Empire State Realty Trust (ESRT) IPO

NEW YORK (AP) — Empire State Realty Trust Inc. said Thursday that it plans to price an initial public offering of the company's stock between $13 and $15 each.
The real estate investment trust, which owns the famous skyscraper that is its namesake, said in a regulatory filing that it is selling 71.5 million shares and offering underwriters the chance to buy up to 10.7 million additional shares, to cover excess demand.
At the midpoint price, and assuming the underwriters exercise their overallotment option, Empire State Realty Trust would raise gross proceeds of $1.15 billion.
The company plans to use proceeds to repay debt as well as cover expenses related to the IPO. Remaining funds will be used for working capital and possible future acquisitions.
It now owns 12 office properties, including seven in midtown Manhattan and the rest in the tri-state area.
The stock will list on the New York Stock Exchange under the ticker symbol "ESRT."

Real Estate Negotiations (Part 8) "An Eye For an Eye"

Today's Real Estate Negotiations Tip is....

"Give Up An Eye For An Eye"

 

I believe that your initial offer should be slightly better than the lesser offer that you would actually accept. However, don't be so quick to give stuff up. Consider the seller's counter offer but if you're going to let something go, so should they. For example: If the seller wants market value for the property, you may be willing to give it to them if they're willing to hold a seller second for the difference of your offer and their offer at 0% interest and amortized over 30 years. So they'll agree to the 0% but not the 30 year amortization? Okay so lets say amortized over 15 years but they have to make repairs to the roof before closing.

 

Get the picture? Never give up something for nothing! 

Real Estate Negotiations (Part 7) "Justify Your Offer Based on Seller's Needs"

Today's Real Estate Negotiations Tip is....

"Justify Your Offer Based on Seller's Needs"

 

If you've followed the tip from my post a few days ago "Know their situation", then you should have no problem with this one. Paint a picture for them of how your offer solves their problems. At the end of the conversation, they should see a clear picture of how taking your offer will resolve their issues and bring them peace of mind. 

Real Estate Negotiations (Part 6) "Review All Options BEFORE Making An Offer"

Today's Real Estate Negotiations Tip is....

"Review All Options BEFORE Making An Offer"

 

Before you make your offer, you should step back and take some time to review all available options. Depending on the deal, you may want to come up with a cash offer (or hard money) and an owner financing offer. Doing this might even give you ideas on how to make your offer even better. After you come up with your offers take some time to put yourself in the seller's shoes. Would you take the offer or would you counter it? Also ask yourself "What would my counter offer be?" Asking these questions will better equip you to answer questions and challenge counter offers.  

Real Estate Negotiations (Part 5) "Stay In Control"

Today's Real Estate Negotiations Tip is....

"Stay In Control"

 

Negotiations can sometimes be a highly charged and emotional event. Check your emotions at the door. Never let the other party get you to a point whereas you end up losing your cool. It's just not worth it. If the other party seems to be getting emotional, or if their just demanding that you answer questions that you're not prepared to answer, it may be time to take a break. Just stop the conversation and go to the restroom or get a drink of water. Allow the conversation to have time to "reset". If this doesn't seem to be working, just call it a night. Say something like "Well I've gathered some valuable information tonight, but I've got to do a little more research before I can make/accept an offer" or "Unfortunately I have another appointment that I need to get to in 15 minutes". Maybe you need to go over some details with your partner, spouse or contractor. Bottom line, Stay in control of the negotiations at all times. Don't lose your cool, and don't let someone else bully or intimidate you into doing anything that you don't want to do.



Real Estate Negotiations (Part 4) "Know Their Situation"

Today's Real Estate Negotiation Tip is....

"Know Their Situation"

You'll find that negotiations are MUCH easier when you know the other person's situation. Knowing their situation will allow you to give on the things that matter to them but are insignificant to you. For example, a few years ago I was negotiating to purchase a property that the seller owned free & clear. I was offering to purchase the property using 100% owner financing. The seller's only hang-up was that he wanted to use the proceeds from a traditional sale to pay off a house in Florida so that he has peace of mind in knowing that if anything was to ever happen to him, his wife would be able to remain in the Florida home without worrying about a mortgage payment. Armed with that information, I offered to have him take out a term life insurance policy and I would pay the monthly premium. In exchange, he would hold a note for 100% of the purchase price at 0% interest until I either sold the property or refinanced.

Bottom line, I would have never been able to negotiate those terms if I didn't know his situation. Click here to see my post on how to find free & clear homes.

Real Estate Negotiations (Part 3) "Find The Reason"

Today's Real Estate Negotiation Tip is....

"Find The Reason"

 

The best kind of seller to buy from is a Motivated Seller. The question is.... "Why are they motivated?" It's very important to get this information out of the seller before or during your negotiations. It's generally pretty easy to get it out of them, you just have to know the right questions to ask and how to ask them. Just be straight forward, ask them "What's your situation?" or "Why are you selling?"

 

If they hesitate and try to change the subject, just let make them feel comfortable and let them know that it's easier to work out a win-win deal if you know a little more about what exactly it is that they need. After they start talking, (excuse the expression but....) SHUT UP!!! Give them a chance to tell you everything. You truly cannot structure a real win-win transaction if you don't know what the sellers need. So make sure that you always ask the right questions and find why they're selling.

 

As a bonus tip, I'd also advise that you bring your smart phone with you and if the seller consents to it, record the conversation. This will give you the opportunity to go back later and see if you missed anything.

Real Estate Negotiations (Part 2) "Know What You Want"

Today's Negotiation tip is....

"Know What You Want"

There are  many different strategies to investing in real estate. If you've found a property that you're interested in purchasing, you should first know what you want to do with that property before you begin negotiations. If you're planning to buy-&-hold this property using owner financing, then you can probably influence the seller to give you the terms that you want (such as 0% interest) by offering a higher purchase price. If you're preferred strategy is flipping houses, then you're primary goal is to buy that property for as little as possible so you can't offer the seller more money, but you can offer a super fast closing by either paying with cash, or using a hard money lender.

To be a successful negotiator, you must understand and think through what you want to accomplish in the negotiation. One great way to do this is to take the time to write out a list of questions that you can ask the seller. The answers will give you the knowledge of how to successfully get exactly what you want and need. 

Real Estate Negotiations (Part 1)

Negotiating is a necessary skill in real estate investing. Without it, you will find yourself overpaying for properties, contractors and even giving away too much equity on your partnership deals.  I actually love negotiating and quite frankly…. I think I’m pretty good at it. That’s why I decided to start this series on the topic. I don’t know exactly how long it will be but I just want to give my readers a leg up on their opposers.  So here’s my first tip….

 

"He who NEEDS most, loses" - Every negotiation starts with a Need and a Desire. If you're working on a particular deal, ask yourself, "Do the sellers need to sell or do they merely want to sell?" You will definitely workout a better deal for yourself if the sellers need to sell the property. On the flip side, you must ask yourself the same question. "Do I need this deal to workout, or do I merely want it to work?" If you feel that you need to buy this property for whatever reason, then you really should check yourself out to see if there are any alternative resolutions to your problem before you agree to anything. You certainly don't want to put yourself in a position that you'll regret down the road. Remember, you're an investor, you should only invest if the numbers work in your favor.

Bottomline.... Always be in the strongest negotiation position!

Interview with Kevin Regan of REAP Partners

REAP Partners’s primary investment focus is on medium sized apartment complexes in New England. They strive to provide their investors with peace of mind derived from acquiring apartment buildings that produce high income from steady, reliable cash flows and managing them to ensure a high quality rental experience for their customers.

REAP Partners was founded in 2012 by real estate investors Kevin R. Regan and Peter L. D’Amato. Prior to launching REAP Partners, Kevin and Pete working independently acquired and rehabbed a total of 18 multi-family properties.

 

The following video is an interview of Kevin on their recent $2,000,000 purchase of 54 Poquonock Ave in Windsor, CT
 

 

If you'd like more information about investing with REAP Partners, Click Here to contact me and I will connect you with Kevin Regan.

Also, feel free to contact me if you'd like to showcase your recent property acquisition on the Connecticut Real Estate Investor's Blog.

4 Alternative Income Sources for Landlords

Even when getting top dollar for a rental property, many landlords still find rising taxes and insurance costs squeezing their bottom line. Well here's some good news, you may already have ways to increase your bottom line with little or no investment using the space and resources that already exist at your property.

Coin-Operated Laundry - Putting coin operated laundry machines in your property can really increase revenues. Your initial investment can range anywhere from $700 - $3,000 for a unit but depending on the size of your property, you could make that up pretty quickly.

Storage - Buy or build lockable storage lockers in a common area and rent them to your tenants for an extra $10-$20 per month.

Pet Fees - If you're not renting to tenants with pets then you're missing out on a great source of extra income. I know that animals can really ruin your rental unit if the owners don't keep up with them. But that's why we charge a fee. Charge your tenants $25 a month for one pet and $10 for each additional pet.

Advertising Space - If your building is on a corner lot or on a busy street, you might be able to charge local businesses for billboard or mural advertising (photo above). Make sure that you check with the town first to make sure that this type of signage is legal. If not, no problem, just apply for a variance with the board of appeals.

Just remember, to begin charging existing tenants, you may need to create a lease amendment at renewal time to add new changes. With month-to-month renters, give a 30-day written notice to advise them of any increase in charges.

5 Ways to Invest In Real Estate Without Getting Your Hands Dirty

Whether you're pressed for time and can't commit to the hustle and bustle of landlording, or you just don't want to deal with the aggregation, here are 5 ways that you can still make a lot of money in real estate:

Wholesaling: A Wholesaler is a person that finds a property for sale (usually distressed property), then puts it under contract and assigns or sells that contract to an investor/buyer. For example:
John Wholesale finds a property that’s going into foreclosure in 2 weeks. After speaking to the owner, he finds that foreclosure is due to the fact that the owner lost his job and can’t continue making payments. Since the property is worth $200,000 and the owner only owes $130,000 including all arrearages, John sees a great opportunity. He signs an assignable contract with the owner to purchase the property for what he owes ($130,000). Then he contacts his list of investors to let them know that he has a great deal on his hands and that they can buy it for $140,000. Everyone wins in this situation. The owner gets to sell his property and avoids a foreclosure on his credit, John makes an easy $10,000, and the Investor buys a property at a great price!
A good Wholesaler focuses on two things; finding great deals and building their list of ready, willing and able investor/buyers.

REITs: REIT stands for a Real Estate Investment Trust. In the most simplistic definition, a REIT is to a real estate property as a mutual fund is to a stock. A large number of individuals pool their funds together, forming a REIT, and allow the REIT to purchase large real estate investments such as shopping malls, large apartment complexes, skyscrapers, or bulk amounts of single family homes. The REIT then distributes profits to its individual investors. This is one of the most hands-off approaches to investing in Real Estate, but do not expect the returns found in hands-on investing. You can buy shares in a REIT via your stock account. They often have a relatively high dividend payment. Simply put…. REITs are an excellent way to invest in commercial real estate if you don’t want the headache of property management or just don’t have the money.

Buying Notes: When you think of a real estate note, you probably think of a mortgage in order to finance the purchase or refinance of a piece of property. Well, buying real estate notes is also an investment strategy used by thousands of investors. You can earn a return on the money you invest in the real estate note. When talking about investing in real estate notes, you may also hear terms such as hard money lenders or private notes because personal money is used as financing funds for the property. When you invest in real estate notes, you receive monthly principal and interest payments based on the note amount and continue to receive the monthly payments until the note is paid in full. Here’s an example of a note buyer in action:
Nick Noteholder sold his home 2 years ago for $200,000. However, since the buyer of his home could only come up with $150,000 for the purchase Nick agreed to hold a note (secured with the house as collateral) for the remaining $50,000. The terms of this note specified that the buyer would pay nick 60 payments (5 years) of $833 per month (interest not included for scenario simplicity). 3 years later, Nick finds himself in a financial bind and needs some quick cash. At that point, the buyer already paid Nick about $30,000 but still owes $20,000 on the note. Nick finds YOU (the notebuyer) You agree to buy the note at a discount for $15,000. Now the buyer ends up paying you the remaining $20,000 by simply continuing to pay his $833 per month for the next 2 years.
Now you have an extra $5,000 in your pocket not including any interest that may have been attached to the note.

Partnerships/Syndication: (AKA Equity Share Partners) This is one of my favorite strategies. With this strategy, you’re truly only limited by your own imagination. Anyone can use it regardless of their credit situation or lack of capital. It’s used everyday by investors large and small. It’s used to buy single families, multi families and even large apartment complexes and strip malls. It’s even used by fortune 500 companies in their various business acquisitions. Bottom line… Equity Partners is the way to go. So how do you find an equity partner? Equity partners can be friends, family members, colleagues or perfect strangers. As long as long as they possess qualities that you don’t have (i.e. capital, credit, expertise or even time to manage the property) you could use them as a business partner or just a partner for a particular deal. If you’d rather not deal with family or friends, believe me, I can understand that. One way to find equity partners is to join your local REIA (Real Estate Investor Association). Most REIAs have monthly or weekly meetings at local hotels or conference centers. There are a few of them here in Connecticut. Email me here for more information on REIAs in your area. Another great way to find them is to find high net worth individuals that are looking for a higher return on their investments. This can be your family doctor, attorney or even your financial advisor. You could even find individuals that currently own investment property and ask them to partner with you on a deal or two. One thing that I’d definitely advise you to do is to be aware of the SEC (Securities and Exchange Commission) rules and regulations governing solicitation of investors if you’re planning to talk to someone out of your immediate circle. You don’t want to end up in deeper debt via fines and penalties by illegally soliciting.
Deal structuring flexibility is another great advantage with equity partners. As long as it’s a win-win situation for all parties involved, you can make a lot of money using this strategy. Let’s say you have plenty of cash available but you have bad credit due to unfortunate circumstances that may have occurred in your life. You could structure the deal whereas you and your partner set up a business entity such as an LLC (Limited Liability Company), then you use your partner’s credit to finance the property and use your cash for the down payment. Or let’s flip that scenario. You have good credit and your partner has the cash but he’s uncomfortable splitting the deal 50-50 because he’s putting up all of the money. You could structure the deal whereas he owns 75% and you own 25% of the property. You then agree to manage the daily responsibility of the property and you have the option to buy back equity at a set price until you own 100% of the property. So as you can see, using equity partners is extremely flexible and only limited by your own imagination.

Private Mortgage Lending: Investors seeking alternatives to the stock and bond markets will find refuge in the world of private mortgage lending. If you’re careful and diligent, you can earn solid returns while minimizing risk. On average, Private Mortgage Lenders can earn between 10%-20% interest when making a loan. Here’s an example of a Private Mortgage Lender in action:
John Flipper found a foreclosure property and signed an agreement to purchase it from the seller at $120,000. His Realtor did a CMA on the property that showed that it could sell for about $200,000 after John puts in $20,000 in renovations. John doesn’t have the cash to complete the deal so he goes to YOU. You agree to loan John the money at 15% interest (Not uncommon for a rehab loan). You loan him the full amount of the purchase and renovation ($140,000). It takes John 3 months to complete the project and sell the property. Now John sells the remodeled property and grosses $55,000 in profits, you made $5,000 in profits (just for loaning him the money), a new family gets to purchase a newly renovated home at a fair price and the seller gets to sell his property and avoids having a foreclosure on his credit. EVERYBODY WINS!!

Foxwoods Expansion Set to Begin Sept 26th

A much-delayed groundbreaking for the outlet mall planned at Foxwoods Resort Casino is scheduled to take place this month, according to Tanger Factory Outlet Centers, one of the project's partners.
The groundbreaking "celebration" is set for Sept. 26 in the courtyard in front of Foxwoods' Grand Pequot Hotel, an announcement from Tanger says. Scheduled to attend are Steven B. Tanger, the Greensboro, N.C.-based developer's president and chief executive officer; Rodney Butler, chairman of the Mashantucket Pequot Tribe, which owns Foxwoods; Gov. Dannel P. Malloy; and Scott Butera, Foxwoods' president and CEO.
"The tribe and Foxwoods are looking forward to this new and exciting development here at Mashantucket," Bill Satti, a spokesman for the tribe, said Tuesday. "They feel this new addition will enhance the pre-existing world class resort that Foxwoods is known for, and Foxwoods will continue to be one of the premier destinations for patrons and guests here in the Northeast."

The project, first announced in February 2012, calls for 312,000 square feet of retail space linking the Grand Pequot Hotel and MGM Grand at Foxwoods, the freestanding casino built near Foxwoods' main complex.
The groundbreaking originally was set for spring 2012, then repeatedly was pushed back. Harsh winter weather and delays in securing agreements with mall tenants were blamed for delays in the start of construction this year. The mall was scheduled to open in 2014.
Tanger, among the largest owners, developers and managers of outlet shopping centers in the United States and Canada, is partnering on the project with Gordon Group Holdings of Greenwich. The Tanger Outlets at Foxwoods would be built on land the partners are leasing from the Mashantuckets.
The mall, scheduled to open next year, is expected to comprise some 80 stores, none of which has been named yet publicly.
State economists last year hailed the project as a potential boon to southeastern Connecticut's economy, providing 400 temporary constructions jobs and about 900 permanent full- and part-time jobs once built.
Tanger owns the Tanger Outlet Center off Interstate 95 in Westbrook.
Both of southeastern Connecticut's casinos have planned retail expansions in a bid to bolster their nongaming offerings.
In June, Mohegan Sun announced plans to add 200,000 square feet of space devoted to retail, entertainment and dining — the Uncasville casino's first expansion in five years.
The $50 million Downtown District is to be built next to Mohegan Sun's Winter Garage and is to include a food pavilion, a 14-screen movie theater, an upscale bowling alley and a "promenade" of shops, including Coach, Tiffany, Sephora, Tommy Bahama, Puma and others.
Two development firms, the Morristown, N.J.-based Hampshire Companies and The Bronson Companies of Beverly Hills, Calif., are partnering on the project, which they would build on land they would lease from the Mohegan Tribe, which owns Mohegan Sun.
Mohegan Sun had indicated the groundbreaking would take place this fall, with the new outlets opening in early 2015.
A Mohegan official said Tuesday he was still hoping for a groundbreaking "this year."

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