Wednesday, March 25, 2009

The Unknowing Student…

By: Shane Scanlon

As a soon-to-be college graduate, my cohorts and I should gain a sense of freedom; alleviating oneself from a lifetime of structured learning and accruing debt. Graduates across the country are finally given the excitement of trying to map out the next 60 years of their lives; however given the current volatility of worldwide economies, we have found ourselves coping with the greatest deal of uncertainty. With the tailspin of the financial markets and many “gen Y-ers” experiencing a first-hand account of their parent’s retirement plans diminishing, another question remains: What are we to do with our money?

As a child, my father always stressed how first impressions are everlasting, and I find that notion true based on my personal experiences to this point in my life. If true with people, I also feel could be true with investing and in a student’s case, there may be a lifetime of paranoia linked to this practice. Between the Dow Jones standing at a mere 58% today compared to its 52-week high and Bernie Madoff organizing the largest investment scandal by a single person, students are going to be left vulnerable in search of a stable avenue for their money. As surprising as this may sound to some of us within the industry, there are people out there who are not aware of passive investment in real estate. The media has engraved the idea of “Flip This House” to be investment real estate which has left people in their mid-20’s shying away from wanting to learn more due to their home-value tumble. In a study done at the University of Tampa, only 5 students of 40 were aware of what a net-lease investment was, and also 33 individuals identified investing in real estate “unfavorable.” When following up with some of these individuals I had found that none of the 5 students who knew what a net-lease investment was were in the 82nd percentile who suspect investing in real estate to be unfavorable.

I see a long-term opportunity for many professionals involved in real estate investment. Sure, it is unreasonable to assume a 23-year-old college graduate earning $42 thousand annually is going to be able to currently afford a $5 million Walgreens, however the ability to penetrate this market with the idea of educating can be advantageous. By simply creating awareness of what a net leased asset is and the passivity of such an investment, you can engage an entire age group who is looking for that trustworthy “someone” to provide answers during their greatest period of ambiguity.

“With every challenge comes a new strategy for taking action.” – Ralph Marston

Monday, March 16, 2009

Musings Of A Veteran Broker

By Guenter Manczur

Those of us who have been around long enough to see prior real estate cycles remember only too well the period of 15% – 18% interest mortgages, the closure of numerous industrial banks and the much larger savings & loan debacle that was followed by an era when RTC-controlled properties seemed to be the only ones being sold.

Yet here we are, some 20 years later, having recently experienced an unparalleled period of price appreciation and economic growth in almost all sectors of the real estate industry. The expectation of constantly increasing prices has been the business model for many property owners, and countless purchases were made with the full expectation that an owner could re-sell any property, any time, for a profit.

Is it reasonable to expect that explosive growth can continue unchecked for long periods of time? Of course, not. Most of us agree that prices fluctuate with supply and demand conditions, and that periodic imbalances will result in price corrections.

In these times of being inundated by a barrage of negative financial news, it’s helpful to remember that commercial real estate transactions will continue to happen even in a down-market, albeit at a slower pace.

Tuesday, March 3, 2009

It’s Darkest before the Dawn

By Jonathan Hipp

It is very easy to justify why it’s okay to be mediocre in today’s real estate market when you listen to the news in its various forms. And then there are all your colleagues and competitors validating all your fears. Markets like this require you to adopt the champion’s creed if you are going to succeed and grow even when all common sense seems to justify the opposite way of thinking. I believe that misery like’s company and it’s easy to become involved in those types of conversations and relationships with family, friends and associates. The thought and attitude used to be that the good times would never end as capital was flowing relentlessly and it seemed everyday that somebody was flipping a property for a big profit and brokerage commission even before they had gone to settlement. It was so easy; we all had keys to the castle. Many brokers and investors made big money by just showing up and playing the game. So here we sit today licking our bruised wounded egos and reflecting and asking where we go from here. I find this from Roger Staubach, former chairman and CEO of the Staubach Company, very fitting for the challenges our industry and ourselves face today.

“To me success is being able to feel good about how you’ve done things. You have to have balance in your life. You can’t think only about ‘what’s in it for me?’ You have to give back and ask for help and say you’re sorry and contribute to the success of others. And you can never give up. Athletics taught me that. You must work hard, prepare, learn from your losses and continue to fight until the very end.”

It’s very true we don’t know how long this cycle will last and we probably haven’t reached the lowest point yet. But I can tell you that it’s always darkest before the dawn.