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Believe in your successful real estate entrepreneur skills but never stop improving

Believe in your successful real estate entrepreneur skills but never stop improving
Real Estate Entrepreneurs Without This Trait Have a Much Lower Chance of Success If you truly break down the top real estate executives that have really strong, highly effective teams that love to work together you will find their leader will be, tenacious, have vision, forward thinking, team leader, good communicator but first and foremost they will have emotional maturity. If you are without an awareness of your own emotions and the ability to manage them, you won’t be able to manage other people or your business effectively. What is emotional maturity?  Emotional maturity is when someone can manage their emotions no matter their circumstances. They know how to respond to tough situations and still keep their cool. It's a skill set they can consistently work on over time. Here’s a good example- an employee makes a mistake, your immediate response might be to correct the mistake and move on. An emotionally mature leader would notice that impulse, then decide if it may be better to listen to why the team member made the mistake and walk them through the thought process and see if there is a possibility there could be a more effective method for long-term success.  Building a strong team is easier with emotional maturity.  Today more than ever your organization achieves its goals through a series of zoom calls, conference calls, daily conversations, interactions and decisions. These interactions involve humans, and the more emotionally intelligent we are, the more effective your team will be on all levels. Inv......
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Is Paying for a Cost Segregation Analysis Beneficial?

Is Paying for a Cost Segregation Analysis Beneficial?
If you were told as a real estate professional that there was a tax credit that could save you thousands in taxes, increase your cash, and allow you to allocate your funds for new investments. You would not only be asking the question: 'Is Paying for a Cost Segregation Analysis Beneficial?' but also 'Why have I not heard of this money-saving benefit?' Cost segregation has been around for some time. In 1997, the Hospital Corp of America and Walgreens Pharmacy appealed that shorter periods should be available, rather than waiting for 27 ½ to 39 years to get their tax returns. These schedules now follow a five-year, seven-year, 27 ½ years and 39 year depreciation time frame. Here is a breakdown of the classifications and depreciation periods. Breaking Down the Cost Segregation Classifications Classification 1 - Building and Personal includes the items added to the property, such as window treatments, moldings, wall coverings, and appliances. These have a five-year depreciation time frame.  Classification 2 - Site Work and Land Improvements include the work done before the foundation is laid down. These works include soil grading, removal, and all the work done around the construction site's surrounding areas. An example of what falls in this classification are driveways, irrigation systems, patios, and landscaping. These have a 15 year depreciation time frame.  Classification 3 - Building Structure includes the building, its foundation, roofing system, exterior facade, plumbing, windows, doors, and frames. These have a 27 ½ years depreciation time frame.  Reasons Why Paying fo......
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Common Metrics/Terms an Investor Uses to Analyze Commercial Real Estate

Common Metrics/Terms an Investor Uses to Analyze Commercial Real Estate
It’s not a secret that numbers drive real estate investment decisions. But the real question is, which metrics are valid? Which metrics matter? Depending on your investment goals and property type, some metrics are more important than others. The following metrics/terms real estate investors commonly use when making portfolio decisions: 1. Capitalization Rate (Cap Rate) Cap rate is mostly used for apartment complexes and commercial buildings. Capitalization rate can also be used for houses and small multifamily properties, but the flip side is that operating expenses are unpredictable with houses since you can’t know how often or how bad your turnovers may be. Cap rate allows you to compare properties in the same asset class with different characteristics that make direct comparison impossible. The disadvantage of the Cap rate is that it’s only a snapshot. It says nothing about the expected growth in expenses, rents, property value, and whether using leverage will increase your return. 2. Cash Flow When evaluating rental properties, it’s vital to figure out your expected monthly cash flow. When determining total expenses, you should include: Property taxes Flood and hazard insurance Water Sewer Garbage Electricity Property management General maintenance and upkeep Capital expenditures Vacancy rate 3. Return on Investment (ROI) RoI is helpful for analyzing how well a deal did in the past. This measurement is always good to have because you can’t adjust your future investing unless you know how your previous investments performed. 4. Internal Rate of Return (IRR) The internal rate of return is used to m......
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Which Commercial Real Estate Sectors Are Approaching Oversupply?

2020 and the years ahead won't come without difficulties for the commercial real estate market. In the United States, certain Commercial Real Estate sectors may be affected by oversupply. the Urban Land Institute states that construction during the current cycle has been below historical trends, but as the cycle matures, we need to look at whether markets are becoming overbuilt. Oversupply may be around the corner for these Commercial Real Estate Sectors: We expect to see some risk of oversupply in Class A multifamily and industrial properties, but the changes that have heightened the demand compared to historical norms should lessen the material impact on fundamentals, which are expected to stay solid. Please NOTE:    This is a general overview of the market sectors across the nation, your specific sub-market may be having substantially different experiences, please consult with a professional commercial real estate agent in your specific sub-market for more details. Industrial Real Estate Sector Industrial real estate also shows signs of overbuilding. Demand stays ahead of supply in both Europe and the U.S, leading to lower vacancy rates. However, as consumers continue to shift toward e-commerce, companies still have to adapt their supply chain strategies and drive the demand for well-located and high-quality logistics facilities. The industrial real estate sector is also heading for slower growth, according to a forecast by the Deloitte Center for Financial Services. The sector, which includes warehouses, flex spaces, distribution centers, and other industrial properties with storage facilities, has been facing sustained demand over......
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Is Investing in an Opportunity Zone Really Worth It?

The main aim of Opportunity Zones is to encourage long-term investments, especially in low-income rural and urban areas throughout the country, and to boost the economy. An Opportunity Zone is an economically distressed rural or urban community that has been identified by state, local, and federal qualifications. Opportunity Zones offer a great investment opportunity for smart real estate investors. However, investors should bear in mind the risk profile of Opportunity Zone deals, which can be much higher in some targeted census tracts than the exchange. The key is to stay diversified while taking advantage of the capital gains tax relief that is available through the program. On the other hand, if investors remain diversified, there may not be enough funds flowing to these vehicles. Only time will tell if this latest program will succeed in identifying the areas that will benefit most from the subsidy, as well as in overcoming the issues that have limited the effectiveness of similar initiatives. Although this concept sounds socially responsible, investors are only delaying or deferring their capital gains taxes.  This program could be good for investors in the sense that it lowers their capital gains taxes, but whether or not it’s going to be good for the people in those communities is still to be seen within the next decade. However, waiting may not be the best move for investors, since these assets are as cheap as they’re ever going to be. Opportunity zones offer three benefits that make real estate attractive to professional inv......
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Which Commercial Property Sectors are Doing the Best During the Pandemic, and Which Ones Are Hurting?

Together with almost every other sector of the economy, commercial property has been disrupted by Coronavirus and social distancing. For many years, the main declining CRE sector has been retail. However, this sector is no longer suffering alone, since the pandemic is hurting most other CRE sectors: hospitality, office, multi-family, personal services, restaurant, entertainment, and construction. A decline in retail space may result in greater demand for industrial space. For the industrial sector properties, demand for storage space from online stores may continue to increase after the coronavirus pandemic. The online shopping industry has created a strong demand for logistic space and warehouse, increasing record asset values and rental rates for industrial properties, while reducing demand for some retail properties.   However, it’s worth noting that some areas of retail are still doing well. Shopping centers are still open because they have supermarkets that are all trading exceptionally well.  The non-discretionary retail segment will probably emerge from this crisis as one of the most resilient commercial property sectors. The performance of commercial office buildings depends on the underlying resilience of the tenant’s business. For instance, where tenants are government departments and big multinational companies with employees working from home, the effects are likely to be minimal. However, those with tenants whose business model has been significantly disrupted by social distancing are being deeply affected.  The aftershock is likely to affect various types of commercial property differently. Shopping malls will probably take some time to return to full capacity, as people remain worried abo......
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Do I need an attorney for my commercial real estate deal, or is my broker enough protection?

Does a seller or a buyer of commercial real estate really have to hire an attorney? The unmistakable answer is, "Yes!" A broker is a licensed professional who you hire to negotiate the sale or purchase of a real estate for a fee or a commission. However, they are typically not attorneys. Many of them will clearly state that real estate brokers are not providing legal advice. Real estate brokers don’t usually get paid unless they close the deal (or unless you are somehow obligated to pay a commission, for example, by withdrawing from a deal). Therefore, brokers are usually not going to take care of the legal details and may even try to push a deal to close as fast as possible. Be sure that separate legal advice from a good real estate lawyer is usually worth the additional cost. It's much more cost-effective to hire an attorney to get the deal done right than to get involved in an expensive lawsuit. A good attorney can also be crucial to getting a beneficial purchase. Also, keep in mind that it’s best to hire an actual commercial attorney who deals with this kind of transaction daily. It may cost a bit more than a general lawyer, but it’s well worth it. What does a real estate attorney actually do? The job of a real estate lawyer is to negotiate and make a transaction happen in a peaceful way that's amenable and fair to all parties. A real estate lawyer takes over after......
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Mastering Multifamily Maintenance Challenges Feature with Joe Killinger

By Meeghan Fuhr  with Joe Killinger Experts weigh in on best practices for finding, training and retaining the skilled maintenance techs that every multifamily property needs. In the current tight labor market, finding and retaining good multifamily maintenance technicians is often challenging. Emerging operators, in particular, are well advised to look for someone who can do it all. “If you have a smaller property and you’re a new property manager or a new landlord, you want to have somebody who can really handle almost everything on the property—and those people are worth their weight in gold,” said Joe Killinger, co-founder of Los Angeles-based Pono Asset Management. Those 24-karat team members don’t just happen by accident, however; after they come on board, it’s up to management to train them properly in the company way. As Killinger explained: “You want somebody who’s always looking for a way to get it done that is going to last, not a temporary fix. If they fix an issue right the first time, it’s going to save on callbacks, so you’re not doubling up your work.” Finding and keeping good maintenance techs requires attention to a variety of other issues: compensation, incentives, and making them feel valued. Pamela Sullens, COO of Golden Mountain Real Estate makes the case for rewards and incentive programs as a strategy to cultivate loyalty. “I think it’s about employee treatment and how you treat your employees, and I think if they have good performance, you have to recognize that,” said Sullens, who served as the Institute ......
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10 Questions a Landlord Should Ask When Interviewing Management Companies

Finding a reputable property management company can be quite daunting as it is difficult to really know how well the company is run. We have put together a list of items you should ask when interviewing a potential property management company.   1. How long have they been in business? You want to associate yourself with an established company, as this speaks to a company’s length of service in the community.   2. Do they manage other assets in your area? A property management company should have a presence in your local area, managing properties that are in the same asset class as your property. For example, if you own an apartment building in West LA, you should look for companies that manage apartments in West LA. The properties they manage may be available on the webpage, if not, ask this question while interviewing them in your initial conversation over the phone.   3. Are they carrying the proper insurance coverages? The company should at a minimum carry general liability and workers compensation for their business. In addition, it is always wise to look for a company that also carries Errors and Omissions insurance.   4. Do they have their own experienced maintenance team or do they have to hire maintenance companies? Many times smaller property management companies will outsource their maintenance. In addition to asking if there is an additional service charge for this, also ask how the management company vets their vendors (do all of their vendors carry liability i......
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Expert Insights with Joe Killinger: Companies Should Look towards Transparency

For our latest entry in our Expert Insights series, we had the pleasure of sitting down with Joe Killinger. We asked Joe to tell us more about where he got his passion for real estate, what he thinks the state of the industry is at this moment and where he thinks it will go next. Read on to find out more about his journey to being a successful real estate professional. Q: Tell us a little bit about your background and why you chose a career in real estate. I grew up on a small farm in central Nebraska and my father saw that the farming industry was going to go through a significant change and quite honestly he wanted to have a better life for his family so he trained and became a licensed Auctioneer and Real Estate Broker. Killinger Auction and Real Estate launched and I immediately got the real estate bug. When I graduated high school I immediately began taking courses to get my Nebraska real estate license and when I went off to college I got my license and was lucky enough to be introduced to Pace Woods that was the CEO of Woods Bro’s Realty in Lincoln, Nebraska. I am not sure why he gave this 18 year old with no experience a start but he gave me a phone book and said there’s your potential clients…good luck! I chose to go after selling and leasing farm land as I thought there may be less competition and I......
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