Washington State Commercial Real Estate Ramblings from a Olympia Commercial Real Estate Agent

Where have all the developers gone?

Ryan Haddock (Sound Advisors) — Tue, 08 Jul 2008 16:39:19 -0500

With financing hitting one of it's hardest times smaller builders have found themselves over leveraged and holding too many properties. Some have turned these into rental properties, some have given up and are losing the half completed homes to the bank and yet others are buying all the homes they can.

Where did the big guys go? Half completed developments surround us, final plat approvals suddenly are taking longer than expected. Those on short plat schedules are dragging their feet so they aren't forced to close. So what's the story.

The real story is this.......timing. Why would you close now or in the near future when financing is tougher than usual? Why would you close now just to flood the market with more lots?

Most developers are holding tight so that they can get the original owners to carry the cost of holding the property through the hard times. Can you blame them? The overwhelming inventory is slowly going to be taken and they will be seeing better times......or so they believe.

What do you think?

On to the other item I mentioned - the developers who are buying. They are seeing incredible deals on short sales as banks are unwilling to take over half completed projects and know they can't sell these to consumers due to financing issues. Developers are buying at 50% - 60% of value, finishing the product and relaying some of the savings on to home owners.

Crazy market, great times and the time to make a deal.....oh and if you know of someone that fits these scenarios let me know, I may have a solution for you!!!

Wanna Make some Money? Must Read Entire Article.

Ryan Haddock (Sound Advisors) — Wed, 07 May 2008 12:50:43 -0500

Once again the growth management act has created headaches for the retail industry especially large end users in need of general commercial zoning or similar. Due to the state legislation of the growth management act many parcels have changed zoning to include high density corridor designations or mixed use densities. This has created the residential over retail design as well as the need for "mixed use" conferences and meetings from the international council of shopping centers.

Don't get me wrong, the higher density does help us maintain our rural lands and preserve the lands in a much more natural way. Although my question is "Have they weighed the cost?"

With many retailers struggling in today's economy we are finding the need to buy items in bulk, using outlet centers and buying as many off-brand items as possible. Several of those retailers such as Costco, Winco Foods and even Home Depot are recognizing these needs although they are unable to find sites due to difficult zoning codes and uncooperative jurisdictions.

Safeway took advantage of their current locations and the mixed use changes by revamping their entire interior, creating an experience while shopping by inserting Starbucks, Jamba Juice and other similar retailers. This change to a "boutique" grocer was a great move by Safeway as they are already located in established high density areas. New retailers to these areas are finding that they must move outside the hub to stay within budget while finding a site large enough for their stores.

New store plans have slowed for most retailers during the last few months although the bulk foods market has grown. Will they locate near you soon? Doubtful if you live in a higher density area - currently many of my clients that are in this arena are looking for sites 5 -10 miles outside of the hub but along highly traveled roads to try and pull those from the hub to them. It's an interesting problem to have in the land of what's left.

Let me know your thoughts - by the way if you happen to know of 10-18 acres that are zoned general commercial on a heavily traveled road, let me know I'm always happy to pay referral fees.

Zillow bugs

Ryan Haddock (Sound Advisors) — Sat, 03 May 2008 12:06:22 -0500

Well for the last three years I had lived in a 1200 SF home, one of my real estate agent friends took a picture of my house and placed it in a Homes and Land Catalog hoping to drum up more calls due to the attractiveness of our neighborhood and home. Well, immediately homes and land placed our home in Zillow, however when inputting the Square Footage they misplaced a few numbers and we were left with 115 SF. Now my house value has plummeted on Zillow as well as a few of my neighbors, it has thrown off the "comps" as well and also created quite a few phone calls.

I am a commercial real estate agent and after inserting three listings about 3 months ago, I am unable to remove them. I have placed them as sold, no longer for sale and every other conceivable status update and they cannot be removed, although I receive plenty of emails letting me know that I have been fired as the agent for these properties.

Please update your system and don't allow catalogs to automatically insert data over the top of homeowner data. You are only ruining your own credibility. I will also be emailing this to the folks at activerain that are from Zillow.

This is a copy of the post I left for Zillow after having several difficulties with their system. Here is the response I received.

"We are sorry for your difficulty, we rely on several real estate magazines for our data and find them more reliable than homeowners data."

AMAZING!!!

Listing Updates - Thurston/Lewis County

Ryan Haddock (Sound Advisors) — Wed, 16 Apr 2008 10:25:49 -0500

Okay well things have changed a bit since last posting an update on my active listings so I want to make sure I put as much information in here as I possibly can.

2225 Cooper Pt. Rd - Total of 12.75 acres with 5.3 acres developable. Difficult jurisdiction and setbacks on the site make it a bit challenging however the 75,000 cars per day and Hwy interchange visibility in the most prominent location in Olympia make this a great opportunity. $3.5M

0 Sawall Ave - 300 acres for residential use. 14 seperate tax parcels, 11 of which have septic approvals. The other 3 tax parcels can be split even further into up to 12. All 23 of these lots are near City of Centralia services and will allow for territorial views. Call for pricing.

2221 93rd Ave SE - Approximately 39.1 acres just outside City of Tumwater ready for residential lot development. $1.2M - City services less than 1000' away.

I'm having trouble getting lending.

Ryan Haddock (Sound Advisors) — Tue, 04 Mar 2008 12:02:48 -0600

Is there anyone out there that can help me with financing. We are having extreme trouble finding financing for a fantastic McMansion that my clients just can't live without.

Please help us figure out how to put this package together. I can tell you it won't be easy but I think if we can find a way we might find the secret to affordable housing!!!

300 ACRES - LEWIS COUNTY, WASHINGTON

Ryan Haddock (Sound Advisors) — Tue, 12 Feb 2008 20:02:26 -0600

Too many projects, very motivated and will consider all offers. Total of approximately 300 acres, currently split into 14 tax parcels. 240 acres zoned 1 per 20 acres and the remaining 60 is 1 per 5. Septic approvals in place for 11 of the parcels with the remaining 3 being transferred into the 1 per 5 zone. Roads are roughed in, have estimates to complete the project. City Services and City Limits less than 1000` feet from the site. Amazing territorial views from top 11 lots, bottom 60 acres has received cluster approval from the city. Annexation within next few years extremely likely.

Currently priced at $1,800,000 - motivated owner

Ryan Haddock

www.soundadvisors.net

The State of the Market Address

Ryan Haddock (Sound Advisors) — Tue, 12 Feb 2008 19:47:46 -0600

Due to the state of the market I think it would be safe to say that many of us have evaluated our current status as realtors. I've spoken to veterans, newer agents and those working around the market and all of them have been dissatisfied with one or more aspects of their current status.

Hey ME TOO!!! All that being said it has caused me to reframe my thoughts on brokerage, development and just plain sales. The best news is that it has created more motivation for me now then ever before. I'm so excited about the possibilities that are opening up that sometimes I feel like a kid in a candy store.

The national news is horrible and has been, that's not news, but the good news is that it is not as bad as everyone thinks. I got a call today from a major home builder who wants to renew our communication lines as they anticipate acquisitions in the upcoming month or two. I have 12 people who are currently looking for commercial properties throughout the area. I work with one retailer who is aggressively expanding in the market and looking to take advantage of the softened prices and lower construction costs than 1 year ago.

The rebound has started.....how long until you realize it? Will you still be around? I know I will.

Ryan Haddock

www.soundadvisors.net

IRS Tax Relief and 1031 Exchange Update

Ryan Haddock (Sound Advisors) — Thu, 13 Dec 2007 21:50:12 -0600

Due to the flooding throughout Washington State, the IRS has updated their 1031 exchange deadlines for qualified candidates.

Please see the information on the IRS website for more information, here is a portion of those affected by the flooding in Washington. Other areas also are candidates for this delay including Oregon, and areas in California affected by the wildfires.

Here are the details for the disaster area in Washington.

FROM IRS WEBSITE -

The disaster area consists of Grays Harbor and Lewis counties.

Deadlines for affected taxpayers to file returns, pay taxes and perform other time-sensitive acts falling on or after Dec. 1, 2007, and on or before Feb. 6, 2008, have been postponed to Feb. 6, 2008.

In addition, the IRS will waive the failure to deposit penalty for employment and excise deposits due on or after Dec. 1, 2007, and on or before Dec. 17, 2007, as long as the deposits are made by Dec. 17, 2007.

If any affected taxpayer receives a penalty notice from the IRS, the taxpayer should call the number on the notice to have the IRS abate any interest and any late filing or late payment penalties that would otherwise apply during the period from Dec. 1, 2007, to Feb. 6, 2008 -- Dec. 1, 2007, to Dec. 17, 2007, for failure to deposit penalties. No penalty or interest will be abated for taxpayers that do not have an original or extended filing, payment or deposit due date, including an extended filing or payment due date, during this period.

IRS computer systems automatically identify taxpayers located in the covered disaster area and apply automatic filing and payment relief. Taxpayers within the covered disaster area do not need to self-identify by writing on their returns or using the disaster designation in their tax software.

Affected taxpayers who reside or have a business located outside the covered disaster area are required to call the IRS disaster hotline at 1-866-562-5227 to self-identify for disaster relief.

Covered Disaster Area

The counties listed above constitute a covered disaster area for purposes of Treas. Reg. § 301.7508A-1(d)(2) and are entitled to the relief detailed below.

Affected Taxpayers

Taxpayers considered to be affected taxpayers eligible for the postponement of time to file returns, pay taxes and perform other time-sensitive acts are those taxpayers listed in Treas. Reg. § 301.7508A-1(d)(1), and include individuals who live, and businesses whose principal place of business is located, in the covered disaster area. Taxpayers not in the covered disaster area, but whose books, records, or tax professionals' offices are in the covered disaster area, are also entitled to relief. In addition, all relief workers affiliated with a recognized government or philanthropic organization assisting in the relief activities in the covered disaster area are eligible for relief.

Grant of Relief

Under sections 6081, 6161, and 7508A, the IRS gives affected taxpayers until Feb. 6, 2008, to file most tax returns (including individual, corporate, and estate and trust income tax returns; partnership returns, S corporation returns, and trust returns; estate, gift, and generation-skipping transfer tax returns; and employment and certain excise tax returns), or to make tax payments, including estimated tax payments, that have either an original or extended due date falling on or after Dec. 1, 2007, and on or before Feb. 6, 2008. For original filing due dates falling during this period, the relief is provided under section 6081 and if additional time to file is needed beyond Feb. 6, 2008, an affected taxpayer may file the appropriate extension request to obtain the remainder of the 6-month period provided by section 6081. For extended filing due dates falling during this period where the full six-month extension period has been used, relief is provided under section 7508A. In such a case, no additional time to file is available after Feb. 6, 2008.

The IRS also gives affected taxpayers until Feb. 6, 2008, to perform other time-sensitive actions described in Treas. Reg. § 301.7508A-1(c)(1) and Rev. Proc. 2007-56, 2007-34 I.R.B. 388 (August 20, 2007), that are due to be performed on or after Dec. 1, 2007, and on or before Feb. 6, 2008. This relief also includes the filing of Form 5500 series returns, in the manner described in section 8 of Rev. Proc. 2007-56. The relief described in section 17 of Rev. Proc. 2007-56, pertaining to like-kind exchanges of property, also applies to certain taxpayers who are not otherwise affected taxpayers and may include acts required to be performed before or after the period above.

The postponement of time to file and pay does not apply to information returns in the W-2, 1098, 1099 or 5498 series, or to Forms 1042-S or 8027. Penalties for failure to timely file information returns can be waived under existing procedures for reasonable cause. Likewise, the postponement does not apply to employment and excise tax deposits. The IRS, however, will abate penalties for failure to make timely employment and excise deposits, due on or after Dec. 1, 2007, and on or before Dec. 17, 2007, provided the taxpayer made these deposits by Dec. 17, 2007.

Casualty Losses

Affected taxpayers in a presidentially declared disaster area have the option of claiming disaster-related casualty losses on their federal income tax return for either this year or last year. Claiming the loss on an original or amended return for last year will get the taxpayer an earlier refund, but waiting to claim the loss on this year's return could result in a greater tax saving, depending on other income factors.

Individuals may deduct personal property losses that are not covered by insurance or other reimbursements, but they must first subtract $100 for each casualty event and then subtract ten percent of their adjusted gross income from their total casualty losses for the year. For details on figuring a casualty loss deduction, see IRS Publication 547, Casualties, Disasters and Thefts.

Affected taxpayers claiming the disaster loss on last year's return should put the Disaster Designation "Washington Severe Storms/Flooding" at the top of the form so that the IRS can expedite the processing of the refund.

Other Relief

The IRS will waive the usual fees and expedite requests for copies of previously filed tax returns for affected taxpayers who need them to apply for benefits or to file amended returns claiming casualty losses. Such taxpayers should put the assigned Disaster Designation in red ink at the top of Form 4506, Request for Copy of Tax Return, or Form 4506-T, Request for Transcript of Tax Return, as appropriate, and submit it to the IRS.

Affected taxpayers who are contacted by the IRS on a collection or examination matter should explain how the disaster impacts them so that the IRS can provide appropriate consideration to their case.

Taxpayers may download forms and publications from this Web site, or order by calling 1-800-TAX-FORM (1-800-829-3676). The IRS toll-free number for general tax questions is 1-800-829-1040.

www.soundadvisors.net

Ryan Haddock

Are you opening yourself to a lawsuit?

Ryan Haddock (Sound Advisors) — Wed, 21 Nov 2007 18:23:46 -0600

As we move to a more litigious society and people are suing everyone for anything does it hurt to take some precautions? Of course everyone agrees the answer to this is NO, of course not. We will mitigate our risk however we can if it doesn't cost alot of money.

As investors to multifamily or commercial properties you could be opening yourself up to a whole host of issues depending on how you take title. Obviously as agents we are not lawyers and must not try to act as such, but wouldn't we be neglect in our duties if we didn't at least explain some examples to our clients?

There are many issues that can arise with respect to how you take title to property, and especially so in a commercial context. If you take title as an individual, you may be exposing yourself to potential liability exposure that you might want to try to avoid or at least minimize. You take title through a business corporation, but doing this could be disaster from a tax standpoint point. Sometimes, there may be other alternatives such as forming a limited liability company that you would own and control that, in turn, could lease the property to your business entity.

If joint ownership is involved, you should clearly understand the differences between taking title as joint tenants, as tenants in common, as a partnership, or as community property. You should also clearly understand your rights versus the rights of your co-owners. Each and all of these types of ownership have significant ownership implications and rights of survivorship.

It short, there are no universal rules of thumb with respect to how to take title. It's always advisable to seek professional advice, including your lawyer and CPA, to assist you in making a smart decision, but it is extremely important that you are aware of these implications and are informed.

Commercial Vs. Residential One on One

Ryan Haddock (Sound Advisors) — Tue, 20 Nov 2007 12:20:52 -0600

Often I am asked about how my job as a COMMERCIAL agent differs from associates in the residential world of real estate. Generally speaking they don't mean the lending structures, the business aspect and/or any of the nitty gritty details of each deal. People want to know, what do I do differently in my day versus my counterparts.

I can tell you the single largest difference is my job is not only that I work business hours like a banker but that my job is BLACK and WHITE. Completely, honestly in many ways my job is easier although I have to wait longer for paydays. When I present a business opportunity to a client they really could careless about the state of the building, the question is "Do the numbers make sense?"

"Yes."

"Then we got a deal."

I envy my counterparts as they often have to deal with the emotional side of real estate.....in commercial we deal with property owners and clients that usually have done this before, many times over and sometimes more than we have. In residential you have first time buyers, sellers who are attached to their home and take every offer, counteroffer as insulting and personal.

In residential you have to manage expectations and emotions on a much greater scale than the commercial market and for that the residential agents have a much harder job than I.

Congratulations to Residential Agents for doing one of the hardest jobs in the world in one of the worst markets we've seen in sometime. Keep being positive and keep working hard, some people will recognize it. I know I do.

Thank you.

Ryan Haddock

www.soundadvisors.net

Is commercial real estate in danger of the credit crunch?

Ryan Haddock (Sound Advisors) — Tue, 20 Nov 2007 11:56:08 -0600

Depends on who you ask is the simple answer. Many commercial analytics are showing a property decline in parts of the country, although others are showing a general increase. No matter who you ask the answer could be different depending on how they evaluate their data. Apartments have decreased, Retail property has increased, Industrial sites have increased, Raw Land has decreased - but some raw land is classified residential in some studies even if it is development land for subdivisions.

The value of commercial real estate as a whole, which nearly doubled in the past seven years, is now starting to decline due to the credit crunch, according to a report set to be released today by Moody's Investors Service.

The report found that the value of commercial property declined 1.2% in September from the previous month. Particularly hard hit were apartments in the West and office property in most states other than California.

Some surveys indicate prices are still rising. For example, commercial property appreciated 2.2% in value in the third quarter, according to an index published by the National Council of Real Estate Investment Fiduciaries. NCREIF looks at appraised value while Moody's bases its values on actual sales, according to Moody's executives.

In any event the commercial sector has only been hurt with issues in lending and doesn't sport the high foreclosure rates found in residential. The default rate for commercial mortgage-backed securities is about 0.4%, compared with a 20% default rate for subprime, or high-risk, home loans, the hardest hit segment of the residential mortgage market. And commercial rents in many markets continue to rise.

Tad Philipp, a Moody's managing director, says he wouldn't be surprised to see the commercial-mortgage default rate double or triple, but he notes that still won't be "alarming" because historically the default rate is about 1%.

www.soundadvisors.net

Ryan Haddock

Are you ready to negotiate your commercial lease?

Ryan Haddock (Sound Advisors) — Mon, 19 Nov 2007 10:22:34 -0600

Various types of leases exist - completely understanding the differences between NNN leases and a gross lease can be extremely important. NNN Leases - true passivity for the Investor will help to explain a portion of the NNN lease. Once you understand the type of lease you are putting together then you must put together a few other pertinent details.

Prior to negotiating the terms of a lease, outline thoroughly provisions that would promote your business. Before entering into a binding contract, decide the term of the lease;

A short term lease yields flexibility and more leeway to change your demands after a given period. Though long term leases are less supple, they provide stability. The negotiating process will take seemingly perpetual give-and-take, but settling for wary provisions is foolish. While the list is boundless, beware of the following stipulations:

Assignment Clauses;
Personal Lease Guarantees;
CPI-Based Rent Increases;
Permitted Use Clause;
Limitation on Improvements; and
Relocation Clause

It is important to understand why these lease stipulations can be unfavorable depending on the verbiage used and how they are negotiated.

Although a lessee analyzes the provisions listed by the owner, he/she may want to insist on additional terms;

Exclusion Clauses;
Security Terms;
Space Boundaries;
Etc.

The very most important thing to remember when negotiating a lease - EVERYTHING IS NEGOTIABLE! and maybe even more important - hire a professional, it costs you nothing to engage an agent as your tenant representative.

Ryan Haddock

www.soundadvisors.net

Pacific Northwest Region Still Soaring

Ryan Haddock (Sound Advisors) — Sun, 18 Nov 2007 11:49:57 -0600

Recently published in the Seattle Times was the Urban Land Institute and PriceWaterhouse survey of landowners, developers, lenders and other industry professionals and the Seattle market is still booming for commercial Real Estate. In fact they predict this to be the 2nd best commercial market EVER!!

Here's an excerpt from the article -

The experts ranked Seattle second only to New York City in overall prospects for commercial and multifamily investment and development. Seattle placed first in industrial, office, rental apartment and for-sale home development, and second in retail and hotel development.

"Seattle is developing into an exciting 24-hour city smack-dab on key Asian shipping routes, and its brainpower economy diversifies... " the report says. "[Seattle's] multifamily and industrial sectors rate as the leading buy candidates in the entire survey."

But "abysmal traffic congestion strangles commuters," it adds.

This is exciting news for all commercial real estate professionals in the area. Not only do we have more investors due to decline in housing but we have rankings and statistics to back up the investment opportunities in our market.

www.soundadvisors.net

Ryan Haddock

Guitarist suing Real Estate Agent

Ryan Haddock (Sound Advisors) — Fri, 16 Nov 2007 18:53:05 -0600

Type in "Real Estate News" into google and the first story you get to read about is guitarist Slash (Saul Hudson) suing their real estate agent and his broker for allegedly lying to he and his wife about size of the home, whether the street is public or private and that title information was withheld from them.

How can you not deduce for yourself if the road is public or private? - Why is it his agents fault regarding size? shouldn't that have been disclosed in the listing as to buyer's satisfaction?

Why is it that negative news gets such a great placement in google? What is the world coming to?

www.soundadvisors.net

Here is a link to the story so you can read the fun for yourself!!

http://www.sfgate.com/cgi-bin/blogs/sfgate/detail?blogid=7&entry_id=22021

What is a TIC investment property?

Ryan Haddock (Sound Advisors) — Thu, 15 Nov 2007 16:06:57 -0600

Tenant-in-Common real estate investments offer investors the opportunity to share in the ownership of large properties such as shopping malls, office buildings, and housing developments, as well as multi-million dollar industrial complexes. This investment structure is designed to allow you to invest in institutional quality real estate without having to buy the entire property. Differing goals can be accomplished by using this method such as a steady stream of income or aggressive appreciation depending on the product.

According to IRS guidelines, no more than 35 investors may take part in a TIC property. TIC investors have a fractional deeded interest in a larger property which is professionally managed. Monthly payments are made to each investor according to his initial equity along with regular reports as to the performance of the property.

When you invest in a TIC property, you reap the benefits of ownership. Rather than buying the right to use a property, as you would in a time-share agreement, you're buying a portion of the deed. As a property owner, you're entitled to income, appreciation and tax benefits. You can also sell your share, or pass the property on in a will.

Tenant-in-Common properties are often sold out in a matter of days, if not hours. This highly desirable and low-maintenance investment opportunity is attractive to a variety of different investors. If you want to gain the competitive edge, or find a property fast, you need to work with a company that has the right connections.

If you'd like more information on TIC properties or further details on possible structuring don't hesitate to contact me via my website. WWW.SOUNDADVISORS.NET

Ryan Haddock

Commercial Investing Simplified with a NNN Lease

Ryan Haddock (Sound Advisors) — Wed, 14 Nov 2007 10:36:26 -0600

A triple net lease, sometimes called a net-net-net or an NNN, is an agreement where the lessee agrees to pay a net rent and a series of other fees for the right to use a piece of real estate for an extended period of time. In addition to a monthly rental fee, the lessee agrees to pay all taxes, insurance, and costs associated with repairs also known as common area maintenance.

Many large national retail chains participate in triple net lease agreements in order to avoid making large capital investments. These companies prefer to keep funds liquid for other investments. A triple net lease is attractive to many real estate investors and developers. One reason is the sharing of financial responsibility another is the passivity of the investment. Once the initial capital is invested, owners can reap the benefits of rental fees and the lack of maintenance fees, while still having the ability to use the tax benefits that come with ownership.

We specialize in helping our clients find real estate arrangements with a variety of different financial structures within this investment. The bottom line is we help you find real estate that produces the highest possible return on your investment for the least risk. Most triple net leases are for a single tenant, and they generally involve long-term commitments from 5 - 25 years.

Many investors take part in triple net leases as part of their 1031 exchanges. If you cash out of one investment, and you're looking for a new opportunity, a triple net lease may be right for you. Let us help you find a property for increased profits, added stability, and ease of management today.

www.soundadvisors.net

Ryan Haddock

NO it's not too early to come up with Christmas Presents

Ryan Haddock (Sound Advisors) — Mon, 12 Nov 2007 13:01:28 -0600

Great Gag gifts the entire family can enjoy!! Do you have that oddball uncle who enjoys getting the gag gift every year? Last year it was a moose that poops Jelly Beans, the year before he got my mother combat boots. It never ends, so this year I thought I'd try to get prepared....I'm searching out Christmas gag gifts.

Here is my current list - and I'm hoping you can add to it as we look for the best option!!!

GIFT NOT INCLUDED
I bought two AA batteries, put them in a box with a note saying "Gift not included"

HOME EXERCISER
The home exerciser is a block of wood with this saying printed on paper glued to it.

HOME EXERCISER
1. Place in middle of the floor
2. Walk around it two times
3. Rest, you've just walked around the block two times.

STRAW HAT
Put some straw in a zip-loc bag and attach a tag that reads "Straw Hat -- Assembly Required"

PUZZLE
Sawdust in a small zip lock bag labeled "Expert Jigsaw Puzzle"

MAGIC WEIGHT LOSS BEANS
1 Remove beans from bag.
2 Throw them on the floor.
3 Bend down and pick up each bean.
4 Repeat hourly as needed.

FURNITURE KIT

An acorn in a bag with note that says: plant and in 40 or so years cut down and make your own oak furniture.

BELLY BUTTON CLEANER

a piece of pipe cleaner that is curved at end to look something like a toilet bowl brush.

Ryan Haddock

www.soundadvisors.net

Will Commercial Real Estate follow the Residential Decline?

Ryan Haddock (Sound Advisors) — Sat, 10 Nov 2007 12:45:49 -0600

Depends on who you talk to, however the short answer is NO and here's why.

Each are affected differently, and following is a brief description.

The market value of commercial real estate is determined by the state of employment and interest rates. Commercial real estate is a business with a profit and loss statement. Hopefully, that profit and loss number is positive and provides cash flow. That number is then transitioned into a capitalization rate and is used as a comparison against other yields of equities and debt.

The value of residential property is also determined by employment and interest rates. However, there is no profit and loss statement for residential real estate and it is not a business. The state of employment and interest rates affect the supply/demand relationship of residential property. That supply/demand relation is stabilized by comparisons between the cost of owning versus the cost of renting.

Currently on the residential side there is a large disparity in rent versus owning and until that number inches closer it is likely we will continue to stay in a Buyer's Market. If landlords raise rents, then likely the demand for residential homes will rise thus causing a Seller's Market.

Most of the commercial investments are based on cash on cash return - for the amount down, how much do I receive annually? Typically an investment at an 8-9 cap rate will be financed around 7% and actually create a cash on cash return of around 10-15%. No matter what market we are in investors will be interested in these returns as they cannot get this from stocks, bonds or mutual funds with any sort of guarantee.

Ryan Haddock

www.soundadvisors.net

I am buying right now! Why aren't you?

Ryan Haddock (Sound Advisors) — Fri, 09 Nov 2007 15:44:37 -0600

THE SPIN IN YOUR MARKET SHOULD BE AS UPBEAT AS THIS PICTURE!! You should be writing tales of positivity. You should be bouncing off the walls like tigger!! Are people coming up to you asking you why you are so happy? THEY SHOULD BE.

Make em wonder - why is this person in real estate in such a horrible market happy? BECAUSE IT"S NOT HORRIBLE SILLY!!!

Are you buying homes for real? Yes I am, and right now is the perfect time to get moving.....remember the article that Tracy Thomas from Calabasas did? Pin The Tail On The Bottom Of The Market - pay attention to it....because she wrote that some time ago.

Things have changed.....statistics are changing slightly......some people are getting it. Those that are getting it are buying, they know the bottom is within sight. If you wait too long you might be regretting that you didn't get in earlier.

Start bouncing off walls, it's always nice to have to explain why you are so happy!!

The Twin Powers Unite to fight GLOBAL NEGATIVITY!!!!!!

Ryan Haddock (Sound Advisors) — Fri, 09 Nov 2007 10:39:01 -0600

Just recently two relevently unknown real estate agents took on the world with their blogs. Very similar to the heroics of Batman and Spiderman these two have taken the world by storm and don't plan on stopping anytime soon. As of Nov. 5, 2007 these two agents have decided to take on the world media and negative press by blogging constantly about the positives they can find in the market. Beware of two masked typers in your local area soon.

Pieces of both blogs are available here - Bring on the Positive, I LOVE my job right now! by Renee Burrows and Positive Real Estate News by Ryan Haddock.

Positive Real Estate News

Ryan Haddock (Sound Advisors) — Thu, 08 Nov 2007 11:15:48 -0600

I SAW A POSITIVE STORY ON THE FRONT OF BANKRATE.COM's WEBSITE!!!!!!! YES A POSITIVE ONE!!!!! AND YES IT WAS ABOUT REAL ESTATE!!!!! CAN YOU BELIEVE IT???

I had to read it twice....but my previous blog - Is it turning? or do we just hope it is? has also received many positive comments from other industry professionals that have noticed the same thing!!

THE BOTTOM IS COMING.......and when it turns it may trend upward quicker than expected. Those that get in early will stand to make the most. The article on bankrate stated that new home sales are actually up from last month, albeit slightly, even though median prices declined. The gist of the post was that demand will likely ramp up sales and assist the rebound and likely the "doom and gloom" will likely be over late in 2008. Why so late?

Still more mortgage resets coming in the next few months and it will likely take 2-3 mos. for the inventory to be normalized after the foreclosures.

I've also noticed many other positive blogs recently and encourage everyone to do their part in assisting the consumers understanding of the situation. The more educated the consumers the more likely the news will follow suit. POSITIVE!!

Ryan Haddock

www.soundadvisors.net

Is it turning? or do we just hope it is?

Ryan Haddock (Sound Advisors) — Wed, 07 Nov 2007 11:25:43 -0600

Recently I've noticed a change in the blog mentality here on activerain as well as other sites. Many of the mortgage brokers are starting to see stated income products coming back online as well as other "responsible" options that were temporarily unavailable.

The inventory numbers seem to be changing nationwide - not certain if they are being sold or if sellers are pulling their listings in favor of renting. Either way as the inventory normalizes or reaches lower levels the bottom of the market is eminent. Will it be tomorrow? UNLIKELY, but it is changing.

Get your buyers and investors ready. Things will happen quickly when they do happen.

Why Blog? Do you do it for you?

Ryan Haddock (Sound Advisors) — Tue, 06 Nov 2007 09:58:55 -0600

I recently read an article that stated most agents blog to market themselves within their local market. So why do we blog on a social networking site that gives us points?

Do the agents with more points get more marketing time?

YES!!!!

This is likely something everyone here has thought about but the more blogs you have the more chances you have to be caught in a search engine. The more social networks you have the more likely you are to get referrals. The more respect you might have in a community could lead to further business as you have blogged about the state of the current market conditions.

No matter how you've done it blogging has become as important to your marketing as your signs and your website. Keep this in mind when posting as well, every single blog is an advertisement of you and how you feel. This is you being real to them the client.

KEEP BLOGGING!!

Ryan Haddock

www.soundadvisors.net

How to receive 6000 points without blogging for 3 weeks!!

Ryan Haddock (Sound Advisors) — Mon, 05 Nov 2007 09:51:21 -0600

shh!!! This is the secret that the rest of active rain doesn't want you to know.....they award points completely different than most people think....25 pts for comments sure, but did you know that you can get 6000 points without even trying?

It's very simple, but you've got to do it exactly the same way everytime otherwise it won't work!! What they don't tell you is that instead of writing 10 blogs a week for 3 weeks to get your points you can do it another way....one that very few people are taking advantage of.

INVITE YOUR FRIENDS!!!!!!!!

Every little invitation can get you more points, I invited a guy I hardly know and he got me 300 points just for signing up!! Some staging professional was going to give me points for inviting her too, but one of her better friends invited her first.

This is your invitation to send out your own invitations before someone else does!!

www.soundadvisors.net

Will your shopping mall be next?

Ryan Haddock (Sound Advisors) — Sat, 03 Nov 2007 11:58:00 -0500

Are your big box and power center retailers going out of business? Would you live above your local grocery store? Are you a mixed use proponent? WHAT IS MIXED USE and WHO KEEPS ON MIXING IT?

As you drive through your market you have begun to see many mixed use examples, but what are they? They seem to be popping up in urban as well as suburban areas and succeeding according to the International Council of Shopping Centers. BUT WHAT IS IT?

The term refers to developments that combine elements of residential, retail, office and entertainment. These projects are often advertised as the ultimate Live, Work, Play environment.

The growth of the mixed use development has assisted developers in creating profitable projects on properties that were at inflated prices. By building a larger density into the project the costs are spread over more units either retail or residential and it suddenly is a performing project instead of a development lost in feasibility.

So how did mixed use come about?

INCENTIVES!!! Yes your local planners and city council started it!! Developers have less impact fees when developing projects of higher densities. Although if you ask them the answer you are likely to hear is -

The scarcity of land for development has necessitated the intensification of the use of available land to accommodate future needs. Mixed-use and compact developments have become attractive approaches, especially in towns and villages where services and transportation are most available.

No matter how you feel about mixed use, it is here to stay - currently seminars and national conventions are being held to help educate developers as well as retailers about the way your shopping centers will look from now on.

Will Wal-Mart one day have 120 residential units atop their stores to take advantage of the tax-breaks?

Ryan Haddock

http://www.soundadvisors.net/