Top Articles - Real Estate

I had the opportunity this past week to answer a number of questions about apartments. I find a great deal of misinformation out there concerning the financing of this excellent type of i

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

ncome producing investment. Before going into some common misconceptions, I should explain the state of the apartment market in general.

Apartments are seeing an overall increase in rent

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

after a long period of stability thanks to the increase in single family home and condo prices over the past few years. Some markets, such as Houston, are overbuilt. Others, such as Los

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

Angeles, are radically over priced. Pricing in multifamily is often expressed as a function of the Gross Rent Multiplier (GRM), but more accurately reflected in the capitalization rate (c

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

ap rate).

The GRM expresses selling prices and value as a multiple of the annual gross rents. A property selling for $1,000,000 with $100,000 in annual income has a GRM of 10. However,

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

t doesn’t tell the whole story. The cap rate measures the return on investment for the capital invested in a property. Using our GRM information, we could have two vastly different cap r

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

tes on two seemingly similar properties.

The cap rate assumes that the property is purchased all cash and is calculated by dividing the Net Operating Income (NOI) by the purchase price.

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

If we had two properties selling for $1MM with Gross Rents of $100,000 and GRMs of 10, which would be the “better” investment? If Property #1 has a NOI of $60,000 and Property #2 has a NO

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

of $30,000, their respective cap rates are 6% and 3%. Property 1 has a 100% better return on capital than Property 2. A lot of factors come into play in this process, but you can see th

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

t GRM can be misleading.

So what does all of this have to do with apartment loan misconceptions? A ton!

Misconception #1: 80% LTV means 80% LTV! Wrong. Most apartment lenders are con

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

erned with something called “debt coverage.” This means that they look solely to the property to be the source of repayment of their loan. So while a lender may say they can give you an

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

80% loan on a purchase, once they look at the property’s NOI and cap rate, they may only be able to offer you 50%. So look to your cap rates, check your cash flow, and don’t believe every

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

hing you read about maximum loan amounts.

Misconception #2. Seller Financing Can Make Up The Difference. I hear this one a lot. The typical statement is something like: “The seller ca

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

carry the difference for no payments for 5 years.” That’s great, but it won’t get you the property. Those lenders I mentioned above are subject to certain rules when underwriting seller

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

financing. First, they have to impute a monthly payment based upon the amount of the note and its rate, usually using interest only. Then, they take this payment and add it to the payme

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

t they’re using for their loan. Once again, they have to test for debt coverage. The reality is that the most seller carry that a property can qualify for is around 10% of the sales pric

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

.

Misconception #3: The Rents Are Way Below Market! That may be the case, but the lender is only going to base its loan on the rents in the property NOW. There are a few exceptions to

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

this, but they’re not really going to help you much. An owner-occupied unit and vacant units will be set at market, but you don’t want too many vacant units or the lender won’t want the d

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

al. It is possible to get estoppels back acknowledging an increase in rent prior to the close of escrow, but good luck getting a seller to agree to that.

As you can see, the financing pr

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

cess is never as easy as some would have you believe. Work with professionals, do your Due Diligence, and work out the financing ahead of time and your projects will go much more smoothly

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

HTTP = HTML link (for blogs, profiles,phorums):
<a href="http://www.toparticles.org.ua/article/140277/toparticles-Apartment-Loans-Common-Multifamily-Misconceptions.html">Apartment Loans: Common Multifamily Misconceptions</a>

BB link (for phorums):
[url=http://www.toparticles.org.ua/article/140277/toparticles-Apartment-Loans-Common-Multifamily-Misconceptions.html]Apartment Loans: Common Multifamily Misconceptions[/url]

Imagine how much your sales and profits would increase if each of your customers come back just one more time a week or a month. You would boost your sales by 50%. Getting your existing customer base to visit more often is easier than you think. Here are seven strategies for getting your customers to come back again and again.

I have a pet peeve that I didn’t know I had until recently. Having been in education for along time, I’ve sat through my share of presentations. Most of the presentations have been on the positive side of tolerable, but there have been a few that left me with nothing more than a sense of relief when it was over. As I’ve considered the situations, I’ve discovered some characteristics that are common to good presentations. So, regardless of the setting—business, school, church, social organization, and so forth—here are some things to keep in mind next time you have to speak to a group of any size.

Here are some tips to help you speed through the payday loan application process.

Tags

Links

Top Articles - Apartment Loans: Common Multifamily Misconceptions

Related Articles: