Where to look for Bank REOs <ul><li>http://bankofamerica.reo.com/search/propertysearch.aspx  </li></ul><ul><li>https://www...
What are the issues to consider on an REO? <ul><li>Existing asset value is determined by trailing 3 or 12 month NOI (from ...
Trend Analysis – what is it worth? Projected NOI / Total Investment Value to Project Investment Projected NOI / cap rate  ...
Trend Analysis – what is it worth? 104.6% Value to Project Investment $34,327,750  Year 3 (2011) proj. value on NOI $32,57...
Conclusions to REO acquisition <ul><li>Must have access to debt </li></ul><ul><li>Debt underwriting more stringent than ty...
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New Opportunities In Public Housing 4 Amoroso

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New Opportunities In Public Housing 4 Amoroso

  1. 1. Where to look for Bank REOs <ul><li>http://bankofamerica.reo.com/search/propertysearch.aspx </li></ul><ul><li>https://www.citimortgage.com/Mortgage/Oreo/SearchListing.do </li></ul><ul><li>http://mortgage.chase.com/pages/other/co_properties_landing.jsp </li></ul><ul><li>Top real estate brokerage firms bid to be the listing agent to remarket bank owned properties </li></ul><ul><li>Some banks direct sell </li></ul><ul><li>All bank websites have basic information and contact </li></ul><ul><li>Other websites have general info on some bank owned assets such as Loopnet, and broker controlled websites </li></ul>
  2. 2. What are the issues to consider on an REO? <ul><li>Existing asset value is determined by trailing 3 or 12 month NOI (from a lender perspective to acquire debt and finance) less debt available to acquire because performance is below market </li></ul><ul><li>Many buyers are using double digit cap rates for NOI analysis due economy eroding values </li></ul><ul><li>Concessions on rent almost always devalue income stream </li></ul><ul><li>Include reserves above the line when determining value </li></ul>
  3. 3. Trend Analysis – what is it worth? Projected NOI / Total Investment Value to Project Investment Projected NOI / cap rate Year 3 (2011) proj. value on NOI Projected Cash flow / cap rate Year 3 (2011) proj. value on cash flow Cap Rate determined by market Sale Cap Rate used in Model Project NOI Year 3 (2011) NOI - projected Cash flow at stabilization Y 3 Year 3 (2011) Cash Flow -projected   Stabilized Valuation Cash flow on trailing 12 / purchase price Cap Rate on Trailing 12 mos. NOI Trailing 12 / purchase price Cap Rate on Trailing 12 mos. Cash Flow Income- Expense Trailing 12 months NOI Income – expenses and reserves Trailing 12 months Cash Flow XXXXXXXX Going In Purchase Price   Acquisition Cap Rate Cap Rate Analysis  
  4. 4. Trend Analysis – what is it worth? 104.6% Value to Project Investment $34,327,750 Year 3 (2011) proj. value on NOI $32,577,750 Year 3 (2011) proj. value on cash flow 8.00% Sale Cap Rate used in Model $2,746,220 Year 3 (2011) NOI - projected $2,606,220 Year 3 (2011) Cash Flow -projected   Stabilized Valuation 4.09% Cap Rate on Trailing 12 mos. NOI 3.47% Cap Rate on Trailing 12 mos. Cash Flow $919,763 Trailing 12 months NOI $779,763 Trailing 12 months Cash Flow $22,500,000 Going In Purchase Price   Acquisition Cap Rate Cap Rate Analysis  
  5. 5. Conclusions to REO acquisition <ul><li>Must have access to debt </li></ul><ul><li>Debt underwriting more stringent than typical – less debt available </li></ul><ul><li>Must have access to equity*** </li></ul><ul><li>Economy has changed all of the rules! </li></ul><ul><li>If you can buy right on an REO – great opportunity! </li></ul>

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