that market which will give us better efficiencies and economies of scale and build stronger and better relationships with the locals.
This new fund will expand on the recent success we have had buying and flipping REO single family homes. Currently we have more investors than inventory and this will allow us to expand the opportunities for us and our investor partners.
I will post our business plan soon that we are using for the 1-4 unit single family homes and for the new apartment venture. To learn more about what goes into developing a private placement memorandum (PPM) you can read a previous post by clicking here.
For the most updated information & news on real estate & Gabhart Investments go to our Facebook & twitter pages