S.E.C. Real Estate Observer

Most people like top ten lists because you know when they end, right? But if you manage, invest in, finance, or own apartments, you never want to see an end to good ideas for better performance.

In today’s real estate climate, making your property more marketable requires creativity and an open mind. Owners need to expand the benefits their properties offer. Along with physical aspects and pricing, the structure of the transaction, and your capabilities and expertise all figure into the formula. The key to completed transactions is determining which benefits appeal to a particular buyer and still provide the same or better benefits for you, the seller.

I turned on the TV this afternoon, and as it was CBS, an Oprah repeat was on, with a very pretty young girl from Pittsburgh singing. She’s a recent winner of a national talent contest, I think about 12 years old, named Jackie Evancho. Watch for this girl.

Just two letters, but “If” is one of the biggest words in the English language. “If” allows one to presuppose a situation in the future, try it on for size, so to speak, and see how it feels. Combined with the words, “would you even consider it?” the word “If” can let you “try on” a future situation. You are only being asked “if you would even consider” committing to a future action. It is very easy to answer yes to such a question, since you are not committing to anything except to “consider” doing something in the future.

In earlier articles, we briefly discussed some of the challenges, regulations and restrictions your local banker is dealing with. Knowing these will help you as a borrower, buyer, or broker be more profitable in 2010-11. Commercial Real Estate, CRE, ratios are driving many of the decisions your bank is making today. If you or your clients have a commercial investment or development loan coming due in the next 12 months, be prepared to move it or pay it off…

When a bank loan goes 30 days delinquent in payments or past the due date, it becomes a scheduled item with the auditors. They may or may not require any reserves be put aside for loan losses. As default status continues, the loan will be written down based on borrower financial strength, appraisal, strength of the bank, etc.

Utilizing IRS Code Section 1031 Tax Deferred Exchanges is one of the most effective ways to create wealth in real estate. However, over time, a real estate investor may end up with valuable property and a low adjusted tax basis.

Yesterday I met with a Senior VP of a community bank. He has been in banking for 40 years. When I asked how he was doing, he said, “I’ve never seen it this bad, even during the RTC days in the 90s.” Do you have empathy for your local banker or disdain for their inability to make you a loan?

The world of investment real estate has changed. In the 12 short months since the economic recession finally hit Wichita, everything about our commercial real estate market has changed, and those who do not recognize the new environment are destined for frustration and failure.

I was thinking the other day. …Has today’s challenging and volatile real estate market taken the wind out of your sails? Do you know of someone involved with a “Problem Property”? Are you not making any money and starting to tap into your reserves? Are you starting to wonder why your bank might be calling every other day to check up on you and how you are feeling? Remember the loan you took out a couple of years ago with a “Lender’s Insecurity” provision that says that any time the lender feels insecure it may call the loan due?