by recentricrealty | Aug 15, 2013 | Property Value Markets, Uncategorized
My soon to be 5th grader, Tyler, is preparing for football camp this week. As a concerned and excited parent, of course I am doing all I can to protect him including making him trail run, lift weights and eat right. I am buying him all sorts of protective gear so he a can hustle out on to the field to hit hard and be safe. Recently, it dawned on me that due to circumstances out of his control, his financial future may look entirely different than mine. And I feel the need to help protect him from that too. So, what sort of global trends can we identify now in order to proactively respond to help kids get a head start? It’s a large topic, but I’ll break it down into three areas worth thinking about:
1) The devaluing of the US dollar: Ever since Nixon decoupled the US dollar from Gold in August of 1972 as its valuation standard, the US dollar train has been on a devaluation collision course. We are the unlucky recipients of a government that has been spending out of control since Nixon enacted this historic event. As the dollar loses its purchasing power, the wages of the average American can not keep up with their required spending power. The end result: Inflation that outpaces wages.
Answer: Invest in tangible assets of which the value and cash flow component rises with inflation. i.e. Long term cash flow real estate, oil and gas wells, and multinational large cap companies which pay good dividends.
2) America’s wealth gap: According to Emmanuel Saez, a professor at the University of California, Berkeley, during the post recession period of 2009-2012, the rich snagged a greater share of total income growth than they did during the boom years of 2002-2007. The illustration below helps put this wealth gap into perspective.
Answer: Provide your children with the street and entrepreneurial smarts to create their own wealth. Don’t teach them to work for other people and their money, yet teach them to have their money and other people work for them. Introduce them to books early on like Jeff Olsen’s, Success for Teens. http://www.amazon.com/Success-Teens-About-Using-Slight/dp/0979034159
3) The environment: Recently a CNBC article highlighted an “economic time bomb” which may cost the world $60 trillion due to the world’s fast changing climate. http://www.cnbc.com/id/100912062. Since the Arctic ice has been recorded in 1979, last summer marked the lowest levels of ice on record. Now, I am no environmentalist, but the ramifications are pretty alarming.
“However, the Arctic’s pivotal role in regulating the oceans and climate means that as it melts it is likely to cause climatic changes that will damage crops, flood properties and wreck infrastructure around the world, according to research by academics at the UK’s University of Cambridge and Erasmus University Rotterdam in the Netherlands.”
Answer: For a long term investing horizon like Tyler’s, my answer to this threat would be to purchase real estate in cooler mountain regions. If Florida, Arizona and Texas are recording extreme heat like never before and sea levels are predicted to rise, it would make sense that the acquiring cash flow commercial real estate at higher elevations might provide a hedge against this threat.
As an investor, you want to choose your options carefully. There are many alternatives to the stock market for you to invest. Resort Realty Capital is currently searching for value-add and opportunistic real estate acquisitions in 12 Rocky Mountain markets through our broker partners. If you would like to learn more, please contact us.
by recentricrealty | Sep 2, 2011 | Property Value Markets, Uncategorized
I often believe that my children are better negotiators than I am. Even though small fry are without formal power or authority, kids seems to get the lion’s share of what they want. Why is this so?
Number one: Kids have high aspirations. They are not carrying around years of baggage and rejection that limits their willingness to ask for the sky and then some. Number two: Children understand the decision making process in the family organization. They know how to work the system; they know who is soft, and who is not. They are so intuitively smart in this area. And Number three: Kids understand that “no” is an opening bargaining position. They understand that it takes a while for their parents to get used to a new idea. So, they will wait and wear you down with ferocious tenacity.
Our lives are full of negotiations every single day. It is a way of life, whether you know it is happening or not. For many of us, life is an ongoing process of trying to influence others, whether it is your friends, boss, client, landlord, car dealer, real estate seller and even a loved one. Here are six tips I use to negotiate, that have helped me over the years. (I hope my wife Amy is not reading this.)
1) Listen, do not talk. If the other side is willing to talk, let them. Take notes, and do not interrupt. You will learn a lot about their position, and they will think you are the nicest person in the world for listening to them.
2) Create long pauses of silence. This makes the other side nervous; they think you are contemplating your next big move.
3) Be humble. It is OK to say I don’t know the answer to a question or problem. It is Ok to say, “I am just not that smart in this area.” It will bring down the defensive walls that have been built up, and will lead to a more human approach to reaching agreement.
4) Like Herb Cohen says, “Care, just not that much.” This is so true, as it makes the appearance that you have other options. My favorite word in business is “options.”
5) Create a win/win. Negotiating is often a way to resolve conflict. At times, some conflicts need not be dealt with, but avoided. You will know when this happens. If it needs to be dealt with, creating a win/win is the only remedy. Be prepared to concede to make the outcome a win for everyone. At the end of the day, it pays to make sure both sides walk away from the table with just a little buyer’s and seller’s remorse.
6) Understand your opponent completely. Do your homework, and know everything there is to know. You can Google them, call people that they know on LinkedIn, and call old employers or employees. You never know what kind of treasure trove you may find.
So the next time your children are relentlessly negotiating their way to more dessert, remember that life is one big negotiation. Take the emotion out of it, and treat it like a game, and you will be far more successful in the process.
Finally, if you will be in Denver on September 21st, please join me for Resort Realty Capital’s educational series called Life’s Financial Navigator, which will be held at the Denver Athletic Club at 7:15AM through 9AM. Breakfast will be provided. The fee is $15.00 but as my special guest, it is free.
Speaker: Christopher B. Pelley, CEO & Managing Director for Capital Investment Management and Jerry Paul, former SVP and Global Partner for INVESCO funds group.
We are pleased to announce Christopher B. Pelley, CEO & Managing Director for Capital Investment Management and Jerry Paul, CFA (Chartered Financial Analyst) will be speaking on the latest macro-economic financial issues facing United States investors. With 30 years of financial services experience, Mr. Pelley and Mr. Paul will provide their unique and broad perspective on navigating the current investment landscape both from a practical and psychological view. Chris’s bio can be found at www.cimcodenver.com/our_team.html.
(Disclaimer: Securities offered through First Allied Securities, Inc., a registered Broker/Dealer, member FINRA/SIPC)
by recentricrealty | Aug 3, 2011 | Property Value Markets, Uncategorized
In anticipation of the upcoming winter snow gently piling on Breckenridge’s Main Street, there is no denying that Breckenridge is one of the most magical ski resort towns in the world. It has the vibrancy of Vail and Aspen, without the price tag of those resorts, making Breckenridge more accessible to all people who love the mountains. As a private equity real estate company, Breckenridge is near the top of the most desirable resort towns in which to invest. It has the big three: 1) driving distance to a major metropolitan area, 2) an excellent family oriented ski mountain owned by Vail Resorts, and 3) a well run government with plenty of financial resources to reinvest into the community.
Breckenridge Ski Resort boasted over 1,750,000 skier visits in 2010. This is no surprise given that the Denver front range megalopolis consists of a population of 4.3 million people and is as close as 72 miles to Breckenridge. The front range area includes as far south as Pueblo CO, and north to Cheyenne, WY, with Denver, Colorado Springs and Fort Collins making up the lion’s share of people.
Additionally, Denver International Airport is the largest international airport in the United States by land size. So far this year, January-March 2011, Denver International Airport is the ninth busiest airport in the world by passenger traffic with 12,873,681 passengers. Those are the kinds of numbers that make real estate work!!
Vail Resorts (NYSE: MTN) runs Breckenridge and three other ski resorts in Colorado, as well as two in Lake Tahoe and a summer resort in Wyoming. Vail Resorts Development Company (VRDC) is the wholly owned real estate development company that Vail Resorts uses to develop all of its company-owned real estate, which includes several projects slated for Breckenridge. One in particular is the Breckenridge Gondola Lot Master Plan, which calls for several parking lots, a hotel, and retail. This is a project that has been on hold for a few years, but once completed, will provide tremendous opportunity for the north side of Breckenridge.
Established in 1859, the historic town of Breckenridge is a home rule municipality that is the county seat of Summit County, Colorado. With an operating budget of $21 million, the town is now sitting on $18 million in a reserve savings account. That is very healthy considering most towns are scrambling to balance their recession battered budgets. This puts them in the cat bird seat to withstand another downturn or re-invest into the town.
While all this seems rosy, we are noticing that the commercial real estate market is lagging and still suffering from the last few years of recession. Opportunities to buy real estate at a discount direct from owners or banks are evident. Resort Realty Capital is currently evaluating several opportunities to profit from these market conditions. If you would like to learn more, please contact us.
Darren Nakos, CCIM
Resort Realty Capital
111 Main Street
Frisco, CO 80443-0630
(720)-663-1430
THIS IS NOT A SOLICITATION FOR INVESTMENT – THIS INQUIRY IS TO FIND OUT IF YOU ARE INTERESTED IN RECEIVING ADDITIONAL INFORMATION. NEITHER RESORT REALTY CAPITAL, LLC, IT’S AFFILIATES AND REPRESENTATIVES MAKE ANY REPRESENTATION REGARDING THE RISKS OF INVESTING IN COMMERCIAL REAL ESTATE. YOU SHOULD CONTACT YOUR OWN PROFESSIONALS TO MAKE THE DETERMINATION AND ASSESS THE RISK OF INVESTING. AS WITH ANY INVESTMENTS, THERE ARE INHERENT RISKS AND NO GUARANTIES OF RETURNS. PLEASE CONSULT WITH YOUR OWN PROFESSIONALS IN DETERMINING THE RISKS ASSOCIATED WITH INVESTING IN COMMERCIAL REAL ESTATE.
by recentricrealty | Jun 30, 2011 | Property Value Markets, Uncategorized
As the firecrackers explode for the celebration of our nation’s birthday this weekend, I can’t help but think about our government, its huge deficit, and why this problem exists. I know “tax” is a dirty word, but taxes are an essential part of keeping our country moving. They keep the highways working, the skies safe from terrorists, and even help out those less fortunate. I am not here to debate the government’s inefficiencies. We all know that when any entity (public or private) holds a monopoly and has the ability to print an endless supply of money, a situation exists that creates words such as pork barrel, watchdog, wasteful, corruption, and Blagojevich. (Sorry, I had to put him in this category.)
What we as United States citizens should be asking this Fourth of July is why our federal, state and many local governments are in such financial turmoil when they are the entities collecting taxes? Let’s take a hard look at the revenue side of taxes. Here are a few facts (Source: Internal Revenue Service):
1) The top 25% of the US population earners paid 86.3% of all income taxes.
2) The bottom 50% of earners paid 2.7% of all income taxes.
3) Those earners in the middle 25% paid 11% of all income taxes.
The U.S. tax code is “absolutely broken” and the only way to fix it is to spread the burden to lower-and middle-income earners, Scott Hodge, president of the Tax Foundation, told CNBC Thursday. “The United States leans more heavily on the top 10 percent of earners than any other country on Earth and our poor people actually have the lowest income tax burden of any industrialized country,” he said.
The United States government is on a path that is completely unsustainable. I don’t believe we will be the next Greece given our ability to raise taxes and cut spending. However, if politicians don’t start making hard decisions today, sustaining the status quo will make those decisions much more difficult and might have potentially violent repercussions.
While I don’t have any answers this month, I do have a suggestion: As you start to examine the presidential candidates coming out of the woodwork, pay special attention to any that have the courage to bring this issue to the forefront. Those are the kinds of leaders this country needs.
Darren Nakos, CCIM
Resort Realty Capital
111 Main Street
Frisco, CO 80443-0630
(720)-663-1430
THIS IS NOT A SOLICITATION FOR INVESTMENT – THIS INQUIRY IS TO FIND OUT IF YOU ARE INTERESTED IN RECEIVING ADDITIONAL INFORMATION. NEITHER RESORT REALTY CAPITAL, LLC, IT’S AFFILIATES AND REPRESENTATIVES MAKE ANY REPRESENTATION REGARDING THE RISKS OF INVESTING IN COMMERCIAL REAL ESTATE. YOU SHOULD CONTACT YOUR OWN PROFESSIONALS TO MAKE THE DETERMINATION AND ASSESS THE RISK OF INVESTING. AS WITH ANY INVESTMENTS, THERE ARE INHERENT RISKS AND NO GUARANTIES OF RETURNS. PLEASE CONSULT WITH YOUR OWN PROFESSIONALS IN DETERMINING THE RISKS ASSOCIATED WITH INVESTING IN COMMERCIAL REAL ESTATE.
by recentricrealty | May 9, 2011 | Property Value Markets, Uncategorized
Springtime in the mountains is a time for celebration. We have endured the long winter and can look forward to a beautiful dry and warm mountain summer. As the saying goes, “People come for the winters, but stay for the summers.”
However, commercial real estate is still in a deep freeze which proves to be a very opportunistic time. There is a tremendous amount of wealth passing from one generation to the next as the opportunities to purchase property for less than what is owed to the banks are becoming more and more prevalent. Here are three reasons why this is happening in the resort markets of Colorado:
1) Typically, we are seeing commercial real estate lag the Denver market by approximately 12-18 months. We are now in the heart of the storm. Banks are no longer delaying and praying, and owners are running out of cash to meet their obligations. Case in point, the beautiful Bachelor Gulch, Beaver Creek Ritz Carlton has fallen into foreclosure:
VAIL DAILY – One of Beaver Creek’s highest-end hotels has gone into foreclosure. Miami-based Gencom, owner of the Ritz-Carlton Bachelor Gulch, owes $61 million, reports the Vail Daily, citing records in the Eagle County Treasurer’s Office. The building and land itself are worth $24.2 million, according to the county assessor. But a more comparable indicator of the value is that of another hotel at Beaver Creek, the Park Hyatt, which in 2007 sold for $69 million.
2) Property tax assessments have dropped by as much as 30%. State law requires that counties value property in even-numbered years. Those values are a snapshot of the local market as of June 30 in even-numbered years. While this will make it harder for sellers to justify a higher price, it will also help buyers negotiate short sales with the banks. While every property will require an independent appraisal, these lower county tax records could provide a bit more evidence to the banks to complete a short sale.
3) Vacation home markets remain the hardest hit sector in the U.S. real estate market. “Mortgage lending in the past three years has been pretty rough, with much higher underwriting standards,” says Paul Bishop, NAR’s vice president for research. “People drawn into the market at this point are buyers with substantial cash, or people not dealing with a mortgage. If your credit is strong and you put down a sizable down payment, lenders are more interested.” Lower residential real estate values typically translate into lower discretionary spending, and a sluggish commercial real estate counterpart.
Resort Realty Capital employs a unique strategy to source commercial real estate opportunities in resort markets. Monitoring foreclosures, public policy and the residential markets are just a few of them. Next month, we will be announcing a partnership with commercial real estate brokers in more than 8 different markets across the Rocky Mountain region which will provide us with access to opportunities before they hit the market.
Darren Nakos, CCIM
Resort Realty Capital
111 Main Street
Frisco, CO 80443-0630
(720)-663-1430
THIS IS NOT A SOLICITATION FOR INVESTMENT – THIS INQUIRY IS TO FIND OUT IF YOU ARE INTERESTED IN RECEIVING ADDITIONAL INFORMATION. NEITHER RESORT REALTY CAPITAL, LLC, IT’S AFFILIATES AND REPRESENTATIVES MAKE ANY REPRESENTATION REGARDING THE RISKS OF INVESTING IN COMMERCIAL REAL ESTATE. YOU SHOULD CONTACT YOUR OWN PROFESSIONALS TO MAKE THE DETERMINATION AND ASSESS THE RISK OF INVESTING. AS WITH ANY INVESTMENTS, THERE ARE INHERENT RISKS AND NO GUARANTIES OF RETURNS. PLEASE CONSULT WITH YOUR OWN PROFESSIONALS IN DETERMINING THE RISKS ASSOCIATED WITH INVESTING IN COMMERCIAL REAL ESTATE.
by recentricrealty | Jan 3, 2011 | Property Value Markets, Uncategorized
Originally Posted: November 1st, 2009
Over the last 5 years, we have seen an extreme bubble in the commercial real estate market, due to overspeculation on real estate. During this bubble, many people disregarded the true fundamentals of what really makes commercial real estate work over the long-term. This is not unlike the Internet stock bubble that occurred back in the late 1990s where people threw out the fundamentals of what the true multiples of EBITDA or profit that a company earns which is truly how you gauge the value of a company. When gauging the value of a company with forward earnings, you price that into the value of the stock; however, this number needs to be within reason. Not unlike commercial real estate, people will speculate on appreciation over time, but if it is factored in unreasonably with a very high level of appreciation into the calculations of the real estate, you run the risk of overpaying for that real estate. Whereby, losing money in the end.
As the market continues to correct itself, there is quite possibly one of the biggest generational opportunities to purchase real estate. The transfer of wealth from one group of investors to another group will be evident by certain owners not being able to withstand either a refinance or a loss of tenants, whereby they must sell or give the property back to the bank. In essence, an investor comes along, will take advantage of this opportunity and purchase at a very low price.
As we all know, markets go up and down. This market will certainly go back up over time; however, over the next 12 to 24 months, the commercial real estate will experience a tremendous amount of turmoil. There are a lot of adjustable rate mortgages or short-term loans that will be required to refinance. A lot of those instances, the personal guarantee that will be required will simply not be enough to get it done whereby the banks will begin the foreclosure process. As the balance sheets of these banks continue to improve, they will be less likely to extend any sort of extension on these loans, whereby making foreclosure more of a reality than it’s been over the last couple of years.
Completing a financial pro forma on a prospective must have sensitivity analysis. Sensitivity analysis allows you to factor in different variables such as interest rate and purchase price, and others to determine what sort of range you can expect on your rate of return if certain variables change over time.
The fundamentals of investing in commercial real estate are more important now than ever. To truly understand the space, capital and property markets when going into a sizable investment are critical. More on this concept in future blogs. For now, luck is the where preparation meets opportunity. And the opportunity of a lifetime is just around the corner.
Regards,
Darren Nakos, CCIM
Resort Realty Capital
111 Main St
P.O. Box 630
Frisco, CO 80443-0630
(Office) 720-663-1430
(Fax) 866-210-0465
