New Commercial Real Estate Investment Advisory Services
As a boutique real estate brokerage firm, Steelhead Capital specializes in the acquisition and disposition of multifamily investment opportunities, and the offers unique ability to provide the individual investor with an institutional approach to buying and selling multifamily investment property.
Steelhead Investment Advisors have a solid background in working with institutional investors, which are defined as organizations whose main purpose is to invest capital in real estate. At Steelhead, our goal is to give the same level of sophistication that we see on the institutional side to the individual investor who looking to buy or sell real estate for their portfolio.
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DARBI: Hello! This is Darbi Worley, your host for the Capital Synergies talk show for real estate sectors. And today we have with us Mr. Sean Aguilar, CCIM and Vice President of Steel Head Capital, along with Mr. Matt McLeod, also Vice President of Steel Head Capital. And Matt is also the head of their Investment Advisory Services division. Ah, good morning Sean and Matt, welcome to the show.
SEAN: Good morning, Darbi.
MATT: Good morning, Darbi.
DARBI: Great! Thanks for joining us. So, many investors, especially the more experienced ones, with portfolio values of, say five to ten, even hundreds of millions of dollars, realize the value of having independent, objective, investment advisors on their team. More importantly, these services help investors maximize their portfolio earnings and minimize their risk. So Matt, what does a buyer of commercial property gain by working with your buyer representation services?
MATT: We try to provide the individual investor with an institutional approach to buying real estate. We have a solid background in working with Institutional Investors, which we define as organizations whose main purpose is to invest capital in real estate. Our goal is to give the same level of sophistication that we see on the institutional side to the individual or "Mom & Pop" investor, who is looking to purchase real estate for their portfolio. We've identified tools which are essential to the success of the institutional buyer but typically are not utilized or available to the individual. What our clients gain is access to these tools and information which allows them to make more informed decisions when buying real estate. Examples of the services that we offer to our clients include Deal Flow or access to investments that we see, our market knowledge and insight, and our institutional strength underwriting. These services are crucial steps to the investment process and many investors just don't know that they are available to them.
DARBI: Well let's say that an investor from the Bay area comes to you with a smaller portfolio, maybe three or four properties and wants to expand; does it ever make sense for an investor... an investor in California to look outside the state for a new acquisition?
MATT: That's a great question, and the answer is yes. And let me give you an example. About four/five years ago, the Southern California market was seeing record sales prices. As a result, many apartment owners took the opportunity to sell their investments for strong returns. However, once they sold, they did not necessarily want to reinvest their dollars in the Southern California market as they felt it was at its peak. They also didn't want to go to Northern California that had already seen record sales prices.
Many wanted to look for a market where they could get more for their money and have the potential for appreciation rent growth. Many of the Southern California investors took their sales proceeds or investment dollars and purchased apartments in Las Vegas. Las Vegas, just so you know, at that time was seeing strong growth in the apartment market as people and employees were leaving high cost of living in California and moving to more affordable areas. The Las Vegas strip was also expanding as hotel construction was at a record pace, further driving up demand for housing in Las Vegas. I had an investor that sold a fifty unit apartment building in Los Angeles and traded it into a two hundred unit building in Las Vegas.
DARBI: Yeah, I was going to say, it's really... it's an opportunity to take advantage of the lower cost of living in another state without having to move there.
MATT: Absolutely! I can tell you that many investors who bought in Las Vegas from four/five years ago, made a wise decision as those investment dollars have doubled in that five year span.
DARBI: Okay. So what about if that investor wants to sell off only part of his/her portfolio? What's the reason for them to work with Steel Head, as opposed to simply listing the property with a realtor, or putting an ad on Loop.net or something like that?
MATT: Well, when it comes to selling a property, exposure and presentation are really the key elements in the sales process. And we have a system in place that creates the broadest possible exposure for a single property or for someone that wants to sell their entire portfolio.
DARBI: Okay. Great!
MATT: We use a direct marketing campaign, which uses a database that we have, that would actually match the property with the most likely potential buyer.
DARBI: So Sean, what do you think of all the talk surrounding the residential lending market? And what kind of impact do you see this having on commercial real estate investing? We've talked about this on our show a few times, but I'd like to get your input.
SEAN: Well, clearly, more recently the Feds lowered their discount rate as well as the Federal Fund Rate by fifty basis points and, you know, it's having an immediate impact on the market in the short term. Cost of credit, you know, which basically means from a homeowner or consumer point of view, your credit card debts are going to, your cost of debt will drop slightly for those residential owners out there who have adjustable... adjustable rate mortgages, you know, their payment is scheduled to go up, but maybe it won't go up as high as it was expected to because of the drop in the discount rate.
You know, that said, I think for the single family market there's, you know, there's still some pain out there still to be taking place and it... it'll probably take maybe nine months to two years to stabilize depending on which markets you are in throughout the mainland U.S. But its impact on the commercial real estate really isn't as big as I think everybody is perceiving it to be because they're basically two different asset classes.
We're still seeing a lot of activity on commercial real estate where there's been some hiccups, quite frankly it's, when you look at the amount of leverage being obtained by; on the institutional side with the hedge funds you know, clearly that source of debt is having its challenges in getting placing... in getting closed on. You're reading about it in the papers right now, when it comes to certain larger companies doing buy-outs of others. But in reference to the focus of our clients through our advisory services, we really think it's a benefit right now because they're not really playing in that field.
There's plenty of capital right now with the local banks and insurance companies, you know, the regional banks, they basically have been unaffected by what's been happening with this so-called credit crunch. The life insurance companies and the regional banks, if anything, their business has picked up dramatically. It's been the Wall Street money that's been having an impact closing deals. And for the market, we tend to work with; as much as we do business with the Wall Street, we still have all the other available flavors of lenders, if you will that we work with that are very much committed to doing deals.
So, our financing side for the real estate investing... the money's there, to lend ... I still think it's a good time to be buying real estate if you're buying the right property and you're buying with the fundamentals in, you know... just to kind of leverage off something that Matt said, you know, we've got the background here, we have kind of a platform and the experience, you know, we just don't source properties but we also do diligent analysis and financing. So...
DARBI: Sounds like it... it's still a good time to... sounds like it's always a good time to invest in commercial real estate but now, more than ever, it's not the time to really go it alone.
SEAN: Absolutely not! It's... yeah you really need a partner to, you know, somebody who is active in the market on a daily basis to help you anticipate where some of the hiccups may come and help you structure a way so that you could execute your plan so you can acquire the properties that you're looking.. but, you know, it's a good time to buy; interest rates overall are still low but you definitely need to partner with somebody that is active out there that knows what's going on and can help you get through the deal because, you know, as much as there is a lot of uncertainty out there, there's still good deals out there. You know, Matt referenced the experience with the South Cal. buyer selling and buying many more units in the Las Vegas area. You know, there... there's still good deals out there if you can find properties that have maybe rents that are below market at... therefore, you know, by increasing rents you can still get a really good return on the deal in lieu of, you know, what's going on out there in the capital markets.
DARBI: Great! So Matt, where can our listeners go to learn more about the New Investments Advisory Services from Steel Head Capital?
MATT: We invite everyone to visit our new website, which is www.steelheadinvestments.com.
DARBI: And there's all kinds of tools out there, correct, there is they can fill out a form and kind of get some information, kind of see where they're at with their deal.
MATT: And if they want someone to do a free evaluation of their property or their entire portfolio, we would be more than happy to get in touch with that person.
DARBI: Okay. Well before we close, you have any other final words of advice for our listeners?
MATT: Please take advantage of us. One of the best things about our service on the purchasing side when we're out there helping you try to find an investment property, is typically our fee is paid by the seller of that property so you get the advantage of all these great tools that we have at no cost. So really try to take advantage of what we have to offer.
DARBI: Outstanding! Well guys, thank you so much for coming on the show. It's really been a helpful discussion on commercial real estate and the New Investment Advisory Services from Steelhead Capital, your commercial financing advantage. Thanks for coming on.
MATT: Great! Thank you, Darbi.
SEAN: Thanks, Darbi.
DARBI: So, if you're an investor looking for guidance in the acquisition or disposition of commercial real estate, be sure to check out the New Advisory Services offered by Steelhead Capitol. Especially in these changing economic times, having this experience on your side may be more important and wise than ever. So you can go to www.steelheadinvestments.com and request a no obligation portfolio review today. This has been Darbi Worley. I'm you host for Capital Synergies. Join us next time on the show and thanks for listening.
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