S.E.C. Real Estate Observer

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Opportunity is only possible when we identify something within a property, problem, or situation that others cannot see. How do we do that? There are many ways to solve a problem and locate the opportunity without knowing how to do it ourselves. We do that by collaborating with others.

Example: Let’s say you found and could acquire a very large see-through 250,000 sq. ft. manufacturing building that currently has no income. It can be acquired for $3 per square foot — $750,000. Wow! Without consulting anyone, we know this has the potential for opportunity but HOW CAN WE CASH IN on that opportunity?

First, we need to identify, break down, and isolate known facts:

• Replacing this building, the construction costs, land, and other costs could easily exceed $15M.
• Filling this building with a USER tenant could generate a very profitable return based upon the acquisition price of $750,000.
• Identifying a USER for a 250,000 manufacturing building could be accomplished by locating a manufacturing company:
  1. planning to EXPAND into the area.
  2. trying to secure a specific GEOGRAPHIC LOCATION that encourages the right start-up benefits, (i.e.,employee base, tax incentives, transportation hubs, etc.)
  3. that can be ACQUIRED AND MOVED to this location.
• Connecting with a NEW START-UP company that is looking for a financially favorable site location.

There are numerous solutions but HOW do we find the TALENT to help us ACT on these ideas?

Many negative economic conditions are working against our field today. We have to go to great lengths to be optimistic enough to find the silver lining. These times bring us one opportunity that isn’t nearly as available in the good times … that opportunity is TALENT! We have never in our history had the opportunity to obtain people with high grade TALENT like we do today. Furthermore, the compensation is at a fraction of the cost that it would have been a couple of years ago.

I don’t have to look too far back to a time when our small town newspaper in Bozeman, Montana had several pages of “Help Wanted” ads begging for employees. Perhaps you can recall this same scenario in your areas. Today some of the smartest and most creative people in our nation will work for you at a fraction of what they would have asked a couple of years ago. In this era of the high-speed World Wide Web, geographic location has little to do with the availability of an employee.

Who would possess the right talent to help us to identify the means to exercise an opportunity that I have outlined above, or any other opportunity for that matter?

Perhaps we could start by talking to an employment headhunter who is trying to place a top leasing agent. We all know that some of the best leasing agents in the country were paid on a combination of salary plus commission. I would bet that some of these agents would now be anxious to be a partner in a Joint Venture to locate a tenant and participate in the project. This may have not been a practice in the past.

What about talking to a few business brokers who are involved in a manufacturing company that could be relocated from its present site and is currently paying $2M in annual lease payments? Would this owner be interested in reducing his rent by $1M annually?

Capitalize on the past experience of others. One of my most beneficial experiences was meeting a former political staff member. Two years ago, his annual base income was nearly $100K but when the administration changed, President Obama appointed a replacement and suddenly, the staff member no longer had a job. As we began to visit, I realized that he was a fount of knowledge about economic development. In particular, his knowledge of incentives that our cities, counties, and states offer to emerging businesses was an untapped resource.

Economic development directors from similar cities or surrounding neighborhoods might prove to be an unturned stone yielding very beneficial suggestions and contacts. What about past employees? We all know that a CEO’s administrative assistant retains astonishing resources that pass from one employment position to the next.

What about a venture capitalist who lost his financial strength through the recent plunge in the markets? Many might know of a company that is in the market to raise funds. If they could relocate to a property that would substantially reduce their rent, the business would suddenly become profitable without other significant changes to their operations.

Is technology being fully utilized? Although you may not know anything about social networking and how it could help you find the company that wants to relocate, there are talented people out there who you can hire who are talented at accessing information via the internet.

Many of our S.E.C. spouses, children, or other family members, and business associates specialize in some of the fields that I’ve mentioned above. MINE YOUR RESOURCES!

By bringing value to distressed real estate of all kinds, the right talent could be very profitable. People continue to make our world go around. That is what the S.E.C. has always taught us. Now, more than ever, we have available TALENT.

Think about it! It’s people!