3. Kenneth T. Holman founded the National Association of Real Estate Advisors (NAREA) in 2012. NAREA
is an association that educates real estate professionals in all aspects of the real estate business from
residential real estate to commercial real estate to investing in real estate.
Mr. Holman is also president of Overland Group, Inc., a multi-faceted real estate organization that
provides, through its individually owned and operated companies, brokerage, construction,
development, financing, property management, and real estate investment consulting to its clients for
both commercial and residential properties. For more than 30 years, Mr. Holman has had extensive
experience in the real estate industry, primarily in the areas of single family and multifamily
residential, lodging, industrial, office, and free-standing retail properties.
Mr. Holman has received several licenses, designations, and awards throughout his career. He holds
three licenses: a real estate broker's license, a general contractor's license, and a mortgage loan
originator's license through the National Mortgage Licensing System (NMLS). He is affiliated with the
following organizations: the National Association of REALTORS (NAR), the CCIM Institute, and the
Institute of Real Estate Management (IREM). He holds both the CCIM (Certified Commercial Investment
Member) and the CPM (Certified Property Manager) designations.
Mr. Holman holds a bachelor of science degree in Accounting from Brigham Young University Marriott
School of Management and a Master of Business Administration (MBA) degree from the University of
Utah David Eccles School of Business. He is the past-president of the Utah Apartment Association and
has been a member of the Centerville City Council, a member of the David School District Foundation
Board, and a founding member of the Centerville-Farmington Rotary Club.
Mr. Holman can be reached at 801.931.5571 or at ken@nareagroup.org
Kenneth T. Holman
2
4.
5. 6
NOTES:
INTRODUCTION:While finding, analyzing, and negotiating a commercial real estate deal may seem complicated, the
real art in acquiring commercial real estate is in arranging the financing. Residential loans and
lending requirements are standardized while commercial loans and lending requirements vary
depending on the property type. Unlike financing residential property, financing commercial
property is difficult and time consuming. The primary reason to seek financing for a real estate
project is to enhance the return on investment by using positive financial leverage.
6.
7. 14
CREATEANINTERESTINTHE
CLIENTTOREADFURTHER.
Elements of a Good Commercial Listing Presentation
The title page includes the title of the property, if any, and the address of
the property. It also gives the name of the person who prepared the
presentation and the name, address, telephone number and any other
relevant contact information. This page is not numbered.
Title Page
Letter of Tr ansm ittal
A letter of transmittal or transmittal letter is a cover letter that
accompanies the presentation. It describes what is being sent and the
purpose for sending it along with the signature of the preparer.
Table of Contents
The table of contents is usually headed ?Contents? and identifies the
contents, usually just the chapters or section headings, included in the
listing presentation along with page numbers or tab numbers to make
finding the information easier.
Executive Sum m ar y
At the beginning of the listing presentation, you should always have an
Executive Summary. This will be one or two pages of the most important
points highlighted and taken from the listing presentation itself. The
Executive Summary is designed to do one thing, create an interest in the
client to read further.
Real Estate Mar ket Over view
A real estate market overview is a statement of the current condition of the
commercial real estate market and identifies basic trends in the market
today. It also gives a summary of the four basic property types, i.e., retail,
industrial, office and multifamily, as it relates to occupancy and rental
rates for the market where the property is located.
Real estate contributes significantly to the wealth of the United States and
is one of four ?core? investment asset classes, along with cash (T-bills),
stocks, and bonds. The total market value of non-governmental owned real
estate was approximately $25 trillion in the mid-2000?s, exceeding the stock
market valuation of about $20 trillion.
Compar ative Mar ket Analysis
A comparative market analysis uses both sold property records for sold
properties that a similar to the subject property in the same area and
currently listed similar properties in the area. When comparing competing
properties, use properties that are located as close to the subject property
as possible. Use sold comparable properties that are not too old. Since
there are always differences, be sure to adjust the subject property?s value
estimate for its differences from the comparable properties. Add or
subtract for acreage size, square footage, condition, etc.
14The Commercial Listing Presentation
8.
9. 12Types of Commercial Real Estate
Apar tments and Multifamily Housing. Generally, apartments with fewer than five units are considered
to be residential property rather than commercial property. Although five units is considered by many as
an entry-level apartment or multifamily project, these properties tend to be much larger with hundreds of
units in the same project. Multifamily housing may be tenant-occupied (as in apartment projects),
owner-occupied (as in a condominium or cooperative project), or mixed (with tenants and owners living
in different units within the same project).
Mobile Home Par ks. Mobile home parks are platted subdivisions with several plots that include utility
hookups, parking spaces, roads, and in some cases, amenities such as a swimming pool and clubhouse.
They are leased to mobile home owners. Mobile homes are prefabricated homes built in a factory and sold
to an individual user. They are usually placed in one location within the mobile home park and left
semi-permanently until moved to a new location.
Mixed Use Developments. A mixed-use development is any real estate development that blends a
combination of residential, retail, commercial, cultural, institutional, or industrial uses where the
functions are physically and functionally integrated. Many mixed-use developments provide pedestrian
connections to walking paths and public transportation.
Multi-Fam ily Residential
Retail
Retail businesses sell finished goods and services in exchange for money. According to the U.S. Census
Bureau, total monthly retail sales in the United States averages about $350 billion. Retail businesses
include everything from large shopping centers to mid-sized department and grocery stores to small drug
stores, and convenient stores. Service related businesses such as beauty salons, tanning salons, and rental
centers are also considered retail businesses. Restaurants, on the other hand, are considered more of a
specialty use and fall into a category all their own.
10.
11. The 7(a) Loan Program is the SBA?s most popular
program. To be eligible you must demonstrate a need
for funds and have a sound business purpose in mind.
To be considered eligible for the SBA 7(a) Loan
Program, your business must meet SBA?s size
standards and be considered small within your
particular industry, operate for profit and have
reasonable equity to invest. The SBA has a Table of
Small Business Size Standards that can be found on its
website https://www.sba.gov.
SBA doesn?t fund these loans directly to small
business owners, but banks receive a guarantee that
the SBA will repay a portion of the loan if you default
on the payments.
The 7(a) Program lets you get loan amount up to $5
million to fund the following things:
- To purchase new land (including construction
costs)
- To repair existing capital
- To refinance existing debt
- To purchase machinery, furniture, fixtures,
supplies or materials
- To fund startup costs.
The 7(a) Program offers flexibility, longer terms and
potentially lower down payments compared to other
financing options. Most 7(a) term loans are repaid
with monthly payments of principal and interest. The
lender may offer both fixed-rate and variable-rate
loans.
The SBA 7(a) Loan Program underwriting parameters
offer higher leverage than most conventional loan
programs. Typical loan terms are as follows:
- The Loan-to-Value ratio can be as high as 90
percent;
- Amortization period of 25 years;
- Debt Coverage Ratio (DCR) of 1.15 compared
to conventional loans of 1.3 or higher;
- Interest rate is normally the Prime Rate plus
2.00-to-2.75 percent; There is usually a
prepayment penalty for early prepayment of
the loan. It usually starts at a 5 percent
prepayment penalty in year 1, a 3 percent
prepayment penalty in year 2, and a 1 percent
prepayment penalty in year 3.
- These loans require a minimum credit score of
600 for the guarantor.
22Types of USGovernment Agency Loans
