S.E.C. Real Estate Observer

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In counseling with your client and preparing your package for market, it is important to identify profit incentives or other strong reasons for an investor to take your client’s property. It is also an excellent counseling tool to bring your client into the real world.

You might want to tell your client, “You know, at the meetings, the audience is going to want to know why they should be interested in your property. The most common incentive is profit. Since we are in competition with other properties being offered at the meeting, it would be helpful to identify the profit in your property. To do that, I need your help. Let’s go over this list together and try to identify as many ways as possible to offer a profit to the taker of your property.”

The following is a list of some of the ideas that you could explore with your client before bringing the package to the market.

• Increasing income through better management.
• Increasing rents in property where rents are under the market rent.
• Increase income by cutting expenses.
• Increase income by doing something creative to reduce vacancies.
• Increase income by adding other services such as:
  • Child care for apartment buildings.
  • Laundry facilities.
  • Executive suites in office buildings:
    • Conference room availability
    • Secretarial services
    • FAX
    • Copier
    • Computer availability
• Increasing income through fix up and remodeling.
• Increasing property value through a change of use.
• Increasing property value by changing its zoning.
• Increase value by processing subdivision map to the tentative approval stage.
• Increase value by processing subdivision map to the final approval stage.
• Improve value by processing building plans to the final approval stage.
• Increasing value by making building sewer, water mains, and street improvements for vacant lots.
• Increasing its value by constructing buildings on vacant property.
• Offering the property to a taker at less than its current appraised value.
• Offering carry-back financing on very soft terms.
• Building additional rentable space.
• Converting the property to condos.
• Converting the property to timeshares.
• Offering to remain in co-ownership in a residential property as an equity share investor.
• Offering to stay in the property as joint venture partner.
• Making the property more desirable by offering to de-finance the property.
• Offering to guaranty the income for a period of time.
• Offer to carry any negative cash flow for a period of time.
• Offering to discount the property with an option to repurchase at a later date.
• Offering to lease back the property on a long-term lease.

While the above is only a partial list of ways to create a profit, it should get the conversation going about making the property more marketable. On the other hand, if the client cannot help you identify any reasons for someone to acquire their property, what does that say about their property? Either way, the list will help bring the owner into a more realistic perception of his property, prepare the owner for a reasonable offer, and increase your chance of closing a transaction.