Calculated Speculation

Calculated Speculation

4 years ago 0 0 1749

A commercial real estate asset is a small business unto itself, operating in a micro-market that may be as big as a ZIP code or as small as a few city blocks. While portfolio investments like stocks, bonds and institutional real estate are heavily affected by macroeconomic trends like employment and interest rates, the financial performance of any given real estate asset is influenced much more strongly by what goes on around it. And even though these high-impact local events may seem to come out of nowhere, in reality they might be a long time coming. Armed with market knowledge, a strategic plan and conservative financing, investors can both capitalize on these trends and mitigate micro-market risk factors. Imagine these micro-market scenarios: A former manufacturing area on the edge of town has become a hot spot, complete with trendy restaurants, craft beer bars and converted loft apartments. Thanks to a

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The Right Spot in the Lineup

4 years ago 0 0 1637

An investment portfolio is a little like a baseball lineup. Smart managers know where to place batters with different skills in the right spot in the batting order. Similarly, when a portfolio is properly constructed, each investment plays a different role and they all work together to maximize team performance. Cash and government bonds are the “contact hitters” of a portfolio. They may not have a lot of flair, but they rarely strike out and will consistently do the little things to help the team, like legging out an infield single—or delivering a safe, moderate return. You want them near the top of your order. Stocks and mutual funds tend to “hit for average.” At any given moment, they may perform great or they may disappoint. But over the long haul, they consistently deliver opportunities to score. And then there are the “power hitters” of the lineup, the ones that

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On Doctors, Lawyers and Real Estate Consultants: Why You Need an Expert

4 years ago 0 0 1573

If you are an attorney or a physician, or if you have friends in these professions, you are probably acutely aware that they spend a lot of time doing things that are not quite so glamorous as a weeknight television drama would suggest. For every “Matlock moment” in a rapt courtroom, attorneys file dozens of motions, type hundreds of memos and research thousands of cases. Similarly, most doctors spend more time writing prescriptions, reading X-rays and sewing up incisions than they do performing life-saving procedures. If the mundane is such a big part of being a highly specialized professional, why do we tend to value them so much? The answer is expertise. When faced with a legal or medical problem, we need motions and prescriptions, and we turn to qualified professionals for those things. But more than this, we need counsel: Someone to assess (or diagnose) our situation, and then

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Sell high? Not so fast!

4 years ago 0 0 1928

One of the truisms of investing is that you should always sell high — in other words, when the market is at its peak. With values for commercial properties approaching, and in some cases surpassing, “all time highs,” one might argue for aggressive selling. Not so fast! Pause, take a breath, and consider the following decision pathway: 1.    A primary consideration should be “What will you do with the money from the sale?” In this market, virtually all asset classes are very expensive, and cash is yielding close to nothing. This leads to question #2… 2.    If the current property is financially sound and producing a good return, why replace it for another? Unless… 3.    If the current property is not performing well, no longer meets your objectives, has changed fundamentally, or has fulfilled the objectives for which it was purchased, it may be time to sell. 4.    Are the

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Six Wealth-Building Real Estate Resolutions for 2015

4 years ago 0 0 1750

You might be surprised to know how many commercial real estate purchases are driven more by emotional than rational decision making. With the real estate and stock markets being white-hot and returns on conservative alternatives near zero, it is tempting and easy to throw caution to the wind. Beware if you dare. If you’re considering a real estate investment in 2015, here are Six Wealth-Building Real Estate Resolutions to ensure that rational thinking prevails. 1. Neighborhood trends matter. Google earth doesn’t tell the entire story. A site visit is worth the time and expense. Also, engage a professional familiar with the property type and local market to provide an objective assessment that will reveal opportunities and potential problems associated with planned rezoning, future developments, transportation changes, or market trends. 2. Physical condition of property Get an inspection! Hidden conditions can be very costly. A pound of prevention…well, you know. 3.

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‘Tis the Season to Consider Family Owned Real Estate Assets

4 years ago 0 0 1731

What better time than the winter holiday season to talk about avoiding conflict and maximizing value for family-owned real estate assets? Family gatherings are upon us, tax season is just around the corner, and the real estate market is once again bustling with opportunity. Whether inherited, directly acquired, or held in a partnership, family-owned real estate can be a source of generational wealth and opportunity. Or they can cause considerable heartache today and for generations to come. Here are four tips for harmonious, profitable management of family-owned real estate: 1. Hire an unrelated, independent professional who will give you an unbiased and unemotional evaluation of the real estate owned. Whether you’re incorporating real estate into an estate plan or you have received individually or jointly inherited real estate, an objective professional evaluation is essential. The emotional investment, if you will, that many people have in family owned real estate, combined

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