The Advantages and Disadvantages of Buying Land As an Investment

Immobilie bewerten, Immobilie Wert, Immobilienrechner, Verkaufsrechner, Immobilienwertermittlung Tel: 06227-399170 Handy: 0176-2116-9990 eMail: info@heidelbergerwohnen.de Internet: www.heidelbergerwohnen.de

Some say that land is the greatest investment that a person can make. Every year, more people are saving up, or applying for a loan to buy some land. Some people buy it because they do not have a roof over their head, while others buy land as an investment for the future. While buying land is highly lucrative, there are some advantages as well as disadvantages of buy real estate as an investment, and here are some of them.

Buying land is advantageous because it is one of the few assets that see such an exponential rise in value over years. Land is almost immortal, and therefore is one of the few assets that are handed down from generations to generations. In fact unless there is some great natural calamity, the owner of the land will always have remuneration, even if their land is destroyed. Along with gold, land becomes the most expensive, valuable asset with the longest life possible.

Another advantage of buying land as an investment is the exponential increase in the price of the land. Every year, real estate prices see a price correction that drastically changes the prices per square feet. This amount is arguably more than any amount of interest that a bank would provide, or the returns on any small scale business that you have invested in.

Buying real estate as investment is also the safest, because this is one resource that will always be required and never go out of fashion. In fact, some financial mavens consider real estate to be a much worthy asset as compared to gold, because of the ready usage that one can find for real estate. Whatever be the financial condition of the country or the person, they will always need land to live and to conduct business.

In the same vein, owning real estate has some disadvantages too. The first disadvantage is that though the price rises quite well, one will always be in a loss making deal when they are selling their real estate, because they could have made a better amount next year, or even six months down the line.

Another disadvantage is that the cost of real estate owned by a person may suddenly decrease due to factors that they have no control on. For example, sometimes the cost may decrease because the land becomes landlocked and nobody can access it via road, air or sea. In other instances, the land might become cheap because the Government has not provided the right kind of amenities and services, thereby decreasing the habitability of the place.

Yet another disadvantage is the cost of the real estate. The cost is so high that people have little assets left to experiment with, thereby forcing them to put all their eggs in a single basket.

Because of these disadvantages, it becomes necessary for a person to research the area well before they finally sign up on the dotted line.

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Source by Keshawn Vaughn

Walgreens, CVS, and Rite Aid – What RE Investors Should Know

Immobilie bewerten, Immobilie Wert, Immobilienrechner, Verkaufsrechner, Immobilienwertermittlung Tel: 06227-399170 Handy: 0176-2116-9990 eMail: info@heidelbergerwohnen.de Internet: www.heidelbergerwohnen.de

There are 3 major drugstore chains in the US: Walgreens, CVS, and Rite Aid. Below are some key statistics about the 3 major drugstore chains as of 2012:

1. Walgreens ranks first with market cap of $28.51 Billion, $72.2 Billion in 2011 total revenue ($45.1B from prescription revenues), and an S&P rating of A. According to Walgreens, 75% of the US population lives within 3 miles from its stores. In April 2010, it acquired 258 Duane Reade drug stores in New York Metropolitan area which brings a total of 7841 drug stores Walgreens operates as of February 2012, including 137 hospital on-site pharmacies.

2. CVS ranks second with market cap of $56.56 Billion, $107.1 Billion in revenue ($40.5 Billion from CVS prescription revenues and $16.1B from its Caremark prescription mail order revenue), and an S&P rating of BBB+. As of December 31, 2011, CVS operates 7404 drug stores.

3. Rite Aid ranks third (fourth, behind Walmart in terms of prescription revenues) with market cap of $1.49 Billion, $26.1 Billion in revenue ($17.1B from prescription revenues), operates 4714 drug stores as of February 2011 and has an S&P rating of B-.

Investors purchase properties occupied by these drugstore chains for the following reasons:

1. The drugstore business is very recession-insensitive. People need medicine when they are sick, regardless of the state of the economy. Both rich and poor people in the US have access to medicine. Some even argue that low-income people use more medicine due to free or low-cost drugs offered by government-assisted programs. So the tenants should do well during tough time and have money to pay rent to landlords.

2. The drugstore business has a good prospect in the US:

· People are living longer and need more medicine to sustain longevity, e.g. Actonel for osteoporosis, Aricept for Alzheimer’s symptoms. Older people tend to use more medicine than younger ones as they often have more medical problems. As the 78 million baby boomers are getting closer to retiring age starting from 2008, the drugstore chains anticipate the demand for medicine to increase in next 20 years.

· The drug market continues to expand as the US population continues to grow. More and more Americans suffer from various diseases. The number of Americans suffers from seasonal allergies doubled in the last 15 years to 37 million people per Fortune magazine. They spent $5.4 Billion in 2009 for allergy drugs. As their waist lines balloon (75% of Americans are forecasted to be either overweight or obese by 2020), more Americans are diagnosed with diabetes, along with high cholesterol at younger and younger ages. In addition, doctors also recommend treating various diseases sooner than later due to better understanding about the diseases. For example, doctors now prescribe antiretroviral drugs for patients soon after infected with HIV virus instead of waiting for the infection to become AIDS. More doctors combine insulin with oral medicines to treat type-2 Diabetes instead of just oral medicines alone. All these factors increase the size of the drug market.

· Advance in genetic engineering has introduced various new genetic DNA testing kits which allow the genetic diagnosis of vulnerabilities to inherited diseases and disorders. Genetic testing is currently the highest growth segment in the diagnostics industry. Some of these genetic tests will probably transform into direct-to-consumer testing kits available in drug stores in the near future.Upon FDA approval, these new products will potentially bring in additional revenue for drug stores.

· Using a new method of tailoring molecules called structure-based design; drug companies come up with new medicines that they might not have discovered otherwise, e.g. Xalkori by Pfizer to treat lung cancer.

· The passage of Health Care Reform Bill on March 23, 2010 provides insurance coverage to an estimated 33 million more American. This is a great present to the drugstore industry.

· There are new drugs to treat previously untreatable illnesses, and new diseases, e.g. Viagra for men’s unhappiness, Avastin for colon cancer, Herceptin for breast cancer,. The new medicines are very expensive, e.g. a year’s supply of Avastin costs about $55,000. Eli Lilly has sold about $4.8 billion of Zyprexa in 2007 for schizophrenia and yet most people have never heard of this medicine.

· There are existing drugs now approved to treat new illnesses and thus increase their sales revenue. For example, Lyrica was originally intended to treat pain caused by nerve damagein people with diabetes. It is now approved by FDA to treat Fibromyalgia which affects 5.8 million Americans per WebMD.

· Big advances in genetics, biology and stem cells research are expected to produce a new class of drugs to treat diabetes, Parkinson’s and various rare genetic disorders. For example the new drug Ilaris from Novartis targets genetic causes of an inherited disorder that there are only 7000 known cases worldwide. However, Novartis hopes to gradually broaden its drugs to a blockbuster drug to more common disorders caused by similar genetics.

· Technology and modern life introduce and require new products, e.g. pregnancy test kits, Lamisil for stronger clearer toe nails, Latisse for longer & thicker eyelashes, Propecia for male hair loss, Premarin for menopausal symptoms, diabetic monitors, electronic toothbrushes, contact lenses, lenses cleaners, diet pills, vitamins, birth-control pills, IUDs, nutrition supplements and Cholesterol-lowering pills (Americans spent nearly $26B in 2006 on Cholesterol medications alone per IMS Health, a Connecticut-based consulting company that monitors pharmaceutical sales.)

· Before the customers can get to the medicine aisles or pharmacy counters, they have to pass by chocolates, sodas, digital cameras, watches, toys, dolls, beers and wines, cosmetics, video games, flowers, fragrances, and greeting cards. Drug stores hope you use the one-hour photos services there. The stores also carry seasonal items, e.g. Halloween costumes, and „As Seen on TV“ merchandise, e.g. Shamwow. As a result, customers buy more than their prescriptions and medicine in these drugstores. CVS reported that non-pharmacy sales represented 30% of the company’s total sales in January of 2007. The figure for Walgreens is 34% and 37% for Rite Aid. Many pharmacy locations are in effect convenience stores especially ones that are in residential or rural areas. And so Walgreens hopes that customers also pick up WD-40, and screwdrivers at its stores instead of at Home Depot; Thai Jasmine rice, and fish sauce to avoid a trip to Safeway or Kroger Supermarkets. During the recession, sales of these non-drug items are down as customers buy what they need and not what they want. Walgreens tries to reduce the number of items by 4000. It also introduces its own private label which has higher profit margins.

· There are more and more generic medications on the market as a number of enormously popular brand-name blockbusters lose their 20-year long patents, e.g. Lipitor (best selling drug in the world to lower cholesterol) in 2010, Viagra (you know what it’s for) in 2012. Drugstores prefer to sell generic drugs to customers due to higher profit margins than the brand-name medications.

· Many people are addicted to pain killers, e.g. Hydrocodone/Oxycodone. Per the DEA in 2012, there are 1.5 million American addicted to cocaine but 7 million addicted to prescription drugs.

· This author estimates that at least 10% of the dispensed prescription drugs are not used at all and sit idle in the medicine cabinets. They are eventually expired and thrown away.

3. These companies sign very long-term NNN leases, guaranteed by their corporate assets. This makes the investment in the underlying property fairly low risk, especially for Walgreens with a S&P „A“ rating. In fact, these properties are sometimes referred to as investment-grade properties. Once the drugstore chains sign the lease, they pay the rent promptly and timely. This author is not aware of any properties leased by one of these drugstore chains in which the tenants failed to pay rents. Even when the stores are closed due to weak sales (Walgreens closed 119 stores in 2007), these companies may sublease the properties to other companies, e.g. Advance Auto Parts and continue to pay rents on the master leases.

· A typical Walgreens lease consists of 20-25 year primary term plus 8-10 five-year options. During primary term and options, there will be no rent increases in most of the leases. This is the main disadvantage of investing in Walgreens drugstores.

· A typical CVS lease consists of 20-25 year primary term plus 4-5 five-year options. The rent is normally flat during the primary term and then there is a 2.5%-10% rent increase in each 5-year option.

· A typical Rite Aid lease consists of 20-25 year primary term plus 4-8 five-year options. The lease often has a rent increase every 5-10 years.

Investment Risks

Although the pharmacy business in general is recession-insensitive, there are risks involved in your investment:

1) The main downside about investing in pharmacies is there is little or no rent bump for a long time, e.g. 20-50 years, especially for Walgreens. So the rent is effectively reduced after inflation is factored in. This is one of the main reasons these properties do not appeal to younger investors, especially when the cap rate is low.

2) The 3 drugstore chains now have a new formidable competitor, Walmart. Walmart sells prescription drugs in more than 4000 Walmart, Sam’s Club and Neighborhood Market stores in 49 states. As of 2012, Walmart is the third largest drug retailer with $17.4B in prescription sales, just ahead of Rite Aid with $17.1B in prescription sales. The retail giant is known for launching in 2006 a highly-publicized $4 generic prescription drug program which now sells 350 generic medications for a 30-day supply. The actual number of medications is less as the medications with different strengths are counted as different medications. For example, Metformin 500 mg, 850 mg, and 1000 mg are counted as 3 medications. Walmart probably makes very little profits on these medications if any. However, the marketing campaign–created by Bill Simon, the President and CEO of Walmart US, generates a lot of publicity for Walmart. Walmart hopes to draw customers to its stores with other prescriptions where it has higher profit margins. In an unscientific survey with just one brand-name prescription of Lyrica, this author finds the lowest price at Costco, the highest price at Walgreens and Walmart at the middle. Other drug chains try to counter Walmart in different ways. Target now offers the same 350 generic medications for $4 for a 30-day supply. Walgreens has a Prescription drugs club with membership fee which offers 1400 generic medications for as little as $1/week. CVS says it will match any offers from its competitors.

3) Chief Business Correspondent Rick Newman from US World & News Report predicted that Rite Aid might not survive in 2009. Rite Aid is still around in 2012. The prediction seems to go away in 2012 as Rite Aid as it was able to refinance the long terms debts and sales revenue has increased.

4) Drugs are also sold in thousands of supermarkets, Target stores, and Costco warehouses. However, there are no drive-through windows at these stores or Walmart to conveniently drop off the prescriptions and pick up medicines. Customers will not be able to pick up their prescriptions during lunch hour or after 7PM at Target stores or supermarkets. They need to have membership to buy medicines at Costco. Others may not fill their prescriptions at Walmart because they don’t want to mingle with typical Walmart customers who are in lower income brackets. And some baby boomers don’t want their prescriptions filled at Target or Walmart because there are no comfortable chairs for them to sit down and wait for their medicines.

5) Drugs retail business to some degree is controlled by the Pharmacy Benefits Managers (PBMs). Customers normally get prescription coverage from their health insurance companies, e.g. Blue Cross. These PBM manage prescription benefits on behalf of the insurance companies. In 2012 Walgreens lost a contract valued at over $5 Billion with Express Scripts, a major PBM. Walgreen revenue was immediately fallen in the first quarter of 2012 as Express Scripts customers cannot fill their prescriptions at Walgreens. The PBMs are also in the drugs retail business via mail orders which do not require leasing expensive retail spaces. The prescription mail orders currently capture over 20% market share of the total prescription revenue. Should customers change their prescription purchase habits to mail orders (there is no such evidence in 2012), it could have negative impact to the business of drugstore chains.

6) Many leases in areas with hurricanes and tornadoes are NNN leases with the exception of roof and structure. So if the roof is damaged, you will have to pay for the expenses.

7) The tenant may move to a new location down the road or across the street when the lease expires. This risk is high when the property is located in small town where there is low barrier for entry, i.e. lots of vacant & developable land.

8) The tenant may ask for rent concession to improve its bottom line during tough times. The possibility is higher if the tenant is Rite Aid and if the store has low sales revenue and/or higher than market rent.

9) More Americans are walking away from their prescriptions, especially the most expensive brand-name medicines. This may have negative impact on the sales revenue and profits of drug stores and consequently may cause drug store closures. According to Wolters Kluwer Pharma Solution, a health-care data company, nearly 1 in 10 new prescriptions for brand-name drugs were abandoned by people with commercial health plans in 2010. This is up 88% compared to 4 years ago just before the recession began. This trend is driven in part by higher and higher co-pays for brand name drugs as employers are shifting more insurance costs to their employees.

Among 3 drugstore chains, Walgreens and CVS pharmacies in general have the best locations-at major intersections while Rite Aid has less than premium locations. Walgreens tends to hire only the top graduates from pharmacy schools while Rite Aid settles with bottom graduates to save costs. When possible, all drugstore chains try to fill the prescriptions with generic medications which have higher profit margins.

1) Walgreens: the company was founded in 1901 by Charles Walgreen, Sr. in Chicago. While the company has existed for more than 100 years, most stores are only 5-10 years old. This is the best managed company among the three drugstore chains and also among the most admired public companies in the US. The company has been run by executives with proven track records and hires the top graduates from universities. Due to its superior financial strength–S&P A rating– and premium irreplaceable locations, properties with leases from Walgreens get the highest price per square foot and/or the lowest cap rate among the 3 drugstore chains. In addition, Walgreens gets flat rent or very low rent increases for 20 to 60 years. The cap rate is often in the low 5% to 6.5% range in 2012. Investors who buy Walgreens tend to be more mature, i.e. closer to retirement age. They are looking for a safe investment where it’s more important to get the rent check than to get appreciation. They often compare the returns on their Walgreens investment with the lower returns from US treasury bonds or Certificate of Deposits from banks. Walgreens opened many new stores in 2008 and 2009 and thus you see many new Walgreens stores for sale. It will slow down this expansion in 2010 and beyond and focus on renovation of existing stores instead.

2) CVS Pharmacy: CVS Corporation was founded in 1963 in Lowell, MA by Stanley Goldstein, Sidney Goldstein, and Ralph Hoagland. The name CVS stands for „Consumer Value Stores“. As of 2009, CVS has about 6300 stores in the US, mostly through acquisitions. In 2004, CVS bought 1,200 Eckerd Drugstores mostly in Texas and Florida. In 2006, CVS bought 700 Savon and Osco drugstores mostly in Southern California. And in 2008 CVS acquired 521 Longs Drugs stores in California, Hawaii, Nevada and Arizona for $2.9B dollars. The acquisition of Long Drugs appears to be a good one as it CVS did not have any stores in Northern CA and Arizona. Besides, the price also included real estate. It is also bought Caremark, one of the largest PBMs and changed the corporation name to CVS Caremark. When CVS bought 1,200 Eckerd stores, it formed a single-entity LLC (Limited Liability Company) to own each Eckerd store. Each LLC signs the lease with the property owner. In the event of a default, the owner can only legally go after the assets of the LLC and not from any other CVS-owned assets. Although the owner loses the guaranty security from CVS corporate assets, this author is not aware of any incident where CVS closes a store and does not pay rent.

3) Rite-Aid: Rite Aid was founded by Alex Grass (he just passed away on Aug 27, 2009 at the age of 82) and opened its first store in 1962 as „Thrif D Discount Center“ in Scranton, Pennsylvania. It officially incorporated as Rite Aid Corporation and went public in 1968. By the time Alex Grassstepped down as the company’s chairman and chief executive officer in 1995, Rite Aid was the nation’s largest drugstore chain in terms of total stores and No. 2 in terms of revenue. His son, Martin Grass, took over but was ousted in 1999 for overstatement of Rite Aid’s earnings in the late 1990s. Rite Aid is now the weakest financially among the 3 drugstore chains. In 2007, Rite-Aid acquired about 1,850 Brooks and Eckerd drugstores, mostly along the East coast to catch up with Walgreens and CVS. In the process, it added a huge long term debt and is the most leveraged drugstore chain based on its market value. The integration of Brooks and Eckerd did not seem to go well. Revenue from some of these stores went down as much as 20% after they change the sign to Rite Aid. In 2009, Rite-Aid had over 4900 stores and over $26 Billion in revenues. The figures went down in 2010 to 4780 stores and $25.53 billion in revenue. On January 21, 2009 Moody’s Investor Services downgraded Rite Aid from „Caa1“ to „Caa2“, eight notches below investment grade. Both ratings are „junk“ which indicate very high credit risk. Rite Aid contacted a number of its landlords in 2009 trying to get rent concession to improve the bottom line. In June 2009, Rite Aid successfully completed refinancing $1.9 Billion of its debts. In 2012, Rite Aid benefits from Walgreens contract problem with Express Scripts. Same store sales increased 2.2%, 3.2%, and 3.6% for January, February and March of 2012, respectively. Rite Aid is still losing money in fiscal year 2012 which ended in March 3, 2012. However, it is losing less, $0.43 per share in 2012 versus $0.64 per share in fiscal year 2011. The company expects better outlook in fiscal year 2013.

Things to consider when invested in a pharmacy

If you are interested in investing in a property leased by drugstore chains, here are a few things to consider:

1. If you want a low risk investment, go with Walgreens. In stable or growing areas, the degree of safety is the same whether the property is in California where you get a 5.5% cap or Texas where you may get a 6.5% cap. So, there is no significant advantage to invest in properties in California as the property value is based primarily on the cap rate. In 2012, the offered cap rate for Walgreens seems to come down from 7.5%-8.4% in 2009 to 5.5%-6.5% for new stores.

2. If you are willing to take more risk, then go with Rite-Aid. Some properties outside of California may offer up to 9% cap rate in 2012. However, among the 3 drug chains, Rite Aid has 10.5% chance of going under in 2010. Should it declare bankruptcy, Rite Aid has the option to pick and choose which locations to keep open and which locations to terminate the lease. To minimize the risk that the store is shuttered, choose a location with strong sales and low rent to revenue ratio.

3. Financing should be an important consideration. While the cap rate is lower for Walgreens than Rite Aid, you will be able to get the best rates and terms for Walgreens.

4. If you are not a conservative investor or risk taker, you may want to consider a CVS pharmacy. It has BBB+ S&P credit rating. Its cap rate is higher than Walgreens but lower than Rite Aid. Some leases may offer better rent bumps. On the other hand, some CVS leases, especially for properties in hurricane areas, e.g. Florida are not truly NNN leases where landlords are responsible for the roof and structure. So make sure you adjust the cap rate down accordingly. Some of the CVS locations have onsite Minuteclinic staffed by registered nurses. Since this clinic idea was introduced recently, it’s not clear having a clinic inside CVS is a plus or minus to the bottom line of the store.

5. All 3 drugstore chains have similar requirements. They all want highly visible, standalone, rectangular property around 10,000 – 14,500 SF on a 1.5 – 2 acre lot, preferably at a corner with about 75 – 80 parking spaces in a growing and high traffic location. They all require the property to have a drive-through. Hence, you should avoid purchasing an inline property, i.e. not standalone and property with no drive-through windows. There is a chance that these drugstores may not want to renew the lease unless the property is located in a densely-populated area with no vacant land nearby. In addition, if you acquire a property that does not meet the new requirements, for example a drive-through, you may have a problem getting financing as lenders are aware of these requirements.

6. If the pharmacy is opened 24 hours a day, it is in a better location. Drugstore chains do not open the store 24 hours day unless the location draws customers.

7. Many properties may have a percentage lease, i.e. the landlord can get additional rent when the store’s annual revenue exceeds a certain figure, e.g. $5M. However, the revenue used to compute percentage rent often excludes a page-long list of items, e.g. wine and sodas, tobacco products, items sold after 10 PM, drugs paid by governmental programs. The excluded sales revenue could account for as much as 70% of store’s gross revenue. As a result, this author has seen only 2 stores in which the landlord is able to collect additional percentage rent. The store with a percentage rent is required to report its annual sales to the landlord. As an investors, you want to invest in a store with strong gross sales, e.g. over $500 per square foot a year. In addition, you also want to check the rent to revenue ratio. If the figure is in the 2-4% range, the store is likely to be very profitable so the chance the store is shut down is low.

8. It does not matter how good the tenants are, avoid investing in declining, e.g. Detroit and/or low-income areas or small towns with less than 30,000 residents within 5 miles ring. In a small town, it may be the only drug store in town and captures most of the market share. However, if a competitor opens a new location in the area, revenue may be severely affected. In addition, the tenant can always moves to a new location down the road when the lease expires since there is low barrier to entry in a small town. These properties are easy to buy now and hard to sell later. When the credit market is tight, you may have problems finding a lender to finance these properties.

9. Many properties have an existing loan that the buyer must assume. If you have a 1031 exchange, think twice about buying this property. You should clearly understand loan assumption requirements of the lenders before moving forward. Should you fail to assume the existing loan (assuming an existing loan is a lot more difficult than getting a new loan), you may run out of time for a 1031 exchange and may be liable to pay capital gain.

10. With few exceptions, drugstore chains do not own the stores they occupy for several reasons. Here are just a couple of them:

– They know the pharmacy business but don’t know real estate. Stock investors also don’t want Walgreens to become a real estate investment company.

– Owning the real estate will require them to carry lots of long term debts which is not a brilliant idea for a publicly-traded company.

11. About 10% of the drugstore properties for sale and typically CVS pharmacies require very small amount of equity to acquire, e.g. 10% of the purchase price. However, you are required to assume an existing fully-amortized loan with zero cash flow. That is, all of the rent paid by the tenant must be used to pay down the loan. The cap rate may be in the 7-9% range, and the interest rate on the loan could be attractive in the 5.5% to 6% range. Hence, the investor pays off the loan in 10 to 20 years. However, you have no positive cash flow. This requires you to come up with outside cash to pay income tax on the rental profits (the difference between the rent and mortgage interest). The longer you own the property, the more outside cash you will need to pay income taxes as the mortgage interest will get less and less toward the end. So who would buy this kind of property?

– The investors who have substantial losses from other investment properties. By acquiring this zero cash flow property, they may offset the income from the drugstore tenant against the losses from other investment properties. For example, a property has $105,000 of rental profits a year, and the investor also has losses of $100,000 from other properties. As a result, the combined taxable profits are only $5,000.

– The uninformed investors who fail to consider that they have to raise additional cash to pay income taxes.

Out of the Box Thinking

If you put too much weight on the S&P rating of the tenants, you may end up either taking a lot of risks or passing up good opportunities.

  1. A Good location should be the key in your decision on which drug store to invest in. It’s often said a lousy business should do well at a great location while the best tenant will fail at a lousy location. A Walgreens store that is closed down later on (yes, Walgreens closed 119 stores in 2007) is still a bad investment even though Walgreens continues paying rent on time. So you don’t want to blindly invest in a drug store simply because it has a Walgreens sign on the building.
  2. No company is crazy enough to close a profitable location. It does not take rocket science to understand that a financially-weak company like Rite Aid will make every effort to keep a profitable location open. On the other hand, a financially-strong Walgreens will need justifications to keep an unprofitable location open. So how do you determine if a drug store location is profitable or not if the tenant is not required to disclose its profit & loss statement? The answer is you cannot. However, you can make an educated guess based on the store’s annual gross revenue which is often reported to the landlord as required by the percentage clause in the lease. With the gross revenue, you can determine the rent to income ratio. The lower the ratio, the more likely the store is profitable. For example, if the annual base rent is $250,000 while the store’s gross revenue is $5M then the rent to income ratio is 5%. As a rule of thumb, it’s hard to make a profit if this ratio is more than 8%. So if you see a Rite Aid with 3% rent to income ratio then you know it’s likely a very profitable location. In the event Rite Aid declares bankruptcy, it will keep this location open and continue paying rent. If you see a Rite Aid drug store with 3% rent to income ratio offering 10% cap, chances are it’s a low risk investment with good returns and the tenant will most likely to renew the lease. The weakness of corporate guaranty from Rite Aid is probably not as critical and the risk of having Rite Aid as a tenant is not really that significant.
  3. Drug stores with new 25 years leases tend to sell at lower cap, e.g. 6-7% cap on new stores versus 8.0-8.5% cap on established locations with 5-10 years remaining on the lease. This is because investors are afraid that the tenants may not renew the leases. Unfortunately, lenders also have the same fear! As a result, many lenders will not finance drug stores with 2-3 years left on the leases. The fact that drugstores with new leases have a premium on the price means they have potential of 20% depreciation (buying new at 6% cap and selling at 7.5% cap when the leases have 8 year left). Some investors will not consider investing in drug stores with 5-10 years left on the lease. They might simply ignore the fact that the established stores may be at irreplaceable locations with very strong sales. Tenants simply have no other choices other than renewing the lease.

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Source by David V. Tran

Buying and Selling Mortgage Notes

Immobilie bewerten, Immobilie Wert, Immobilienrechner, Verkaufsrechner, Immobilienwertermittlung Tel: 06227-399170 Handy: 0176-2116-9990 eMail: info@heidelbergerwohnen.de Internet: www.heidelbergerwohnen.de

It might be common nowadays to see a sign that reads "mortgage notes for sale," but since this is about money and business, things could get tricky. Here is a guide meant to help each individual in choosing the right mortgage note and how to wisely purchase notes for sale.

A mortgage note is proof that there was a debt made for a piece of land or property. When a person puts his property for mortgage, it's like saying that if he is unable to pay, then the property will be the one to repay the fee or cost that the debtor was unable to pay for. Some people sell their mortgaged land or property and are called mortgage notes.

First, contact a mortgage broker. They can be found online, in newspaper ads, or in the local phone directory. It might also be helpful to ask friends and colleagues for referral as trust is already built in. The mortgage broker's job is somewhat like a matchmaker as his role is to find which note best suits the client.

It is good practice to carefully go through the mortgage note with the broker. Since it will come with some terms, it is best to ask the broker what they mean and how to go about the investment. The broker is supposed to discuss the investment opportunities and the rate of interest as a return on the investment. It would also be helpful to contact the bank or firm which processed the note for better understanding and practical advice.

When buying a mortgage note, a promissory note is required. This formalizes the agreement and makes it bound to legal terms, which is safer since the former owner will have to pay the new lender (the one buying the note) a certain amount of money. The promissory note should also include all the terms and agreements that are written on the note.

When buying these kind of notes, a third and unbiased party is usually involved and that person is in charge of creating an escrow account. A note broker or real estate broker is someone who is authorized to create an escrow account and manage the funds of the mortgage note.

Once bought, the buyer must deposit the funds into the escrow account and the person that's managing the account will be responsible for the disbursement of the money to the one who sold it.

The new owner of the mortgage note should then receive monthly payments as he now owns the property. Again, the money should be paid to the escrow account and in the same way, the manager of the account will be the one to disburse the funds.

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Source by Eliza Raven Diaz

How to Optimize Your Tenant Mix Analysis

Immobilie bewerten, Immobilie Wert, Immobilienrechner, Verkaufsrechner, Immobilienwertermittlung Tel: 06227-399170 Handy: 0176-2116-9990 eMail: info@heidelbergerwohnen.de Internet: www.heidelbergerwohnen.de

In a retail shopping center, a tenant mix analysis remains the most important part of property performance. When you get the tenant profiles and mix well balanced you can drive more sales to the property and strengthen the rental for the landlord. It is an 'equation' of property performance, and it should be respected.

In these times where retail shopping and shopping center performance is under some pressure, it is essential that you do a property business plan once per year and bring into that plan key elements of activity and planning. The parts of that plan should include:

  • Tenant mix analysis
  • Tenant mix strategy
  • Lease standards
  • Anchor tenants
  • Vacancy management plan
  • Vacancy marketing
  • Income and Expenditure analysis and benchmarks
  • Customer profiles
  • Sales records for tenant segments
  • Marketing strategies for the property
  • Landlord lifecycle plans
  • Tenant retention programs
  • Capital expenditure and refurbishment initiatives
  • Maintenance planning
  • Competitor analysis

So let's go back to the point of analizing the tenant mix. Here are some ideas to help you get started with that.

  1. What anchor tenants do you have in the property and how long do they have remaining in occupancy? If your anchor tenant is important to the property and the mix (that is likely to be the case), you will need a renewal or replacement program that is in place to resolve any vacancy threat.
  2. Specialty tenants should be well matched to the property and the shopper. The placement of specialty tenants should occur in 'clusters' that encourage sales and shopper attention. If a shopper purchases goods in one shop, the adjacent shops should be complementary to possibly extend the sale potential from each shopper purchase.
  3. Some of your tenants will be 'destination' in type. That means you will see people visit that shop regardless of its location. A post office is a good example. In a shopping center it is good to have a few of these destination tenants and spread them into locations where they benefit the overall tenant mix.
  4. Look at the 'permitted use' as detailed in each of the tenants leases. For example, and when it comes to food courts, it is important to ensure that the 'permitted uses' and 'exclusivities' noted in each lease are respected. One of the most common problems in a food court is the sale and providing of 'coffee'. If you have a major coffee shop retailer in the shopping center, you could be destroying its trade by allowing every other retailer to sell coffee. That is where a 'permitted use' strategy is useful.

Taking all of these issues, you can plan the tenant mix and tenant profile in the property. A successful retail property is all about strategy and planning. If you manage or lease a shopping center, it is your job to recognize that fact and implement the plan.

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Source by John Highman

List FSBO's With Real Estate Letters That Offer Good Advice

Immobilie bewerten, Immobilie Wert, Immobilienrechner, Verkaufsrechner, Immobilienwertermittlung Tel: 06227-399170 Handy: 0176-2116-9990 eMail: info@heidelbergerwohnen.de Internet: www.heidelbergerwohnen.de

Trying to list FSBO's? Here's what your marketing needs to stress.
You know why home sellers are trying to sell without your help. They think they're going to save a lot of money. And to be absolutely honest, those who know what they're doing, have nerves of steel, and who don't need to go to a job every day can come close to doing what you can do.

As for the rest of them … your marketing needs to gently point out that they simply don't know what they're getting into!

No, you can't say that. Making a would-be client look or feel foolish is definitely not the way to earn their business. So you need to be gentle in your presentation.

You need to offer some help in the form of tips, or perhaps clue them in about the various disclosure forms they'll need. You might offer some advice about how to steel themselves against the insults they'll hear as buyers try to push the price downward. (I used to laugh to myself about the comments buyers made to me. Sometimes I wanted to ask why they wanted to buy the house since they hated it so much.)

And of course, you need to remind them that buyers will try to point out that they're not paying a Realtor so naturally they can sell the house for less.

Before embarking on do-it-yourself home selling, homeowners should ask themselves:

• Do I know how to determine their home's value in today's market?
• Am willing to work with and pay a buyer's agent?
• Do I know how to market my home and get it in front of enough buyers?
• Can I deal in a civil manner with people who severely criticize my home?
• Am I willing to demand that buyers reveal their financial situation before I take my home off the market to negotiate with them?

You should touch on all these points when you're talking with FSBO sellers, and you can incorporate them into a special report or a series of real estate letters to mail to them. If you enjoy writing and have a few extra hours you can create letters that are uniquely yours.

If you don't enjoy writing or don't have extra hours, you can buy pre-written real estate letters and just get busy sending them.

Either way, real estate letters written in this manner are a soft-sell technique that will position you as a non-pushy, non-threatening agent who knows how to sell homes. With each letter you'll become more of a trusted adviser, so that when they do decide they need help they'll naturally turn to you.

But how do you first contact these people?

One way is to offer the special report on your website. Visitors opt in to get the report and their addresses are automatically entered into your auto responder to receive the letters.

You could write down addresses and try to locate the names to go with them, or (Please, no!) Write to Dear Homeowner. I personally think you should use an opt-in on your site even if you take the hands-on approach … which is to get out there and meet the people.

I know – that can be a little bit scary. But if you decide what you're going to say ahead of time, and practice it, it will get easier.

Write a script that sounds natural to you. Something along the lines of "Hi, my name is Sally Jones from ABC Realty. I see you're offering your home for sale by owner and I stopped by to ask if you were willing to let buyer agents show it to their customers."

If you say it all at once, they won't have a chance to say "I'm not listing" and slam the door on you.

Some of them may not have thought about the fact that some buyers want agent representation, so at this point you may need to explain the procedure. If you have a buyer list you mail to, you could mention it. If you use a one-time / one-party listing agreement, do mention that as well.

If they say yes, they're willing to work with buyer's agents, do ask for a tour and do take notes. You could even snap a picture to go with the notes.

The important thing is that you don't ask for the listing at that time. (Not unless they throw themselves at your feet and beg you to take over this horrible job they got themselves into. In that case you must be a good samaritan and help them.)

If they say they don't want to work with buyer agents, be polite and friendly and say "OK, I'll let the others in my office know so they won't bother you." You might also throw in something complimentary about the house and tell them that if they change their minds to let you know, because you'd sure like to show it. Give them your card, of course.

Before you leave, tell them that you have a special report with tips for owner-sellers and you'd like to send it to them. That gives you the opportunity to ask for their names. You probably should also ask if the house address is their mailing address, since some people do prefer post office boxes to home delivery. Mail the special report as soon as you get back to the office, and enclose a nice little handwritten note thanking them for talking with you. If you can come up with something more personal to add, do it. For instance, if they were about to leave for a child's soccer game, say you hope their team won. That's just to show that to you they are more than just a house address – you noticed who they really are.

Be sure to enclose another card just in case they tossed the first one the minute you left.

Then, every few days send along a new real estate letter with a new bit of advice that will be useful to them. Do end each letter with an offer to help should they decide against doing this on their own.

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Source by Marte Cliff

How Soon Can You Be Evicted After The Foreclosure Sheriff Sale?

Immobilie bewerten, Immobilie Wert, Immobilienrechner, Verkaufsrechner, Immobilienwertermittlung Tel: 06227-399170 Handy: 0176-2116-9990 eMail: info@heidelbergerwohnen.de Internet: www.heidelbergerwohnen.de

Homeowners in foreclosure are rightfully worried about not being able to save their homes and how quickly they will be evicted after the sheriff sale. Although the lender and various „experts“ will threaten them with the sheriff showing up the next day to violently kick them out of the house, this is just not the case in foreclosure situation. The county sheriff and the eviction crew will not show up the next day after the sheriff sale, and homeowners should ignore the fear-mongering that threatens this possibility.

Owners should be aware of the implications of the foreclosure auction, though. The sheriff sale will transfer ownership of the property, and the foreclosure victims will not own the house after this point. But this does not mean that the eviction process will happen automatically right after the house is auctioned, as there are more steps that will need to be taken by the new owner.

The high bidder at the auction will most likely have to have the sheriff sale confirmed (this is not a specifically detailed step in every state). This can take from a few days to a couple of weeks after the auction, depending on how quickly the courts and new owner act. But this is generally just a simple step in the foreclosure process after the sale that involves the sheriff and judge confirming the auction was for a legal amount and that the deed has now been awarded to the new owner.

The new owner will most likely be the original foreclosing bank that the homeowners had been dealing with in the first place to stop foreclosure. About 95% of foreclosures end up being purchased by the lender, rather than a third party.

In order to evict former homeowners, the lender will have to request the court grant it possession of the property and order the county sheriff to evict any remaining people or personal items and change the locks. This is a legal process, though. Homeowners should not fear that a bunch of government thugs with badges and guns will show up at their house the day after the sheriff sale to kick them out. Of course, this is exactly what happens, but at a later date if the foreclosure victims do not move out in time.

But the entire eviction process can take up to a month after the sale; throwing people out of their homes is not a simple process before or after a county auction. The court will have no problem ordering the eviction (unless the former owners go and try to contest the sale, eviction order, etc.), but the sheriff’s department will have to give notice of the impending removal. This can be as little as posting a piece of paper on the property with three days notice to move. Thus, after the sheriff sale, former homeowners better be prepared to leave on their own or work out another solution.

People facing foreclosure should not be overly concerned about being kicked out of a house with little notice. The sheriff will not just show up the next day or a few hours after the sheriff sale, as there is still a legal process that must be followed for a bank to take back possession of a foreclosed property. Homeowners probably have at least two weeks to a month after the sheriff sale date to arrange for a new place to move into.

In any event, homeowners are always encouraged to call the sheriff’s department to ask them when then eviction will take place. Even more promising, they can also usually ask for a few extra days or a week in order to move everything out and give up the house peacefully. There is still a chance to negotiate with the local government for more time (courts and sheriff) so that the former owners are not taken by surprise by the eviction.

Thus, the banks and government officials will not evict foreclosure victims right away after the auction, but there is no time to spare, either. Having a couple of weeks to move out can give people a chance to find a place and move in at their own pace, but even a month-long eviction process will go by very quickly. If in doubt, homeowners should contact their local government officials and ask about the eviction — the courts or sheriff will be able to inform them of the date and try to work out the most reasonable solution. They want as little trouble after foreclosure as the former homeowners do.

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Source by Nick Heeringa

eBay Selling Strategy # 3 – What Not to Sell On eBay

Immobilie bewerten, Immobilie Wert, Immobilienrechner, Verkaufsrechner, Immobilienwertermittlung Tel: 06227-399170 Handy: 0176-2116-9990 eMail: info@heidelbergerwohnen.de Internet: www.heidelbergerwohnen.de

Strategy # 3 – What Not to Sell On eBayDeciding what to sell on eBay will be among the most important decisions you will make with your eBay business. It will ultimately determine your success of failure. Many mistakes can be corrected along the learning curve of getting your eBay business up and running and then successful, but there is no solution for the problem of selling something that nobody wants to buy.

If You Build It .. Will They Come? I recently worked with a client who had thousands of men's ties that he wanted to sell. He did some preliminary research and saw that comparable ties were selling very well on eBay and because he had obtained his inventory for pennies on the dollar he thought that he would set up an eBay business to sell off his ties. I was hired to help his staff get set-up on eBay with a seller's accounts, a Paypal business account, accounts with Fedex, UPS and the US Postal System and an in-house system to manage their inventory. They even went out and hired a professional photographer to take pictures of their items.

I trained the staff in how to run a successful eBay business, how to best present their items, how to schedule auction start and end times for maximum exposure, how to maintain good customer contact and service, and how to package and ship their items. In a month they went live with their first auctions.They sold 3 ties the first month.The owner and his staff were devastated. They felt they had put in a large investment of time and money in setting up their eBay identity, hiring a consultant (me) and being trained and proficient with the eBay selling process; so they couldn't figure out why they were not making any sales.

The Hard Truth They looked to me for the answer. I reminded them that all throughout the process of setting up their eBay business I had warned them that middle to low quality men's ties were not the type of item that was going to just fly off of the shelves. The truth is that their ties were not selling because no one wanted to buy them. Well, that's not exactly accurate as it turned out 3 people actually wanted their ties that first month.If they were committed to selling this item then they would have to be in it for the long haul, and not expect to generate the quick profits enjoyed by eBay sellers with more "sexy" or trendy, high-demand items.

They would need to commit to an eBay keywords campaign; build their feedback by purchasing 100 or so items on eBay and develop a marketing strategy that included off-eBay promotions.There are more variables at play in having auctions end successfully than are sometimes apparent to new eBay sellers, but they are the same types of variables that regular brick and mortar sellers have to content with.

The rules listed below may seem obvious to you but they are worth noting. What Not to Sell: Rule 1: Do not sell an item that already has more than 10 auctions running with no bids. If you do a search on eBay and see that there have been many auctions recently for the item and that most have ended with few or no bidsat all stayaway from selling that item. Also, if the item has received bids but the bids are lower than the price you would want to receive for the item, this is a good reason to stay away from the item.

What Not to Sell: Rule 2: Do not sell items that you know nothing about or that have a steep learning curve. For instance, cars. There are many people, individuals as well as auto dealers making a lot of money selling cars on eBay. But it is not a good choice for an item to sell if you don't know anything about cars.I once was contracted by a client to sell a very large meteorite that had been in his possession for some time. I knew nothing about meteorites, the different types, their value or anything. I told the client that I wasn't prepared to help him sell this item without first doing a lot of research.

He insisted that anyone who saw the auction and wanted to buy it would understand the value of it and that I should just list it and let the eBay marketplace determine the value. I did just that but not before doing some research so that I could write the auction listing. Unfortunately, the information that I listed in the auction about the type of meteorite we were selling was incorrect.I got a ton of email from potential bidders telling me how very wrong my description of the meteorite was. I ended up removing the listing from eBay early because of the response of the people who frequent eBay who know about meteorites.

What Not to Sell: Rule 3: Do not buy items at wholesale to resell on eBay. It is not possible to make money on eBay by buying items at wholesale prices and then looking to resell them on eBay. The eBay marketplace doesn't support that type of business model.There are simply too many people selling items that you can source that way. If you can get the item wholesale, probably so can a hundred or more other people, all of whom are probably trying to sell them on eBay as well. The competition on a traditional wholesale to retail model is just too steep. Also, unless your item is the next iPod you won't get anything close to the retail price for it on eBay. (There are some exceptions to this which I'll get into later.)

What Not to Sell: Rule 4: Do not sell items that consistently close at less than $ 30. It is hard to make a profit, let alone a living, on eBay, relying on items that sell on eBay for very little money. There are people that will buy an item for $ 4.00 sell it on auction for $ 8.00 and believe that they made 100% profit. This borders on insanity. That $ 4.00 item had to be listed on eBay, more than likely with photos. The auction needed to be monitored with any bidder's questions answered. Once completed the item had to be packaged and shipped. And out of the $ 4.00 "profit" there are those pesky eBay & Paypal fees to consider. So, the item you paid $ 4.00 for costs $ 0.60 to list with a gallery picture, $ 0.95 for eBay Listing & Final Value and $ .053 for Standard Paypal fees.

Total cost for listing and selling the item on bay is $ 1.55 add to that the $ 4.00 the amount that item cost you and you are left with a whopping $ 2.45. If you subtract a minimal cost for your labor this item on which you thought you made $ 4.00 has actually cost you money to sell! If you spread this type of philosophy across your entire eBay business effort you will go out of business in a very short time .

What Not to Sell: Rule 5: Do not sell anything on eBay's list of restricted items. This really is a no-brainer as long as you know that there is a list of items that are prohibited from being sold on eBay. Although people consistently try and skirt this rule, some of the items on the list include weapons including guns and knives, animal skins, American Indian artifacts, & human body parts.

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Source by Stephanie McIntyre

Affiliate Marketing Tips and Keywords For Selling Fitness and Exercise Equipment

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As an affiliate marketer your main job is to presell the products that you are promoting on your website. When you are preselling exercise and fitness equipment, knowing the reasons why people buy them allows you do a better job at preselling.

Below are some of the reasons that people want to buy exercise and fitness equipment. These reasons can also be why people would buy equipment for someone else.

To lose weight and tone their muscles
To become healthier and feel better
To build a lot of muscle
To make their body to look more attractive
To slow down the aging process
To help in the recovery from an illness or injury
To please their family members or other people in their lives
To fit into their clothes
To be more successful in their career or get a new job
To follow an order from a doctor
To get health insurance or life insurance
To be able to exercise in the privacy of their home
To prepare for an upcoming event such as a wedding or high school reunion
To make a one-time purchase instead of buying a gym membership

There are many types of exercise products that affiliate marketers can promote. It is a good idea to choose a niche to specialize in.

Below is a list of some of the products that you can promote.

stationary bikes
spin machines
Pilates machines
free weights
rowing machines
gliders
treadmills
weight machines
trampolines
ski machines
ellipticals
resistance bands
multi equipment machines
jump ropes
stair climbers
balance balls
sports training equipment
ab machines

You can also feature products related to exercise equipment on your website. Some related products are:

Exercise clothes
Videos and DVDs on exercise programs
Health and fitness magazine subscriptions
Diet plans
Books about healthy cooking and eating, diet plans, exercise plans
Extra equipment or attachments to the products

On your affiliate website you should have words or phrases that will help sell the exercise equipment. Sometimes just one word will resonate with a person and persuade them to buy.

The following are positive words and phrases related to exercise.

lose weight
feel healthy
look better
stop aging
build muscle
increase stamina and endurance
no embarrassment
improve confidence
get in shape
live longer
increase energy
feel thin / sexy / younger / more attractive
look thin / sexy / younger / more attractive
tone up
fit into old clothes
keep the weight off
enjoy the beach
lose fat
eat more
wear a swim suit

Using images and graphics on your website will also help sell the exercise equipment. Visitors to your site will project themselves in the pictures and this will help persuade them to buy.

Some imagery ideas are:

Before and after pictures of people getting into shape
People smiling and enjoying exercise equipment
People at home using the equipment while watching TV or being near their young children

If you are planning to drive traffic to your website by using pay-per-click advertising you will need good keywords for your ad campaigns.

Here are some keywords and phrases related to exercise equipment.

fitness equipment
exercise bike
home fitness
gym equipment
gym machines
home gym
exercise equipment
fitness machines
weight lifting equipment
used exercise equipment
exercise machine
exercise
abdominal equipment
fitness exercise equipment
home exercise equipment
weight equipment
exercise program
exercise bike equipment
sports equipment
fitness exercise

Informative articles are something you should have on your affiliate website. These not only help sell the equipment but will help the search engine optimization of your site. Articles will keep visitors on your website for longer and will improve the overall quality of your site.

Here are some ideas for articles relating to exercise:
How a person used the equipment to quickly lose a lot of weight.
How a person got in shape and it helped them get a date.
How a person improved their overall health and fitness
How easy it is to set up or use the exercise equipment.

Building a list of subscribers will enable you to establish a long-term relationship with your visitors. In order to get them to sign up for your mailing list or newsletter you can offer them a free information product related to exercise.

Ideas for free information products related to exercise are:
A list of good and nutritious foods to eat.
A list of exercises they could do anywhere.
How to make time in the day for a quick workout.
Exercise equipment reviews and recommendations.
Diet plan reviews and recommendations.

Since exercise equipment is usually a high ticket item there is the potential to make a lot of money in affiliate commissions. Finding exercise equipment to promote is not difficult. You can check on the official website of the equipment maker and see if they have an affiliate program. You can also search on the affiliate networks to see if they represent exercise equipment. Choose a program that offers a variety of creative linking opportunities. Most programs offer free datafeeds of the merchant's product catalog. Using datafeeds on your website, along with informative articles will allow you to create an authority website that will rank well in the search engines.

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Source by Adam Z. Sterling

Real Estate Sale Leaseback – Right for Your Business?

Immobilie bewerten, Immobilie Wert, Immobilienrechner, Verkaufsrechner, Immobilienwertermittlung Tel: 06227-399170 Handy: 0176-2116-9990 eMail: info@heidelbergerwohnen.de Internet: www.heidelbergerwohnen.de

As 2012 gets rolling and companies continue to look for something to give them hope, we should be looking at unique and creative ways to find that boost they need. To illustrate this, on the cover of December's CFO magazine, the headline is "Looking for Lift" with the subheadline "CFO's in Banking, Housing and Manufacturing Chart New Strategies for 2012." One underutilized strategy where a company that owns commercial property can find that boost they are looking for is through a sale leaseback transaction.

A sale leaseback is a financial transaction that allows a property owner to sell their property and lease it back without affecting their day-to-day operations. Companies use this strategy as a way to quickly raise capital and accomplish a number of other corporate goals, including:

– Paying down debt

– Funding growth

– Acquiring other businesses

– Reinvesting the capital into current operations

Whether your company owns a single property or a portfolio of properties, there are investors actively looking to place their money and acquire property even in these uncertain times. In return for their cash now, they will look for long term leases to be executed as part of the transaction. Of course, the financial strength of the seller, the condition of the property (ies), and other comparable properties all factor in when determining the value of the asset (s) for sale and the terms of the lease. Professional real estate firms that have relationships with the investment community can help a corporation determine the value of the asset (s) in question, the terms of the potential lease, manage the due diligence process and help facilitate the completion of the transaction.

While there are many investment groups currently looking to place money and purchase commercial property, having the right relationships with groups that purchase your product type and focus on your particular size of transaction is critical to ensuring a successful sale leaseback. Furthermore, being able to present the investment opportunity to the largest pool of potential buyers improves the chances of securing multiple offers and can potentially increase the value of the property. When a seller has multiple buyers bidding on the same asset, a competitive environment ensues which can increase the sales price and improve the terms of the lease.

As your corporation considers new financial strategies for this year and next, if you own commercial property consider evaluating a sale leaseback as a vehicle to pay down company debt, fund growth, acquire another business or to reinvest the capital into your current operation where needed. This strategy is an underutilized way for corporations to get a boost when they need one without affecting the operation of the business.

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Source by Jerad A Rector

Defeat Your Homeowner Association

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First, this article is written from the viewpoint of a California resident. Much of the information presented here is relevant to other states, but you should check your own state’s laws to make sure they are the same or similar.

For most people buying a new home in today’s America there is usually a mandatory membership to a homeowner association, referred to as an „HOA.“ These organizations are essentially mini governments that posses the power to make and enforce laws, including the right to foreclose on a family’s home, townhouse or condominium.

The original intention in the creation of the HOA envisioned an active participation by all of the members; a tight knit community where common problems were dealt with by the community members through the offices of the HOA.

The reality is nothing like the vision.

Today, in most cases an HOA is a very small number of people who actively keep the authority of the HOA in their hands, and their hands alone. Usually these circumstances are brought about by a lack of participation by the majority of the HOA members.

The lack of member participation creates a certain rational for the Board of Directors, who interpret the other member’s disinterest as the reason they must keep the HOA’s authority to themselves. The community becomes divided between those who control the Board of Directors, and everybody else.

For everybody else, an HOA is typically not easy to deal with. They wield the authority to foreclose homes, levy steep fines, and often control aspects of the community members‘ lives that typical Americans believe are a precious homeowner’s private right, like what your kids are allowed to do while playing in their own backyard.

Homeowners often find themselves in a contest with their HOA over these rights. Can I park my car in my driveway? No, says the HOA because we few active members passed a law that says you can’t park a car in your own driveway unless you use the car every day.

Can my kids play basketball in our own backyard? No, says the HOA, because we few active members passed a law that says no basketball courts are permitted that can be seen from the street. And, by the way, you are not allowed to cover that open fence to limit our visibility into your backyard because we few active members have passed a law that says we have the right to see into your backyard.

Can I tint my windows? No, says the HOA, because… Well, you get the picture.

Now the part you have been reading to find. How do you defeat your HOA?

First, you must make sure you continue to pay your HOA dues. Most homeowners who get into a fight with their HOA over issues like a rule restricting backyard activities, use of your own driveway and garage, and denials of your planned home improvement projects, often get angry and stop paying dues.

This is a mistake. Pay your dues. However, you can usually omit paying those late fees and fines. In California, an HOA cannot foreclose your home based on accumulated late fees, fines, and other expenses like the ‚cost of collecting‘ your unpaid late fees and fines.

They can sue you in small claims, or even in the limited jurisdiction of the Superior Court because then they will get attorney fees, which will be huge. The resulting judgment, however, is far more difficult to use to foreclose on your home because it has no priority over existing liens, meaning the HOA would need to pay off your mortgage to get your home using a lawsuit judgment. (In California, the moment you lose such a lawsuit, go the State Bar and demand Fee Mediation – HOA lawyers charge you like they are first class lawyers, but charge their clients like they are 1st year noobs.)

But, let’s not let it get that far, OK? Here are a few basic rules to live by when dealing with your HOA.

HOAs typically don’t have a properly elected Board of Directors. As soon as you receive that annoying letter telling you to stop your kids from playing in the backyard, send a letter back asking to have a copy of all the Governing Documents.

Hopefully, the HOA will ignore or deny this request.

They are not allowed to deny or ignore a request for copies of the Governing Documents.

Obtain a copy of all your Governing Documents and read them to see what constitutes a properly elected Board of Directors. In those communities where member participation has been limited to just those few who want to be Board Members, there typically has never been a „quorum“ attained to properly elect the Board.

The Board, therefore, is usually sitting by default.

Default Board’s are limited in the scope of their authority, and in some cases have no authority at all.

In all your correspondence, constantly remind the Board that they are not properly elected.

Follow these basic steps;

1. Demand a ‚meet and confer‘ with a Board Member to discuss the issues. The HOA is not permitted to deny your request to meet and confer. Record the meeting on video.

2. Demand a hearing before the Board. Record the meeting on video.

3. Appeal the Board’s decision. Record the Appeal Hearing on video.

4. Demand Mediation after the Board affirms their previous decision at the Appeal.

Typically, HOA Board of Director members are not well versed in the laws governing the operation of an HOA. many will be passingly familiar with the portions of the relevant foreclose laws, and of course they will know the HOA’s rules and regulations by heart.

However, I have found that often the Board of Directors are not familiar with the requirement to meet and confer in good faith. Therefore, it is common that the Board of Directors member who appears to meet and confer, will meet but not confer. There is a good faith requirement that renders inappropriate the kind of responses the typical HOA Board of Directors member will offer in response to your questions.

For instance; you have received a letter saying you must move you 1966 Ford Mustang from your driveway because it is not driven every day. OK, you say, „what proof do you have that its not driven every day?“

„We have an anonymous tip from another homeowner“ replies the HOA Board member.

„OK, you had a complaint. But, what proof do you have that the Mustang is not driven every day? A mere complaint is not proof and does not rise to the level of a violation. You are supposed to investigate to determine whether the complaint was fact or mere opinion. So, what proof do you have?“

There is a very large probability that the „complaining member“ was none other than the Board of Directors themselves who merely discussed your Mustang at their last meeting. So, no proof exists.

Write a summary of the meet and confer. State that the Board Member did not have any proof of the violation, and therefore no violation exits.

When the HOA sends you its next letter, usually a threat to move the Mustang or face steep fines, you send a letter denying that any violation exists. Remind them they are not properly elected, and that the results of the meet and confer were favorable to you, not the HOA.

The HOA is supposed to set a hearing where evidence of your violation is presented, and then rule on the evidence and testimony provided at the hearing. Make sure you demand such a hearing, and make sure you attend. It’s a good idea to record the meeting by video.

Not surprisingly, the HOA will rule in its favor, even when you have evidence that proves no violation existed, or they had no evidence that proves a violation existed.

Demand an appeal. Make sure you attend, and yes, record it on video. At the Appeal Hearing, point out that the Board Members are not properly elected and did not have facts to support their previous ruling.

When the Board affirms their prior ruling, demand mediation.

At the mediation, point out to the mediator that the Board is not properly elected, failed to meet and confer in good faith, called a disciplinary hearing without any proof that a violation existed, ruled against you without any proof that a violation existed, and affirmed their ruling despite a lack of evidence and/or evidence to the contrary.

Mediators will only want to split the matter in two; if you have been fined $1000, they will encourage you to offer $500.

Refuse.

Your next step is the most crucial. The HOA will expect you to pay, or in the most unlikely situation, to file a Superior Court action to enforce the Governing Documents.

Instead, you file what is called a „Writ of Mandate.“ This is the proper venue to appeal the Board’s ruling.

While this will cost you some attorney fees, it is the winning move. HOA’s and their lawyers typically are not familiar with this particular judicial option and will be totally out of their depth when confronted with a Writ of Mandate.

The Writ Court will, however, entertain you because you are appealing an administrative body who has the obligation to accept and rule according to the evidence and testimony presented. And, then they fail to rule according to the evidence, they can be reversed by the next higher court. In California, the next higher court above the Appeal Hearing of an HOA is the Superior Court’s Writ Judge.

If you have carefully compiled the evidence indicated above, you are highly likely to prevail. The fines will be reversed, the late fees etc will be voided, and your attorney will be paid by the HOA.

Thereafter, the HOA is likely to turn a blind eye on your Mustang, or your kid’s backyard basketball court, and look for easier victims.

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Source by James D Stone