Executive Summary
Property valuations in the Greater Cleveland area have declined significantly – in some cases, houses are selling for 70-80% less than their peak in 2005-06. In addition, virtually no mortgage money is available to borrowers. Meanwhile, foreclosures are turning former home owners into renters and the rental market overall is improving. However, the challenging economy is also creating financial pressure on tenants.
Rental properties are operationally intense and require hands-on management and exceptional leasing services. In addition, while many properties on the market do not require substantial renovation, we must offer a competitive advantage, reasonable pricing to our tenants and attractive amenities to make sure our properties are fully occupied. Based on our initial discussions, we are inclined to recommend that we engage in “straight rental” and not offer clients lease options at this time. Such is the case because the mortgage market makes financing renters very difficult, sale prices may be very depressed at this time and our objective is to generate maximum rental income with the least amount of capital allocated. However, this idea is open for discussion and we would like to hear your thoughts.
Additional Factors for Your Consideration
Realty Corporation of America has existing real estate capabilities in place that can be utilized to manage and market rental properties. These capabilities include the following:
1) A construction services team that we have available to service our bank asset management clients and our auction services business. The key members of this team include John Caputo, Rod Whittington and Ryan Towne.
2) Our sales team is willing to assist leasing properties for a flat fee.
3) The Realty Corporation of America website can be utilized to promote rental property.
4) We could go to market under the name Realty Corporation of America because we already have an established brand name.
5) Realty Corporation of America has the ability to give “first look” at properties coming onto the market because of our REO business and our Auction Division.
6) Realty Corporation of America would make extremely low cash offers to buy properties and can easily track market times of homes and follow up with low offers on an on going basis to make sure the prices we pay for properties are as low as possible.
7) Because we are a real estate broker, we can easily list properties for sale and have some advantage in terms of an exit strategy.
Bottom line: With no overhead, we could start a rental business.
Property Acquisition Candidates
For discussion purposes only, we are pleased to provide you with several samples of the profiles of properties we may consider acquiring. Of course, we would not pay the ask prices for any property. Kindly consider the following:
2-family – 948 Royal in Cleveland, Ohio 44110
This property in the Collinwood community appears to have been renovated recently and requires modest repair. Key features include:
2 bedroom 1 bath each unit
2,012 sq ft
No garage
Asking Price: $14,900
Estimate Rental Income: $500-$600 each unit
3-family – 1646 Coventry in Cleveland Heights, Ohio 44118
This 3 family home near the Cleveland Heights/ East Cleveland boarder sold for nearly $200,000 2 years ago and appears to have been upgraded recently. Cleveland Heights has a point of sale, often with escrow requirements that must be addressed prior to close. Key features include:
3 bedroom 1 bath first 2 units, 3rd unit 1 bedroom 1 bath
3,298 sq ft
2 car detached garage
Asking Price: $29,900
Estimate Rental Income: $800 each 2 units - $400 3rd unit
The following three single family homes are likely to command higher rent that two family properties and are described as follows:
Single family – 4906 E 88th in Garfield Heights, Ohio 44125
3 bedroom 1 bath
1,664 sq ft
No garage
Asking Price: $14,500
Estimate Rental Income: $900-$1000
Single Family – 832 Lecona in Cleveland Heights, Ohio 44121
3 bedroom 1 and ½ bath
1,562 sq ft
1 car detached garage
Asking Price: $14,900
Estimate Rental Income: $800-$900
Single Family – 3327 Euclid Heights in Cleveland Heights, Ohio 44118
Large Brick Center Hall Colonial
4 bedroom 1 and ½ half bath
2,554 sq ft
3 car detached garage
Asking Price: $35,000
Estimate Rental Income: $1000-$1200
Wednesday, December 31, 2008
Monday, December 1, 2008
REO Overview
Hello Everyone!
Realty Corporation of America has been doing "short sales" and bank REO work for over a decade. While the big companies laughed at our initiative and were excited to keep getting overpriced listings and fight a "brand image" war, we were able to build our business with our bank owned listings. The top earners at our Company have always been members of our short sale and bank listing team! This e mail is being sent to newer team members who have asked about jumping into this sector of our Company. We've been successful in this business segment thanks to the amazing hard work of Mike Mulloy, Brian Jordan, Richard Zecchini, Mike Sanderson, Andy Morris, Harry King and Abby in our corporate office. Other factors critical to our success include these:
(1) It's easier to sell the cheapest house on the street -- even if it needs work!
(2) We earned lots of small checks instead of waiting for one big deal to close to make money
(3) Banks lower prices until the house sells -- unlike "retail" sellers that might just rent the house or take the home off the market
(4) Many bank owned homes are purchased with cash or hard money -- so we often avoid the "Mortgage Drama" and delayed closings!
(5) Our low overhead structure and high commission split means that our team can still make good money even when the commission check isn't as large as we'd like!
AND NOW our auction business (www.realtycorpauctions.com) gives us the ability to offer this service to banks as well as our more traditional listing programs. The auction business has become a huge competitive advantage -- it generates buyer leads, builds awareness of the Company and gives us a service that few others offer!
Given the huge growth in this segment (20,000 foreclosures in Cuyahoga County this year and 1.3 million bank owned homes expected to sell next year -- almost 1/3 of the market), consider spending time with us as we discuss adding to our "BPO" team. BPOs, or Broker Price Opinions, are our reports to our asset manager clients -- most of these banks pay us for this work! If you'd like to make steady money or want to learn more about how this service can make you money, please join us next Tuesday while Mike Mulloy and I provide everyone with a market overview and details on how to make money with bank owned listings.
This meeting is COMPLETELY OPTIONAL and is set for 2 PM on Tuesday November 18th on the 16th Floor of the Beautiful Superior Building in our conference room! Hope you can stop by!
Thank you very much for being a part of the Company and helping us compete and succeed in challenging times. I'm deeply appreciative of your help!
Tony
Realty Corporation of America has been doing "short sales" and bank REO work for over a decade. While the big companies laughed at our initiative and were excited to keep getting overpriced listings and fight a "brand image" war, we were able to build our business with our bank owned listings. The top earners at our Company have always been members of our short sale and bank listing team! This e mail is being sent to newer team members who have asked about jumping into this sector of our Company. We've been successful in this business segment thanks to the amazing hard work of Mike Mulloy, Brian Jordan, Richard Zecchini, Mike Sanderson, Andy Morris, Harry King and Abby in our corporate office. Other factors critical to our success include these:
(1) It's easier to sell the cheapest house on the street -- even if it needs work!
(2) We earned lots of small checks instead of waiting for one big deal to close to make money
(3) Banks lower prices until the house sells -- unlike "retail" sellers that might just rent the house or take the home off the market
(4) Many bank owned homes are purchased with cash or hard money -- so we often avoid the "Mortgage Drama" and delayed closings!
(5) Our low overhead structure and high commission split means that our team can still make good money even when the commission check isn't as large as we'd like!
AND NOW our auction business (www.realtycorpauctions.com) gives us the ability to offer this service to banks as well as our more traditional listing programs. The auction business has become a huge competitive advantage -- it generates buyer leads, builds awareness of the Company and gives us a service that few others offer!
Given the huge growth in this segment (20,000 foreclosures in Cuyahoga County this year and 1.3 million bank owned homes expected to sell next year -- almost 1/3 of the market), consider spending time with us as we discuss adding to our "BPO" team. BPOs, or Broker Price Opinions, are our reports to our asset manager clients -- most of these banks pay us for this work! If you'd like to make steady money or want to learn more about how this service can make you money, please join us next Tuesday while Mike Mulloy and I provide everyone with a market overview and details on how to make money with bank owned listings.
This meeting is COMPLETELY OPTIONAL and is set for 2 PM on Tuesday November 18th on the 16th Floor of the Beautiful Superior Building in our conference room! Hope you can stop by!
Thank you very much for being a part of the Company and helping us compete and succeed in challenging times. I'm deeply appreciative of your help!
Tony
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