How to win in 2010

December 30th, 2009 by John Combs

This time of year we can choose to either look back or look ahead. Based on some of the Year in Reviews I’ve read already, I advise looking ahead. While the overall economy does seem to be rebounding, the best advice is to take matters into your own hands. Choose the best path for your business in 2010. Choose to win.

I’ve compiled a few strategies to consider if you’re looking to gain more value from your real estate and better position your properties for 2010. To be honest, some of these recommendations for winning in 2010 are actions you should have considered in 2009. Don’t put off the resolutions that could help your bottom line. While they won’t help your waistline (depending what your personal New Year’s resolutions may be), they are worthwhile if you want to win in 2010.

Stay close to your tenants. According to Kingsley Associates, an industry research firm that conducts tenant surveys, almost 20 percent of tenants never interact with their property managers. Connecting with your tenant can bring about higher levels of tenant satisfaction, which also promotes better retention. Conversely you can also better observe how their underlying business is doing. Don’t let a tenant get too far behind. Look for signs of decline. The earlier you can identify a potential problem, the faster you can correct the problem and safeguard your revenue. What are signs that a tenant may be in trouble? More empty offices or cubicles. Empty parking spaces. Unreturned phone calls. Bounced checks and repeat late rent payments. If you can, blend and extend terms if you believe the tenant’s business is viable.

Rebid and re-negotiate contract services for properties paying particular attention to the scope of services. To preserve revenue, many owners and managers are cutting back on 24/7 guard service or modifying cleaning specifications to reduce operating costs. Try to adjust the scope of work without compromising service quality. Some of the ideas noted by Patricia M. Areno, CAE, Senior Vice President, BOMA International on the BOMA website include: adjusting the frequency for window washing or for sweeping and mopping stairwells, taking advantage of economies of scale by using the same vendor for multiple properties, and evaluating service levels to be sure you are getting all the services in your contract agreement.

Keep the vacancies in move in condition. If you are in a building that is 15 years or older, make sure the entry, common area and suites show well. This is not the time to let it be. If you have empty space, be proactive. Your buildings need to look great and you need to work more with the brokerage community. Schedule open houses or, if you can, offer incentives. Think about what you can do for potential tenants. Provide free rent periods and other incentives.

Review tax bills and appeal valuations The valuations show how much a property is worth based on calculations by the Assessor’s Office. While notices should reflect current market data, property valuation can be a complicated and lengthy process that, despite an ever-changing market, has to refer to a fixed period. The valuation appeals process can be simple and beneficial to a property owner if there is evidence of a different lower value for the property.

Continue your commitment to reduce utility costs. According to California’s Flex Your Power program, energy represents as much as 30 percent of a building’s operating costs. Undertaking energy efficiency measures can reduce energy consumption – and thus, utility bills – by 30 percent or more. These savings directly benefit the bottom line. A 30 percent reduction in energy consumption can lower operating costs by $25,000 per year for every 50,000 square feet of office space. The best part is that these improvements to energy efficiency are often attained through no-cost or low-cost projects that also enhance the indoor environment of commercial office buildings. Consider these ideas: Turn off copiers and other office equipment at night to save energy and money. Conduct periodic night tours to identify equipment that’s left running in your buildings and tenant suites. Keep the commitment to “green” your buildings. Implementing energy saving and sustainable practices has been shown to increase tenant satisfaction and property values.

Thank you for your interest and commitment to this blog. 2010 is bound to be another challenging year and I look forward to commenting on it for the real estate community.

The State of California Real Estate

Southern California has had its great share of real estate struggles since 2007, and the economic recession of 2008 only made it worse. However, over the past few months, a stabilizing real estate market has offered optimistic views of the future of the Southern California real estate market. Home sales are beginning to rise and the drop in median prices have slowed, giving real estate experts the impression that the real estate market has hit bottom and is poised for a rebound. However, many still feel that the economic stability of the state of California and the concern for job security still pose as major obstacles to the successful recovery of the Southern California real estate market.

According to DQNews.com, many cities, including Santa Barbara, are beginning to post increases in home sales and slower declines in the median price of home sales. In fact, October experienced the smallest decline in median home prices since 2007, primarily due to a smaller inventory of foreclosed and distressed properties on the market. The median price for a home in Southern California was $280,000, up 1.8 percent from the previous month but down 6.7 percent from the previous year. Some regions near Santa Barbara are even beginning to experience year over year gains in the overall median home price. In October of 2009, about 22,000 new and resale houses and condos were sold in Southern California, which was a 2.8 percent increase from the previous month and also a 2.8 percent increase form the previous year. October also marked the 16th consecutive month ending in a year over year gain in home sales. Experts also believe that the federal tax credit for first time home buyers has also been a major factor in the increase in home sales, as well as affordable mortgage rates and home prices.

The Pacific Coast Business Times also reports that real estate experts forecast that the Santa Barbara real estate market will rebound in the coming months as signs show that the market has already hit bottom. Declining foreclosure rates will play a major role in the improvement of median home prices. However, experts still believe that the commercial real estate market has a longer way to come, given that the market is still struggling with a 13.3 percent vacancy rate and virtually nonexistent construction activity.

Taxes, Taxes and more Taxes!!!!!

URGENT! CONTACT YOUR CONGRESSMAN TO AVOID COMMERCIAL REAL ESTATE TAX HIKES

December 9, 2009 on 10:50 am

Action to Oppose More Than Doubling of Taxes on Real Estate Carried Interests

Edited by Jodi Summers

In early December, Congressman Charles Rangel Ways, chairman of the Ways and Means Committee of the House of Representatives, introduced the “Tax Extenders Act of 2009″ (H.R. 4213). Wrapped in this legislation package is a proposal that would more than double the taxes on carried interest received by general partners in real estate partnerships. Under this legislation, carried interest would no longer be taxed as capital gains at 15 percent, but as ordinary income at rates as high as almost 35 percent…making everyone’s investment real estate holdings a lot less sexy.

Kick us while we’re down. Those investing in commercial real estate are already feeling economic distress because of the decline of property values and the lack of loans available. The proposed legislation would more than double the taxes imposed on many real estate entrepreneurs.

If H.R. 4123 enacted into law, this proposal could be the largest modification to the taxation of real estate since the Tax Reform Act of 1986.

This bill was past stealthfully, proposed on December 7th, it bypassed the customary legislative process, bypassing the House Ways and Means Committee, and going directly to the House floor for a vote on December 9, reducing meaningful opportunities to amend the bill.

Safeguard your real estate assets; communicate with your Congressional Representatives and Senators! Let them know that this tax increase on carried interest will further damage the commercial real estate industry and undermine efforts in their own communities to spur job growth and economic recovery.

http://www.capwiz.com/naiop/issues/alert/?alertid=14439831&type=CO has letters ready to go to your congressmen.

Save your assets and contact them!

Key Professional to Make Use of When Buying Real Estate

01.12.2009 | Author: Chris Channing

A small ring of professionals is necessary when buying your first home. Such professionals all work together to make your buying process to be a smooth, fast, and safe one. If you are buying your home for the first time, it’s important to take advantage of each professional to avoid hardship.

The first professional that comes to mind is the real estate broker- who is going to help you find the actual real estate you wish to buy. Although some argue that brokers aren’t completely necessary, for the average first time home buyer working a full time job, it would be too much work otherwise. Real estate brokers also have key contacts in the industry to aid you in other aspects of home buying.

Getting approved for a mortgage loan is the logical next step. A lender will take the time to comb over your financial history and ability to pay a mortgage loan. If approved, the lender will proceed to set a payment plan that corresponds to your budget. Sometimes getting approved is tricky- and it might take months to fix a credit rating.

An appraisal is in order for a home you aren’t sure is priced right or not. The appraiser can be of great help in formulating a good offer for the real estate in question. A good real estate broker should be able to give a ball park estimate of what the home is worth according to current market conditions. Real estate brokers can also sometimes act as an inspection agent for the home.

Saving money after buying the home because priority in order to keep bills paid. Applying and qualifying for a tax credit can lessen the burden of bills for up to $8,000 for qualified home buyers. There are several tax credits to take advantage of, so if you can’t qualify for one, talk to an accountant for more ideas on saving money via tax credits.

Lastly, obtain insurance on the property once it is received in your name. Lenders will automatically demand that you do this in order to protect their investment, but it doesn’t hurt to look around before the purchase so you know which insurance agency has the best deal. Become educated on what the policy does or doesn’t cover, and do consider getting a more expensive policy to cover your home from acts of nature such as a tornado or hurricane.

Your team of professionals that you choose will cost a pretty penny- but it’s a sum well spent. Buying real estate is much easier with the help of others on your side to find the deals, close them, finance and then insure them so that your future with your home will be long lasting.