Weatherman Jay Scotland Wants to Call His REALTOR

This is a little old now, but I just found it on http://www.ptbocanada.com/journal/2010/12/21/video-peterborough-year-in-review.html and had to share. Jay was 'arrested' for charity and at about the 2 minute mark he asks for his lawyer and, remarkably(?), his REALTOR! Give me a call anytime you need some real estate help Jay :)

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Commercial Real Estate Optimism - I'm Not the Only One

Sam Zell is thinking long term and reading the signs...CRE will recover and price will rise.
Real estate mogul Sam Zell said he expects little U.S. commercial real estate construction over the next one to three years except for apartment buildings, a hiatus that would restrict supply and boost the value of existing properties. "We're now approaching 3 1/2 years of no development, and I see little prospect for new supply over the next 12 to 36 months except multifamily." With little new supply, the value of existing (properties) should increase and vacancies should fall, Zell said. "I think real estate is going to do well over the next 24 months."
 found via http://bit.ly/eeXwK5

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Picking and Paying Your Jerry Maguire


Nice video by John Warrilow on the importance of cultivating relationships with business brokers and mergers and acquisitions professionals.

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How to Win at Commercial Real Estate Negotiation

http://www.sxc.hu/profile/Mattox
A Syndicated Post By John Highman

Commercial real estate is a category of property that is structured around income performance. It is the lease that provides the stability to the income performance. When you get the lease correctly structured and agreed, the property will be a performing asset. Poorly leased properties with random lease documentation on average achieve lower sale prices when purchased by an investor.

If you are a property investor, you will be very interested in the structure of the relevant property lease and the stability of the sitting tenant. If you are a real estate agent, it is important that you develop lease controls and processes that optimise the tenancy outcome for the landlords that you serve.

The lease on a property will impact the cash flow for many years, hence careful control and decisions are part of the process.

To lease a commercial property, it is not just a matter of making decisions regards rental and lease term. The critical elements of the lease document will include important points such as:
  1. The type of rental paid is actually more important than the level of rental. This rental type can be gross or net rental and the recovery of outgoings from the tenant will be impacted by the choice of rental. The net income for the building is driven from the decisions taken by the landlord in this regard.
  2. The initial lease term should be carefully considered and this is done at the commencement of the lease when the tenant is found. Usually this lease term will be a number of years based on the negotiation between the tenant and the landlord. In most property types, it is not desirable to have lengthy lease terms which restrict the landlord from future property decisions. This has to be balanced against the landlord's requirement to do the lease deal in the prevailing market at the time. A landlord should always retain control over the asset and not randomly give lengthy lease terms without careful consideration on the future of the investment property.
  3. An option for a further lease term. Many tenants prefer and seek to have an option for a further lease term. This gives them stability in the business operation. It does however restrict the landlord from future property decisions and any associated strategies such as redevelopment or refurbishment. This then suggests that the option for a further lease term should not be given without careful consideration.
  4. The incentive given for any initial lease term may exist and may vary by type. When property markets become less active or frustrated by the economy, tenants will ask for an incentive as part of taking up a lease; the landlord will have little choice. The incentive can be a variety of methods including cash, landlord fit out, reduced rent, or rent free period. The choice that the landlord makes is largely dictated by the impact of the incentive on the landlord's taxation position. For example, a landlord funded fit out may be an item of expense which may create depreciation under local taxation laws. The landlord needs to check this out with their accountant. It could be that the landlord will see the depreciation as more useful than a rental reduction or rent free to the tenant.
  5. The permitted use for the premises should be clearly outlined in the lease documentation. What you should be seeking to do is control is direct the way in which the premises are used. This is critical when it comes to future occupation and potential assignment of the lease. It is to the landlord's advantage that the property is used specifically for an agreed purpose. This then prevents any conflict with the tenant mix in the property. When the tenant mix is poorly controlled, it will impact the rental and destabilise the property. As you would expect, this is critical in a retail shopping centre.
  6. The outgoings recovery is of concern to the landlord and the tenant. The outgoings that are recovered from the tenant should be clearly detailed in the lease document. When a property is sold in the future, the recovery of outgoings will be of great interest to the buyer of the property. They will be seeking to maximize their net return and recover as much from the tenants as possible.
  7. The controls imposed on a tenant during fit outs are important if you want happy tenants in the building. When a fit out is commenced for a sitting tenant, it is in the landlord's interest to control the trades people on site and the approval processes for the fit out works. This will allow the landlord to achieve the quality of fit out construction that complements the building whilst not upsetting other tenants in close proximity. Part of this will be the due regard to the structural drawings and design of the building. Any tenant fit outs should be approved by the landlord before the works are commenced. It may also be that the local planning authority should approve the fit out design and drawings before they are undertaken.
John Highman is an expert in investment real estate strategy, property performance, and tenant mix analysis and strategy. He is an author and coach that helps property investors, and real estate agents improve their retail, industrial, and commercial real estate opportunities and targets.
John has specialized in major commercial, industrial, and retail property for over 30 years. He knows what works and what doesn't. He gives you the 'good oil' on getting active and achieving results.

You can get John Highman's free tips and tools in commercial, industrial, and retail property at http://www.commercial-realestate-training.com

Article Source: http://EzineArticles.com/?expert=John_Highman 

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Getting the Real Truth in Commercial Property Inspections

Syndicated Post

By John Highman

When looking at a new commercial or retail investment property for the first time, it is wise to have some form of checklist and system which assists you in the process. We have created this checklist to help get you on the right track.

When inspecting the property is almost like having your own due diligence process underway. Do not believe everything you see and certainly investigate anything of question. Anything of importance that someone tells you about the property should be investigated.

Having a keen eye for property detail and a diligent record keeping process as you walk around is the only way to inspect investment property. It is remarkable how these records have to be revisited at a later time for reassessment.

So let's consider the following as some of the basic issues to review in your property inspection process.
  1. A copy of the land title records is fundamental to your inspection before you even start. As part of this process, also seek out a copy of the survey records and any existing leases or licences. Also seek out any unregistered interests that may not appear on the title to the property. If in doubt seek a good property solicitor to help.
  2. Take care to understand the location of the property boundaries and look for the survey pegs relevant to the survey plan. If in doubt seek a good surveyor.
  3. Within the property land title there can be a number of easements, encumbrances, and other registered interests which need fully investigating. These interests can impact the price that the property achieves at the time of sale and can also impact of the method of lease occupancy. If any registered interests exist on the property title, a copy of the relevant documentation is the first stage of the investigation which should then be followed by questions.
  4. Local council records may also have impact on the property. Are there any orders or notices that have been issued or are outstanding on the property, and can these things be of concern to the potential investor?
  5. The zoning for the property and the zoning activity or changes in the precinct can impact a property. As part of this process, it is wise to include neighbouring properties and inspect them to ensure that they have little or no effect or impact on your subject property.
  6. Copies of the local town plan will help you understand current planning issues. A discussion with the local planning office or planning officer can put you on the right track and explain any current issues or matters that may arise. In this process, it is wise to keep records of the discussions and the findings.
  7. If copy of lease documentation is available for neighbouring properties then seek it out and review it. It is always good to know what the neighbouring tenants are doing and how long they will be there.
  8. The local topography and plans across the immediate area will help you understand the fall of the land and the impact of any slopes and natural drainage. Look at the location of any water courses and flood plains. Seek out the history of any flooding in the area.
  9. Supply of electricity into and across the area should be understood. If your property is an industrial property then the supply of energy to the property will be strategically important to any industrial tenant. If any easements or encumbrances exist across the property for electricity, then seek to understand the rights and obligations that these documents create on the property owner.
  10. Services and amenities to the investment property will impact the future operations and interest from the business community. To the question to ask here is the nature of these services and amenities and whether they are well maintained.
  11. Look for changes in road and transport corridors that impact the property or region. Any change in roads can dramatically shift the way in which property is used.
  12. Look for the location of public transport and its potential to enhance your property function. Many businesses need stable and frequent public transport to help employees access their jobs.
  13. Look at the community and business demographics of the region. The growth patterns for the last 5 to 10 years will help you understand the future of the property.
  14. Other property valuers in the area are a good source of market intelligence. They can usually tell you the history of the area and the current business sentiment. Rental levels, incentives, and sale prices per square metre are valuable elements of market intelligence. They will all have impact on the yield that the property presents to any property investor.
  15. Look around the area to see how many other properties are currently available for sale. Seek details of these properties and the prices being sought. If these properties have been on the market for a long time it will give you an idea of just how acceptable the regional prices and business sentiment is at the time of your inspection.
  16. Look around the area to see how many properties are currently vacant. With reference to each particular vacant property, get details of the rental being sought and the time that the property has been on the market. You will need to form their own judgment on whether these rentals are relevant and reasonable in the current marketplace.
  17. The supply and demand of vacant space by property category is an investigation to be undertaken in the region. What you want to know is exactly how much space is coming into the market in the future and how much space exists now for tenants to occupy.
  18. Check out any new property developments that could be in the early stages of consideration and development approval. The key question here is the impact that these properties may have on your property.
  19. The history of the area is always of high value to you. In commercial, industrial, and retail investment property, the history that you are after is the last five years. It is remarkable how much information you can glean from regional property sales and rental trends. Given that commercial and retail investment property works on the cycle of rise and fall, it is the history that can open up your understanding of what's been going on and where things are headed.
  20. With any property investigation, and particularly with properties that are complex and large, it is wise to seek out the comments of architects and engineers. What you need them to do here is comment on the structural integrity of the property and its future usable life. Also seek to identify how the property may be expanded or refurbished when times require.
  21. Chase down the tenancy schedules for other properties in the area. Whilst these are not always easily obtained, they are of high value. They will tell you so much about the activity in other properties and buildings that may impact your future leasing strategy or property sale. What you do not want is a significantly high vacancy factor near your property when you are trying to lease it.
  22. Review the local precinct for the larger businesses and how they operate. In doing this, you can understand who are the major business players and the major employers. Having these companies in the area is good thing, but losing them can be a major threat to the region. We call this the business stability factor. It should form part of your investment property assessment for the future.
  23. Review the other major tenancies in the area and see how they operate. They can both stress and enhance the area depending on how they operate and the times of day that they do so. Of prime example is a transport company that has vehicle access peaks at certain times of the day. This can challenge the other businesses in the area and how they operate.
  24. Walk around the precinct and the property taking many photographs for later investigation. It is surprising how useful photographs become for the reassessment of the property inspection. Walking through the streets in the region allows you to get a feel for the function of the streets and the neighbouring properties. It puts you in greater perspective for the services and amenities, and the function of all local surrounding businesses. A tip in the keeping of digital photographs for later evidence is the reversion of the important photos to 'gif' type files. This format is not easily changed and therefore more stable as court evidence of critical matters.
  25. Knock on the doors of the other local businesses and talk to them about how things operate locally for them. Other tenants and businesses in the region will tell you so much and put you on the track of challenges and problems in the region.

Inspecting the commercial investment property is very much a physical process. In only this way can you completely connect with the property function before you form an opinion of its suitability for your plans, pricing, rental, or occupancy.

John Highman is a prominent investment real estate speaker and coach that helps property investors, and real estate agents globally to improve their commercial real estate property performance. He himself is a successful real estate agent that has specialised in major commercial asset sales and leasing for over 30 years.

You can get John Highman's free tips and tools in commercial, industrial, and retail property at http://www.commercial-realestate-training.com.

Article Source: http://EzineArticles.com/?expert=John_Highman

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Commercial Real Estate Success - The First Step

Syndicated Post by Darin Garman Platinum Quality Author

"The gem cannot be polished without friction, nor man perfected without trials." -- Chinese Proverb

One of the things to help you reach your commercial real estate and your wealth goals in the next year is really decide which track is best for you at your current place in your "investment life."

I have a lot of investors contact me with the same question, especially in recent months...

"How do I get into some great commercial real estate properties that will start building my wealth ASAP?"...Or something to that effect.

First, decide what your track is. What do I mean by track? I mean deciding how to proceed based on where you are AND what your expectations are.

Be realistic with this and schedule some time to work on planning for your wealth goals this year. If you are reading this article, I can guarantee you have heard 1,000 times to write down your goals. But I would make another suggestion that is critical to your success - write down what you DO NOT WANT from your investment business.

For example, on my list I have the following items:

I do not want a large amount of unnecessary overhead expenses.
I do not want to be a "hands on" landlord.
I do not want to be involved in the day-to-day property management operations.
I do not want a large number of employees.

You get the picture. What you will find is identifying what you DO NOT WANT is just as important as identifying the goals you want to achieve.

The reason this is so critical is if you choose a wealth goal that violates one of your "DO NOT WANT" list items, you will not achieve it. Many investors fall prey to what I would call 'other people's goals" - whether those be of a spouse, business partner, or friend. I have even seen very experienced investors make this mistake.

Make sure you include these items in your planning:

1. Make a list of "DO NOT WANT" items for your commercial real estate business.
2. Make sure your "WANT" list does not violate these rules.

This is one of the best way to get to your goals, faster. No question about it. So, decide where you really want to be and GET SERIOUS about accomplishing all you can in THIS YEAR. Remember, if you are not where you want to be at this point you have no one to blame other than yourself.

Do you want to learn more about investing in commercial properties? Click the link below for my FREE 7-Part Investment e-Course. I'll also send you my FREE special report and teleseminar access "How to Buy Apartments and Commercial Real Estate With No Or Low Money Down."

Download it free here: Commercial Real Estate.

Article Source: http://EzineArticles.com/?expert=Darin_Garman

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Real Estate is Like Golf



Follow the Wheel Estate Cam for more.

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Building a Stellar Condo Conversion Team

Syndicated Post

All successful condo conversions rely on the efforts of a great many people, and building a condo conversion team that you can work well with is paramount to a successful and lucrative project. The people you surround yourself with will be your most valuable resource for information, skill and guidance. Here is a brief rundown of the good people you will want to find for your team.

Mentors
One of the best ways to ensure success is to copy and do what successful people do. If you aspire to be successful in the field of condo conversion, then it only makes sense to forge some friendships with others who are doing that already. Study what they've done and what they're doing. Ask them what mistakes they've made and what lessons they have learned, so you can avoid similar pitfalls. Everyone who is trying to master a skill can learn best from a mentor. Ideally, you want your mentor to be someone who has completed a few successful condo conversions, and is willing to share that information with you.

Real Estate Broker
Since you are dealing in real estate, a knowledgeable and experienced commercial broker will also be a valuable member of your team. You can't begin your project without finding the best property for your investment, and this is the person who will help you find what you're looking for, and will be at your side to guide you through each and every step of the process.

Construction Lender
Next on the list should be a banker that you respect and trust, and who has experience working with real estate investors. You are going to need loans and financing to fund your project and this is the person who can make it all happen. It's not a bad idea to look to your own personal banker first and see if that will be a good fit. After all, you already have a relationship and it may work out just fine.

Bookkeeper and Accountant
To help keep things in good order financially you will also need a reliable and knowledgeable bookkeeper and accountant. Again, it is wise to seek out professionals in this area who have experience working with independent business owners and if possible who also understand real estate investing.

Architect
An architect will be needed for some projects so it's a good idea to establish a relationship with one right away even if you may not need the service for your first project.

Real Estate Attorney
A lawyer who is experienced in working with real estate investments will be of enormous value when it comes time to handle all the legalities of your purchases, sales and the day to day functions of your corporation.

Building Inspector
You will also want a reliable building inspector as part of your team, preferably someone who has lots of experience. Missing a major flaw during an inspection can cause you plenty of dollars and headaches down the road.

General Contractor
Naturally your team will also include numerous members from various trades. The best way to establish this team is through a general contractor that you get to know and trust.
Building a reliable team is one of the most important steps of your condo conversion project. Build it well and you'll save yourself time and money in the end.

If you liked this article about condo conversion investing, tell all your friends about it. They'll thank you for it. If you have a blog or website, you can link to it or even post it to your own site (don't forget to mention http://www.TheCondoKit.com as the original source), or just come visit our site to learn lots more.

About the Author
Matt Sparks is a successful entrepreneur, both offline and on. He is also an amateur rock climber and author. He has written books, articles, and blogs about social business, real estate, finance, New Urbanism, sustainable cities, longevity, and rock climbing.

(c) Copyright - Matthew R. Sparks. All Rights Reserved Worldwide.

  

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First Quarter Commercial Real Estate Sales Up in US Too

After posting yesterday about the tremendous year over year increase in City of Peterborough commercial real estate sales (Yeah, I know it's a small number -> 8 vs 3 sales, but this isn't a major metropolitan area either!), this tidbit was released today on nreionline.com:

Q1 CRE Sales: Change in Attitude

Apr 26, 2010 1:55 PM, By Ben Johnson, a special to NREI from OKCREview
What a difference a year makes. You hear that a lot around the commercial real estate industry today, especially when it comes to the overall investment sales market.
According to new data from New York-based researcher Real Capital Analytics (RCA), sales volume reached $15.4 billion, which is a 50% increase from the first quarter of 2009. More good news: Every property type registered higher volume.
Surprisingly, despite the huge overhang of distressed properties, it was core rather than distressed sales behind the volume gains. Sharp declines in cap rates were recorded for certain assets due to competition among buyers and the rapidly improving debt markets that are allowing buyers access to low interest rates.
Let the good times roll....I can dream can't I?


Source: http://bit.ly/8XQ2gF

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Peterborough 2010 Commercial Real Estate Market Off to Great Start!

It's a bright new day for commercial real estate in Peterborough!

Just a quick note about sales volume and dollar volume of commercial sales reported on Peterborough and the Kawarthas Associaion of REALTORS® MLS®.

In 2009 during the period from January 1 to April 25, there were a total of 3 property sales recorded within the City of Peterborough, not including leases and business sales of course.  In 2010, during the same period, there were 8 property sales through the MLS® for the City.  This is an increase of over 166%!

Looking at the dollar volume of sales is even more striking.  During this same time period in 2009, the total sales volume was just $684,000.  In 2010 year to date, total sales volume was $4,105,000.  This represents an increase of just over 500%!

And you thought the commercial real estate market in Peterborough was slow...

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Moustached Americans Seeking Tax Break

And now for something completely irrelevant to commercial real estate! I love it! Here's hoping we can get a similar scheme passed here in Ontario :)

By QMI Agency

Moustached Americans are looking for a tax break from Uncle Sam.

The American Mustache Institute (AMI) says the "social and environmental benefits to moustache growth and maintenance provide a service to the U.S. economy."

And at least one expert agrees with them.

Dr. John Yeutter who is an associate professor of accounting and tax police at Northeastern State University in Oklahoma says in his paper, Mustached Americans And The Triple Bottom Line, that moustache maintenance is a deductible expense.

"Given the clear link between the growing and maintenance of moustaches and incremental income, it appears clear that moustache maintenance costs qualify for and should be considered as a deductible expense related to the production of income under Internal Revenue Code Section 212," he wrote.

Yeutter points out that in the U.S. Congress, there are 29 Democratic members sporting moustaches and 12 who have beards.

Previous congresses have provided tax incentives for specific societal segments whose efforts enhanced economic growth, Yeutter said.

The AMI is suggesting a $250 special deduction for moustache grooming supplies. It says those tax incentives could be used to purchase items like wax, facial hair colour, moustache combs and mirrors, condoms, moustache insurance and "Burt Reynolds wallet-sized photos."
 Source: http://www.torontosun.com/news/weird/2010/04/15/13597256.html

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Sometimes You Just Have to Jump Off the Edge


After seeing this video, I'm reminded of the importance of just getting in there and doing it!  You have to jump off the edge sometime.

Coincidentally, I read a great post this morning on the Bloodhound Blog titled: Simple Concept – Not So Simple To Execute – Grow a Pair  It's a great read, and worth taking the time for.

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GTA Commercial REALTORS® Release Commercial Market Report

TORONTO, ONTARIO--(Marketwire - April 6, 2010) - In March, TREB Commercial Members reported 860,895 square feet of leased space, a 104 per cent increase from the 421,642 leased square feet recorded in March 2009, Commercial Council chair Garry Lander announced today.
In the first quarter of 2010, lease transactions for commercial space increased 73 per cent from the first quarter of 2009.

"Demand for commercial real estate is strongly related to economic growth and job creation. As company's order books expand, they will take on more employees and many will ultimately require more space," Mr. Lander said.

"The level of GTA employment has been trending upward since the summer of 2009, with the Canadian economy growing more strongly than expected. The commercial market has benefitted."

Lease rates for industrial space dipped to $4.91 per square foot net (sfn) from the $5.59/sfn figure recorded in March 2009. Commercial and office lease rates rose, with the former trading for $18.59/sfn compared to $17.44/sfn last year and the latter climbing to $12.47/sfn compared to $9.78/sfn last year.

Sales Market Highlights
TREB Members recorded 54 sales of IC&I properties in April, including 34 industrial buildings of all size categories, with an average selling price of $70.27 per square foot. This compares to a figure from non-MLS sources of $70.60 per square foot.
For a complete copy of the Commercial Realty Watch visit www.TREBCommercial.com.

Members of the Toronto Real Estate Board's Commercial Division adhere to a strict Code of Ethics and Standards of Business Practice, only those who have met the standards established by their peers are eligible to become Members.
Greater Toronto REALTORS® are passionate about their work. They adhere to a strict Code of Ethics and share a state-of-the-art Multiple Listing Service. Serving over 28,000 Members in the Greater Toronto Area, the Toronto Real Estate Board is Canada's largest real estate board. Greater Toronto Area open house listings are now available on www.TorontoRealEstateBoard.com.

For more information, please contact
For Media/Public Inquiries:
Toronto Real Estate Board
Mary Gallagher, Manager Media Relations
Office: (416) 443-8158
Email:maryg@trebnet.com
www.TorontoRealEstateBoard.com

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How to Find the Right Commercial Real Estate Broker

Syndicated Post by Darin Garman

One of the things that can really catapult your success investing in apartments and commercial real estate is working with the right commercial broker. Finding a great deal is really all about the numbers, and getting more deals across your desk. Working with the right commercial broker will not only save you time, but make you a lot of money by getting opportunities in front of you.

So the question is, "How do you find the right commercial broker?"

I will "bottom line" this for you and make it easy. Make sure you find a broker that does nothing but investment real estate and specializes in it. DO NOT use a broker that is a "jack of all trades," meaning going from an open house on a Sunday to chatting with you about the 320 unit property on Monday.

You want someone that does nothing but spends time in the investment real estate world.

Why?

The specialized knowledge that a commercial broker has will be able to get you more GOOD opportunities to look at and because they know the market will be able to identify properties that can be very profitable. A good broker can also assist you in developing ways to purchase the property where you are making money at the closing table too. Plus they will help you avoid some of the common investment mistakes, as well.

This, more than any other of my "rules" is violated, and the investors that do violate this many times pay for it too. Make sure that you are not one of them.

Do you want to learn more about investing in commercial properties? Click the link below for my FREE 7-Part Investment e-Course. I'll also send you my FREE special report and teleseminar access "How to Buy Apartments and Commercial Real Estate With No Or Low Money Down."

Download it free here: Commercial Real Estate.

Article Source: http://EzineArticles.com/?expert=Darin_Garman

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A Creative Strategy You Can Use to Buy a Business Now

Syndicated Post by Martin Shultz

You want to buy a business now. You believe that market conditions in your target industry have bottomed and are most likely to improve. You need a creative strategy that will allow you to satisfy wants and needs of prospective business sellers, but still not expose you and your capital to too much risk if your timing is wrong. In summary you want the best of both worlds.

Yours is not an unreasonable request. And there is a proven and much used creative strategy that both buyers and sellers have used to bridge these kinds of gaps for decades. It had probably fallen into disuse during the expansionary period leading up to the current severe recession. It was not needed very often because of easy availability of relatively cheap debt, and because most people believed the good times would continue to roll. And most who didn't believe this weren't going to step into the path of an oncoming freight train by buying a business.

The circumstances that have brought about the need for this creative strategy are different than those common during this last expansionary period. Now there is uncertainty about future prospects. Both in terms of direction and in terms of amount. This disparity will tend to create a significant gap between the future expectations of most businesses for sale, in the minds of current owners, and prospective buyers. And the respective views of the future may not even be expressed explicitly. They may be implicit in their respective views of the underlying value, and related price of a business.

Sellers understandably want to ignore or seriously discount the results on their respective businesses of the past couple of years. They want to revert to the industry multiples that had previously been used as rules of thumb for valuations in their industry. And in doing so, either want to average the past few years cash flow results, and apply the multiple on the average, or something similar.

As a buyer, you have a different perspective. You would certainly like to get a bargain, and buy a really great business at a considerable discount. But in the real world, that doesn't happen very often. So you need a creative strategy to get you to a situation that is almost as good. And that is a situation where you won't lose money if you are wrong. This is consistent with Warren Buffet's rule number one for investing. It is "Don't Lose Money". (And as information rule number two is remember rule number one.) Or at the very worst, you will lose money but you know how much, and are prepared to risk that amount.

Let's get down to basics. You are evaluating a business that you are thinking of buying. You may be having difficulty justifying the asking price. It is not consistent with your view of the future. You may not be as confident as the current owner about the specifics of future expectations for the performance of the business. You may disagree with the timing of the cash flows his price implies. You may also disagree with the actual size of the annual cash flows his price implies. And there may be other issues including expectations for future interest rates. All of these have caused you to believe that at the asking price you will not achieve your expected return on capital. Or even worse, cause you to lose money. And worst of all, it is difficult to quantify the loss you could be exposed to. It may be time for some creative buying.

In these circumstances, many buyers will work diligently to convince the seller of the error in his thinking. In some situations that may work. But there are other factors working against you. The seller may have become fixated on a price, and this fixation will close his mind to your argument. An old uncle of mine used to say "convince a woman against her will, she's of the same opinion still". I am certain he was not the author of this what we would now consider to be a sexist remark, but used it frequently. He failed to realize that it applies equally to men and women. So try as you might, your attempts at reason and logic may well fail.

There are other details that will come into play as well. And they are very important to enhancing the buyer's willingness to accept part payment in the form of an earn out out (sic). So you need to have the details clearly understood and incorporated into a formal agreement. Things like what triggers the obligation to pay, and when payment becomes due. You will need professional help to accomplish this, either from a lawyer or accountant experienced in working with this concept. Make sure that the agreement contemplates the seller being provided with some right to audit so long as you have earn out related obligations to him. That way you should avoid any feeling on his part that he is being cheated. Proactively offering the right to audit will help you sell him on the concept in the first place. It will show him that your intentions are strictly honest.

This type of creative strategy is one that gets the seller what he wants or close to it. Provided that future events unfold in accordance with his stated or implied view of them. But it saves you from paying for something that may not take place, until it does happen. It effectively saves you from paying today, for a future that you don't experience, and one that you don't benefit from. You will be in a position of agreeing to pay for these future results, and paying for them, as you experience their benefit.

Will this work in every situation? Not likely. But proposing a creative strategy like this will demonstrate to the buyer that you agree with his price, so long as it is justified by results. Nothing works in each and every case. But you have nothing to lose by proposing it, particularly when it is obvious to you that you will have a disagreement on price without it. What is the worst that can happen? The seller will say no. And that is not fatal. What is more likely is that the seller will ask questions for clarification. Providing you with an opportunity to explain and discuss the situation. Be flexible in considering his input. So long as it is consistent with your risk management approach.

You may have to give a little on price in order to properly manage your downside risk. You may end up paying a bit more than you originally wanted to pay. But does that matter when you are paying with income that exceeds your original expectations? And only from this incremental income. It is not unlike paying commission on a sale that you wouldn't have made without the efforts of the individual entitled to the commission. You will be paying purely for results. At least on the earn out portion. Consider the slight increase to be the premium that you are paying to insure your risk.

For more actionable information that will help you in assessing a business buying opportunity take a look at the information at http://www.selling-a-business-without-stress.com/freereport.html. Although it is written to help sellers of businesses, it will work well for you. It is written from the perspective of what buyers should look for in a business, and accordingly what business owners should provide.

The author, Martin Schultz is a leading authority in preparing a business for sale and the publisher of the free information site http://www.selling-a-business-without-stress.com which provides actionable information about selling a business. His experience includes over 20 years evaluating acquisitions including as one of the founding shareholders of a publicly traded company that grew through acquisition. (After merging with another business of similar size, the merged company now trades on the NYSE.) His other credentials include an MBA from a highly respected North American university, followed by over 30 years of business experience. Martin is now an author and business consultant in corporate finance.

Article Source: http://EzineArticles.com/?expert=Martin_Schultz

Still confused about an 'earn out'?  Stay tuned and, in an upcoming article, I'll get into the explanation of the mechanics of this creative business purchase and sale option! - Doug

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Commercial Real Estate Recovery Stronger Than Many Realize

The recovery is stronger than many realize, says Chaim Katzman, chairman of Gazit-Globe and Equity One. His reasoning? Good deals still are very scarce. Katzman has been raising capital and recycling funds through new partnerships in anticipation of more investment opportunities coming to market, he says. "The bid-ask spread is narrowing as more people realize that things aren't as bad as they first thought," he says.
Video Link: http://bit.ly/aYNuao

Source: reit.com

More videos from NAREIT: http://www.youtube.com/NAREIT1

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Commercial Real Estate Bottoming

In reference to the ever popular claim, "Commercial real estate is the next shoe to drop" - which, in my opinion, is the most over-hyped and over-used sensationalist claim in modern business reporting history - Walt Rakowich, CEO of Prologis says:

"...the shoe has dropped....that's old news..." - emphasis added
Time to start looking at the next part of the cycle folks.

via Deal Junkie

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Peterborough This Week Asks: Does Peterborough have the infrastructure it needs to grow?

In this article yesterday in Peterborough This Week,  Joel Wiebe explores a recent report on projected growth for the city and county of Peterborough.  One of the main themes of the piece is the need for improved traffic movement in the city and the debate that just won't die: The Parkway.
Facing a 13 per cent population growth and only a four per cent employment growth, he (Jeff Leal, MPP) says reflects the City's demographics, with many retired residents here and more on the way.

MPP Leal points out it also shows increased commuters using services like the Go buses.

The City's director of Utility Services, Wayne Jackson, says it is up to councillors to determine what is too congested for a road. Is an extra 15 minutes in a commute acceptable?

"Time is money for businesses," he says of possible economic impacts.

He highlighted Mayor Ayotte's comments about people heading down residential side streets if the roads get too busy. This leads, he explains, to angry residents.

Good alternatives need to be found, he adds, whether it means expanding or altering current roads to allow more traffic to be handled or to entice people use different roads.
I can't believe I agree with Coucillor Peeters, but:
Councillor Patti Peeters has a simple answer -- build The Parkway.

"Why are we still talking about The Parkway?" she asks. "Because we need one."
This is something I've been vocal about in the past.  Click here for my letter to the editor, and here for a response to that letter about the Parkway.  Councillor Peeters is absolutely right, we need the Parkway and it should have been built 50-odd years ago when the land was assembled.  Roads identified in the print edition of the paper as congested or in danger of congestion included: Monaghan Road, Parkhill Road, and Fairbairn Street.  Sounds suspiciously like the route one would take if the Parkway existed...

Route taken by many city residents today.



Parkway Route as envisioned by city planners 50 years ago.

Of note is that the route most people take today, along Clonsilla, up Monaghan, across Parkhill and then north on Fairbairn, is primarily through residential areas.  I know, because I regularly use this route because there is no alternative.  These are mostly two lane roads built 50 - 70+ years ago when average traffic counts were likely less than a third of the volume seen today.  The people that live on those streets must curse those politicians of the past who didn't have the will to see this road built. 

Not one of those streets was designed to handle the volume of traffic that they see every day.  As a result of driving so much traffic through those residential streets, there are far too many lighted intersections.  The amount of stop and go traffic in a city the size of Peterborough is inexcusable.  Where are the environmentalists on this issue?  I thought that constantly starting and stopping your car was terrible for the environment?  I thought sitting in an idling car was bad for the environment; did I miss something?

I've said it before, I'm saying it again:

Build the Parkway. Now.

Update: There was a really good letter to the editor in Peterborough This Week on February 9, 2010 that supports what I've been saying: Build The Parkway

Nicely put Mr. Bayly!

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Hayek vs. Keynes Rap Anthem



Found via bloodhoundblog.com. Also check out: econstories.tv - the creators of the video.

It's the economy, stupid ;)

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Canada Ranks 3rd Best Place to Invest in Commercial Real Estate for 2010


via thestar.com

The United States remains the country selected as the “most stable and secure real estate investment  environment,” according to a recent survey report by The Association of Foreign Investment in Real Estate.  But the country on the move is Canada, which now ranks 3rd worldwide thanks to our stable investment environment!
The United States remains the country selected as the “most stable and secure real estate investment environment,” although with a declining lead:
• The U.S. receives 44 percent of the vote;
• Germany receives 21 percent;
• Canada receives 14 percent.

 
In addition, according to the AFIRE site, Canada is also number 5 on the list for the best expected appreciation in property values going forward.


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Should You Renovate to Attract and Retain Tenants?

Are you a small independent landlord trying to rent your properties? Consider renovating them. A recent survey indicates that over half of small, independent landlords are renovating vacant properties in an effort to differentiate themselves from the competition and attract tenants. Renovations don’t just help you attract new tenants; they help you retain current tenants as well.

“With so many homes and apartments sitting empty, landlords want their properties to stand out from the competition,” says Tracey Benson, president of The National Association of Independent Landlords. “Even if landlords have no rent coming in, they need to bite the bullet and make improvements to put their properties on renters’ short lists.”

The Association recently conducted a survey of landlords across the country and found that over half (52%) of smaller, independent landlords who expect the difficult rental market to continue are renovating their vacant properties. Over three-quarters of these landlords (76%) are doing so in an effort to attract tenants, while 42% of respondents said they are renovating to keep current tenants from moving.

But you don’t need to install high-end accoutrements like granite counters, stainless steel appliances or laminate floors to attract or retain tenants. Even low-budget investments like new carpeting or a fresh coat of paint can make a difference.

“Just about any improvement will make a property look better than one that hasn’t received much TLC,” Benson says.

For more information on how to attract or retain tenants in your apartment properties, or to learn about available properties, give our Century 21® office a call today.


Source: Century 21® USA

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Point of Capitulation Reached in U.S. Commercial Real Estate

Great video from CNBC on the state of commercial real estate according to Barry Gosin, CEO of Newmark Knight Frank.



Of particular interest to me were his words, "The market has, for the most part, capitulated." This is important because it reflects the words of some of my clients - they have been looking for this 'capitulation' so that they can get back into the market and start buying again.

Do I agree with them that they needed to wait for this point of capitulation?  Not at all.  A good deal is a good deal is a good deal regardless of what everyone else is doing and it's always the right time to buy if the fundamentals of that particular deal make sense.

Why am I happy to hear this kind of talk then?  It means that the market is catching up with common sense and we can get back to business!  Don't wait any longer to look at investing in commercial real estate.  Let's get back at it!

If you're ready to get started, call me.

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Bludgeoned Commercial Real Estate Has Begun To Entice Chinese Bottom Feeders




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7 Time Management Tips For Small Business Owners



Guest Post

Are you a small business owner who is always late in meeting deadlines? Or are you the kind of business owner who does not have time for his family and always feels the pressure of doing more in less time. Then please keep on reading. Being self employed is really great but it also demands you become more organized. This article is going to cover the tips which would help you to manage your time in much better way so that you can become more efficient and therefore more productive.

Learn to say no: You should learn to say no to all unnecessary business meetings or enquiries from customers who are not really interested in your services. Unnecessary business meetings and customer enquiries take too much time that could be saved if you start filtering them and ignoring the less important ones.

Make a list: Making list of tasks that you want to do in one day and to arranging them according to their importance and allocating a fixed amount of time to each task saves a lot of time that used to get wasted in thinking about which task to do after completion of any other task.

Set small goals: Day to day you should set smaller goals which are easily achievable instead of setting long term goals. For example, if you want to read a book having ten lessons, rather than setting your target to read the whole book in ten days, set a goal of one lesson a day. Reading one lesson a day has a better chance of being achieved than reading whole book in ten days.

Avoid wasting time on social media websites: We never notice but most of us use to waste lot of time checking emails, surfing social media sites, reading blogs etc. Set a fixed amount of time to read your emails, twitter, forums etc.

Complete task in one shot: Never leave the tasks without completing them. We have a habit of delaying tasks that are either tough or are not of our choice. But leaving them without completing them and resuming them again wastes your valuable time which you have to spend every time to make yourself ready to start the work exclusively for each specific task.

Use technology/outsource: Many free applications are available which can easily handle almost all kinds of business operations. You can use such applications or outsource your administrative tasks so that you can focus easily on creative ways to grow your business.

Be flexible: It is very common to face unpredicted situations where you have to give your attention to other activities which are not related to your business. For example: taking care of an ill family member or attending a family function. Try to keep your schedule flexible so that you can easily adjust to such things without sacrificing already scheduled tasks.

Rudo Barr is working as an internet marketing executive for Fortepromo which creates high quality promotional products that help companies to promote their brands. 

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