Jong Lee
Claremont, CA (USA)
Role(s):
Other
Visionary
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Startup
Location:
Claremont
Industry:
Real Estate
Year Founded:
2008
Number Employees:
1-10 people
Description:
R/E investment with notes purchase from community banks in Southern California
Business Plan
1) Notes purchase at 70% to 75% discount directly from retail/community banks.
• Strength: Don't have to bear additional brokerage commission expense of 3% to 4%
• Contact local commercial banks in Los Angeles area.
• Will purchase mostly shopping centers. No special purpose building such as gas station, church, motel, vacant land, etc. Office buildings are less favorable due to downturn in real estate market.
• Remaining note term of usually less than 3 years to maximize our return.
• Mostly variable rate unless proven otherwise with very low LTV and favorable fixed rate.
• Because of carrying cost, impairment on asset quality, and investors' concerns, banks try to liquidate it before it becomes serious problem loans. But in many cases, it might be a successful loan with sufficient time allowed to the borrowers/developers.
• In the meantime, we might be able to enjoy extra default rate of 5% margin of the original rate.
• We need have trend analysis in retail building based on current environment related with energy cost and change in consumer spending habit which will be key determinants to success of retail shopping center to assess the level of risk involved with the purchase.
2) OREO purchase at better discount than the note purchase