Mortgage features

• Fix debt service at the close of escrow.
• The market rate APR should be at a discount to the capitalization rate.
• Make sure debt service is paid by current rents and not guaranteed or projected rents.
• Push the amortization term out as far as possible and avoid balloon payments.
• Negotiate an assumption for a buyer (not to be unreasonably withheld).
• Avoid mortgage lock-ins.
• Avoid yield-to-maintenance prepayment agreements.

Property management features

• Strong lessees have a positive affect on real estate value.
• Be aware of all the marketing tools that are available for leasing.
• Develop lessee profiles for focused marketing activity.
• Where possible, begin negotiating leases one year prior to their expiration.
• For control and efficiency, review all operating expenses (line-by-line) monthly.
• Examine all budget differences of more than 2%.
• Develop and put into place energy conservation and energy saving programs.
• Develop lessee services that create additional income.

Conclusion

Three categories of investors emerge from every economic recovery: survivors, non-survivors, and new winners. Survivors are old investors who base their decisions on existing, sound financial facts that affect earnings. Non-survivors are old investors who base their decisions on projected financials that affect both earnings and non earnings issues (i.e., replacement costs, gross rent multipliers, etc.). New winners are those that adhere to their convictions and are rewarded accordingly.

The United States is fortunate to have a stable government, an extraordinarily educated and trained employment pool, an abundance of natural resources, advanced technology, a competitive spirit, and a strong sense of fair play. Consequently, our country has had a pattern of long-term growth since its founding in 1776. Admittedly this growth has been interrupted by a combination of mild and sharp declines that have lasted for short to long periods of time. Each time these interruptions end, the country resumes its long-term growth trend. NetGain believes that the next resumption of our country’s long-term growth trend will result in a strong profitable period. Two categories, the survivors and the new winners, will be the beneficiaries of this extraordinary profit opportunity.

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