Frequently Asked Questions
Q: What makes you different from other Brokers?
Terry Moore has been a real estate investor with more than 20 years’ experience as a landlord. He knows the good and the bad from personal experience. He understands the truth and knows how to explain it. In the last decade, Terry and his team have closed more income property escrows than our competitors and have successfully closed more escrows than the top three firms combined. Terry has a passion for helping investors create wealth and leave a legacy through real estate investing.
Q: How do I know the price is fair and competitive on the property I listed with you?
A great broker will do a thorough analysis of the facts to ensure you receive full value. When we study the reports of closed transaction of similar properties, we find that Sellers who sell too low are those who did not use an investment specialist to represent them.
My team and I study the market and analysis similar properties that have recently sold and what currently listed for to help us advise you on the most accurate value of your property. You will see what similar sized properties in the same neighborhoods have sold for within the last year. For apartments, we prepare a report that lists six to twelve sales with key information items: Price per unit, gross rent multiplier, cost per square foot, and cap rate. These key details allow us to calculate the same way a bank appraiser would analysis the property.
The second part to determine the value of your property is we create a report of current listed properties that are similar to yours. This report will help you learn what your competitors are asking and see how your property would rank in comparison. Together, we decide what price your property should be listed for.
Our success ratio is higher than the county average because we tell the truth. Some brokers will list the building for a high price and then after sitting on the market with little to no action, will ask you to do a price reduction. We treat you the way we want to be treated – as an informed adult. Much of our business comes from referrals because we help our clients sell at fair prices.
Q: Your firm, ACI, seems to dominate the income property ads. How do I know that you close deals?
COMPS Inc. reports ACI as a Power Broker every year the designation has been awarded. ACI has represented Buyers and Sellers of apartments over 4,000 transactions. That is more transactions than the number two and number three firms in San Diego combined.
Q: Some brokers and brokerage houses seem to focus on maximizing their income then serving in the best interest of a Seller. How do I know that you be focused on my success?
Some of our competitors have a written policy maximizing commission inside the brokerage firm. Our approach is different. When you hire us to sell your property, we have a fiduciary responsibility to sell your property for as much money as possible as soon as possible. We know that exposing your property to 5,000 agents and thousands of principals through the Multiple Listing Service (MLS), direct mail marketing and the Internet marketing will give you more chances to sell your property.
Q: How long does it take to sell income property?
When our clients are motivated and are willing to list their property with fair market price and terms, we have had accepted offers within a week. In most cases, it will take from one to three months to generate and negotiate an acceptable offer. Generally, a Buyer will have 17 days from acceptance to inspect the property and review the property due diligence paperwork. The appraisal and loan process typically takes about six weeks from the date of acceptance to be finalized. In other words, closing escrow can take up to two months after there is agreement on price and terms.
In some cases, the first Buyer to put the property under contract may not close. Sometimes this occurs because the Buyer doesn’t like what they see on the inside or the lender does not provide a loan as big as the Buyer hoped for.
Q: I already have good cash flow now, so why should I trade up?
If you think that rents will increase and values will increase, then you will benefit more by owning a larger building than a smaller property. Many of our clients also trade into bigger or newer properties or into more affluent areas.
Q: I hate paying extra taxes or paying taxes early. I have heard of tax-deferred exchanges. Can you help me do that?
Yes! Terry Moore has helped many clients do tax-deferred exchanges. He has used this process on his own personal account, and has taught classes on the 1031 exchange. Tax-deferred exchanges are one of the most powerful tools available to real estate investors. It is like getting an interest-free loan from the government. We have helped people move equity from houses, land and apartments into apartments, commercial and triple net properties. There is no good reason to pay taxes early.
Q: What do I need to do to my property to get the best price?
Generally, make your property the most appealing property possible. This can include paint touch ups, freshen the landscaping, and raising rents to market value. A used car that has been detailed brings more than the same vehicle that has been driven through the desert and sold being washed. Contact us and we can provide a customized suggestions to make your property more appealing.
Q: What kind of financing can I get when I buy apartments?
For most transactions of five or more units, you can obtain a 60% loan-to-value. If the property is one of the most ten most expensive zip codes, the lender may require a down payment of 50%. The lender will loan a higher dollar amount in the more affluent areas than in the average location but the property must still service the debt. In the more expensive areas, investors might pay more than eleven times the annual rent. In most parts of the county, properties can be bought from twelve to sixteen times the annual rents. The lenders understand that you can pay a lot more for a great location, however the cash flow alone does not justify the price in the glamorous zip codes.
Q: Do I need a property inspector?
Most prudent Buyers will hire an expert property inspector. You will look carefully at the property and so will your agent. Most Buyers are not construction experts, nor are most brokers. Paying a few hundred dollars on a $900,000 purchase seems like sensible insurance. When someone buys a used car, prudent buyers may have a mechanic check it out before releasing all the cash.
When you inspect the property, you are looking for surprises. You want to ensure that the exterior matches the interior. If the outside is run down, you can expect there will be some deferred maintenance on the inside. Don’t expect perfection. The units won’t be model homes – that is why Buyers are allowed a due diligence period to diligently inspect the property.
Q: When I bought my house, I was able to see inside before I wrote the offer. Why can’t I see inside before I write an offer?
When you buy a house from a Seller who resides in the house, the Seller has a strong incentive for you to get full information. Apartment residents do not have any incentive to let strangers come into their home. Most Buyers who write offers will not agree on price and terms with the Seller. The industry recognizes that serious investors need to see inside the units. The solution is to enter tenant’s units only when there is an accepted offer between the Buyer and Seller. If the property does not show well, the Buyer can cancel the transaction.
Q: What is the trade-off between buying in an affluent neighborhood and buying in a more challenged neighborhood?
Each investor will select the neighborhood that makes the most sense to the investor. Once we know more about you, we can help you determine which may be the best fit for you. A great neighborhood is NOT automatically the best investment, regardless of the price. Sometimes more challenged zip codes can be the superior investment, at the right price, for investors who understand the residents and consequences.
Q: I have worked hard for my money. I don’t want to a retail deal; I want a GREAT BUY. How can you help me find a great buy?
No investor has money to waste. No one plans on paying too much. Of course, you want to be careful with your money. The reason that you need a great broker is to increase your chances of success.
Part of what makes this arena so interesting is the motivated people who want to improve their position. We have served investors for over two decades. When we meet, we can talk more about how to minimize your risk and increase the likelihood that you will be among those fortunate enough to close an escrow.
Q: I want cash flow. What kind of a property should I expect to get?
Lenders will not make a loan unless they are confident that an ordinary investor will have positive cash flow. If you buy in less expensive areas, you will have a lower dollar loan per unit. The income from the property will support the lower loan. If you select one of the fancier neighborhoods, you will pay much more for the units. The lender will loan more dollars, but at a smaller percentage of the purchase. No matter where you buy, the bank will only loan enough so that the property will generate enough money to make the payments and generate positive cash-flow.
Q: I want to buy in a good, safe neighborhood. Can I still expect a good return on my money?
More expensive units tend to require a larger down payment. In almost every case, your cash flow is likely to be superior to the dividends that you would receive on Standard & Poor’s 500 index fund. Your cash flow may be from two to four times as good as the cash flow that would come from stock dividends. With income property you will have tax shelter, which is not available from stocks.
