Your Information Servant

Wouldn’t you, your family and/or your business like to most efficiently receive the most insightful and useful information you would like to have? Your Information Servant provides the most useful, complete and concise answers to specific questions.

In addition wouldn’t it also be great for you to select business, real estate investment, sports, entertainment and education related topics for which you will be sent dedicated weekly newsletters with insightful article information, news and events?

Your Information Servant eliminates the need for you, your family and your business staff often spending numerous frustrating hours of very valuable time in going on the internet or to a library or to an expensive training event or seminar to obtain the most relevant information you instantly want or need to acquire.

Your Information Servant will provide you direct answers for your specific questions in addition you will be sent a complimentary easy to read fact filled newsletter that contains latest news, very useful commentary and events on the topic of your choice.

Do you have a new start up business or project that you need assistance with?  Your Information Servant Serves as an Excellent Accountability Partner that will keep you motivated and assist you get through the rough times when you might otherwise quit or fall short of your goals and expectations.

To assist your startup business or existing business development Your Information Servant, upon request, will provide you a business plan template for you to utilize and will also assist you to complete a competent business plan and take the required immediate action for your business to achieve success.

Specialized Information Include (But Are Not Limited To) the Following:

  • Business Marketing & Copywriting

  • Real Estate Investment

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  • Railroad Operations & Management

  • Project/Construction Management

  • Basic Mathematics

  • Technical Writing

  • Mechanical Engineering Education/Professional Engineer Licensing

It is so fortunate that we live in an age of the internet for which you can find significant amounts of information by utilizing search engines.  However for topics such as real estate investing, basic math and mechanical engineering education (to name only a few) that require full explanation and detailed instructions the results from internet searches generally are insufficient in comparison to receiving direct question answers from experienced knowledgeable persons and subject matter experts.

While no person or company knows everything on a particular topic Your Information Servant is a expert research specialist dedicated to saving you significant time and effort in searching for the answers to your questions often with in-depth responses in as little as 20 to 30 minutes as opposed to having to devote numerous hours, days, weeks, months or even years of training.

Your Information Servant takes great pride in providing you complete, comprehensive additional relevant data and facts on topics that you inquire about. Our goal is for you to be pleasantly surprised and completely satisfied with the provided information some of which you may not have known to ask about on a submitted topic.

All requested information will be sent to your email address usually as a PDF (Portable Document Format) attachment (and/or Microsoft Word document) depending on the availability and type of requested information. Your Information Servant newsletters are transmitted only as PDF email attachments.

There are no long term commitments or any contracts.  You can receive the answer for one question and you’ll receive a complimentary newsletter on a topic of your choice, or receive the answer to several questions and receive newsletters on multiple topics.

The cost of Your Information Servant varies dependant on the amount of time required to answer your question. It is the goal of Your Information Servant for your cost to be very affordable.

The typical minimum fee is $100 for a 350 to 400 word response and one newsletter, a great bargain for the quality of information that you will be receiving.  For some questions that can be answered very quickly less than the $100 typical minimum fee may apply.

Formal Training Programs Are Available To You Upon Request!!!

To Receive a Price Quote Send Your Question(s) or Training Requests to: BizMarketingSmith@gmail.com Alternatively you can also call 347-979-7906

Note: Your Information Servant is provided by BizMarketingSmith operated by CEO Gary P. Smith, P.E. a licensed Professional Engineer.  

 Sample Your Information Servant Client Response

The following is Your Information Servant’s submission to a client who requested to receive the basic information he needs to know to develop and submit an offer to purchase a commercial building:

 Commercial Real Estate Basic Information

The following are definitions of key basic terms and calculations that are utilized for purchasing commercial real estate:

Gross Potential Income: All the money that comes into a property which includes not only rental income at full occupancy but also other income generating items like vending and laundry machines, parking and storage fees and even late rent fees that potentially may be collected. The phrase “Pro Forma” is based on the Gross Potential Income.

Effective Gross Income (EGI): Is the Gross Potential Income minus the dollar value of all vacancies.

Operating Expenses (OE): The day to day expenses that must be paid to operate the commercial property. The operating expenses include taxes, insurance, repairs, maintenance, administrative expenses, management fees, payroll, marketing, contracted services and utilities that the property owner must pay. Note operating expenses do not include finance payments for the property.

The most important initial calculation in purchasing commercial real estate is calculation of the Net Operating Income (NOI). NOI = EGI minus OE. NOI is calculated on an annual basis

For example a property that has an EGI of $6,000 per month. A typical operating expense ratio for a commercial property is 50% of the EGI. For this simple example EGI is $6,000 X 12 (months) = $72,000 using 50% of EGI for the estimated OE means that the NOI = $72,000 – $36,000 = $36,000

The second very important commercial real estate calculation is the Capitalization Rate (abbreviated as Cap Rate). Cap Rate = NOI divided by Property Value for which the Purchase Price is typically used as the Property Value. Cap Rate = NOI ÷ Purchase Price

For most commercial properties the Cap Rate will range from 6 to 12 percent. You want to purchase a property at the highest Cap Rate possible in order to obtain the most annual profits.

If you want to do a preliminary assessment of what a good purchase price for a commercial property is start out using a 12% (.12) Cap Rate. Purchase Price = NOI ÷ Cap Rate

For the above example a good Purchase Price would be: $36,000 ÷ 0.12 = $300,000

Other Key Commercial Real Estate Terms & Calculations:

Debt Service (DS) = Annual Property Finance Expense (money you pay to the lender)

Cash Flow (Before Taxes) = NOI minus Debt Service. Therefore for the above example if the monthly finance expense is $2,000 per month ($24K per year) the property Cash Flow = $36,000 – $24,000 = $12,000.

Debt Service Coverage Ratio(DSCR): DSCR = NOI ÷ Debt Service. Lenders generally want a DSCR of at least 1.2 Note that sometimes the term Debt Coverage Ratio (DCR) is used which means the same as DSCR. For the above example the DSCR = 36,000 ÷ 24,000 = 1.5 a very good DSCR

Acquisition Costs: To purchase a commercial property usually requires the buyer to put up a down payment (typically 1 to 3% of purchase price is required from sellers) along with other upfront expenses such as appraisal, attorney fees, inspections, etc. Acquisition funding can be borrowed.

Cash on Cash Return (CoCR): CoCR = Cash Flow ÷ Acquisition Costs.  A CoCR of at least 10% is generally considered a good deal. In other words you make a 10% profit return on the money you had to expend to purchase the property.

The General Process of Purchasing Commercial Real Estate

When you, the buyer, start out making a formal offer to purchase a commercial real estate property you create and submit to the seller a Letter of Intent (LOI).

The LOI is a basic first agreement between commercial property buyer and the seller. It provides the basic guidelines for the buyer to perform due diligence in reviewing in detail the seller’s provided income and expense statements, the seller’s tax returns that proves the income statements are true, physical inspection of the property, a title search (typically paid for by the seller), review of property surveys the seller may have, review of existing leases, review of seller bank statements showing rent deposits (again as proof of income), profit and loss statements for the past 3 years, maintenance and repair records, capital expenditures over the past 3 years, any engineering or architectural studies of the property, environmental reports, inventory of personal property that will be transferred, real estate tax and insurance bills and all active service agreements with vendors.

Typical due diligence periods for commercial properties are 30 days from the time that the seller provides you all of the documents that you request to review.

Overall the Buyer’s Due diligence is a Financial, Physical and Legal Inspection of the property that is under purchase consideration.

After satisfactory completion of the property due diligence a formal purchase and sale agreement is signed by both the seller and buyer and the purchase closing occurs typically between 30 and 45 days afterward the purchase and sales agreement is signed.

In Summary the Key Aspects of the LOI are as follows:

The Property Address, Purchase Price (to be finalized in the Purchase and Sale Agreement), Time Frames for completion of Due Diligence and the Effective Purchase Closing Date, Document and Physical Inspection Period, Deposit, Title Policy, Access to the Property (for you, contractors and/or inspectors).

Always try to include a clause which allows you to assign the LOI and Purchase and Sale Agreement to another person or entity. If a real estate broker is involved a statement of who (typically the seller) pays the realtor commission should be included.

To save the buyer from paying a lawyer to draft the Purchase and Sales agreement the buyer can state in the LOI that the seller furnishes it. Therefore you the buyer will save significant money in only paying your attorney to review the agreement and include applicable clauses.

You should always have your purchase and sales agreements state that the seller has no knowledge of hazardous waste on the property including underground oil tanks, toxic mold, asbestos, buried asphalt shingles, etc. Most lenders will require a phase one environmental inspection however if the lender doesn’t require it or you are not using a lender it still is a good idea to have one conducted.

The following is a Basic Sample LOI Format:

 Letter of Intent

                                                                                                                         [Date of Agreement]

Buyer’ Name and/or Assigns

Address

City, State ZIP

Phone #

Fax #

Email address

Seller’s Name / Broker, or both

Address

City, State ZIP

Phone #

Fax #

Email address

Re: Property Name, Address, City, State and ZIP

Dear [Name of Seller]:

This Letter Of Intent is presented to you by _________________ and/or assigns, (hereinafter, “Buyer”) to set forth the essential terms and conditions of our proposed acquisition of a property owned by ______________________, (hereinafter, “Seller”) located at _____________ (Address) __________, __(City) ___, ____ (State ZIP) _____, (hereinafter, the “Property”).

This offer to purchase the Property is based upon the following terms and conditions:

Purchase Price: $______________. The price is subject to the terms and conditions defined herein.

Property: All the real, personal, intellectual, tangible and intangible property owned by Seller, associated with the Property known as ________________, located in _____________, ____,including but not limited to all land; improvements; equipment; escrows; rents and other deposits; leases, together with all options and renewals; documents; records; and any and all other property whether or not defined herein, pertaining to the operation of the above referenced Property.

Due Diligence Materials: Within __ days of the execution of this Letter of Intent by Seller, Seller shall deliver to Buyer copies of the documents identified in Exhibit “A”, attached hereto, as preliminary due diligence materials required to enable Buyer to determine the feasibility of the transaction contemplated herein and assist with the preparation of the Purchase Agreement as described below.

Further, Seller hereby grants its permission and agreement for physical access to the Property by the Buyer or its representatives for purposes of inspection and assessment Property’s condition. If for any reason the parties do not execute the Purchase Agreement as set forth below, Buyer will promptly return all due diligence materials to Seller.

Purchase Agreement: The parties will negotiate a mutually acceptable Purchase Agreement within ___ business days of the acceptance of this Letter of Intent. The Purchase Agreement will be prepared by Seller and submitted to Buyer or its counsel within ____ business days from the date of execution of this Letter of Intent. The parties agree to negotiate the Purchase Agreement in good faith and have it executed within ___ business days after receipt or this Letter of Intent. Failure to consummate an agreement withing said time period shall render this Letter of Intent null and void.

The Purchase Agreement shall include the following terms and conditions:

Purchase Price: $______________ (subject to verification by Buyer of Seller’s representation of the Net Operating Income of $______________ from operations of the Property).

Earnest Money Deposit: Upon execution of the Purchase Agreement, Buyer shall deposit _____________________ dollars ($_________), with a mutually agreeable Escrow Agent to be credited to the Purchase Price at Closing. The Earnest Money funds shall be refundable for any reason during Review Period, as defined below. After the completion of the Review Period, these funds shall then be subject to the terms of the Purchase Agreement.

Review Period: Upon the execution of the Purchase Agreement, Seller agrees to deliver to Buyer any additional documents as Buyer in its sole discretion may require. Buyer shall have ___ business days from the date of receipt of the last document within which to review the information and inspect the Property. On or before the end of the Review Period, Buyer shall notify Seller of its acceptance of the information and condition pertaining to the Property.

If the Buyer determines in its sole discretion that Property is not acceptable, then the Earnest Money shall be returned to Buyer and the Purchase Agreement rendered of no further force or effect.

Financing: The purchase of the Property shall be subject to the Buyer obtaining a loan in the amount of $________, on terms and conditions acceptable to Buyer in its sole discretion.

[Alternatively, if existing financing is to be assumed, the existing balance and assumption terms should be noted here]

Closing: Closing will take place by escrow with Buyer’s title company, in accordance with local custom, within __ business days of the end of the Review Period. Taxes, utilities, rents, insurance and other recurring expenses of the operation of the property will be prorated as of the date of closing. All closing costs, including but not limited to the transfer, excise, or revenue taxes or stamps levied by any governmental body as a result of the transfer, shall be paid by the incurring party. Each party shall be responsible for its own legal fees. Escrow fees will be divided equally between Buyer and Seller.

Brokerage: The parties expressly acknowledge that this transaction was brought about through the services of ________, (Broker). The Broker will be compensated for its services in accordance with the brokerage agreement between the parties.

[Alternatively: The parties hereby expressly acknowledge and agree that there are no brokerage commissions or fees due as a result of this transaction.]

Expiration: This Letter of Intent is open for acceptance by the Seller for a period of five (5) business days, from the date above. If not executed by ________ ____, 200_, this offer to purchase is null and void.

If the above offer is acceptable, please countersign on the appropriate line below and fax the entire document to us at the number above.

We look forward to working with you toward a mutually beneficial transaction.

Sincerely,

 

(Signature of Buyer’s agent, title)

Accepted for Buyer this ____ day of _____________, _____:

Buyer’s Entity name and/or Assigns

By: (Name of Buyer’s Agent)

Its: (Title of Buyer’s Agent)

(Signature of Seller’s Agent, title)

Accepted for Seller this ____ day of _____________, _____:

Seller’s Entity Name

By: (Name of Seller’s Agent)

Its: (Title of Seller’s Agent)

 EXHIBIT “A”

PRELIMINARY DUE DILIGENCE EXHIBITS

Most recent Title Report or Policy and legible copies of all exceptions

Any existing Environmental Report and related documents

Any existing appraisal and all documents and exhibits

Lease Document(s), with all amendments

Existing Survey and Site Plan

Any and all Easement Agreements (included in title record)

Any and all service contracts, licenses, agreements to be assumed by Buyer

Real Estate Tax Bills and any notices of proposed assessed valuations

Current Rent Roll

Actual operating statements or tax returns for the most recent 3 years of operation and current year to date

Sellers Schedule E for the most recent 3 year period.

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