2009 August | Real Estate Ambassador by Ark Rhowmine

Archive for August, 2009

First In, First Out | Commercial Real Estate | Wausau WI

filed under: Commercial Real Estate Market posted on August 28th, 2009

First In, First Out? The housing sector, which led us into the woods in the first place, is slowly leading us out. New and existing home sales increased in July by 9.6 and 7.2 percent, respectively, buoyed by the $8,000 tax credit for first-time buyers and competition for entry-level homes between first-time buyers and investors. The months’ supply of new homes on the market is headed down at a brisk pace, ending July at 7.5 months versus a balanced market of five to six months. The supply of existing homes, at 9.4 months, also is trending lower but at a more leisurely pace. According to the closely monitored Standard & Poor’s/Case-Shiller 20-city home price index, the seasonally adjusted average price of a single-family home rose 0.7 percent from May to June, the first increase since May 2006. (The index is based on a three-month moving average, i.e. the three months ending in June compared with the three months ending in May.)

Like housing, the long-suffering manufacturing sector is poised to break out of its multi-year slide. Durable goods orders surged 4.9 percent in July, its biggest gain in two years. Orders for civilian aircraft led the way.

One particularly hard-hit corner of the manufacturing sector, the recreational vehicle industry, is on the mend. Northern Indiana has been among the hardest-hit regions in the country, prompting President Obama to visit the city of Elkhart on three occasions. But several RV manufacturers in the region are adding jobs, and one new company is being launched. (Click here for article.) Can cash-for-campers be far behind?

Source: Robert Bach, SVP, Chief Economist, Grubb & Ellis

Commercial Real Estate & Investment Properties listed by Ark Rhowmine click here.

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Become a Financial Detective When Investing in Real Estate | Commercial Real Estate | Wausau WI

filed under: Real Estate Investment Strategies posted on August 14th, 2009

Become a Financial Detective When Investing in Real Estate: When comparing real estate investment purchases due diligence is of the utmost importance to your efforts. Like any business or investment, owning real estate has risks. You may accept higher or lower risk levels but you need to know the facts in order to weigh the risk/reward opportunity. How can you know if what you are about to invest your hard earned money into is a good deal if you do not have all the facts? You need to know the facts. Do not going to a transaction with your heart and not your brain. Your emotions can cause a lot of grief if you do not invest wisely and due diligence in finding the facts.

Topics and select questions to ask when researching a property:

Seller’s Motivation: Ask a question of the seller, why are they selling? It might be a simple reason. They are planning to retire or they want to invest into a different type or property.
Operating History: Find out how long they have been in the business. Did they buy the business from someone else? And how long has the business itself been in existence? Also going to community and find out what the reputation of the business has been.
Profit / Loss statement (3 years)
Balance Sheet (3 years)
Schudule “E” (3 years)
Accountant: Have your business accountant reviewed the three documents above. They will be able to analyze the financial history of the property/business and give you their opinion.
Financing: Maybe, the seller would be willing to finance a portion of the sale.
Tax Issues: Again, have your accountant review and give you their opinion.
Market Study: Do a market study. Is there a great demand for this type of business that you are but to invest in? Do you have compotion, if so can you bring a better product?
Demographics: While performing a market study, note the demographics of the area of which this investment is located and asked these questions. Is the target market nearby? In five years from now can I sell the business or will the area change?
Leases/Tenants: If the business has tenants, how long are there leases for? Get copies of the leases.
Appraisals: Always get an appraisal, the lending institution will want an appraisal, it is a good tool to see the current value of the investment.
Building and property condition: Even though you have walked through the property it is always a good practice to hire a home inspector or commercial property inspector who will provide inspection report of their findings. You never know what they might find.
Capital Improvements (Past, Present and Future): Ask what improvements they have made to the business or property and what they recommend. This again will give you somewhat of a history and a better idea of what you could possibly expect.
Legal: When writing an offer to purchase on an investment property or commercial business it is highly recommended that both parties have a real estate/business attorney review the contract.
Underwriting: Contact an insurance agent who has experience in the underwriting capabilities of providing coverage for this investment or type of business.
Title: All property sales in the state of Wisconsin need to have title filed in the county records. It is highly recommended to use an abstract / title company who will file these documents for you, do property background checks and provide a title insurance and warranty deeds. This will protect you as the buyer from any hidden liens on the property or any unknown claimants to the property.

After researching these topics, and you are staified with the answers, you will be well on your way to understanding what is really going on and if this property is truly worth acting on. These tasks may seem overwhelming, however a good commercial and investment real estate agent will guide you through these processes.

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Grubb & Ellis

Ark Rhowmine Grubb & Ellis | Pfefferle PO Box 865 Wausau, WI 54401 Direct/Cell // 715.297.1953 ArkR@gepwi.com