As we were going through some of our MMM Challenge applications, we noticed that a past employee of a developer we worked with (in volume) applied to work with us.

Here are some of his answers...

Question: What is the most money you have made in a month?
Answer: "Over $20k"

Question: What was different this month?
Answer: "Well this month I closed on properties to the HIS Network worked with Rick Melero in Plant City and closed units I sold in Largo St petersburg Ft Myers and Tampa.  I also got paid on my own investment."

I love it when people prosper when they work with us. I believe a key to true success is when you work with others for the purpose of creating a win win for everyone involved.

Rick Melero
www.RealDealOrlando.com

We will be including a multitude of tutorials to show you how simple it is to use the Real Deal Community. It is so simple that Dayton, our 8yr old member, will show you how it all works.

8 yr old Dayton will show you on this video how to Download Real Estate Investor Training FOR FREE and he will show us how simple it is to join a group within the community and begin networking.

   

  Real Deal Commercial Investing Webinar


We are very excited to announce that we will be hosting a Real Deal Commercial Webinar.

We will cover in 7 simple steps the process of investing in commercial. Now is the time to get involved.

This webinar will not teach you how to get rich in 30 days. But it will teach you the steps you need to take to build long term wealth over time.

If this sounds like you, make sure to join us on our next call.

                                        Click Here

MMM Challenge Update #1

We are amazed at the response from all of the applicants. From the time of the recording to now we have had another 30 applications. This is great!!! So... while we are in the process of looking over all of these, I suggest that you watch this video. We will be releasing more updates soon.

We look forward to working with the top 24! Good Luck.

Rick Melero
HIS Real Estate Network
www.MMMChallenge.com

Dec 31, 2009 6:39 PM, By Matt Valley

While the calendar is turning the page on a new year, the severe problems facing the commercial mortgage-backed securities (CMBS) market will ensure that it experiences déjà vu for months to come.

The delinquent unpaid balance for CMBS loans climbed to $37.9 billion in November from $32.55 billion in October, a 16% spike, according to Realpoint LLC. The increase is due largely to the financial troubles of the Extended Stay America hotel chain, which is delinquent on a $3.5 billion portion of its $4.1 billion portfolio loan.

Realpoint projects the balance of delinquent CMBS loans to grow to between $50 billion and $60 billion by mid-2010. A loan is considered delinquent when it is 30 days or more past due.

“This outlook is mostly due to the reporting of several large loans from recent vintage transactions that continue to show signs of stress and default, along with continued balloon maturity defaults from more seasoned transactions,” writes the research firm.

The CMBS loan delinquency rate of 4.7% notched in November is projected to reach between 5% and 7% in the first quarter of 2010. That figure could potentially approach and surpass 7% to 8% under more heavily stressed scenarios through the middle of 2010, according to Horsham, Pa.-based Realpoint, which has been tracking CMBS loan delinquencies since 2001.

The multifamily sector accounted for 26% of the $37.9 billion delinquent unpaid balance for CMBS in November, followed closely by retail (25%), office (16%), and hotel (15%). Conversely, the industrial market accounted for less than 2% of the delinquent unpaid balance for CMBS during the same period. Health care properties represented less than 1%.

Special servicers continue to have their hand full, the research shows. The volume of CMBS loans in special servicing continues to rise dramatically on a monthly basis, with November marking the 19th straight monthly increase. Specifically, the unpaid balance for specially serviced CMBS rose from a trailing 12-month high of $58.36 billion in October to $65.8 billion in November, or a nearly 13% increase.

The number of CMBS loans newly transferred into special servicing totaled 324 in November. The current balance on those loans is $8.64 billion. Among the transfers were 177 loans issued from 2005 to 2007 — the height of the bull market for commercial real estate lending. These 177 loans have a current balance of $7.46 billion.

Simply put, 86% of the newly transferred loan balance to special servicing is tied to the heady lending period of 2005 through 2007, when issuance was soaring and underwriting was loose.

“Our default risk concerns for the 2005 to 2007 vintage transactions relative to underlying collateral performance and payment ability are more evident on a monthly basis,” writes Realpoint. “Both the volume and unpaid balance of CMBS loans transferred to special servicing on a monthly basis continues to raise questions about underlying credit stability in today’s market climate for these more recent vintage CMBS deals.”

Indeed, the percentage of loans in special servicing increased from 8.2% of all CMBS by unpaid balance in November, up from 7.2% in October.

The average loss severity — the amount written off as a loss and expressed as a percentage of the unpaid balance plus related workout fees — also is on the rise. In November alone, an additional $254.6 million in loan workouts and liquidations across 52 loans were reported with an average loss severity of 46%.

Eleven of those 52 loans had a combined loan balance of $55.2 million and experienced a loss severity of only 1%. But 41 loans with a combined loan balance of nearly $199.4 million posted an average loss severity of 58%.

Among other highlights in the report:

The risk of default among CMBS borrowers with balloon payments coming due is rising rapidly, either because of limited refinancing proceeds available or the properties are performing poorly. In some cases, borrowers have already exhausted their loan extension options.

The office market in most metropolitan statistical areas (MSAs) continues to be roiled by layoffs, bankruptcies and corporate downsizing, even in historically strong markets such as New York.

A decline in distressed asset sales or liquidations is expected into early 2010 as traditional avenues of securing new financing is less available.

Realpoint projects that consumer spending will fall throughout 2010, putting a damper on the retail sector as a whole. Look for an increase in store closures and potential loan defaults.

The combination of falling commercial real estate values and owners’ diminished equity in their commercial and multifamily properties will prompt struggling borrowers of marginally performing assets to hand over the keys and walk away.

The negative outlook for the hotel sector is growing as many sizable hotel loans and portfolios from 2005 to 2008 vintage pools have reported poor or declining results in 2009, particularly in the luxury segment. Many hotel properties are being transferred to special servicing for imminent default and/or debt relief.

The bottom line is that while the economy is forecast to slowly improve in 2010, the headaches for commercial real estate borrowers and lenders won’t fade anytime soon.

With every problem an opportunity is revealed. Though the commercial real estate sector is experiencing difficulty with defaulting loans and balloons coming due etc, it is important to note that this is the time to bring your partners to the table and buy with cash. I am seeing first hand the motivation of lending institutions and private lenders. Many have been very open to negotiating a fair price.

As the price values go down due to vacancy rates going up you will have an opportunity to buy based on the income in the bottom of the cycle and will be positioned for long term growth once the cycle begins to climb as it has in the last 4 cycles over the previous 45 years.

Call me crazy but this is the time we should be working together to buy properties that cash flow today and bring mega wealth tomorrow. Are you with me? :)

Rick Melero
www.RealDealOrlando.com

It's just a small, white envelope stuck among the branches of our Christmas tree. No name, no identification, no inscription. It has peeked through the branches of our tree for the past 10 years or so. It all began because my husband Mike hated Christmas---oh, not the true meaning of Christmas, but the commercial aspects of it-overspending...the frantic running around at the last minute to get a tie for Uncle Harry and the dusting powder for Grandma---the gifts given in desperation because you couldn't think of anything else.
Knowing he felt this way, I decided one year to bypass the usual shirts, sweaters, ties and so forth. I reached for something special just for Mike. The inspiration came in an unusual way. Our son Kevin, who was 12 that year, was wrestling at the junior level at the school he attended; and shortly before Christmas, there was a non-league match against a team sponsored by an inner-city church, mostly black.
These youngsters, dressed in sneakers so ragged that shoestrings seemed to be the only thing holding them together, presented a sharp contrast to our boys in their spiffy blue and gold uniforms and sparkling new wrestling shoes. As the match began, I was alarmed to see that the other team was wrestling without headgear, a kind of light helmet designed to protect a wrestler's ears. It was a luxury the ragtag team obviously could not afford. Well, we ended up walloping them. We took every weight class. And as each of their boys got up from the mat, he swaggered around in his tatters with false bravado, a kind of street pride that couldn't acknowledge defeat.
Mike, seated beside me, shook his head sadly, "I wish just one of them could have won," he said. "They have a lot of potential, but losing like this could take the heart right out of them." Mike loved kids-all kids-and he knew them, having coached little league football, baseball and lacrosse. That's when the idea for his present came.
That afternoon, I went to a local sporting goods store and bought an assortment of wrestling headgear and shoes and sent them anonymously to the inner-city church. On Christmas Eve, I placed the envelope on the tree, the note inside telling Mike what I had done and that this was his gift from me. His smile was the brightest thing about Christmas that year and in succeeding years.
For each Christmas, I followed the tradition---one year sending a group of mentally handicapped youngsters to a hockey game, another year a check to a pair of elderly brothers whose home had burned to the ground the week before Christmas, and on and on. The envelope became the highlight of our Christmas. It was always the last thing opened on Christmas morning and our children, ignoring their new toys, would stand with wide-eyed anticipation as their dad lifted the envelope from the tree to reveal it's contents. As the children grew, the toys gave way to more practical presents, but the envelope never lost its allure.
The story doesn't end there. You see, we lost Mike last year due to dreaded cancer. When Christmas rolled around, I was still so wrapped in grief that I barely got the tree up. But Christmas Eve found me placing an envelope on the tree, and in the morning, it was joined by three more. Each of our children, unbeknownst to the others, had placed an envelope on the tree for their dad. The tradition has grown and someday will expand even further with our grandchildren standing around the tree with wide-eyed anticipation watching as their fathers take down the envelope.
Mike's spirit, like the Christmas spirit, will always be with us. May we all remember each other, and the Real reason for the season, and His true spirit this year and always. God bless---pass this along to your friends and loved ones.
--- Copyright © 1982 Nancy W. Gavin
--- Submitted by Edwin G. Whiting

My prayer for you this Christmas is that your hearts would opened to true love and that you would be filled with the desire to leave a legacy that will forever impact others much like the story you just read. May God bless you and keep you.

Merry Christmas!

Rick Melero
www.RealDealCommunity.com

While the media cries doom and gloom for the Commercial Real Estate Industry, investors and lenders are getting ready to square off.

Two things that I want to point out:

1. If the market is so horrible and the assets so toxic, why are the lenders fighting to stay in control ?

2. It does not matter at which trend the real estate cycle is in, there will always be buying opportunities for those who understand investing.

We have lined up to buy income producing assets, have you? 

The battle lines are being drawn for control of distressed properties.

But opportunistic real estate buyers have been running into roadblocks coming from two of the least expected sources — lenders and existing debt holders. As it turns out, some lenders and debt investors are not only unwilling to sell their secured real estate-backed loans, but their unsecured loans as well.

A brewing showdown

An old strategy has been driving this behavior of late, one in which parties are using their subordinated and unsecured debt positions to muscle their way into control of underlying properties.

In some cases, investors are buying up debt for pennies on the dollar, and so far the move has netted them control of trophy properties such as the Stuyvesant Town/Peter Cooper Village in New York, the John Hancock Tower in Boston, and the Sheffield57 in New York. As borrowers default on unsecured debt, this has spelled the demise of some otherwise secured deals.

Consider that Citigroup has put the kibosh on a deal in which opportunity investment fund Max Property is attempting to buy out a £232 million ($383 million) portfolio of UK industrial properties from the receiver of a joint venture called the Cambridge Place-Torre Asset Foundation.

The joint venture's real estate was placed into receivership with Ernst & Young. Citigroup provided a £38.9 million ($64.2 million) mezzanine loan in the original financing transaction, and believes it can best recover its investment by acquiring the entire portfolio.

As a subordinate lender in the structure, Citigroup stands to lose all of its investment, if Max Property is successful in a distressed discount purchase. So Citigroup is asking the receiver to allow it to put in a competing bid for the portfolio.

The fact that Citigroup is willing to go to such lengths to recoup its investment as a subordinated debt provider is proof positive that the battle lines are being drawn for control of distressed assets. And as a result the tsunami of distressed deals that many cash-rich investors are expecting to pick off on the cheap may be anything but certain.

With lenders and debt investors just as eager to gain access to distressed properties, there may be a showdown underway to pre-empt the fire sale of distressed properties — especially high-quality assets. That showdown will likely be between opportunistic investors and asset managers acting on behalf of lenders, portfolio holders, and even some securities investors.

Putting cash to work

There is precedent here from the equity and corporate finance investment business. The August 2009 Merrill Lynch Fund Managers Survey of 204 fund managers — with $554 billion under management — found that investors are eager to put cash to work. The survey showed the highest optimism among managers and investors since 2003.

One of the survey's measures is average cash balance held by these fund managers. These balances have fallen to 3.5% of total fund assets from 5.4% at the beginning of the year, according to the survey, and stands at its lowest level since July 2007. This trend is consistent with the mounting level of cash that real estate investors want to put to work.

Now that real estate fund sponsors have raised capital from partners and private investors, with a focus on buying distressed notes and properties, expect more confrontations like the showdown between Citigroup and Max Properties.

And by the way, a third party has entered the fray of late. Delancey Real Estate Asset Management Ltd., a London-based private equity firm, has joined Citigroup in its rival bid against Max Properties.

And with so many battles for control of distressed properties occurring, it is likely that some distress fund investors will be disappointed. The highly anticipated wave of real estate deals to be had — mainly the result of maturing loans that are having trouble getting refinanced — has so far turned out to be primarily lower-quality transactions sold mostly through the Federal Deposit Insurance Corp. Those deals are unlikely to attract major institutional investors.

On the other hand, well-capitalized lenders and institutional note investors like Citigroup and the asset managers they can deploy are keen to pre-empt the easy distress buyout opportunities. For this reason, the standoff between lenders and opportunity investors may only be getting started.

W. Joseph Caton is managing director of Oxford, Conn.-based Hartford One Group, a real estate finance training consultant.

DISTRESSED MORTGAGE SALES AT A GLANCE

What follows is a snapshot of FDIC transactions in the second quarter of 2009.

Commercial Mortgages Sold:

$1.2 billion

Proceeds:

$650 million

Transactions:

171 deals

Price:

55 cents for each dollar

Recovery:

55% of the loans' balance

Sources: FDIC, Distressed Asset Coalition
 By W. Joseph Caton

The market will never tell you when to buy, only how to buy within each trend. So get ready to build wealth one deal at a time. No matter what anyone says... there will be deals out there.

Are you ready?

Rick Melero
www.RealDealOrlando.com

CREO Summary: Fourth Quarter 2009

The third quarter of 2009 brought signs of relief to a U.S. economy fighting to emerge from what has been coined the Great Recession. Most measures of economic activity moved in upwards. However, commercial real estate did not find its footing in the constantly shifting terrain of weak fundamentals and timid transaction activity. Demand for commercial properties continued on a downward path, adding pressure on prices and rents. Moreover, credit conditions continued to tighten as banks moved to strengthen their balance sheets. As a result, vacancy rates have been rising and the volume of distressed properties has grown. Nonetheless, it is worth noting that the pace of decline in fundamentals is slowing, and sales transactions are posting positive growth.

This is truly the time to buy commercial real estate. Investors need to get their private equity partners ready for this amazing repositioning of wealth . I want you to look over this full report because though I believe in taking advantage of the market conditions I also believe in making informed investment decisions. As I have said before, the market cycle does not tell you when to buy, it shows you how to buy. So the better you understand your market the more effective you will be in your investing efforts.  

GetFull Issue




Rick Melero
www.RealDealOrlando.com

As a real estate investor I can tell you that some of the information on this white paper article can help you during these hard economic times.

To succeed in this real estate market, investors and managers need a new kind of toolbox. While financial implements are still critical, more traditional tools of the trade, a hammer, paintbrush and the number of a good plumber, for example, have joined them.

As the industry experiences one of the worst downturns in decades, real estate investors and managers are reconsidering strategies for success. Many of them have embraced a back-to-basics approach that provides a path for staying strong in a difficult economy. A key part of that approach: actively maintaining their properties.

                             Download Full White Paper

Rick Melero
www.RealDealOrlando.com