Data Collection and Income & Expense Analysis of Apartment Buildings

Data Collection and Income & Expense Analysis of Apartment Buildings

Here is the first post in many to come on analyzing residential income properties. This is directly from my course on property valuation and analysis.

Learning Objectives of this Post on Analyzing Apartment Buildings and Residential Income Properties: Data Collection and Income & Expense Analysis

  1. Identify sources of data
  2. Describe the components of an income & expense sheet
  3. Understand how to arrive at Net Operating Income (NOI) from Gross Scheduled Income (GSI)

The first step to accurately determine the market value of a real estate investment is a solid program of data collection and analysis. Each property will have its own unique considerations

All should at least begin with:

  • Property type
  • Overall condition of the improvements
  • Type of construction
  • Neighborhood analysis
  • Overall market conditions
  • Income and expense analysis
  • Legal requirements, zoning etc
  • Comparable property data

This list is broad in scope, but it’s a good foundation for the data collection plan. The data collected from the market on comparable type property will be used to determine the appropriate capitalization (CAP)  rate and make market comparisons in a later step. Unsure of what a Cap Rate is? Check out my blog post that explains everything you need to know about this powerful valuation metric.  The next step is the actual collection of the data.

Data Sources

The data required for the analysis is obtained from many of the same sources as the information used in residential sales.

  • Owners records
  • Multiple Listing Service (MLS), Costar, Loopnet, Commercial Agents & Property Owners, Public records
  • Census data
  • Chamber of Commerce
  • Local Housing Authority
  • Appraisers
  • Trade associations
  • Local Council of Governments
  • Tax assessment records

This should give you an idea of a few of the possible sources of data and the steps to begin the data collection process. Once the data has been collected the next step is the analysis of the data.

The Operating Report (Profit and Loss Statement)

When analyzing a real estate investment, we begin with an existing operating statement, also known as a profit and loss statement. The operating report will consist of both income and expense items attributable to the property. In the first step of the analysis, we will only be concerned with the cash income and expense of the property. We will consider depreciation and other non-cash benefits in a subsequent calculation.

Gross Scheduled Income

The gross scheduled income is the amount of money that the property would produce on an annual basis if it were fully occupied. Included in gross scheduled income would be any income attributable to the property from non-rent sources.

What types of sources can be included for determining gross scheduled income?

These sources could include income from laundry and vending machines, parking and storage fees, as well as other owner operated concessions.

When analyzing the gross income, consideration is given not only to the existing rents being charged, called contract or current rent, but also economic or market rent, which is the rent the property would command if it were available for rent in the current market. An adjustment can be made to the gross income if the market indicates that market rent differs from the actual rent. If such an adjustment is made, that should be plainly noted on the operating statement (see loss to lease).

 

Vacancy & Collection Losses and Effective Gross Income

The chief component in the calculation of effective gross income is the vacancy and collection loss rate. Most properties are not expected to remain fully rented for the entire period of ownership. When a tenant vacates, often there is at least some rental income lost during the turn over period due to repair or remodeling time. In addition to this consideration, one must face the reality that there may be a situation where a tenant becomes unable or unwilling to pay rent as agreed. In this circumstance there will be some rental income lost.

The vacancy and collection loss is usually expressed as a percentage of the gross annual rental income. There are several generally accepted methods for determining the amount of the vacancy and collection loss

  •  Historical data on the subject property
  • Published figures for the community
  • Market analysis

Other places to get historical operating data is

None of these things by themselves will probably give you a 100% complete picture but combining different resources the picture will become much clearer.

Historical data and market analysis are perhaps the most accurate, because typically published figures for the community are an average, and may not be representative of the property you are analyzing. Once the appropriate rate has been developed, the loss is subtracted from Gross Scheduled Income to derive at Effective Gross Income.

Example:
Gross Scheduled Income $12,000
Vacancy and Collection Loss (5%)  (600)
Effective Gross Income   $11,400

Gross Operating Income

To figure the gross operating income you go through the following steps:

Gross Scheduled Income
– Vacancy & Credit Loss
= Effective Gross Income
+ All Other Income (garage rent, laundry income, vending, etc)
= Gross Operating Income

The figure derived from this process is what we will call rental income. This is the actual income received after taking into account vacancy and credit loss against potential income.

Other income can come from a variety of sources. In apartments, it is quite often laundry, but it could be rental on furniture for furnished apartments, garages, etc.

The resulting figure of gross operating income is all the income left over after subtracting out the above mentioned items. It is your actual income in hand before expenses. Therefore it is a very important number.

Operating Expenses

The next step in the analysis process is to determine the total operating expenses for the property. Like income, expenses will be analyzed on an annual basis. The investor will do a detailed analysis of the expenses of a given property, so it benefits the practitioner to have done a thorough analysis in the beginning.

It is important to carefully analyze all categories of expenses to accurately portray the financial condition of the property. There are different categories of expenses, depending upon the type of property you will be analyzing, however all expenses are segregated into two basic categories, fixed expenses and variable expenses.

What are three fixed expenses and 10 variable expenses?

Fixed Expenses

A list of typical fixed expense categories will include

  •  Property taxes
  • Insurance
  • Landscaping and service contracts
  • Any expense that does not change from month to month

What determines a fixed expense is the fact that the expense will not vary in response to changing levels of occupancy.

Do not include mortgages as part of operating expenses!Mortgages are not part of operating expenses and are categorized elsewhere.

This group of expenses is not difficult to document for your analysis, but be careful to consider the fact that these expenses may not be the same for a new owner; i.e., the building insurance may go up and most likely the real estate property tax may be reassessed upon transfer.

Real Estate taxes can be one of the largest expenses so make sure to calculate any new tax increase or decrease in your analysis.

Variable Expenses

This category of expenses is much longer, and categories to consider will vary depending on the type and size of the property under analysis. This category will include all of the expenses necessary to maintain the income stream of the property and to provide agreed upon services to the tenant. To attempt a comprehensive list of all expense categories for all types of properties might be impossible and, certainly, is beyond the scope of our study. We will discuss the more common types of expenses in some detail, remembering that each property has unique characteristics and may include its own unique expense categories.

Off-Site Management

Many properties will be managed completely by off-site personnel. The cost of off-site management is determined and subtracted as an expense of operation. It should be noted that a management expense is a valid deduction from income even if the owner is managing the property. There are many firms specializing in this field; they usually charge between 4% and 10% of the rental amount.

 Payroll On-Site Personnel

Resident management is used when the day to day activities of the property require constant supervision. A resident manager is sometimes given free or reduced rent. If that is the case, you must include the managers unit rent in gross scheduled income, then enter the amount of free rent as an expense. In California, if a property has 16 or more units it is the law to have a resident manager on site.

 Expenses/Benefits

This would be for other management costs. For instance, office and administrative expense, performance bonuses paid to an on-site manager, and any health insurance or retirement plan contributions would be listed here.

Taxes – Workers’ Compensation

Whenever there is an employee, there are various taxes the employer is responsible for. Among these are: Social security tax, unemployment tax, as well as local, state and federal income taxes. These taxes are payable by the employer, and in addition, the employer is required to withhold some amount from the employee’s pay and forward it to the IRS.

Repairs and Maintenance

This is the total amount of repairs and maintenance necessary for the year. This would not include any money spent on capital improvements. A capital improvement is any improvement which substantially increases the useful life of the property. If you find a property which has not had any maintenance expense in the recent past, you will probably find a trade off in the overall condition of the property.

Utilities

This is probably the most difficult portion of the operating statement to complete accurately. This information is most easily obtained from the owner. NOTE: If the owner is paying the utility bills and is then reimbursed by the tenant, the full utility cost will be listed here and the amount reimbursed to the owner would be listed as other income (this is referred to as R.U.B.).

Accounting and Legal

This is the amount for the bookkeeping required on the property. It will include any amounts paid for payroll reporting or for monthly profit and loss statements. This should also include any legal expenses associated with evictions, drafting of leases, etc.

Advertising, Licenses and Permits

Many larger properties will have ongoing advertising expenses. At the very least there will be some cost at each vacancy. This includes the amount spent for advertising, as well as any licenses or permit charges; e.g., city business license, pool inspections, and/or housing code inspections.

Supplies

This might include supplies for the vendors mentioned previously: Bug spray, batteries for smoke detectors etc.

Miscellaneous

That’s right! There should always be a category for those expenses too insignificant to warrant their own category. This would include any additional expenses which were not accounted for elsewhere in the analysis.

 Contract Services

These are services which are supplied by outside vendors not already accounted for under fixed expense categories. These are additional services such as maintenance contracts, design services, appraisals and as many others as necessary.

Here is a list of the more common expenses in alphabetical order. Some of them we list without explanation because they are rather obvious:

  • Accounting and Legal expense
  • Advertising
  • Gas
  • Insurance
  • Licenses and permits
  • Miscellaneous and other expenses Property Insurance
  • (Property) Management
  • Payroll and Workers Compensation
  • Real Property Taxes
  • Repairs and Maintenance
  • Services
  • Sewer
  • Supplies
  • Telephone
  • Utilities (Such as the electric bill)
  • Water

Total Operating Expenses

This is the total of the expenses calculated. This is not to include vacancy or credit losses. Remember that what we are attempting is to give as accurate a picture as possible of the property’s financial condition. The property’s value will be dependent upon the ability to produce income, so it is important to be as accurate as possible in estimating both income and expenses.
The total operating expenses are now subtracted from the effective gross income.

Example:
Effective Gross Income $11,400
Total Operating Expenses (4,500)
Net Operating Income $ 6,900

Net Operating Income (NOI)

The net income that a property is capable of producing will be one of the first indicators of the worth of an investment. Later when we begin to apply the capitalization rate to the property, the NOI will be used to estimate total investment value.

The calculation of the net operating income does not take into consideration the effect of any potential financing of the property. This may seem odd at first, but in consideration, it will not take long to realize that the property should have a value that is completely independent of any financing that an investor might use to acquire that property.

Measure NOI correctly in order to properly value property

NOI is arrived at as follows:

Gross Operating Income
– Operating Expenses
– Capital Expenditures
Net Operating Income

Sales Proceeds

The sales proceeds that come from divesting yourself of a property are as follows:

Sales Price
– Selling Expenses
= Net Sales Proceeds
– Adjusted Basis _
= Taxable Gain
– Depreciation _
= Capital Gain / Loss

 

Data Analysis

Having discussed the income and expense analysis in detail, we will concentrate on the balance of the data and other considerations. The property will be analyzed for the following:

  •  Income quantity
  • Income quality
  • Income durability
  • Special risks

All of these considerations will be compared to other investments available in order to determine the appropriate rate of return and measures of value for the property being analyzed.

Test Your Knowledge: Data Collection and Income & Expense Analysis Questions

1. What is the chief component in the calculation of effective gross income?

2. How do you come to Effective Gross Income?

3. Circle the following that are considered an operating expense:

Property taxes Insurance The owner’s income taxes
Mortgage debt service Payroll taxes Utilities
Property maintenance

4. How do you arrive at NOI from Gross Operating Income

5. How do you arrive at the capital gain / loss from the sales price?

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CoStar San Diego Multifamily Real Estate Market Update 2018

CoStar San Diego Multifamily Real Estate Market Update 2018

CoStar San Diego Multifamily Real Estate Market Update 2018

On August 14th, CoStar Senior Market Analyst, Josh Ohl, came into Gabhart Investments to give a presentation on the state of the San Diego Multifamily Real Estate market. In this fast-paced presentation, Josh offered an in-depth overview of the future outlook of San Diego multifamily real estate, an economic forecast, where we are currently at in the market cycle, and much more. This blog post will give you an overview of all the topics discussed as well as many important graphs and charts designed to give you a comprehensive look at the San Diego Multifamily market. Let’s take a deeper look.


Main Take-Aways

  • The rental market is stable with occupancies hovering right around 94-95%. Rent growth year over year is at 4.5%.
  • The lack of housing – we’re simply not building enough to accommodate our city’s growth. San Diego needs 175,000 new units within the decade and is only on pace to build roughly 65,000.
  • The pillars of the economy are stable, even after Qualcomm laid off 1,300 employees over the last couple of months
  • The potential tearing up of NAFTA and what trade tariffs could do with Mexico may lead to issues. We currently do about $6 billion of trading with Mexico every year out of San Diego. Over 100,000 jobs in the region are tied to trade. This may impact the metro to some extent. Tariffs could also impact developers costs with imported materials.
  • We just finished the first half of 2018 with the strongest venture capital investment. $450 million of venture capital investment went into life sciences.
  • The navy is going to be stationing another 15,000 sailors here by 2025 – where they are going to live is a question we will have to answer as we already in a profound housing crisis (remember, they’ll be bringing their families too)
  • The lack of a San Diego Convention Center expansion could drive away Comic Con which just renewed their lease through 2021. That’s about $150million of economic impact.
  • Expansion – we’re into year 9 of expansion but it’s only a matter of time before the bubble does in fact burst.

November Ballot

  • Proposition 10 – Californian’s will be deciding whether or not to repeal Costa-Hawkins and enact the Affordable Housing Act (which would give local jurisdictions the right to pass rent control measures). If passed, this could be a disaster for the California and San Diego Economy.
  • Locally, National City Residents will be among the first city in San Diego County to decide on rent control. The National City Rent Control and Community Stabilization Ordinance will be decided on. The impact could be felt by both landlords and tenants as landlords will lose property rights and tenants will face tougher conditions when finding housing. If you’d like an official copy of the ordinance, let us know in the comments below.
  • What’s going to happen with Qualcomm Stadium? Are we going to put a San Diego State University expansion campus there or Soccer City? Or will we just be looking at the same old obsolete eyesore for years to come?
    • Likely it’ll be the last. Voters may not have time to be familiar on these very last-minute ballot efforts and spending tax dollars on a development isn’t always popular.

San Diego Apartment Fundamentals

apartment supply demand and vacancy in San Diego

  • It generally doesn’t matter what is built, there’s typically going to be a demand to fill those units.
  • Vacancies are flatlined at a steady 4%.
  • One trend we’re starting in San Diego is that occupancy is hovering right around 94-95%.
  • Lower vacancies are compelling people to stay in their apartments longer. The average resident stays for about 2 years.
  • Lower vacancies are also good for landlords. Renewal increases are strong at about 4-5% a year and when the tenant moves out, rents generally can be increased by about 10-15%. This is great, however, rent control may jeopardize many of these opportunities (more on this later).

San Diego Construction

San Diego Construction 2018

  • These numbers only reflect buildings that are actually being built. You may notice other sources indicate higher levels, however, those sources may factor in buildings that simply get a permit but never actually break ground.
  • Construction is picking up but it’s nowhere near enough to meet the growing demand.
  • Cost of lumber has gone up 20% since 2017 – this could mean higher construction costs.
  • Proposed tariffs could have an impact on developer’s proformas and smaller developers may feel the increases significantly.

Where They’re Building in San Diego

San Diego Heat Map Construction

  • About 25% of downtown’s inventory is currently under construction.
  • In Carmel Valley/Del Mar with One Paseo, about 10-12% of the current inventory is under construction.
  • Pockets of Mission Valley are seeing some construction with areas zoned for higher density residential.

 

San Diego Construction Cycle
San Diego Construction Cycle

  • One of the biggest trends that we have observed during the last cycle compared to this cycle is the change in floorplans.
  • San Diego is one of the largest metros in the US where floor plans have shrunk.
  • We’re building a lot more studios and one bedroom apartments. This is because developers can build and charge more for these units in areas like Little Italy, East Village, etc…
  • This could also mean rent per square foot is increasing and people are waiting longer to get married/start families so there’s less demand for larger spaces.

San Diego Rent Growth

San Diego Rent Growth

  • San Diego ended the second quarter of 2018 with year over year rent growth of 4.5%. Among major metros in the US, San Diego is in the top 10.
  • We’re into year 9 of rent expansion
  • The average rent in San Diego is approximately $1800.
  • CoStar anticipates positive rent growth over next few years.
  • This could be drastically different this time next year if Proposition 10 is passed on the November ballot. This would repeal the Costa-Hawkins Rental Housing Act and allow for cities to pass their own rent control ordinances. Don’t believe it’ll happen? In November, National City will be the first city in San Diego County to decide on rent control. This has the potential to harm landlords and renters.

San Diego Rent Control Lunch & Learn

San Diego Rent Control Class Gabhart Investments

I’ll be hosting an informative lunch and learn on Tuesday, September 18th, where you can learn more about Proposition 10 and the impact rent control may have on San Diego. This will have a strong emphasis on the san diego multifamily market, however, all property types will be discussed. I strongly encourage you to attend this informative event. Free lunch is provided to those who RSVP.

Sign Up Here

San Diego Annual Rent Growth by Submarket

  • Rent growth is the strongest in Point Loma at 10%.
  • Areas like East County, UTC and Downtown are seeing high rent growth.
  • The coastal markets are reaping the benefits of the increased demand during the summer months.
  • The San Diego rental market is seeing unprecedented rent growth and health.

san diego rent growth vs income growth

  • Incomes are not growing as fast as rents are growing, this is leading many San Diegan’s to downsize or share units.
  • This trend has continued for the past 7-8 years and probably will for many years to come.
  • Median renters household income is about $48,000
    • 42% of income is going towards rents
    • Downtown renters are paying 50% or more in some cases
  • Historically as rents continue to grow, people will look towards home ownership.
  • People are staying in their starter homes for about 9-10 years (up from the US average of 5-6 years)

San Diego Housing Crisis

San Diego Housing Growth

San Diego Single Family Housing Growth

  • Historically San Diego has been building more single-family residences (SFR) than multifamily units, however, these trends are starting to change. We’re actually building more apartments now.
    • this could be due to a lack of land or simply demand changes.
  • The San Diego Housing Commision estimates in the next decade based on population growth, we need about 175,000 additional units of supply.
    • This equates to roughly 17,000 units each year.
    • San Diego is FAR behind these numbers and is experiencing a housing crisis.
    • Roughly 3,000-3,500 multifamily units are being added each year.
    • Single-family permits are only averaging about 2,000 a year.
    • This places us about 12,000 or so units behind each year.

San Diego Capital Markets

san diego real estate sales volume

  • The San Diego multifamily market is having a really strong run as of late. Peak sales volume in 2017 was led by areas like Mission Valley which had $900 million in total sales volume. This is attributed to large deals like Pacific Ridge.

San Diego Sales Volume and Pricing

  • Last year we hit peak price at $270k a door and this year in the 1st half of 2018 we’re down to $255k. This isn’t a major cause for concern but should be something to watch for.
  • Newer construction on average is ranging between $400,000-450,000 a door with exceptions like The Dylan in Point Loma where prices were at about $500,000 a door.

san diego real estate quarterly sales volume

  • The total number of transaction is down 30% in the first half of 2018 compared to the first half of 2017
    • Fewer people chasing deals and banks looking at higher LTVs up to 50%
    • Institutional investors may be in hold periods
  • In the first half of 2018, we’ve only had 2 deals go over $100 million.

san diego cap rates by property type

  • Industrial properties are leading the way with the highest cap rates, followed by office, retail, and multifamily.
  • Along the coast, we’re seeing deals close at insanely low cap rates of 1.5-2.5%.
  • Many of the 5-5.5% cap rates in areas like National City, Chula Vista, La Mesa, North County, etc… are no longer around.
  • CoStar does not anticipate much cap rate expansion – maybe .3%
  • Our two favorite property types are multifamily and industrial. An ideal strategy may be for someone to move out of a lower cap rate multi-family property that could possibly fall under rent control in the future and move to a higher cap rate industrial building.

San Diego Demographics

San Diego Population Growth

  • People with graduate degrees are coming to San Diego. Our tech and life sciences industries have driven significant growth.
  • Those with a high school education are moving out due to a lack of wages that can meet the increased cost of living in San Diego.
  • Population growth has fallen below the national scale. This is due to San Diego’s transient town mentality where residents do not typically stay for more than a few years. The transient mentality can be attributed to several factors including the higher cost of living, decreasing housing stock, environmental factors, etc…
  • International migration has been the driver of our population growth. This can be attributed to factors like our growing life sciences and tech industries among other things.

San Diego Migration Statistics

  • Many San Diegan’s are beginning to migrate to more affordable markets like Phoenix, Texas, and the Inland Empire. From 2012-2016, 42,000 people migrated to the Inland Empire alone. If this trend continues, San Diego may lose out on a lot of talented workers.
  • Lack of job growth is leading some to pursue jobs in more thriving locations like the Bay Area.

San Diego delayed life changes demographics

  • Increasingly San Diegan’s are waiting longer to get married. From 2000-2015 the average age to get married went up by approximately 5 years.
  • This means the demand for more smaller units such as studios and one bedroom have increased and the demand for single-family homes has declined.

San Diego income growth

  • San Diegan’s income growth is lagging far behind the increased cost of living. We’ve only seen about 2-3% increases this cycle. If this trend continues, many working-class San Diegan’s could face financial hardships as they try to afford the increased cost of living.

San Diego Employment

San Diego employment

  • San Diego is currently above the national average for employment.
  • We hire about 20,000 workers year over year in San Diego.

Biggest Impact – Qualcomm

  • In April, Qualcomm laid off 1,300 employees. They gave back approximately 300,000 sq ft of office space.
  • The impact on the San Diego metro area is estimated at $5 billion. This accounts for 4% of the San Diego GDP.
  • For every job Qualcomm creates, another 2.5 jobs are added to the region on average.

Downtown San Diego Submarket

Downtown San Diego Submarket

  • 25% of downtown’s market is under construction.
  • No new supply in 2016 allowed for the increase in demand on newer constructions.
  • Downtown San Diego is one of the only places where vacancies are going up. This has to do with how
    many units are being built there compared to demand.
  • 60% of the units coming online this year in San Diego will be in Downtown.

Downtown San Diego Pipeline

Downtown San Diego Pipeline

  • The downtown market lacks a strong live, work, play environment. The lack of a Chargers stadium really hurt the area. Most buildings only consist of ground floor retail. There are very few places in San Diego where you can walk out of your 5-star class-A building and walk into a large homeless population (East Village is one of those places)
  • It remains to be seen how much demand will be driven to these units in the coming years.
  • As you can see, there is plenty of proposed buildings that may come online in the next decade. It will be interesting to see how this develops.

San Diego Trolley Expansion

San Diego trolley

  • San Diego is banking on the fact that people will start using the trolley with the expansion into the UTC area. There are approximately 112,000 riders a day but that number is only a small dent in the overall commuting population.
  • We are a largely suburban office campus market. People like their cars and there are very few places to get to without a car in San Diego.
  • It will be interesting to see what the trolley expansion will have on areas like Downtown San Diego.
  • The UTC stop has 2 million sq ft of office space within half a mile of it. This is great, however, the question becomes, “who’s going to want to walk half a mile in a suit in 90-degree heat”? Or what about those who simply have driven their whole life and don’t see the point in taking the trolley?
  • The trolley will be vital to continued development growth, but it remains to be seen if San Diegan’s will ever adopt it in large numbers.

** All graphics used in this article were provided by Josh Ohl, a Senior Analyst at CoStar. CoStar Group is the leading provider of commercial real estate information, analytics, and online marketplaces. They have been a tremendous tool for myself and countless other real estate professionals. Please visit their website and get in touch with your local representative today. **


Curtis Gabhart and Gabhart Investments, Inc – 2018 All Rights Reserved
The material contained in articles that appear on gabhartinvestments.com is not intended to provide legal, tax or other professional advice or to substitute for the proper professional advice and/or commercial real estate due diligence. We urge you to consult a licensed real estate broker, attorney, tax professional or other appropriate professionals before taking any action in regard to matters discussed in any article or posting. The posting of an article and of any link back to the author and/or the author’s company does not constitute an endorsement or recommendation of the author’s products or services.

 

Commercial Real Estate Due Diligence Class Recap

Commercial Real Estate Due Diligence Class Recap

Commercial Real Estate Due Diligence

After having a great discussion during my last class on Commercial Real Estate Due Diligence, I wanted to take this opportunity to share with you some of the key takeaways. This article is intended mainly for apartments/multi-family, however many of the same principles will apply across different areas of commercial real estate. I’ll start with a brief overview, then dive into each topic a bit more, and finally leave you with my powerpoint presentation that gives an overview of the topics I covered in my class. It is my hope you will add many of these ideas to your property analysis toolkit.

What is Due Diligence?

Due Diligence is a necessary part of any real estate transaction.

  • It is the process of examining a property, related documents, and procedures conducted by or for the potential lender or purchaser to reduce risk.
  • Applying a consistent standard of inspection and investigation to determine whether actual conditions reflect the information represented.
  • The process by which you confirm that all of the facts of a deal are as they have been represented to you by the seller.

 

Conducting proper due diligence can be the difference between turning a profit or suffering a financial loss in a real estate transaction.

If you’re new to commercial real estate transactions, I recommend that you consider bringing in someone with more knowledge. It’s OK to admit you need help. Getting help from an experienced commercial real estate broker can add a lot more money to your pocket and make the process much easier for all parties involved.

 

Start With Initial Due Diligence

Once you’ve found your target property, begin by requesting all of the information in the seller’s possession (expense reports, property records, profit and loss statements, etc…). Often you will find on smaller to mid-sized apartment buildings that owners do not keep detailed records. This means you will need to do a little more investigating to get the accurate expense numbers.

Talk to the current tenants about things that are wrong with the building. Ask how long have they been there, if they are happy with things, what’s the neighborhood like, etc.… Current tenants can be a tremendous resource for learning about a property. If there is a current property management company in place, ask the tenants how responsive they are to their needs. A lot of times it’s easier to keep the same management company in place for the first few months of acquisition if they are doing a good job. Talk with the maintenance people about matters not tended to or problems that will have to be fixed in the future. They are often going to be more honest than a seller would about the actual condition of the property.

 

Financial Due Diligence

commercial real estate sales comparable

  • Review the profit and loss statements (P&L). Make sure you pay extra attention to any areas where significant gains or losses occurred and try to spot any discrepancies.
  • Underwrite the property. Never take a seller and brokers provided pro forma at face value. Their numbers are usually a smaller look at the property and might not reflect how the financial performance of the property in a few years time.
  • Look at rent and sales comparable in the area.
  • Since your evaluation of the property will depend upon income today and tomorrow, the accuracy of the historical data, as well as the validity of projections, will significantly alter your potential financial return.
  • Look into the rent roll and leases including the terms, deposits, and payment history.
    • Be aware of handwritten changes to the leases
    • Get written confirmation or an Estoppel Certificate from the tenants if you can’t read the document or if the statements are unclear.
      tenant estoppel certificate

      Tenant Estoppel Certificate

      • An Estoppel Certificate is a statement signed by the landlord and tenant that states that particular facts are correct, that there are no defaults, and that rent is paid on a specific
    • Look for rent concessions
    • Are the security deposits mentioned in the lease the same as those outlined in the rent roll? (This is usually a problem area)
    • Cross check the rent roll against the income statement.
  • Get a lease abstract. This is a summary of the essential financial, business and legal information that exists in a commercial real estate lease. It should bring to the reader’s attention any important lease provisions, financial obligations or other issues of importance.
  • Always add your property management fees back into your expenses. Quite often, the current owner could be managing it and won’t factor that cost into their expenses, which could make the NOI appear higher than it would be if you bought it.
  • Reconstruct the financials on your own… add things back like long-term capital improvements (HVAC, electrical, roof, cabinets)… then show how that would affect your financials as you spread those costs out over time.
  • Recommend taking CCIM classes for understanding the financials and underwriting a property.

If you’re an expert in the location you’re interested in; you may still feel comfortable buying a property without the expense reports because you’re familiar with what expenses should look like. This is another reason why having an experienced broker could help because sometimes you will find properties that could be good deals but may lack proper financial reports.

Make sure you’re comfortable with the deal above all else.

financial due diligence checklist

Here is my quick financial due diligence checklist

Physical Due Diligence

commercial real estate physical due diligence

  • Walk every unit. It sounds like common sense but make sure you take a look at everything.
  • Don’t trust the seller/broker to tell you the unit is in perfect condition.
  • As you walk the units, I recommend using a “walkthrough sheet.” I have included a sample in my PowerPoint, which you can find at the end of this blog post. If you would like the full checklist, please let me know if the comments below.
    • As you walk the units, assess the overall condition of them. Take inventory of things that need to be addressed, breaking it into what must be fixed and then a “wish list” of items you’d like to get to eventually.
    • Look for any warning signs or safety concerns.
    • Are there any tenant concerns? Things like hoarding, multiple pets, an excessive number of occupants, unapproved alterations, illegal activity, …
  • Building inspectors are never a bad thing to have. Often you’ll get your money back in the deal.

physical due diligence commercial real estate

Legal Due Diligence

Here are some necessary things you’ll need.

  • Title inspection and survey
  • Environmental inspection (typically paid for by the buyer)
  • Inspection for building code violations. This is critical for understanding any potential hazards or areas that need immediate addressing.
  • Checking to make sure that the property is in zoning code compliance

Disclosures

When using AIR Commercial Real Estate Forms

  • Seller Mandatory Disclosure Statement (SMDS)
  • Property Information Sheet (PIS)
  • Tenant Estoppels (TEC)
  • Commercial Property Owner’s Guide to Earthquake Safety (pre-1960 buildings)

AIR is a leading, member-owned real estate network. From contracts to networking and education, they’ve been helping commercial real estate professionals for years. Developed by top commercial real estate experts, AIR CRE Contracts are recognized as the industry standard, and the most efficient way to close a deal. I highly recommend you look into becoming a member as they offer over 50+ contracts that you can use and edit to your own needs. Learn more by clicking here. 

When using CAR (California Association of Realtors) Residential Income Purchase Agreements

  • Know Material Facts
    • Seller property questionnaire (CAR Form SPQ) or Exempt Seller Disclosure (C.A.R. Form ESD) if TDS-Exempt
  • Commercial Property Owner’s Guide to Earthquake Safety (Pre-1960 Buildings)
  • Tenant Lease Agreements
  • Tenant Estoppels (TEC) if agreed in the contract
  • Survey, plans and engineering documents, if any, prepared on seller’s behalf or in seller’s possession.
  • Permits and structural medication documents – if in seller’s possession

Statutory Disclosures

When using CAR Residential Income Purchase Agreement (cont’d)

  • Lead-based paint pamphlet and form
    • Applies only to residential property built before 1978
  • Natural and Environmental Hazards
    • Seller is required to disclose if the property is located in a special flood hazard area; potential flooding (inundation) area; very high fire hazard zone; state fire responsibility area; earthquake fault zone; seismic hazard zone; and (iii) disclose any other zone as required by law and provide any additional information needed for those zones. These are satisfied with an NHD Report.
  • Withholding Taxes
    • Seller shall deliver to the buyer or qualified substitute, an affidavit sufficient to comply with federal (FIRPTA) and California withholding law (C.A.R. Form AS or QS)
  • Condominium/Planned Development Disclosures
    • Seller has seven days (standard) after acceptance to disclose to the buyer whether the property is a condo minimum or if its located in a planned development or other common interest subdivision.

Click here to download the CAR Sales-Disclosure-Chart

The California Association of Realtors (CAR), is real estate trade association to develop and promote programs/services that enhance a member’s ability to conduct business with integrity and competency. They have many tools designed to help you thrive in your real estate career. From their zipForm transaction tools to their education courses and more, they are a great resource. Learn more by clicking here

legal due diligence checklist real estate

Final Thoughts

Thank you for taking the time to read this article. I hope you found it helpful. As always, please leave any thoughts or comments below. We hope you will join us for our next class on “Don’t Take Cap Rates At Face Value” on Thursday, May 31st.

Stay up to date with all of our upcoming real estate classes by clicking here. We offer one class a month that covers relevant and important commercial real estate topics.  

[slideshare id=95881673&doc=duediligenceforcommercialproperties-180503222059]

 

Curtis Gabhart and Gabhart Investments, Inc – 2018 All Rights Reserved
The information presented in this article represents the opinions of the author and does not necessarily reflect the opinions of Gabhart Investments, Inc. The material contained in articles that appear on gabhartinvestments.com is not intended to provide legal, tax or other professional advice or to substitute for the proper professional advice and/or commercial real estate due diligence. We urge you to consult a licensed real estate broker, attorney, tax professional or other appropriate professionals before taking any action in regard to matters discussed in any article or posting. The posting of an article and of any link back to the author and/or the author’s company does not constitute an endorsement or recommendation of the author’s products or services.

 

Don’t Take Cap Rates at Face Value When Buying Your Next Multi-Family Building

Don’t Take Cap Rates at Face Value When Buying Your Next Multi-Family Building

The Quick Facts

  • Cap rates on properties can be misleading without proper expense reports
  • Many small to mid-sized multi-family buildings don’t have accurate expenses records
  • By only looking at cap rates can cause you to lose out on potential good deals
  • It is imperative to do your due diligence and analyze the expenses
  • Pairing yourself with proper representation (commercial broker) can make a huge difference
  • Learning standard expense multipliers can save you a lot of time and money

 

So, you’re looking to purchase your next multi-family building. You’ve selected a few perspective properties, gathered the financial reports, and are trying to decide which is the best investment. How do you know which one is the best deal? Many investors would run straight to comparing capitalization rates (AKA cap rates).

While this is a good start, I’d argue that you should be cautious when comparing cap rates. It is crucial never to take a cap rate at face value and always conduct proper due diligence and seek appropriate representation. Not only could you overpay for a property, but you could also miss out on some great deals. The answer to this dilemma lies in the expenses.

First, I will explain why cap rates can be inaccurate due to inaccurate expenses and then offer a more accurate and efficient alternative.

If you’re unfamiliar with cap rates, get caught up to speed by checking out my earlier blog post on cap rates. 

Be sure to make it down to the end of this post for my PowerPoint presentation on “Don’t Take Cap Rates at Face Value”. I’ve included some valuable and practical examples of the topics discussed in this post. 

CAP Rates

To understand cap rates better, it is best to take a look at a crucial component, the net operating income (NOI).

Net Operating Income on commercial properties

To arrive at the net operating income, we must subtract gross operating income from operating expenses; but what if the operating expenses are misreported? That can have a drastic effect on the final calculation of a cap rate.

Most small to mid-sized apartments available on the market don’t have actual expense reports or profit and loss statements from the owners.

This could happen because the owner is:

  • Unorganized
  • Hiding expenses
  • Doing repairs themselves and not factoring in things like labor costs
  • Miscategorizing capital expenses as maintenance expenses
  • Keeping incomplete expense reports or in some cases, no reports at all.

Other times it can also be the broker’s fault because they don’t ask for the expense reports from the owner.

A failure to have actual expenses can lead to you, the potential buyer, to purchase an over-priced deal or worse, walk away from a great deal.

Here are some ways it can be inaccurate

San Diego Painter Mr Magoo

I’d like to introduce Mr. Magoo, a carpenter, and the owner of a small apartment building that has recently been put on the market. He’s seen a couple of Martha Stewart shows and thinks he’s quite the handyman, so he decides to do all maintenance and repairs himself. He’s made some questionable decisions like when he mixed several leftover paint cans to paint the exterior of the building, or when he patched a leaky roof with plywood. He’s also read online about property management and decides he can manage the building himself.

By doing this, Mr. Magoo has been able to save thousands of dollars on labor and maintenance expenses. He’s able to avoid placing these line items on his expense report, which makes his NOI appear higher than it is.

So, one day you’re on LoopNet or Costar looking for commercial property and stumble upon his building and decide to give him a call. When you speak to Mr. Magoo, he tells you it is an excellent building with little expenses. He claims that maintenance and repairs only cost him 5% of total expenses, which is drastically different from another owner who may assign 25% of their total expenses towards maintenance and repairs.

After doing some math on the given expenses, let’s say you calculate the cap rate of his property to be 6%. You think this looks like a great deal and are considering making an offer.

This can pose a severe problem if you, the potential buyer, take his expenses at face value without conducting any due diligence.

If you were to look into the expenses on Mr. Magoo’s property, you would find his cap rate is inaccurate unless you plan to hire yourself to be the painter and the property manager. The reason his cap rate appears to be high is that he was not accounting for the labor or market costs of maintenance. Unless you’re making less money than a property manager or painter at your current job, you should hire professionals. You’re going to save more money by paying them to do these services, and a lender will always add these expenses to their underwriting criteria. Your job should be running the operations, finding more properties, or continuing your career that pays you more than painting or managing your property. So, in this scenario, the cap rate is useless because Mr. Magoo’s expenses do not represent what you, the new owner, would be paying.

Without digging into his expenses, you might end up paying far more for a property that doesn’t produce anywhere near the stated NOI.

Now I’d like to demonstrate how over-reporting maintenance expenses can drive you away from potential deals.      

Let’s say you stumble upon a 6-unit apartment building that has everything you are looking for in a multi-family property. The only issue is that it has an alarmingly low cap rate of 3.5% and very high expenses. Many inexperienced investors or brokers may walk away from this deal without even digging into the expenses.

Upon further investigation, you discover the current owner has been overstating expenses because they don’t know how to accurately spread out repair costs over the life of the repair. When looking at the report, you see that there were two consecutive years of significant electrical upgrades that cost about $30,000 per year. This adds up to $60,000 in total expenses for new electrical that was meant to last 50 years. The owner should have spread out that $60,000 expenses over the life of the electrical rather than doing it up front. An experienced broker would be able to spot this and reallocate the expenses to the property area. After correcting the error, you will see that the cap rate will go up and expenses will go down.

As you can see, by the owner not understanding how to report expenses accurately, the property seems to be a bad deal. You may have walked away from a great opportunity had you not conducted a little due diligence.

Property Taxes

Another way cap rates can be misreported is through property taxes. The property taxes for multi-family apartment buildings in San Diego is 1.2% of the purchase price of the building. Where many inexperienced brokers can make mistakes is by basing their cap rate calculation off the old property taxes which is not accurate of what the new owner will be paying. Here’s an example:

Let’s say you have a property that the current owner bought for $1,000,000 over ten years ago.

Old commercial real estate investment

Currently, the owner would be paying $12,000 a year in property taxes. The property is then listed on the market for $2,000,000. Instead of calculating the new property taxes, which would be $24,000 per year, the broker decides to use the same $12,000 that the current owner is paying.

New owner for commercial property

What results is that the expenses will be reported at less than what they actually will be. This has the unfavorable result of artificially increasing the cap rate. When the new owner acquires the property, they will not be receiving that same income as their property taxes will be based on the new purchase price.

Furthermore, this could cause you to pay more for the property than it’s worth. Take a look at the following spreadsheets.

Old vs New commercial real estate investment

The difference between the old and new property taxes comes out to be $12,000. If we value the $12,000 difference at 5% cap rate ($12,000/.05) we get a value of $240,000. Now, let’s say the property requires a 25% down payment. If you were to pay the original asking price of $2,000,000 assuming the old property taxes, your down payment would be $500,000 ($200,000 * .25). If, however, you took into consideration the reduced value given the updated property taxes, you would see the offer price comes down to $1,760,000 ($2,000,000 – 240,000). This makes your 25% down payment $440,000. That’s a $60,000 savings by accurately accounting the property taxes.

This is why it is crucial to pair yourself up with proper representation. An experienced commercial broker would realize this and account for it in the offer.

The pay between experienced commercial brokers and new ones is not far off, so why not pair up with one who is experienced?

So now that I’ve demonstrated some ways that cap rates can be inaccurate let’s look at a better alternative.

Standard Expense Multipliers

With properties that may not have accurate expense reports (especially small to mid-sized apartment buildings), I recommend that you use standard expense multipliers to learn the price per square foot. This puts you in a much better position to understand a properties performance and overall value. I have found the Institute of Real Estate Management (IREM) Apartment Expense Multiplier sheet to be extremely valuable when determining baseline expenses.

Operating expenses for commercial real estate

When used appropriately, this will allow you put a better estimate on what your actual expenses may look like on a price per square foot basis.

This will allow you to compare the owner’s expense report versus your estimate. Any significant discrepancies could be a red flag that requires further investigating. These calculations will save you a lot of time and potential money spent.

If you’re trying to look through 180 listings, you can’t underwrite every deal promptly. Instead, what you can do is quickly look at each deal and say, “okay, this is a $170,000 unit. It’s a 14 times GRM.  If you put about a 40% expense on it, it is going to be in the 4% cap range”. Using this approach is going to make it much quicker for you to go down the line of properties.  Also, sometimes you’re going to find very similar buildings. If you saw something that sold for a particular gross rate multiplier, that may be a better way to sort through properties quickly. It will become easier to make apples to apple comparisons because those rents that they listed are usually accurate as long as they’re not pro forma rents.

So, when do you use Cap Rates?

Well, the larger the property or, the more organized an owner is, the more likely it’s going to be accurate. Also, the more respectable and experienced the broker is, the more likely it’s going to be a precise number. If the pay difference between an experienced and new broker isn’t far off,  why not pair yourself with an experienced broker?

Rarely, when you get down to it, will expenses be precisely what any owner says.  The question becomes; how far off is it?  So, my first piece of advice is to try to deal with people who are reputable and looking at the numbers. If everything you see in the market is at a 5% cap rate, and all of a sudden you find a property with a 7% cap rate – you should think to yourself, “that’s suspicious, why is it still on the market?”. Another example is if you see two comparable buildings with similar rents but drastically different cap rates; this could indicate something is off.

If you’re looking at larger properties or ones run by management companies, the numbers are more likely to be accurate because the owner is going to be able to print out a profit and loss statement. However, another problem arises.

What you could find is that the owner wants to write off as much money as they can on the property. Besides depreciation, they can achieve write-offs through two main ways.

  1. First is by doing maintenance and writing it off the in the year you did the work. This could be things like fixing your toilet or patching the roof.
  2. The second is capital improvements. Capital improvements typically have a long life but can range from one year to several years. A roof, for example, is a capital improvement because even though I paid $10,000 for it today, that write-off might be over the ten-year life of the roof. Because of this, I’m only able to write off $1000 per year against my income.  Although this is the case, a seller may say, “no, that’s still maintenance, so I’m going to write off the entire $10,000 this year”, even though it’s very questionable if not outright fraudulent to do so – but it still happens more than you’d think. A good broker would be able to spot this right away and reallocate it to the proper area of the financial statement. This would change your overall NOI.

So, when working with cap rates where you get income/expense reports, it is imperative to take a look and identify which numbers are actual maintenance and which ones are capital improvements. You also need to see if they’re moving their maintenance into capital improvements. Sellers often do this so they can report more income in the year that they sell, which gives them a higher sale value. Doing your due diligence here can save you a lot of time and money.

Here’s a great example of a multi-family apartment building in San Diego that I bought a while back. The property had a very low cap rate, which typically means that it’s not producing a lot of income. Many investors would walk away right there without digging into the financials. However, after we got into the property, we realized the expenses were misallocated, and the CAP rate turned out to be higher than it was initially stated. We were able to turn a healthy profit on the building by not taking the CAP rate at face value right away.

The moral of the story is be careful when you rely on the CAP rates of small to mid-sized properties.

  1. Learn your expenses
  2. Learn the price per square foot
  3. Learn the market rents in the area so you can apply those metrics to buildings you are analyzing
  4. Take a look at who is listing the property. Is it somebody who has experience? Are they missing a lot of financial numbers?
  5. Do they have expenses listed out, or do they just give you a bottom line number?
  6. Do they have a marketing package? Are they seeming overly aggressive with what they’re proposing?

Sometimes the best deal you buy are the properties that were not marketed correctly. These can often be opportunities for you get a lower price if you conduct the necessary due diligence.

Please leave in the comments below any thoughts you have on cap rates and valuing a property or any stories you may have run into…

Curtis Gabhart, CCIM

Edited by: Blake Imperl

Disclaimer: I’d like to point out that none of the content in this article is absolute. It’s just food for thought and is based on my numerous years of experience dealing with commercial real estate.

These are just some things you may want to think about when analyzing commercial properties. It isn’t always advantageous to rely heavily on CAP rates when looking at properties where you don’t know their actual expenses. This post was designed to offer an alternative for when you’re looking at dozens of properties and trying to find the best deal available.

Additional Education

Please take a look at my PowerPoint Presentation from my recent class on “Don’t Take Cap Rates at Face Value”. I teach monthly commercial real estate classes on a variety of topics from due diligence to getting started in commercial real estate and everything in between. If you’re interested in finding out more about my classes, please visit my Eventbrite Page where you can find the complete list of upcoming classes. 

Looking for some more tips on buying multi-family properties?  Click here to check out my multi-family inspection tips!

Want to get more return on your investment? Here’s a great article on how to increase your buildings’ property value fast by investing in a new paint job. 

How to Value Commercial Real Estate 101 Slideshare – This crash course will take you through the basics of valuing commercial real estate. It has over 106,000 views so far!

The New Tax Laws Effects on Commercial Real Estate Live Presentation

The New Tax Laws Effects on Commercial Real Estate Live Presentation

You’re Invited to Learn About the New Tax Laws That Are Affecting Commercial Real Estate

Please join us for an informative live presentation with Dan Adams, Senior Vice President & Commercial Lending Manager at Wells Fargo. Dan will be taking us through the changes, how they affect commercial real estate, and also conducting a Q&A to answer any questions you may have. Come prepared and ready to learn how you can maximize your business, personal, and investment strategy.

Date: March 29th, 2018

Location: KW Commercial Del Mar/Carmel Valley

Time: 12:00-1:00PM

Seats are limited to 30! Sign up today to secure your spot!

Registration is free and we encourage donations to Autism Tree Project Foundation (ATPF)

autism tree project foundation logoThe Autism Tree Project Foundation helps spread community awareness for autism. Their goal is to give children on the autism spectrum a voice and additionally aims to build community compassion towards the parents and families of these special children. ATPF helps thousands of families with autism create a roadmap for their child with autism and navigate a very complex system of care required for children with Autism Spectrum Disorder.

All monies donated to ATPF go straight to helping real families in our community through one of their 20 critical programs. These programs are on-going and provided to families at no charge, making the Autism Tree Project Foundation very unique. They are a grassroots foundation and have only 1 full-time employee on staff. They do not charge any of their families for ATPF programs.

Sign-Up Here

Earlier this month we asked you for your top questions on the new tax law. Dan was generous enough to answer some. Here’s the top 5:

1. There are new rules for Sub S corp and LLC’s. Do they apply to real estate in single asset entities?

Yes, the new pass-through rules apply to single asset (real estate) entities.   This means that the 20% deduction of pass-through net income applies to the rental real estate owned by a business, an individual, or a living trust.

2. Are there any changes in expensing acquisition costs that were capitalized in the old tax rules?

No, those rules remain exactly the same. 

3. Are there changes in the Alt Min Tax rules for passive investors?

Yes, there are significant changes to the Alternative Minimum Tax (AMT).     Generally speaking, the AMT has basically been eliminated.   It would be extremely rare for an active or passive investor to be subject to the AMT anymore.  I have read some comments that the IRS now expects the AMT to impact fewer than 1,000 individual taxpayers going forward.

4. Any changes in 1031 or installment sale rules?

Yes, we can now only exchange real property (not tangible personal property like improvements).  That creates a difficulty for buildings which had a cost segregation study done, in that the short-life assets would be taxed as boot (taxable gain) in the exchange.  Ideally, the replacement property would need to have a cost segregation study done immediately so that the additional depreciation from that could be used to offset the taxable gain from the exchange boot. 

5. How are the taxes on each property affected as far as tax write-offs?  It seems if they only allow a certain amount of taxes to be written off, it is going to affect the property prices?

The $10,000 state and local tax limit applies to state income taxes and property taxes paid on your primary, secondary, or investment properties only.  There is no limit on business properties or rental properties that are owned by a corporation/LLC.  There is a chance that owning a home is less lucrative now because of the tax limitations.  This could artificially increase demand to rent a home instead of own it. 

Click here to check out our tax article about the Tax Cuts and Jobs Act 

Interview with Globest

globest daniel adams tax law

In a recent article with Globest, Dan discussed some of the recent changes.

Below are a few highlights of the article, to view the full interview, click here

  • Dan believes the new tax laws are positive for the industry by creating certainty.
  • The tax policies ability to spur GDP growth is an indicator of the increase in the demand for office, industrial, warehouse, and other commercial property.
  • The new tax law made numerous changes that will favorably affect commercial real estate as an asset class, including indirect changes such as reductions in tax rates.
  • The law provides for a 20% reduction of business income for most pass-through entities.
  • 1031 Exchanges are now only available with real estate.
  • The increase in estate-tax exclusion to $11 million per person should be viewed as favorable since those are the assets that most often appreciate and are inherited by heirs.
  • The demand for single and multi-family properties will go up as the tax advantage of owning a home has been significantly reduced.
  • US-Based Manufacturing will increase, which could drive demand in that sector.
  • Although it’s been said California was hit harder than other states, much has been exaggerated. The $500,000 capital-gain exclusion for sale of principal residence still exists.
  • The new tax law isn’t a “one size fits all” situation. Brokers should consult their tax professional and figure out how to structure their business, their income, and their investments in a way that maximizes the advantages of the new tax law.

daniel adams wells fargo san diegoDaniel Adams – Senior Vice President, Business Banking Area Manager, Wells Fargo Bank – Dan leads a team that provides commercial real estate loans, treasury management, and credit lines to businesses in Southern California and Nevada. They provide loan structuring, underwriting and risk analysis for operating businesses and commercial real estate investors, and also offer working capital optimization technologies to help businesses operate more efficiently. Dan’s team originated over $300 million in loans in each of the past four years, including Small Business Administration, Healthcare Finance, Equipment Leasing/Purchases, and conventional lending products. Dan is a veteran U.S. Marine artillery officer with multiple deployments to the Middle East and Southwest Asia and also an adjunct Graduate Finance Professor at several local universities.

Wells Fargo’s Business Banking Group serves the needs of small- to mid-size privately held businesses throughout the country. They provide a proactive approach to a team of local Relationship Managers and others to provide customized service and rapid response to help our customers succeed financially.

Questions about the event? Contact us here