Posted to ABC News7 on:
6:23 pm Thu May 01, 2008 - MANASSAS, Va.
Prince William County (webnews) supervisors have made a key change to the county's illegal immigration policy, considered one of the most aggressive in the nation.
The board decided late Tuesday to direct police officers to question criminal suspects about their immigration status only after they have been arrested.
In October, the board directed police to check the residency status of anyone who is detained, no matter how minor the offense, if they believe the person might in the United States illegally.
Republican Supervisor Martin Nohe said Tuesday that the change in the illegal-immigration policy will limit the county's risk of a lawsuit.
Supervisors supported the change after cutting $3.1 million from the county's budget that would have funded video cameras in police cars to enforce the policy. Police had wanted the cameras to protect officers from allegations of racial profiling.
The change came before the board approved a fiscal 2009 budget of $893 million.
Prince William supervisors revisited the illegal immigration policy after Democratic Supervisor Frank Principi last week expressed concern about overly harsh enforcement.
Tuesday, he proposed a change that would have directed police to question a person's immigration status only after they have been arrested and taken to jail. He was the only supervisor to support it.
More than 100 people addressed the board for more than five hours Tuesday regarding both budget and immigration matters. Some asked the board to keep the illegal-immigration policy intact, while others urged supervisors to limit it.
"If [people] enter our country illegally, they should be deported, whether they are a criminal or not," said Walter Menz of Woodbridge.
Ruth Hellwig, a 45-year resident of Woodbridge, said, "it's dividing neighbor against neighbor ... even the children are discriminating against one another in the school system."
Tuesday, August 12, 2008
Wednesday, July 30, 2008
HOPE FOR HOMEOWNER ACT OF 2008
Hello Everyone,If you have questions about the new bail out from the government, here are some questions and answers:
Questions and answers about the Hope for Homeowners Act of 2008, passed by Congress last weekend to try to steer as many as 400,000 struggling homeowners away from foreclosure:
Q: What exactly will the legislation do?
A: It will allow those who qualify to cancel their old mortgage loans and replace them with 30-year fixed-rate loans for up to 90 percent of the home's current value. The FHA will insure a total of $300 billion of the loans over a three-year period.But the decision on whether to write such a loan remains up to banks, which would have to be willing to take a loss on the existing loans in exchange for avoiding an often-costly foreclosure.
Q: Who is eligible?
A: Eligible borrowers must have spent more than 31 percent of their monthly incomes on their mortgages as of March 1, 2008. The troubled loan must have originated no later than Jan. 1, 2008, and be on the borrower's primary residence. And the borrower's income must be verified.
Q: When does the program start?
A: It takes effect Oct. 1 and runs through September 2011, although the FHA isn't likely to have it operating at full capacity until next year.
Q: Since lenders can pick and choose which loans to refinance, how can consumers determine if theirs will be selected?
A: Check with the bank or financial company servicing your mortgage, but it may be weeks before they make decisions concerning the new guidelines and assess individual loans.Even then, keep expectations limited."Servicers are going to be reluctant to take the government up on their offer," predicted Mark Zandi, chief economist at Moody's Economy.com. "The earliest they'll start taking them up on it is early next year. And even then it's likely to be modest."
Q: Is there anything a homeowner can do to improve chances of benefiting from the program, such as crunching numbers to make a case for the bank?
A: Not really. The best step is to keep up your payments as best you can.
Q: But doesn't this provide an incentive to NOT pay your mortgage, if you're barely keeping ahead of bills and are underwater on your house, so you can qualify?
A: No. If your situation deteriorates enough, the bank may reject any possible new loan."Turning yourself into a financial basket case is not going to work," said Dan Seiver, a finance professor at San Diego State University. "If you turn into a complete deadbeat, the servicer is going to just foreclose and dump it."
Q: So what should I be doing now besides trying to keep up with payments?
A: Talk to a local credit counselor and call the toll-free hot line of the Hope Now alliance — an industry group trying to coordinate a response to the mortgage crisis — at 1-888-995-HOPE. It is available 24 hours a day to provide mortgage counseling in multiple languages. Mary Thomason, director of resource development for The Impact Group of Atlanta, a housing counseling group, also suggests tracking expenses and income closely in order to be able to forecast your cash flow for the next six months and give yourself better control of your finances.
Q: If the banks and lenders refuse to write these loans, then what?
A: Public and political pressure may prompt them to participate. If not, and more people continue to lose their homes, Zandi says the next White House administration subject them to additional regulations or investigations if they remain unwilling to take on the risks.
Q: What happens if I'm able to sell my home after I refinance?
A: If you sell during the next five years, you must agree to share 50 percent of any profits from the resale with the government. What's more, homeowners can only retain equity gains based on a sliding scale. The homeowner would have zero equity from a sale in the first year, with the amount rising 10 percent in each succeeding year and capping at 50 percent from a sale in year five and thereafter. The equity must be repaid because the maximum amount on the new loans will be capped at 90 percent of the current market value, which automatically gives the previously troubled homeowner 10 percent equity in the home.
Q: Where can consumers find more detailed information about the plan?
A: There is a six-page summary of the housing act at http://banking.senate.gov/public/_files/HousingandEconomicRecoveryActSummary.pdf and the FHA's Web site at http://www.fha.gov is a place to watch for updated information. The entire 694-page bill is at http://www.house.gov/apps/list/press/financialsvcs_dem/hr3221_bill_text.pdf
Questions and answers about the Hope for Homeowners Act of 2008, passed by Congress last weekend to try to steer as many as 400,000 struggling homeowners away from foreclosure:
Q: What exactly will the legislation do?
A: It will allow those who qualify to cancel their old mortgage loans and replace them with 30-year fixed-rate loans for up to 90 percent of the home's current value. The FHA will insure a total of $300 billion of the loans over a three-year period.But the decision on whether to write such a loan remains up to banks, which would have to be willing to take a loss on the existing loans in exchange for avoiding an often-costly foreclosure.
Q: Who is eligible?
A: Eligible borrowers must have spent more than 31 percent of their monthly incomes on their mortgages as of March 1, 2008. The troubled loan must have originated no later than Jan. 1, 2008, and be on the borrower's primary residence. And the borrower's income must be verified.
Q: When does the program start?
A: It takes effect Oct. 1 and runs through September 2011, although the FHA isn't likely to have it operating at full capacity until next year.
Q: Since lenders can pick and choose which loans to refinance, how can consumers determine if theirs will be selected?
A: Check with the bank or financial company servicing your mortgage, but it may be weeks before they make decisions concerning the new guidelines and assess individual loans.Even then, keep expectations limited."Servicers are going to be reluctant to take the government up on their offer," predicted Mark Zandi, chief economist at Moody's Economy.com. "The earliest they'll start taking them up on it is early next year. And even then it's likely to be modest."
Q: Is there anything a homeowner can do to improve chances of benefiting from the program, such as crunching numbers to make a case for the bank?
A: Not really. The best step is to keep up your payments as best you can.
Q: But doesn't this provide an incentive to NOT pay your mortgage, if you're barely keeping ahead of bills and are underwater on your house, so you can qualify?
A: No. If your situation deteriorates enough, the bank may reject any possible new loan."Turning yourself into a financial basket case is not going to work," said Dan Seiver, a finance professor at San Diego State University. "If you turn into a complete deadbeat, the servicer is going to just foreclose and dump it."
Q: So what should I be doing now besides trying to keep up with payments?
A: Talk to a local credit counselor and call the toll-free hot line of the Hope Now alliance — an industry group trying to coordinate a response to the mortgage crisis — at 1-888-995-HOPE. It is available 24 hours a day to provide mortgage counseling in multiple languages. Mary Thomason, director of resource development for The Impact Group of Atlanta, a housing counseling group, also suggests tracking expenses and income closely in order to be able to forecast your cash flow for the next six months and give yourself better control of your finances.
Q: If the banks and lenders refuse to write these loans, then what?
A: Public and political pressure may prompt them to participate. If not, and more people continue to lose their homes, Zandi says the next White House administration subject them to additional regulations or investigations if they remain unwilling to take on the risks.
Q: What happens if I'm able to sell my home after I refinance?
A: If you sell during the next five years, you must agree to share 50 percent of any profits from the resale with the government. What's more, homeowners can only retain equity gains based on a sliding scale. The homeowner would have zero equity from a sale in the first year, with the amount rising 10 percent in each succeeding year and capping at 50 percent from a sale in year five and thereafter. The equity must be repaid because the maximum amount on the new loans will be capped at 90 percent of the current market value, which automatically gives the previously troubled homeowner 10 percent equity in the home.
Q: Where can consumers find more detailed information about the plan?
A: There is a six-page summary of the housing act at http://banking.senate.gov/public/_files/HousingandEconomicRecoveryActSummary.pdf and the FHA's Web site at http://www.fha.gov is a place to watch for updated information. The entire 694-page bill is at http://www.house.gov/apps/list/press/financialsvcs_dem/hr3221_bill_text.pdf
Saturday, July 19, 2008
Thursday, July 10, 2008
PRO AND CONS OF THE 1031 EXCHANGE
October 1, 2007
Pros and Cons of the 1031 Exchange
By Neil A. OHara
How would you like to exchange one appreciated asset for another without having to pay capital gains tax? In the world of stocks and bonds, that only happens within qualified accounts like IRAs or 401(k)s. But it's a different story if your clients own business-related or investment real estate. Section 1031 of the Internal Revenue Code permits owners to exchange one piece of real property for another of "like kind"—a term broad enough to encompass anything from raw land to office buildings or mineral properties—without paying capital gains tax as long as they reinvest the entire sale proceeds in the new property.
A few restrictions apply, of course. The owner has 45 days from the closing of the sale to identify one or more replacement properties, and must close the new purchases within 180 days of the original sale. The owner can't touch the sale proceeds, either. The money has to go into escrow at a "qualified intermediary"—typically a bank or title insurer—pending reinvestment. A 1031 exchange works only if the real estate is held directly or as a tenancy-in-common (TIC), an undivided fractional interest in a property. Interests in a partnership or real estate investment trust (REIT) don't qualify. Nor does property used by the owner as a residence, which rules out vacation homes unless they are rented out.
In a hot real estate market, owners must take care not to flip properties in 1031 transactions. "If you trade too quickly the IRS may say you didn't buy the property for investment, but for the purpose of resale," says Steve Mastbaum, a tax expert and shareholder in law firm Greenberg Traurig's New York office. The consequences are ugly. The IRS not only disallows the tax deferral but also treats the profit as ordinary income rather than as a capital gain.
For people willing to accept the constraints, 1031 exchanges can lay the foundation for significant wealth. Stephen Wayner, first vice president at Bayview Financial Exchange Services in Coral Gables, Fla., has a client who put down $300 on each of two $3,000 lots he bought 33 years ago. Four exchanges later his net worth is $4.3 million—and he never put in another penny. Wayner says clients often use the tax-free proceeds of one sale for the down payment on a replacement, which allows them to buy more property and leverage the return.
IRS figures show a dramatic increase in 1031 exchanges in recent years. In 2004, the most recent year for which data is available, 219,675 individuals reported transactions, more than double the number in 2000. For partnerships, the transaction volume almost quadrupled to 47,928. Wayner says a whole new industry has sprouted since a 2002 IRS ruling permitted up to 35 people to join together as TICs to buy a piece of property and still qualify for 1031.
Patricia DelRosso, president of Inland Real Estate Exchange Corp. in Chicago, expects the growth to continue, as baby boomers who have spent their lives managing small real estate portfolios approach retirement. "They no longer want to deal with the three T's: tenants, toilets and trash," she says. "We can meet that need by offering a 1031 TIC exchange." While the owner still participates in decisions to sell, rehab or refinance the property, a management company handles collections and regular maintenance. DelRosso says a TIC exchange provides an opportunity to diversify, too. The owner can trade a portfolio of single-family rental homes for fractional interests in up to three replacement properties—a shopping center, an office building and a multifamily apartment complex, for example. Although advisors don't get paid directly from 1031 exchanges, suggesting a way for a client to defer tax builds credibility. And as William Fleming of PricewaterhouseCoopers' private company services practice notes: "People with these kinds of properties often have big securities portfolios."
(c) 2007 On Wall Street and SourceMedia, Inc. All Rights Reserved.
http://www.onwallstreet.com/
http://www.sourcemedia.com
Pros and Cons of the 1031 Exchange
By Neil A. OHara
How would you like to exchange one appreciated asset for another without having to pay capital gains tax? In the world of stocks and bonds, that only happens within qualified accounts like IRAs or 401(k)s. But it's a different story if your clients own business-related or investment real estate. Section 1031 of the Internal Revenue Code permits owners to exchange one piece of real property for another of "like kind"—a term broad enough to encompass anything from raw land to office buildings or mineral properties—without paying capital gains tax as long as they reinvest the entire sale proceeds in the new property.
A few restrictions apply, of course. The owner has 45 days from the closing of the sale to identify one or more replacement properties, and must close the new purchases within 180 days of the original sale. The owner can't touch the sale proceeds, either. The money has to go into escrow at a "qualified intermediary"—typically a bank or title insurer—pending reinvestment. A 1031 exchange works only if the real estate is held directly or as a tenancy-in-common (TIC), an undivided fractional interest in a property. Interests in a partnership or real estate investment trust (REIT) don't qualify. Nor does property used by the owner as a residence, which rules out vacation homes unless they are rented out.
In a hot real estate market, owners must take care not to flip properties in 1031 transactions. "If you trade too quickly the IRS may say you didn't buy the property for investment, but for the purpose of resale," says Steve Mastbaum, a tax expert and shareholder in law firm Greenberg Traurig's New York office. The consequences are ugly. The IRS not only disallows the tax deferral but also treats the profit as ordinary income rather than as a capital gain.
For people willing to accept the constraints, 1031 exchanges can lay the foundation for significant wealth. Stephen Wayner, first vice president at Bayview Financial Exchange Services in Coral Gables, Fla., has a client who put down $300 on each of two $3,000 lots he bought 33 years ago. Four exchanges later his net worth is $4.3 million—and he never put in another penny. Wayner says clients often use the tax-free proceeds of one sale for the down payment on a replacement, which allows them to buy more property and leverage the return.
IRS figures show a dramatic increase in 1031 exchanges in recent years. In 2004, the most recent year for which data is available, 219,675 individuals reported transactions, more than double the number in 2000. For partnerships, the transaction volume almost quadrupled to 47,928. Wayner says a whole new industry has sprouted since a 2002 IRS ruling permitted up to 35 people to join together as TICs to buy a piece of property and still qualify for 1031.
Patricia DelRosso, president of Inland Real Estate Exchange Corp. in Chicago, expects the growth to continue, as baby boomers who have spent their lives managing small real estate portfolios approach retirement. "They no longer want to deal with the three T's: tenants, toilets and trash," she says. "We can meet that need by offering a 1031 TIC exchange." While the owner still participates in decisions to sell, rehab or refinance the property, a management company handles collections and regular maintenance. DelRosso says a TIC exchange provides an opportunity to diversify, too. The owner can trade a portfolio of single-family rental homes for fractional interests in up to three replacement properties—a shopping center, an office building and a multifamily apartment complex, for example. Although advisors don't get paid directly from 1031 exchanges, suggesting a way for a client to defer tax builds credibility. And as William Fleming of PricewaterhouseCoopers' private company services practice notes: "People with these kinds of properties often have big securities portfolios."
(c) 2007 On Wall Street and SourceMedia, Inc. All Rights Reserved.
http://www.onwallstreet.com/
http://www.sourcemedia.com
Monday, July 07, 2008
U.S. residents to be fingerprinted
U.S. residents to be fingerprinted
By Tomasz Zalewski, Super Express, 28 July 2006.
Translated from Polish by Ania Milewska.
The U.S. Department of Homeland Security announced that greencard holders – permanent U.S. residents – will be fingerprinted at U.S. borders each time they re-enter the country. The new law is to go into effect in a few months. Since January of 2004, fingerprints (taken with a scanner and not with ink) and digital photos of all foreigners, with the exception of Canadians and Mexicans, visiting the United States have been taken at U.S. borders under the U.S. Visit Program. Snaring unlawful residents So far, close to 61 million people have been processed to determine the validity of their visas, to search for criminal records or for suspicion of terrorism. Anna Hinken, a spokesperson for the Department of Homeland Security, stated that fingerprinting permanent U.S. residents (who are not yet citizens) will help identify people who are using false or stolen greencards, which are easily accessible in the black market. Annually, about a million greencard holders cross U.S. borders, entering or leaving the country. It is estimated that about 12 million U.S. residents are greencard holders. Is it discrimination? The announcement of the new regulations has sparked protests by several pro-immigrant organizations. They claim that fingerprinting is discriminatory and is reminiscent of the requirement implemented after the 9/11 attacks, which affected males from the Middle East and South Asia, who had to register with the immigration authorities after entering the United States.
This article appeared in Edition 233 of Voices That Must Be Heard.
Translation © 2006, IPA, all rights reserved. Included by permisson of Super Express.
By Tomasz Zalewski, Super Express, 28 July 2006.
Translated from Polish by Ania Milewska.
The U.S. Department of Homeland Security announced that greencard holders – permanent U.S. residents – will be fingerprinted at U.S. borders each time they re-enter the country. The new law is to go into effect in a few months. Since January of 2004, fingerprints (taken with a scanner and not with ink) and digital photos of all foreigners, with the exception of Canadians and Mexicans, visiting the United States have been taken at U.S. borders under the U.S. Visit Program. Snaring unlawful residents So far, close to 61 million people have been processed to determine the validity of their visas, to search for criminal records or for suspicion of terrorism. Anna Hinken, a spokesperson for the Department of Homeland Security, stated that fingerprinting permanent U.S. residents (who are not yet citizens) will help identify people who are using false or stolen greencards, which are easily accessible in the black market. Annually, about a million greencard holders cross U.S. borders, entering or leaving the country. It is estimated that about 12 million U.S. residents are greencard holders. Is it discrimination? The announcement of the new regulations has sparked protests by several pro-immigrant organizations. They claim that fingerprinting is discriminatory and is reminiscent of the requirement implemented after the 9/11 attacks, which affected males from the Middle East and South Asia, who had to register with the immigration authorities after entering the United States.
This article appeared in Edition 233 of Voices That Must Be Heard.
Translation © 2006, IPA, all rights reserved. Included by permisson of Super Express.
Thursday, July 03, 2008
NEW VICE PRESIDENT
I have recently accepted the role of Vice President of Sales and Marketing for US Home Construction, Inc. We are both a Licensed Class (A) Builder, and an Architectural firm. The combination of these two important roles classifies us a Design-Build firm. The original General Construction company is about (12) years old. The old company was in need of a face lift and new management so US Home Construction, Inc. was bought and restructured recently. I am here because my goals as a real estate developer coincide perfectly with the growth strategy of the company. As a vice president I can keep the flexibility I need to assure success.
Find more photos like this on DCLife Magazine
My background enables me to provide:
- Accurate market consultation
- Marketing strategy
- Campaign Design
- SEM and SEO Comsultation
- Access to commercial lending
I think that I have a greater chance at becoming a top Real Estate Developer with such a strong relationship with a great Design-build firm.
_____________________________________________
Benefits of Design-Build
It is important to note that the Design-build method, while not focused on saving the owner construction costs, nonetheless often saves the owner money on the overall project. The combined effects of carrying a construction loan (which typically carries a higher interest rate than permanent financing) and an earlier useful on-line date usually yields considerable overall profitability to the project and may make seemingly unfeasible projects into genuine opportunities.
The compression is an important aspect of the implementation of this system. Other attributes include:
- increased accountability by the service provider
- single source project delivery
- a value based project feedback system
Accountability
Rather than a parcelized level of responsibility of the classic design-bid-build, design-build provides an integrated solution for the owner or client. This moves projects away from the "finger-pointing" that is often commonplace in contemporary construction projects, and allows the owner to look to one entity with any questions or concerns.
Single Source
Instead of having several contractors and consultants, an owner has just one entity to deal with. Design revisions, project feedback, budgeting, permitting, construction issues, change orders, and billing can all be routed through the design-build firm. This single point of contact allows a certain degree of flexibility for the owner. Most design-builders will leverage that flexibility for the owner's benefit by continually refining the construction program to maximize the owner's value at the completion of the project.
Value-based project feedback
Typically, in order for a contractor to bid on a project, very specific details relating to the methods and materials must be given to avoid any ambiguity and to make an "apples to apples" comparison of bids. In a design-build context, the owner, the owner's other consultants, and the design-builder can work together to determine what methods and materials will maximize the owner's value. In instances where marginally more expensive materials, designs, or construction methods might yield a higher return on investment for the owner than those of lower cost, the owner is free to adjust the project's program without having to re-bid the entire project.
Wednesday, June 25, 2008
Editor's Letter: Too Far, Too Fast
January 1, 2008
Editor's Letter: Too Far, Too Fast
David Bodamer Editor-in-Chief Retail Traffic Magazine
The meteoric ascent of Centro Properties Group from a company few were familiar with a decade ago to a firm that controls one of the 10 largest portfolios in the United States always seemed too good to be true. It turns out, it was.
While Australian capital has long had a prominent presence in the U.S. (names like Westfield, Macquarie and Galileo come to mind), Centro's rise was somehow different. It collected properties as if they were stamps, amassing more than 700 in a matter of years through portfolio deals and outright acquisitions of companies. In the process it leapfrogged past firms with decades of experience owning and operating properties in the U.S. market. And 2007 provided the firm's master stroke: the acquisition of New York City-based New Plan, one of the oldest and largest retail REITs in the country.
A few months ago I had the chance to sit down with Centro CEO Andrew Scott when he was in New York attending an investors conference. One of the things I asked is how the company was able to move so far so fast. He pointed to the superannuation funds in Australia whereby every worker puts 9 percent of their money into retirement accounts. And a preference there has always been to invest in commercial real estate.
In Australia, however, the vast majority of investible real estate is already owned by funds like Centro. As a result, Australian firms have to be aggressive abroad in order to invest their funds.
Scott said that Centro constantly had money streaming in and was able to move from acquisition to acquisition without seemingly ever taking a breather to absorb the new properties. He even hinted that there might be more deals for the firm in the offing this year. As it turns out Centro's growth wasn't just the result of those funds. In reality, it was carrying an extremely heavy debt load, with much of that short-term financing stemming from its aggressive acquisitions strategy.
Now it's looking at billions of dollars worth of maturing debt that all needs to be paid back (or refinanced) by February 15. The initial reports coming out of Australia are that no bank is willing to do that unless Centro dramatically decreases its leverage levels. The only way it can do that is to sell assets quickly. And that creates a whole other problem.
Centro's fall is proving doubly painful because investors in U.S. retail REITs have gotten spooked by Centro's rapid fall. They are worried that U.S. REITs have followed suit and dumped REIT shares in the days after Centro's announcement sending many companies to new 52-week lows. That may hamper some REITs' ability (or willingness) to jump in and buy Centro's portfolio, especially if it would require them to take on more debt — something that's extremely tricky in the current environment.
In the end, there's a strong argument that Centro's problems are the result of bad timing and a too-aggressive strategy. It seems highly unlikely that other firms will face similar issues since no major retail REITs have similar leverage levels or are looking at the amount of debt maturing in 2008 that Centro faced.
But it also shows that getting a handle on the credit crisis may not be as easy as we thought a couple of months ago either.
© 2008 Penton Media. Displayed by permission. All rights reserved.
You may forward this article or get additional permissions by typing http://license.icopyright.net/3.5516?icx_id=retailtrafficmag.com/management/edletter/centro_properties_group_fall/index.html into any web browser. Penton Media, Inc and Retail Traffic logos are registered trademarks of Penton Media, Inc. The iCopyright logo is a registered trademark of iCopyright, Inc.
Editor's Letter: Too Far, Too Fast
David Bodamer Editor-in-Chief Retail Traffic Magazine
The meteoric ascent of Centro Properties Group from a company few were familiar with a decade ago to a firm that controls one of the 10 largest portfolios in the United States always seemed too good to be true. It turns out, it was.
While Australian capital has long had a prominent presence in the U.S. (names like Westfield, Macquarie and Galileo come to mind), Centro's rise was somehow different. It collected properties as if they were stamps, amassing more than 700 in a matter of years through portfolio deals and outright acquisitions of companies. In the process it leapfrogged past firms with decades of experience owning and operating properties in the U.S. market. And 2007 provided the firm's master stroke: the acquisition of New York City-based New Plan, one of the oldest and largest retail REITs in the country.
A few months ago I had the chance to sit down with Centro CEO Andrew Scott when he was in New York attending an investors conference. One of the things I asked is how the company was able to move so far so fast. He pointed to the superannuation funds in Australia whereby every worker puts 9 percent of their money into retirement accounts. And a preference there has always been to invest in commercial real estate.
In Australia, however, the vast majority of investible real estate is already owned by funds like Centro. As a result, Australian firms have to be aggressive abroad in order to invest their funds.
Scott said that Centro constantly had money streaming in and was able to move from acquisition to acquisition without seemingly ever taking a breather to absorb the new properties. He even hinted that there might be more deals for the firm in the offing this year. As it turns out Centro's growth wasn't just the result of those funds. In reality, it was carrying an extremely heavy debt load, with much of that short-term financing stemming from its aggressive acquisitions strategy.
Now it's looking at billions of dollars worth of maturing debt that all needs to be paid back (or refinanced) by February 15. The initial reports coming out of Australia are that no bank is willing to do that unless Centro dramatically decreases its leverage levels. The only way it can do that is to sell assets quickly. And that creates a whole other problem.
Centro's fall is proving doubly painful because investors in U.S. retail REITs have gotten spooked by Centro's rapid fall. They are worried that U.S. REITs have followed suit and dumped REIT shares in the days after Centro's announcement sending many companies to new 52-week lows. That may hamper some REITs' ability (or willingness) to jump in and buy Centro's portfolio, especially if it would require them to take on more debt — something that's extremely tricky in the current environment.
In the end, there's a strong argument that Centro's problems are the result of bad timing and a too-aggressive strategy. It seems highly unlikely that other firms will face similar issues since no major retail REITs have similar leverage levels or are looking at the amount of debt maturing in 2008 that Centro faced.
But it also shows that getting a handle on the credit crisis may not be as easy as we thought a couple of months ago either.
© 2008 Penton Media. Displayed by permission. All rights reserved.
You may forward this article or get additional permissions by typing http://license.icopyright.net/3.5516?icx_id=retailtrafficmag.com/management/edletter/centro_properties_group_fall/index.html into any web browser. Penton Media, Inc and Retail Traffic logos are registered trademarks of Penton Media, Inc. The iCopyright logo is a registered trademark of iCopyright, Inc.
Tuesday, June 24, 2008
VIEW A TYPICAL SEM CONTRACT
Consultant:
Eugene Smith, Jr.
27 Danbury Street, S.W.
Washington, D.C. 20032
Email: corporate@mestizomedia.com
Phone: 571-276-9683
Goals
Develop an online marketing strategy and a viable plan that will enable client to efficiently attain targeted registered contacts within twelve months. Consult for Web site enhancement to compliment online marketing strategy. Customize a Client Response and Management system. Coordinate prospect delivery to account managers, and develop a tracking system to monitor account manager effectiveness. Facilitate Customer Service, Retention and Sales Training (Soft Sales).
Duration of Services
The typical term of the consulting engagement is three months. Consulting will automatically continue in one-month increments unless another agreement is made between the parties, or it is cancelled. Either party may cancel the agreement provided 15-days written notice (email is acceptable).
Project Management Services
During the term of the engagement Consultant will oversee Client's online marketing program, make recommendations, react to Client input and decisions, and in approved cases act on the behalf of Client on various aspects of the program. Consultant is responsible for maintaining a timeline and working with sub-contractors to keep the project on schedule. The project includes several components as further described below, including Marketing Strategy, Search Engine Optimization, Web Site Enhancement, Online Marketing Planning, and Branding Strategy.
Marketing Strategy
• Consultant will apply online marketing knowledge and Internet technology
expertise to Client's ideas and business objectives to develop a plan that will achieve specific and measurable results toward the desired goal.
• Consultant will offer advice and additional ideas during regular discussions with Client.
• Consultant will create and maintain a central document that outlines specific elements of the plan and seek Client approval.
• Consultant will create a timeline to ensure elements of the plan are being acted upon.
The marketing strategy will be the first deliverable of the consulting engagement. All elements of the original marketing strategy will require approval by Client. Any future deviations from the original plan will require written approval by Client.
Search Engine Optimization Services
Consultant coordinates efforts of professional SEO firms to expeditiously make necessary changes to the site(s) to achieve better search engine rankings. During strategy development phase;
• Consultant will work with Client to identify keywords that will be targeted for high ranking.
• Consultant will be responsible for obtaining at least two competitive bids for any sub-contracted work. This may include additional SEO services and/or Media services. Because of industry contacts and relationships, Consultant may be able to obtain services on a wholesale rate and pass along the savings.
• Consultant will communicate to contracted firm the target list and monitor the results.
• Consultant will negotiate with contracted firm to efficiently build upon existing site infrastructure to avoid excess cost. Some Web site development work may be needed for SEO to be successful.
• Consultant will maintain communications to ensure project stays on schedule.
Web Site Development Services
SEO and adding functionality to the Web site(s) necessitates Web site development work. Using the Client approved marketing plan;
• Consultant will provide an itemized list of pages, applications and possible enhancements. Client will approve list.
• Consultant will develop the pages, or recommend that certain work be sub-contracted. Client will decide if work will be sub-contracted.
• Consultant will be responsible for obtaining at least two competitive bids for any sub-contracted work. Because of industry contacts and relationships, Contractor may be able to obtain services on a wholesale rate and pass along the savings.
• Consultant will maintain communications with web development firm to ensure project stays on schedule.
Online Marketing Planning and Execution
Concurrent to the work previously described, consultant will;
• Develop an online marketing plan that will achieve the defined goal.
• Communicate aspects of the plan to Client for approval.
• Negotiate the best rates and obtain insertion orders from selected advertising vendors.
Because of industry contacts and negotiation skills, often Consultant will be able to arrange CPA (Cost-Per-Action) deals that carry less risk for the Client.
• Implement approved elements and track effectiveness.
• Provide feedback on campaign successes and failures.
• Develop tracking mechanisms to determine effective CPA.
• Optimize marketing plan toward lowering CPA.
• Provide pacing reports and projections related to progress.
Intangible Services
There is an intrinsic value associated with the Consultant's unique qualifications, experience and know-how. Whether measured in cost savings, additional revenue, increased efficiency, alternate business opportunities, brand recognition, improved conversion rates, speed to market, or other business development improvements, by contracting services the Client acknowledges additional benefits not specifically identified in the agreement.
Fees
A retainer fee for work described in this proposal is determined to be $18,000.00, with payable upon acceptance of this agreement. A Schedule of Payments is expressed below under “Payment Terms & Conditions”. Subsequent months, pursuant to the automatic renewal clause under "Duration of Services" are per month at a rate of $7,000.00, payable no later than the fifth day of the month in which services are to be rendered.
Consultant will charge a campaign management fee based on 10% of the total cost of any advertising insertion orders that are negotiated and accepted by Client under this agreement. This fee is similar to, but lower than the standard advertising agency commission rate of 15% and is only applied to advertising orders made during the term of this agreement, which are negotiated on behalf of Client, recommended by Consultant, and accepted by Client. Campaign management fees are billed at the end of the month in which the order is accepted, payable within 15 days or no later than fifteen days prior to the end date of the engagement, whichever is earlier. An incentive-based prospect management fee of $100.00 per successfully captured account.
Payment Terms & Conditions
Schedule of Payments
$9,000.00 (equivalent to 50% of the retainer fee) Due by June 22, 2007
$4,500.00 (equivalent to 20% of the retainer fee) Due by August 10, 2007
$4,500.00 (equivalent to 20% of the retainer fee) Due by September 21, 2007
Due to the intangible nature of the services rendered, Consultant expects timely payments. All fees billed under the terms of the agreement that remain unpaid for twenty-five (25) days after the invoice date will be considered a default by Client. At that time all services will cease until the balance is paid in full. If payment is not made, any outstanding deliverables will be rendered void. Consultant will pursue delinquent fees to the fullest extent possible under the law.
Option to Amend
This agreement may be modified at any time provided both parties agree in writing, to any modifications. Consultant will require that any changes of significance be made on a dated copy of this agreement, with acceptance indicated by original signatures. Other changes may be made through email correspondence at the discretion of Consultant.
Search engines that may be included in testing are, Google Adwords, Yahoo! Search Marketing (formerly Overture), FindWhat, Mamma.com, Enhance Interactive, Kanoodle, E-Pilot, among others.
Upon ratification of this agreement, the term of this consulting engagement will commence on the second Monday following the date of endorsement of all parties involved.
Develop an online marketing strategy and a viable plan that will enable client to efficiently attain targeted registered contacts within twelve months. Consult for Web site enhancement to compliment online marketing strategy. Customize a Client Response and Management system. Coordinate prospect delivery to account managers, and develop a tracking system to monitor account manager effectiveness. Facilitate Customer Service, Retention and Sales Training (Soft Sales).
Duration of Services
The typical term of the consulting engagement is three months. Consulting will automatically continue in one-month increments unless another agreement is made between the parties, or it is cancelled. Either party may cancel the agreement provided 15-days written notice (email is acceptable).
Project Management Services
During the term of the engagement Consultant will oversee Client's online marketing program, make recommendations, react to Client input and decisions, and in approved cases act on the behalf of Client on various aspects of the program. Consultant is responsible for maintaining a timeline and working with sub-contractors to keep the project on schedule. The project includes several components as further described below, including Marketing Strategy, Search Engine Optimization, Web Site Enhancement, Online Marketing Planning, and Branding Strategy.
Marketing Strategy
• Consultant will apply online marketing knowledge and Internet technology
expertise to Client's ideas and business objectives to develop a plan that will achieve specific and measurable results toward the desired goal.
• Consultant will offer advice and additional ideas during regular discussions with Client.
• Consultant will create and maintain a central document that outlines specific elements of the plan and seek Client approval.
• Consultant will create a timeline to ensure elements of the plan are being acted upon.
The marketing strategy will be the first deliverable of the consulting engagement. All elements of the original marketing strategy will require approval by Client. Any future deviations from the original plan will require written approval by Client.
Search Engine Optimization Services
Consultant coordinates efforts of professional SEO firms to expeditiously make necessary changes to the site(s) to achieve better search engine rankings. During strategy development phase;
• Consultant will work with Client to identify keywords that will be targeted for high ranking.
• Consultant will be responsible for obtaining at least two competitive bids for any sub-contracted work. This may include additional SEO services and/or Media services. Because of industry contacts and relationships, Consultant may be able to obtain services on a wholesale rate and pass along the savings.
• Consultant will communicate to contracted firm the target list and monitor the results.
• Consultant will negotiate with contracted firm to efficiently build upon existing site infrastructure to avoid excess cost. Some Web site development work may be needed for SEO to be successful.
• Consultant will maintain communications to ensure project stays on schedule.
Web Site Development Services
SEO and adding functionality to the Web site(s) necessitates Web site development work. Using the Client approved marketing plan;
• Consultant will provide an itemized list of pages, applications and possible enhancements. Client will approve list.
• Consultant will develop the pages, or recommend that certain work be sub-contracted. Client will decide if work will be sub-contracted.
• Consultant will be responsible for obtaining at least two competitive bids for any sub-contracted work. Because of industry contacts and relationships, Contractor may be able to obtain services on a wholesale rate and pass along the savings.
• Consultant will maintain communications with web development firm to ensure project stays on schedule.
Online Marketing Planning and Execution
Concurrent to the work previously described, consultant will;
• Develop an online marketing plan that will achieve the defined goal.
• Communicate aspects of the plan to Client for approval.
• Negotiate the best rates and obtain insertion orders from selected advertising vendors.
Because of industry contacts and negotiation skills, often Consultant will be able to arrange CPA (Cost-Per-Action) deals that carry less risk for the Client.
• Implement approved elements and track effectiveness.
• Provide feedback on campaign successes and failures.
• Develop tracking mechanisms to determine effective CPA.
• Optimize marketing plan toward lowering CPA.
• Provide pacing reports and projections related to progress.
Intangible Services
There is an intrinsic value associated with the Consultant's unique qualifications, experience and know-how. Whether measured in cost savings, additional revenue, increased efficiency, alternate business opportunities, brand recognition, improved conversion rates, speed to market, or other business development improvements, by contracting services the Client acknowledges additional benefits not specifically identified in the agreement.
Fees
A retainer fee for work described in this proposal is determined to be $18,000.00, with payable upon acceptance of this agreement. A Schedule of Payments is expressed below under “Payment Terms & Conditions”. Subsequent months, pursuant to the automatic renewal clause under "Duration of Services" are per month at a rate of $7,000.00, payable no later than the fifth day of the month in which services are to be rendered.
Consultant will charge a campaign management fee based on 10% of the total cost of any advertising insertion orders that are negotiated and accepted by Client under this agreement. This fee is similar to, but lower than the standard advertising agency commission rate of 15% and is only applied to advertising orders made during the term of this agreement, which are negotiated on behalf of Client, recommended by Consultant, and accepted by Client. Campaign management fees are billed at the end of the month in which the order is accepted, payable within 15 days or no later than fifteen days prior to the end date of the engagement, whichever is earlier. An incentive-based prospect management fee of $100.00 per successfully captured account.
Payment Terms & Conditions
Schedule of Payments
$9,000.00 (equivalent to 50% of the retainer fee) Due by June 22, 2007
$4,500.00 (equivalent to 20% of the retainer fee) Due by August 10, 2007
$4,500.00 (equivalent to 20% of the retainer fee) Due by September 21, 2007
Due to the intangible nature of the services rendered, Consultant expects timely payments. All fees billed under the terms of the agreement that remain unpaid for twenty-five (25) days after the invoice date will be considered a default by Client. At that time all services will cease until the balance is paid in full. If payment is not made, any outstanding deliverables will be rendered void. Consultant will pursue delinquent fees to the fullest extent possible under the law.
Option to Amend
This agreement may be modified at any time provided both parties agree in writing, to any modifications. Consultant will require that any changes of significance be made on a dated copy of this agreement, with acceptance indicated by original signatures. Other changes may be made through email correspondence at the discretion of Consultant.
Search engines that may be included in testing are, Google Adwords, Yahoo! Search Marketing (formerly Overture), FindWhat, Mamma.com, Enhance Interactive, Kanoodle, E-Pilot, among others.
Upon ratification of this agreement, the term of this consulting engagement will commence on the second Monday following the date of endorsement of all parties involved.
Wednesday, June 11, 2008
Lehman raising $6B in capital, expects $2.8B loss
June 9, 2008
By JOE BEL BRUNO
AP Business Writer
Lehman Brothers Holdings Inc. on Monday confirmed fears on Wall Street that the credit crisis isn't quite over, and it left investors to wonder if other major investment banks face the same set of risks.
The nation's fourth-largest investment bank said wrong-way trading moves and risky mortgage-backed securities plunged it into a nearly $3 billion second-quarter loss. It marks the first time Lehman was unable to post a profit since going public in 1994.
Its stock fell nearly 9 percent and helped drive a broad sell-off in bank and brokerage shares.
Lehman's top executives, who have repeatedly assured investors that their books were safe, will fund the firm's survival by raising $6 billion of fresh capital. It is a move many of Lehman's competitors have already been forced to make.
The announcements, made before the official June 16 release date of Lehman's results, were an attempt to calm a market still badly shaken by the near collapse of Bear Stearns in March. Analysts were disappointed that Lehman's loss was much deeper than they expected, and felt it could have an impact on rivals.
"There is a broader element to all this," said David Trone of Fox-Pitt Cochran. "Management considered this to be an aberration, but I think you'll see similar results in form and structure, just the magnitude will be smaller."
Sanford C. Bernstein analyst Brad Hintz, a former chief financial officer of Lehman, said one concern is the $130 billion of mostly residential and commercial real estate assets the firm sold during the quarter. Those sales triggered billions of dollars of gross mark-to-market adjustments — or accounting changes to the value of assets — since the beginning of last year.
He believes that if those prices are deeply discounted, it would set a precedent that could hurt rivals like Merrill Lynch & Co., Morgan Stanley, and Goldman Sachs Group Inc. "There could be a modest domino effect," Hintz said. Those companies have also had write-downs of mortgage-backed assets, with Merrill taking a heavy enough hit that it lost its CEO. Goldman is believed the be the strongest of the Wall Street companies.
Further, Lehman's investments to hedge against troubled assets on its books backfired, and CFO Erin Callan said they "were significantly impacted" during the past few months. She said the highest point of the market's disruption this year was in March, but conditions have eased since then.
Lehman said it expects to lose $2.87 billion, or $5.14 per share, for the period ended May 31, compared with the $1.3 billion, or $2.21 per share, it made in the year-ago period. Analysts had expected the company to report a loss of just 22 cents per share for the period, according to Thomson Financial.
CEO Richard Fuld said he was "very disappointed" in the quarterly results. However, he believes the additional capital — raised through an offering to yet unnamed investors — will help keep the company whole amid continued market turmoil.
There had been market speculation that Lehman was seeking outside investors to offset losses during the quarter and fortify its balance sheet. Some analysts felt the firm's balance sheet was the closest of all the Wall Street firms to Bear Stearns, which narrowly avoided bankruptcy in March through its government-sponsored sale to JPMorgan Chase & Co.
But so far, Lehman appears in better shape — and possibly has generated more confidence among investors — than Bear, which was badly undermined when panicky customers withdrew their money from the investment bank. Moreover, after the Federal Reserve helped engineer JP Morgan's buyout of Bear, investors have felt more secure that the government is unlikely to let a big investment bank fail.
Lehman is expected to raise capital by selling to mostly American investors $4 billion of new common shares and $2 billion of three-year mandatory convertible preferred stock. The convertible stock is required to be turned into common shares by the end of the three-year period.
The firm was under pressure after David Einhorn, who runs the hedge fund firm Greenlight Capital, vocally and publicly raised questions about Lehman's earnings during the first quarter. He said the company has not disclosed all of its losses, and felt Monday's announcement was only the start.
"Lehman is raising $6 billion that they said they didn't need to replace losses that they said they didn't have," he said in an interview. "Since the credit markets actually improved this quarter, such losses primarily reflect losses that might have been taken in prior quarters. A preliminary analysis of the pre-release and conference call suggests that there are still unrecognized losses on the balance sheet."
In addition, Lehman's stock sale will significantly dilute outstanding shares. As of March 31, Lehman had about 553.6 million shares outstanding. The common stock offering would add about 142.9 million shares, while the conversion on the preferred stock would eventually add as many as 71.4 million more shares.
Lehman shares fell $2.81, or 8.7 percent, to $29.48. Moody's Investors Service and Fitch Ratings both cut their ratings on Lehman, exacerbating the decline.
In this Jan. 24, 2008 file photo Chairman and CEO of Lehman Brothers, USA, Richard Fuld speaks during a working session at the World Economic Forum in Davos, Switzerland. Lehman Brothers Holdings Inc. on Monday said it will raise $6 billion in new capital to shore up its balance sheet after saying it expects to post an unexpectedly large second-quarter loss of nearly $3 billion. (AP Photo/Virginia Mayo, file)
By JOE BEL BRUNO
AP Business Writer
Lehman Brothers Holdings Inc. on Monday confirmed fears on Wall Street that the credit crisis isn't quite over, and it left investors to wonder if other major investment banks face the same set of risks.
The nation's fourth-largest investment bank said wrong-way trading moves and risky mortgage-backed securities plunged it into a nearly $3 billion second-quarter loss. It marks the first time Lehman was unable to post a profit since going public in 1994.
Its stock fell nearly 9 percent and helped drive a broad sell-off in bank and brokerage shares.
Lehman's top executives, who have repeatedly assured investors that their books were safe, will fund the firm's survival by raising $6 billion of fresh capital. It is a move many of Lehman's competitors have already been forced to make.
The announcements, made before the official June 16 release date of Lehman's results, were an attempt to calm a market still badly shaken by the near collapse of Bear Stearns in March. Analysts were disappointed that Lehman's loss was much deeper than they expected, and felt it could have an impact on rivals.
"There is a broader element to all this," said David Trone of Fox-Pitt Cochran. "Management considered this to be an aberration, but I think you'll see similar results in form and structure, just the magnitude will be smaller."
Sanford C. Bernstein analyst Brad Hintz, a former chief financial officer of Lehman, said one concern is the $130 billion of mostly residential and commercial real estate assets the firm sold during the quarter. Those sales triggered billions of dollars of gross mark-to-market adjustments — or accounting changes to the value of assets — since the beginning of last year.
He believes that if those prices are deeply discounted, it would set a precedent that could hurt rivals like Merrill Lynch & Co., Morgan Stanley, and Goldman Sachs Group Inc. "There could be a modest domino effect," Hintz said. Those companies have also had write-downs of mortgage-backed assets, with Merrill taking a heavy enough hit that it lost its CEO. Goldman is believed the be the strongest of the Wall Street companies.
Further, Lehman's investments to hedge against troubled assets on its books backfired, and CFO Erin Callan said they "were significantly impacted" during the past few months. She said the highest point of the market's disruption this year was in March, but conditions have eased since then.
Lehman said it expects to lose $2.87 billion, or $5.14 per share, for the period ended May 31, compared with the $1.3 billion, or $2.21 per share, it made in the year-ago period. Analysts had expected the company to report a loss of just 22 cents per share for the period, according to Thomson Financial.
CEO Richard Fuld said he was "very disappointed" in the quarterly results. However, he believes the additional capital — raised through an offering to yet unnamed investors — will help keep the company whole amid continued market turmoil.
There had been market speculation that Lehman was seeking outside investors to offset losses during the quarter and fortify its balance sheet. Some analysts felt the firm's balance sheet was the closest of all the Wall Street firms to Bear Stearns, which narrowly avoided bankruptcy in March through its government-sponsored sale to JPMorgan Chase & Co.
But so far, Lehman appears in better shape — and possibly has generated more confidence among investors — than Bear, which was badly undermined when panicky customers withdrew their money from the investment bank. Moreover, after the Federal Reserve helped engineer JP Morgan's buyout of Bear, investors have felt more secure that the government is unlikely to let a big investment bank fail.
Lehman is expected to raise capital by selling to mostly American investors $4 billion of new common shares and $2 billion of three-year mandatory convertible preferred stock. The convertible stock is required to be turned into common shares by the end of the three-year period.
The firm was under pressure after David Einhorn, who runs the hedge fund firm Greenlight Capital, vocally and publicly raised questions about Lehman's earnings during the first quarter. He said the company has not disclosed all of its losses, and felt Monday's announcement was only the start.
"Lehman is raising $6 billion that they said they didn't need to replace losses that they said they didn't have," he said in an interview. "Since the credit markets actually improved this quarter, such losses primarily reflect losses that might have been taken in prior quarters. A preliminary analysis of the pre-release and conference call suggests that there are still unrecognized losses on the balance sheet."
In addition, Lehman's stock sale will significantly dilute outstanding shares. As of March 31, Lehman had about 553.6 million shares outstanding. The common stock offering would add about 142.9 million shares, while the conversion on the preferred stock would eventually add as many as 71.4 million more shares.
Lehman shares fell $2.81, or 8.7 percent, to $29.48. Moody's Investors Service and Fitch Ratings both cut their ratings on Lehman, exacerbating the decline.
In this Jan. 24, 2008 file photo Chairman and CEO of Lehman Brothers, USA, Richard Fuld speaks during a working session at the World Economic Forum in Davos, Switzerland. Lehman Brothers Holdings Inc. on Monday said it will raise $6 billion in new capital to shore up its balance sheet after saying it expects to post an unexpectedly large second-quarter loss of nearly $3 billion. (AP Photo/Virginia Mayo, file)
Thursday, May 29, 2008
Banks Facing Up to Reality of Diminished Values
By Jim Freer
This year, reality is sinking in at many community banks that have high ratios of noncurrent land development and other real estate loans.
"They realize," said Kingsley Greenland, chief executive officer of the Boston loan-sale adviser DebtX, "that the values, not just of the loans but of the collateral, are not going to come back any time soon."
Thus, many such banks are looking to sell some of these loans — a change from their previous strategy of continuing to restructure weak credits while trying to delay writedowns.
Some are turning to advisers like DebtX that market bank loans to institutional investors.
Others are speeding up their real-estate-owned sales, provided the discounts are not too steep on undeveloped land and stalled housing tracts. Their goal is to sell properties this year rather than incur tax liabilities and other costs as they wait for a housing market rebound.
The $7 billion-asset United Community Banks Inc. in Blairsville, Ga., began that strategy last year because "we cannot predict when prices will start reversing," said David Shearrow, executive vice president and chief risk officer.
Some bankers and advisers expect a new round of banks' and their holding companies' setting up "bad bank" subsidiaries to hold noncurrent loans and REOs.
One example is BankAtlantic in Fort Lauderdale, Fla., which in March transferred $101.5 million of noncurrent loans to a newly formed asset workout subsidiary of the $6 billion-asset parent, BankAtlantic Bancorp.
Almost all the loans were so-called land bank loans to Florida residential developers whose builder clients did not carry out deals to buy lots after the housing market began to soften in late 2006.
Alan Levan, the chairman of BankAtlantic and its holding company, said using an entity that is not part of the bank adds flexibility for timing loan sales. The subsidiary could become a joint venture partner in some developments after the housing market begins to rebound, he said.
Meanwhile, some banks are turning to traditional-style auctions, complete with bidding and the hammer falling, to unload housing construction loans and undeveloped properties.
J. Durham & Associates in Albany, Ga., is to hold the first in a series of Atlanta-area auctions of bank-owned commercial real estate properties and undeveloped land in late June.
Many publicly traded banks are among those that have decided to sell loans and REOs quickly — rather than face the prospect that prices may still be falling late this year and into 2009.
Analysts and investors "are comparing these banks to their peer groups and asking, 'How are you managing your nonperforming assets and REOs?'," Mr. Greenland said. "A way to stay ahead is to not wait to foreclose but to sell the loan before it gets to foreclosure and mitigate your losses."
A growing number of banks are taking a "pay now rather than pay later" approach to selling loans and accepting discounts, said Christopher Marinac, the director of research at the Atlanta investment bank FIG Partners.
DebtX, which also sells nonproblem loans to institutional investors, sold loans for about 100 banks last year.
That total could double this year, Mr. Greenland said.
Cowlitz Bancorp. in Long-view, Wash., with about $500 million of assets, has been selling real estate and commercial loans through DebtX since 2003.
Its latest DebtX sale was an acquisition and development loan to a developer near Portland, Ore., for which it received "just under 50 cents on the dollar," said Cowlitz president and CEO Richard Fitzpatrick.
The single-family home project stalled because several builders had backed out of contracts to buy lots.
Cowlitz might have spent three to five years trying to sell the project if it had taken it through foreclosure, Mr. Fitzpatrick said.
"We sold, received some cash, and moved on," he said.
Still, in sales before this year, including some of nondistressed loans, Cowlitz had gotten "north of 85 cents on the dollar" on some DebtX sales.
This year, Cowlitz took possession of another home building project near Portland that it is marketing itself — again willing to accept a discount rather than absorb several years' holding costs.
Some banks with problem loans and their borrowers are turning to private lenders, such as Forman Capital in Delray Beach, Fla.
Forman Capital's lending in Florida and other states has been on nondistressed commercial properties.
Now, with the number of noncurrent bank loans growing, CEO Brett Forman said his company will consider buying distressed housing development loans. Mr. Forman and other private lenders have more flexibility than banks in structuring loans, including those for distressed debt.
Data from the Federal Deposit Insurance Corp. show the market for distressed bank real estate debt has grown.
From Dec. 31, 2006, and Dec. 31, 2007, the industry's noncurrent ratio for all real estate loans grew from 0.80% to 1.71%. The noncurrent rate on construction and development loans soared from 0.71% to 3.15% during those 12 months.
Among banks with assets of $1 billion to $10 billion, the noncurrent ratio for all real estate loans rose from 0.67% to 1.53%, and from 0.76% to 3.05% on construction and development loans.
The FDIC had not released its first-quarter industry data by press time, but if earnings reports of publicly traded banks are an indication, the numbers are likely to get worse. Many community banks' quarterly earnings included significant increases in noncurrent loans to home builders.
United Community Banks reported that its ratio of nonperforming assets to total assets rose from 0.56% at the end of last year to 1.07% at March 31. Its noncurrent loans and REOs are primarily for housing construction in the Atlanta market.
United has been able to sell REOs aggressively because it exceeds all measures required for being considered well-capitalized, Mr. Shearrow said.
Writedowns have ranged from "0 to 20%" on sales of completed projects and "anywhere from 15 and 20 to 50%" on lots and undeveloped land, he said. Buyers usually are local developers and individuals, he added.
United uses its own staff to find buyers and tries to get properties off its books within 90 days of foreclosure. It prefers to foreclose and sell properties rather than try to sell problem loans before they reach foreclosure. In addition to being behind on loan payments, housing developers often are owed money by subcontractors and have liens, Mr. Shearrow said.
Setting up a subsidiary for problem loans is another strategy that requires a bank to exceed well-capitalized levels, said BankAtlantic's Mr. Levan.
The bank and its holding company satisfy the requirement. The holding company added to its capital in March by selling 2.1 million shares of Stifel Financial Corp. for $82.2 million and used much of the proceeds to buy loans from the bank.
"As opposed to being concerned about capital at the bank level, we can be more creative in working with borrowers and in completing foreclosures as the case may be," Mr. Levan said.
Steven Fritts, the FDIC's associate director for risk management policy, said the agency is not hearing much about banks setting up "bad bank" affiliates. Still, he said, "It can make sense to isolate those assets. It allows loan officers to focus on developing new business."
State laws on corporations and Federal Reserve and Office of Thrift Supervision rules on holding companies are what Mr. Fritts calls the "dominant legal drivers" for setting up such subsidiaries.
Taking foreclosed properties to auction is an alternative to managing them in a bad bank setup.
The Martin Realty Advisors in Alpharetta, Ga., and joint venture partner J. Durham & Associates have recently been advising several banks in southeastern states about auctions. "This is at an early stage," said Joe Durham, the president of J. Durham Associates. "We will start seeing more banks realize that they need to sell now because the markets are not getting better."
Mr. Durham said the first auction featuring bank assets will include undeveloped land, stalled condominium projects along the Florida Panhandle coastline, and stalled single-family projects around the Southeast.
Those kinds of properties are prominent as collateral for loans that DebtX sells in an online bidding process to more than 3,500 institutional investors. Mr. Greenland said he anticipates vacancies rising at numerous "marginal shopping centers," and that loans on retail properties could be the next to falter.
DebtX's business includes a five-year agreement with the FDIC, signed last year, to sell real estate assets that are in receiverships.
This year, reality is sinking in at many community banks that have high ratios of noncurrent land development and other real estate loans.
"They realize," said Kingsley Greenland, chief executive officer of the Boston loan-sale adviser DebtX, "that the values, not just of the loans but of the collateral, are not going to come back any time soon."
Thus, many such banks are looking to sell some of these loans — a change from their previous strategy of continuing to restructure weak credits while trying to delay writedowns.
Some are turning to advisers like DebtX that market bank loans to institutional investors.
Others are speeding up their real-estate-owned sales, provided the discounts are not too steep on undeveloped land and stalled housing tracts. Their goal is to sell properties this year rather than incur tax liabilities and other costs as they wait for a housing market rebound.
The $7 billion-asset United Community Banks Inc. in Blairsville, Ga., began that strategy last year because "we cannot predict when prices will start reversing," said David Shearrow, executive vice president and chief risk officer.
Some bankers and advisers expect a new round of banks' and their holding companies' setting up "bad bank" subsidiaries to hold noncurrent loans and REOs.
One example is BankAtlantic in Fort Lauderdale, Fla., which in March transferred $101.5 million of noncurrent loans to a newly formed asset workout subsidiary of the $6 billion-asset parent, BankAtlantic Bancorp.
Almost all the loans were so-called land bank loans to Florida residential developers whose builder clients did not carry out deals to buy lots after the housing market began to soften in late 2006.
Alan Levan, the chairman of BankAtlantic and its holding company, said using an entity that is not part of the bank adds flexibility for timing loan sales. The subsidiary could become a joint venture partner in some developments after the housing market begins to rebound, he said.
Meanwhile, some banks are turning to traditional-style auctions, complete with bidding and the hammer falling, to unload housing construction loans and undeveloped properties.
J. Durham & Associates in Albany, Ga., is to hold the first in a series of Atlanta-area auctions of bank-owned commercial real estate properties and undeveloped land in late June.
Many publicly traded banks are among those that have decided to sell loans and REOs quickly — rather than face the prospect that prices may still be falling late this year and into 2009.
Analysts and investors "are comparing these banks to their peer groups and asking, 'How are you managing your nonperforming assets and REOs?'," Mr. Greenland said. "A way to stay ahead is to not wait to foreclose but to sell the loan before it gets to foreclosure and mitigate your losses."
A growing number of banks are taking a "pay now rather than pay later" approach to selling loans and accepting discounts, said Christopher Marinac, the director of research at the Atlanta investment bank FIG Partners.
DebtX, which also sells nonproblem loans to institutional investors, sold loans for about 100 banks last year.
That total could double this year, Mr. Greenland said.
Cowlitz Bancorp. in Long-view, Wash., with about $500 million of assets, has been selling real estate and commercial loans through DebtX since 2003.
Its latest DebtX sale was an acquisition and development loan to a developer near Portland, Ore., for which it received "just under 50 cents on the dollar," said Cowlitz president and CEO Richard Fitzpatrick.
The single-family home project stalled because several builders had backed out of contracts to buy lots.
Cowlitz might have spent three to five years trying to sell the project if it had taken it through foreclosure, Mr. Fitzpatrick said.
"We sold, received some cash, and moved on," he said.
Still, in sales before this year, including some of nondistressed loans, Cowlitz had gotten "north of 85 cents on the dollar" on some DebtX sales.
This year, Cowlitz took possession of another home building project near Portland that it is marketing itself — again willing to accept a discount rather than absorb several years' holding costs.
Some banks with problem loans and their borrowers are turning to private lenders, such as Forman Capital in Delray Beach, Fla.
Forman Capital's lending in Florida and other states has been on nondistressed commercial properties.
Now, with the number of noncurrent bank loans growing, CEO Brett Forman said his company will consider buying distressed housing development loans. Mr. Forman and other private lenders have more flexibility than banks in structuring loans, including those for distressed debt.
Data from the Federal Deposit Insurance Corp. show the market for distressed bank real estate debt has grown.
From Dec. 31, 2006, and Dec. 31, 2007, the industry's noncurrent ratio for all real estate loans grew from 0.80% to 1.71%. The noncurrent rate on construction and development loans soared from 0.71% to 3.15% during those 12 months.
Among banks with assets of $1 billion to $10 billion, the noncurrent ratio for all real estate loans rose from 0.67% to 1.53%, and from 0.76% to 3.05% on construction and development loans.
The FDIC had not released its first-quarter industry data by press time, but if earnings reports of publicly traded banks are an indication, the numbers are likely to get worse. Many community banks' quarterly earnings included significant increases in noncurrent loans to home builders.
United Community Banks reported that its ratio of nonperforming assets to total assets rose from 0.56% at the end of last year to 1.07% at March 31. Its noncurrent loans and REOs are primarily for housing construction in the Atlanta market.
United has been able to sell REOs aggressively because it exceeds all measures required for being considered well-capitalized, Mr. Shearrow said.
Writedowns have ranged from "0 to 20%" on sales of completed projects and "anywhere from 15 and 20 to 50%" on lots and undeveloped land, he said. Buyers usually are local developers and individuals, he added.
United uses its own staff to find buyers and tries to get properties off its books within 90 days of foreclosure. It prefers to foreclose and sell properties rather than try to sell problem loans before they reach foreclosure. In addition to being behind on loan payments, housing developers often are owed money by subcontractors and have liens, Mr. Shearrow said.
Setting up a subsidiary for problem loans is another strategy that requires a bank to exceed well-capitalized levels, said BankAtlantic's Mr. Levan.
The bank and its holding company satisfy the requirement. The holding company added to its capital in March by selling 2.1 million shares of Stifel Financial Corp. for $82.2 million and used much of the proceeds to buy loans from the bank.
"As opposed to being concerned about capital at the bank level, we can be more creative in working with borrowers and in completing foreclosures as the case may be," Mr. Levan said.
Steven Fritts, the FDIC's associate director for risk management policy, said the agency is not hearing much about banks setting up "bad bank" affiliates. Still, he said, "It can make sense to isolate those assets. It allows loan officers to focus on developing new business."
State laws on corporations and Federal Reserve and Office of Thrift Supervision rules on holding companies are what Mr. Fritts calls the "dominant legal drivers" for setting up such subsidiaries.
Taking foreclosed properties to auction is an alternative to managing them in a bad bank setup.
The Martin Realty Advisors in Alpharetta, Ga., and joint venture partner J. Durham & Associates have recently been advising several banks in southeastern states about auctions. "This is at an early stage," said Joe Durham, the president of J. Durham Associates. "We will start seeing more banks realize that they need to sell now because the markets are not getting better."
Mr. Durham said the first auction featuring bank assets will include undeveloped land, stalled condominium projects along the Florida Panhandle coastline, and stalled single-family projects around the Southeast.
Those kinds of properties are prominent as collateral for loans that DebtX sells in an online bidding process to more than 3,500 institutional investors. Mr. Greenland said he anticipates vacancies rising at numerous "marginal shopping centers," and that loans on retail properties could be the next to falter.
DebtX's business includes a five-year agreement with the FDIC, signed last year, to sell real estate assets that are in receiverships.
Friday, May 16, 2008
ON THE PATH TO BECOME A PRIVATE ANNUITY TRUST
COUNSELING CLIENTS
What strategies can planners suggest for clients who already own multiple homes in overvalued markets? If the bubble has not deflated in your area, you might counsel clients to sell their second homes if they want to get top dollar.
"We have a client who just sold a vacation home and an adjoining lot in Tahoe," says Stone, referring to the area around the lake that spans the California-Nevada border. "He wasn't using it enough to keep it, and he got a good price: $1.2 million." The price was so good, in fact, that the client would have had an $800,000 gain and a steep tax bill. "To defer the tax, we suggested this client sell the property to a private annuity trust," Stone says.
In this arrangement, the real estate is sold to a trust, which in turn makes a sale to a third party. The trust then reinvests the proceeds and pays lifetime income to the original owners as well as any balance to designated heirs. This way the client can defer income tax on the sale, effectively provide the heirs with a basis step-up and remove any funds left in the trust from the seller's taxable estate. But there are potential gift tax consequences, depending on the seller's age and the cash flow paid by the trust (see "Going Private," below).
Another tax-effective move is for clients to sell their primary residence and move into what had been a second home. The $250,000 home-sale exclusion ($500,000 for married couples) would shelter gains from the sale as long as the seller had lived in the house for at least two of the previous five years. If the clients decide to sell the former vacation home after living in it for two years, they would qualify for another $250,000 or $500,000 tax break.
"A married couple I represent did this recently, moving from the San Francisco Bay area to Tahoe," says Jane Williams, chief executive officer of Sand Hill Advisors, a wealth management firm in Palo Alto, Calif. "They sold their primary residence and moved into their vacation home." Williams works with many people who are experiencing a major life transition, such as a divorce or the death of a spouse. "The family home, which is often a major asset, can be an expense rather than an income-generator," she says. "For people with more real estate than they can maintain, we encourage downsizing."
What strategies can planners suggest for clients who already own multiple homes in overvalued markets? If the bubble has not deflated in your area, you might counsel clients to sell their second homes if they want to get top dollar.
"We have a client who just sold a vacation home and an adjoining lot in Tahoe," says Stone, referring to the area around the lake that spans the California-Nevada border. "He wasn't using it enough to keep it, and he got a good price: $1.2 million." The price was so good, in fact, that the client would have had an $800,000 gain and a steep tax bill. "To defer the tax, we suggested this client sell the property to a private annuity trust," Stone says.
In this arrangement, the real estate is sold to a trust, which in turn makes a sale to a third party. The trust then reinvests the proceeds and pays lifetime income to the original owners as well as any balance to designated heirs. This way the client can defer income tax on the sale, effectively provide the heirs with a basis step-up and remove any funds left in the trust from the seller's taxable estate. But there are potential gift tax consequences, depending on the seller's age and the cash flow paid by the trust (see "Going Private," below).
Another tax-effective move is for clients to sell their primary residence and move into what had been a second home. The $250,000 home-sale exclusion ($500,000 for married couples) would shelter gains from the sale as long as the seller had lived in the house for at least two of the previous five years. If the clients decide to sell the former vacation home after living in it for two years, they would qualify for another $250,000 or $500,000 tax break.
"A married couple I represent did this recently, moving from the San Francisco Bay area to Tahoe," says Jane Williams, chief executive officer of Sand Hill Advisors, a wealth management firm in Palo Alto, Calif. "They sold their primary residence and moved into their vacation home." Williams works with many people who are experiencing a major life transition, such as a divorce or the death of a spouse. "The family home, which is often a major asset, can be an expense rather than an income-generator," she says. "For people with more real estate than they can maintain, we encourage downsizing."
Tuesday, May 06, 2008
Inflation first aid: Gold, oil and real estate
Inflation first aid: Gold, oil and real estate
By ROB CARRICK Globe and Mail Update
The arch-enemy of all investors is threatening a comeback after a long time away.
Inflation hasn't been a top-of-mind consideration for investors since the early 1990s, and today it's hardly noticeable. But there's growing concern that soaring prices for oil and food products are within the next year or so going to push the inflation rate higher than we've seen it in years.
This edition of the Portfolio Strategy column is all about inflation-proofing your portfolio, which is more problematic than you may think. Some investors automatically look to real-return bonds if inflation's a threat, but there are good reasons to avoid them. Gold and commodities are classic inflation defences, but neither is any sort of a bargain right now.
The first thing you need to understand about inflation is that it's a global phenomenon, even if the cost of living here in Canada in March was just 1.4 per cent ahead of where it was a year earlier. The inflation rate in the United States in March was 4 per cent, and other regions are comparable or worse.
“In Europe, inflation is running over 3 per cent, and in the emerging markets it's on fire,” said Alec Young, an equity market strategist with Standard & Poor's in New York. “In Russia, you've got 12 per cent and you've got 8 per cent in China. It's accelerating.”
Expect the usual carnage if inflation flares up here. The bond market will be hammered as interest rates rise, and the stock markets will struggle. The trouble for stocks arises from the fact that inflation makes investors more conservative about what they're willing to pay for a company's shares. Price-earnings ratios tend to fall, and that means lower share prices.
The market sectors that buck this trend are the ones that are based on gold and commodities such as oil and gas, metals and fertilizer. The psychology here is that commodities are hard assets that hold their value when prices are rising.
When the inflation rate surged into double digits in the 1970s, commodities were the place to be. The problem with commodities today is that they've already experienced a gigantic runup in price. In fact, rising oil and fertilizer prices are key reasons why inflation is globally on the rise. The price of crude oil, for example, has jumped about 75 per cent in the past year to its current range of around $116.
“Traditional inflation hedges don't look like attractive bargains right now, so the past may not be prologue this time around,” Christopher Davis, an analyst with the Chicago-based research firm Morningstar, wrote in a commentary this week.
Mr. Davis suggested a dollar-cost-averaging approach for getting into commodities, where you make small, regular purchases every month or quarter. That way, you get to take advantage of the sort of pullbacks we saw this week in oil and gold prices. Long term, there are commodity price forecasts out there that make a case for buying at current levels. Last month, CIBC World Markets issued a widely quoted forecast that crude oil prices would rise to $200 (U.S.) a barrel over the next five years, and that gasoline prices would jump to $2.50 (Canadian) a litre.
Be prudent when adding commodity exposure to your portfolio. Many Canadian investors already have substantial exposure to oil, metals and gold through their mainstream equity funds, exchange-traded funds and individual stocks. Both sectors together accounted for 47.8 per cent of the S&P/TSX composite index as of March 31.
Gold is the classic inflation hedge because of its intrinsic value, but S&P metals analyst Leo Larkin believes the price is heading lower in the months ahead. The price of gold surged 32 per cent last year and another 23 per cent in early 2008 to a peak of $1,030 (U.S.). It has since fallen to the $855 range, and Mr. Larkin said it's possible it might decline to $730 at worst.
From there, Mr. Larkin expects gold to head sideways for six months or so before mounting a comeback that could see it revisit the highs of earlier this year. “If inflation is kicking up, I don't see why ultimately it wouldn't surpass the old highs maybe some time in mid-2009.”
An inflation-resistant sector you can buy into now at cut-rate prices is commercial real estate, which is mainly represented in the stock markets by real estate investment trusts. Recent financial market volatility has made investors leery of REITs on a global basis, and concerns about slower economic growth are a problem as well.
Here in Canada, the S&P/TSX capped REIT index is off about 18 per cent over the past 12 months. However, CIBC World Markets issued a report earlier this month saying the selloff of Canadian REITS belies some strong underlying fundamentals such as low vacancy rates and only a trickle of new properties hitting the market this year and next.
While the stock markets are averse to inflation, bonds are strongly allergic. Rising prices will goad central banks into increasing interest rates, and that always sends bond prices lower. Your best bet, says BMO Nesbitt Burns fixed income strategist Michael Herring, is to invest in short-term bonds. They'll hold up better than long-term bonds in a rising-rate environment.
The obvious bond choice for the year ahead would seem to be real-return bonds, which adjust their semi-annual interest payments and the amount you receive on maturity to account for higher inflation. But Mr. Herring advises against real-return bonds because they're a suspect value based on current prices. “My point of view is that people are overpaying for the inflation insurance that real-return bonds give you.”
Another thumbs-down for real-return bonds comes from Sheldon Dong, fixed income strategist at TD Waterhouse. He doesn't recommend them for retail investors because they behave like long-term bonds and thus have a tendency to be disturbingly volatile on a month-to-month basis.
“I've never been a big proponent on these things,” Mr. Dong said. “Most people own stocks, and most people own oil. That's their inflation protection right there.”
©
© Copyright CTVglobemedia Publishing Inc. All Rights Reserved
By ROB CARRICK Globe and Mail Update
The arch-enemy of all investors is threatening a comeback after a long time away.
Inflation hasn't been a top-of-mind consideration for investors since the early 1990s, and today it's hardly noticeable. But there's growing concern that soaring prices for oil and food products are within the next year or so going to push the inflation rate higher than we've seen it in years.
This edition of the Portfolio Strategy column is all about inflation-proofing your portfolio, which is more problematic than you may think. Some investors automatically look to real-return bonds if inflation's a threat, but there are good reasons to avoid them. Gold and commodities are classic inflation defences, but neither is any sort of a bargain right now.
The first thing you need to understand about inflation is that it's a global phenomenon, even if the cost of living here in Canada in March was just 1.4 per cent ahead of where it was a year earlier. The inflation rate in the United States in March was 4 per cent, and other regions are comparable or worse.
“In Europe, inflation is running over 3 per cent, and in the emerging markets it's on fire,” said Alec Young, an equity market strategist with Standard & Poor's in New York. “In Russia, you've got 12 per cent and you've got 8 per cent in China. It's accelerating.”
Expect the usual carnage if inflation flares up here. The bond market will be hammered as interest rates rise, and the stock markets will struggle. The trouble for stocks arises from the fact that inflation makes investors more conservative about what they're willing to pay for a company's shares. Price-earnings ratios tend to fall, and that means lower share prices.
The market sectors that buck this trend are the ones that are based on gold and commodities such as oil and gas, metals and fertilizer. The psychology here is that commodities are hard assets that hold their value when prices are rising.
When the inflation rate surged into double digits in the 1970s, commodities were the place to be. The problem with commodities today is that they've already experienced a gigantic runup in price. In fact, rising oil and fertilizer prices are key reasons why inflation is globally on the rise. The price of crude oil, for example, has jumped about 75 per cent in the past year to its current range of around $116.
“Traditional inflation hedges don't look like attractive bargains right now, so the past may not be prologue this time around,” Christopher Davis, an analyst with the Chicago-based research firm Morningstar, wrote in a commentary this week.
Mr. Davis suggested a dollar-cost-averaging approach for getting into commodities, where you make small, regular purchases every month or quarter. That way, you get to take advantage of the sort of pullbacks we saw this week in oil and gold prices. Long term, there are commodity price forecasts out there that make a case for buying at current levels. Last month, CIBC World Markets issued a widely quoted forecast that crude oil prices would rise to $200 (U.S.) a barrel over the next five years, and that gasoline prices would jump to $2.50 (Canadian) a litre.
Be prudent when adding commodity exposure to your portfolio. Many Canadian investors already have substantial exposure to oil, metals and gold through their mainstream equity funds, exchange-traded funds and individual stocks. Both sectors together accounted for 47.8 per cent of the S&P/TSX composite index as of March 31.
Gold is the classic inflation hedge because of its intrinsic value, but S&P metals analyst Leo Larkin believes the price is heading lower in the months ahead. The price of gold surged 32 per cent last year and another 23 per cent in early 2008 to a peak of $1,030 (U.S.). It has since fallen to the $855 range, and Mr. Larkin said it's possible it might decline to $730 at worst.
From there, Mr. Larkin expects gold to head sideways for six months or so before mounting a comeback that could see it revisit the highs of earlier this year. “If inflation is kicking up, I don't see why ultimately it wouldn't surpass the old highs maybe some time in mid-2009.”
An inflation-resistant sector you can buy into now at cut-rate prices is commercial real estate, which is mainly represented in the stock markets by real estate investment trusts. Recent financial market volatility has made investors leery of REITs on a global basis, and concerns about slower economic growth are a problem as well.
Here in Canada, the S&P/TSX capped REIT index is off about 18 per cent over the past 12 months. However, CIBC World Markets issued a report earlier this month saying the selloff of Canadian REITS belies some strong underlying fundamentals such as low vacancy rates and only a trickle of new properties hitting the market this year and next.
While the stock markets are averse to inflation, bonds are strongly allergic. Rising prices will goad central banks into increasing interest rates, and that always sends bond prices lower. Your best bet, says BMO Nesbitt Burns fixed income strategist Michael Herring, is to invest in short-term bonds. They'll hold up better than long-term bonds in a rising-rate environment.
The obvious bond choice for the year ahead would seem to be real-return bonds, which adjust their semi-annual interest payments and the amount you receive on maturity to account for higher inflation. But Mr. Herring advises against real-return bonds because they're a suspect value based on current prices. “My point of view is that people are overpaying for the inflation insurance that real-return bonds give you.”
Another thumbs-down for real-return bonds comes from Sheldon Dong, fixed income strategist at TD Waterhouse. He doesn't recommend them for retail investors because they behave like long-term bonds and thus have a tendency to be disturbingly volatile on a month-to-month basis.
“I've never been a big proponent on these things,” Mr. Dong said. “Most people own stocks, and most people own oil. That's their inflation protection right there.”
©
© Copyright CTVglobemedia Publishing Inc. All Rights Reserved
Monday, April 21, 2008
CHAPTER TWO OF ACCLAIMED BOOK BY REAL ESTATE INVESTOR JAMES BEST
Before we get started in the nitty, gritty details, I thought I should share some background information on myself with you so that you might have a better understanding of how I approach real estate investing. I used to be a CPA with a large accounting firm and hated every minute of it. Every Sunday night, I would have a pit in my stomach with the thought of having to start another work week. My job in the accounting firm was to go audit our clients’ financial statements. So every day I would go to work at companies that didn’t really want me there. I was an auditor. Nobody likes an auditor.
While auditing these companies, I started to feel like I was on the sidelines watching them make things happen. My clients’ companies were making things happen. They were in the game. I felt as if I weren’t really in the game. I was just checking the score. Who likes to sit on the sidelines? The fun is in the game.
Ever since college, I knew that real estate investing was very profitable. I kept thinking that real estate investing would be a great way to earn a living without having to sit behind a desk all day long. So, like many people, I bought one of those so-called "get rich buying real estate" systems from a TV commercial. I won’t name any names, but if you turn on your TV very late tonight, I would be willing to bet you will find a new version of the same commercial running on some channel. I read every book I could find on how to buy foreclosed homes and sell them for a profit. I can honestly say that I tried everything recommended from these books and tapes. This book has been written with my blood, sweat and tears of real estate investment. As an investor, I have learned from my own real life experiences. As a real estate broker, I have learned from countless clients that have invested in real estate using different approaches.
The approach to investing that we have moved toward over all of these years has been working so well because of the underlying philosophy, which I will explain in detail throughout this book. It took a lot of mistakes to realize why investing in real estate was so challenging. Here are some of my mistakes….
I found out through the school of hard knocks that Get Rich in Your Spare Time really meant spending a whole lot of time making not so much money. One of the books that I read recommended that I go find sellers that would sell their home to me and act as the bank. So, in essence, I should buy their home and they would receive monthly payments from me over time instead of their full sales price at the time of sale. With this approach, I supposedly wouldn’t need a bank and could buy homes without having a down payment. The truth was that the only people willing to accept this arrangement had homes that were garbage. In the late 1990’s and early 2000’s mortgage interest rates became so low that there has been a huge supply of home buyers. Because there are so many buyers, home sellers can get their full sales price without having to take any risk by accepting monthly payments. The real estate market in general over the last few years has been a seller’s market. This means that in most cases the seller calls the shots. If interest rates go into the double digits again, I suspect that these techniques might be more profitable because the market will become a buyer’s market.
Wednesday, April 16, 2008
CHAPTER ONE OF ACCLAIMED BOOK BY REAL ESTATE INVESTOR JAMES BEST
Are You Ever Going to Be Able to Retire or
Are You Going to Mop Floors at McDonald’s?
Have you ever walked into a fast food restaurant and noticed a Senior Citizen mopping the floors or cleaning the tables? I have, and it really breaks my heart. Do you think that the Senior Citizens who are mopping the floors dreamed of the day when they could retire and then work at McDonald’s to earn some extra income? Can you picture them in their 20’s, 30’s, 40’s and 50’s just waiting for the day when they could start at McDonald’s?
I am presenting this on the funny side, but it is a serious point for you to consider. The Senior Citizens you see working are not working because they want to. (Well, some of them probably do want to.) My mother retired a few years ago and has a part-time job because she likes to meet new people and see old friends at work! The majority of Senior Citizens are working because they have to. The reason they have to work is because their monthly income isn’t enough to cover their monthly living expenses.
Do you want to mop floors and clean bathrooms when you hit your golden years? If not, then consider this:
If You Ever Want to Retire in Your Life,
You Better Start to Create Passive Monthly Income Today
What is guaranteed to you in today’s world? Is your job secure? Are you guaranteed to get Social Security or your pension at work? Will the stock market continue with hardly any growth? Study after study has shown that Social Security will run out of money. The reason is because the baby boomer population will go from working and paying to Social Security to retirement and collecting Social Security. The number of people still in the workforce paying into the plan will not be enough to cover all of the outgoing payments made to retirees.
Look at Enron! Thousands of employees’ retirement accounts disappeared over night. Don’t think that you will be safe. The biggest problem that I see most people make is to rely on one income. Relying on one of anything is very dangerous to you. If you are relying on your 401(k) and the stock market crashes, you are going to suffer. If you are relying on Social Security and it runs out of money, you are going to suffer. In fact, many people rely on just one income from their job. What happens when the company downsizes and your one income goes away? Never rely on one of anything. It is far too risky.
You really need to protect yourself from the danger of “one” by creating other multiple income streams. By having 20 income streams coming to you each month, you are not as dependent on any one of them. This book is about building passive monthly income streams that you can live on to ensure your financial security and independence.
When I say passive income, I mean money that you receive every month from your investments. Understand that it takes some work to set up passive income streams. However, once your income streams are set up, you simply have to manage them.
In this book, I will show you how to create on average $58,004 in profits from buying just one single-family home for investment.
Let me ask you a very serious question:
If all you did was invest in two single-family homes and never did any other investing for the rest of your life, would you be better off financially?
Well, I know the answer and you know the answer. It’s actually a silly question; however, the majority of people never ask themselves this question. If you kept your job and had two rental properties that would be three income streams you would have coming to you. As you will see shortly, it is actually many more income streams. Each income stream you create is added financial protection for you and your family.
What is the best investment your parents ever made? Many of you will say that your parents’ best investment would have to be their homes. The next logical question then becomes, what would your parents’ life look like, if they had bought two rental properties 30 years ago? What would the life of the Senior Citizen working at the fast food restaurant be like today had they invested in real estate earlier in their lives? Would they still be mopping the floors and cleaning ketchup off of the tables?
I don’t want to see you cleaning floors; instead, my goal with this book is to motivate you to just invest in a few single-family homes. That’s it. I know that if I can give you the encouragement and tools to get started, you can dramatically change your future. If you take the ideas in this book and continue to buy two homes a year for the next 10 years that would be fantastic! The focus is for you to get started today and build monthly passive income so that you can live life on your terms and not be dependent on any one income stream.
Think about this:
If you were to invest in just one single-family home today and keep it until your retirement, you would increase your net worth by $411,613. You would have a monthly income from this one home in excess of $1,330. (A $100,000 home appreciating at 5% a year for 30 years would
be worth $411,613.) And that’s a conservative example. It could be much more in a market experiencing soaring appreciation.
Just a few homes purchased now could make you a millionaire in retirement. By owning real estate as an investment, you are not relying on Social Security or your employer’s pension. If you are lucky enough to receive Social Security or a pension, super for you! Treat it as a bonus. However, by owning real estate, you are guaranteeing your future financial security and not just hoping for the best.
The amount of income you create from your real estate investing is completely up to you. In fact, how quickly you can achieve financial independence is entirely up to you too. One of my client members, Joe Mercadante, was able to achieve financial independence in seven months at the age of 34. You can create as much income, or as little as you want. The choice is 100% yours.
The reason I am able to say this so confidently is because I have some clients that only create $15,000 on one property and don’t do anything else. I have other clients that create $30,000 on one property and then repeat the process over and over again on other properties.
You see, building your wealth is simple, but it’s not easy. The thought of buying two homes and renting them out is simple. But actually doing it is not easy.
That’s where this book comes in. This book will help you make the simple, easy!
Copyright 2008
Are You Going to Mop Floors at McDonald’s?
Have you ever walked into a fast food restaurant and noticed a Senior Citizen mopping the floors or cleaning the tables? I have, and it really breaks my heart. Do you think that the Senior Citizens who are mopping the floors dreamed of the day when they could retire and then work at McDonald’s to earn some extra income? Can you picture them in their 20’s, 30’s, 40’s and 50’s just waiting for the day when they could start at McDonald’s?
I am presenting this on the funny side, but it is a serious point for you to consider. The Senior Citizens you see working are not working because they want to. (Well, some of them probably do want to.) My mother retired a few years ago and has a part-time job because she likes to meet new people and see old friends at work! The majority of Senior Citizens are working because they have to. The reason they have to work is because their monthly income isn’t enough to cover their monthly living expenses.
Do you want to mop floors and clean bathrooms when you hit your golden years? If not, then consider this:
If You Ever Want to Retire in Your Life,
You Better Start to Create Passive Monthly Income Today
What is guaranteed to you in today’s world? Is your job secure? Are you guaranteed to get Social Security or your pension at work? Will the stock market continue with hardly any growth? Study after study has shown that Social Security will run out of money. The reason is because the baby boomer population will go from working and paying to Social Security to retirement and collecting Social Security. The number of people still in the workforce paying into the plan will not be enough to cover all of the outgoing payments made to retirees.
Look at Enron! Thousands of employees’ retirement accounts disappeared over night. Don’t think that you will be safe. The biggest problem that I see most people make is to rely on one income. Relying on one of anything is very dangerous to you. If you are relying on your 401(k) and the stock market crashes, you are going to suffer. If you are relying on Social Security and it runs out of money, you are going to suffer. In fact, many people rely on just one income from their job. What happens when the company downsizes and your one income goes away? Never rely on one of anything. It is far too risky.
You really need to protect yourself from the danger of “one” by creating other multiple income streams. By having 20 income streams coming to you each month, you are not as dependent on any one of them. This book is about building passive monthly income streams that you can live on to ensure your financial security and independence.
When I say passive income, I mean money that you receive every month from your investments. Understand that it takes some work to set up passive income streams. However, once your income streams are set up, you simply have to manage them.
In this book, I will show you how to create on average $58,004 in profits from buying just one single-family home for investment.
Let me ask you a very serious question:
If all you did was invest in two single-family homes and never did any other investing for the rest of your life, would you be better off financially?
Well, I know the answer and you know the answer. It’s actually a silly question; however, the majority of people never ask themselves this question. If you kept your job and had two rental properties that would be three income streams you would have coming to you. As you will see shortly, it is actually many more income streams. Each income stream you create is added financial protection for you and your family.
What is the best investment your parents ever made? Many of you will say that your parents’ best investment would have to be their homes. The next logical question then becomes, what would your parents’ life look like, if they had bought two rental properties 30 years ago? What would the life of the Senior Citizen working at the fast food restaurant be like today had they invested in real estate earlier in their lives? Would they still be mopping the floors and cleaning ketchup off of the tables?
I don’t want to see you cleaning floors; instead, my goal with this book is to motivate you to just invest in a few single-family homes. That’s it. I know that if I can give you the encouragement and tools to get started, you can dramatically change your future. If you take the ideas in this book and continue to buy two homes a year for the next 10 years that would be fantastic! The focus is for you to get started today and build monthly passive income so that you can live life on your terms and not be dependent on any one income stream.
Think about this:
If you were to invest in just one single-family home today and keep it until your retirement, you would increase your net worth by $411,613. You would have a monthly income from this one home in excess of $1,330. (A $100,000 home appreciating at 5% a year for 30 years would
be worth $411,613.) And that’s a conservative example. It could be much more in a market experiencing soaring appreciation.
Just a few homes purchased now could make you a millionaire in retirement. By owning real estate as an investment, you are not relying on Social Security or your employer’s pension. If you are lucky enough to receive Social Security or a pension, super for you! Treat it as a bonus. However, by owning real estate, you are guaranteeing your future financial security and not just hoping for the best.
The amount of income you create from your real estate investing is completely up to you. In fact, how quickly you can achieve financial independence is entirely up to you too. One of my client members, Joe Mercadante, was able to achieve financial independence in seven months at the age of 34. You can create as much income, or as little as you want. The choice is 100% yours.
The reason I am able to say this so confidently is because I have some clients that only create $15,000 on one property and don’t do anything else. I have other clients that create $30,000 on one property and then repeat the process over and over again on other properties.
You see, building your wealth is simple, but it’s not easy. The thought of buying two homes and renting them out is simple. But actually doing it is not easy.
That’s where this book comes in. This book will help you make the simple, easy!
Copyright 2008
Monday, March 10, 2008
MAKE THE MOST OF EVERY DOLLAR
By: Eugene O. Smith, Jr. March 10, 2008
CEO Mestizo Media Group, Inc.
The principles of real estate investing are a bit more forgiving than investing in the stock market. Considering our curent economic situation, and the future of our property values our country has been put in an extremely vulnerable position. From within it looks as if the value of our land and homes has crashed, and that the we were all mistaken. Well I don't agree I think that the value of our land and homes has increased. I think that the systems we have in place to secure them has failed us.
Let me explain. I owned four properties less than a year ago. One being primary residence, two being investments, and the other raw land. The value of these properties at that time were low. This was proven to me by the ease of purchase. I had no serious difficulty finding the money to secure these investments. Now all of my properties were in the Washington D.C. metro area. The D.C. metro area is an absolutely fabulous place to live or visit. I love the culture, the sites and seafood, the history, and not to mention it's the capitol!
Well now that same real estate portfolio that I had created would be worth less than half of what it would have appraised for just 3 years ago. Lucky for me I sold it. Most people did not, And now with real estate agents reporting day on market times going in to the five and six hunreds ... it's not pretty.
So I guess my question is, what happened to the value? I still truly feel that there aren't many places on the planet to live that are much nicer that the D.C. Metro area. You see I have live in quite a few places, so I can say that. I've lived in; MD,WV,SC,OK,VA,FL,GA,NY,DC, and Germany. I've visited quite a few coutries and states as well. With all I've seen, I can say with confidence that the Washington DC area holds it's own. It really is breath-taking.
My value is not gone. People all over the planet would love to purchase those same properties that I once owned. They would love to have a vacation home in the same zip code as the U.S. Commander and Cheif. So what's all of the fuss about? Well for the first time in history, America is so broke that we can't even afford our own land. I'm afraid that there are plenty of foreign investors waiting in the wings for this very moment. If foreign investors really knew first-hand what has hapened here, they would be buying up high-value propery by the billions.
Wait a minute.......THEY ARE!!
The current mortgage failure is not only a threat to our economy, it's a HUGE threat to our national security. My mission over the next twelve months will be to educate myself and others to the advantages of using our TSP, TSA or 401-k accounts to purchase leveraged properties as a tax-deferred investment instrument.
CEO Mestizo Media Group, Inc.
The principles of real estate investing are a bit more forgiving than investing in the stock market. Considering our curent economic situation, and the future of our property values our country has been put in an extremely vulnerable position. From within it looks as if the value of our land and homes has crashed, and that the we were all mistaken. Well I don't agree I think that the value of our land and homes has increased. I think that the systems we have in place to secure them has failed us.
Let me explain. I owned four properties less than a year ago. One being primary residence, two being investments, and the other raw land. The value of these properties at that time were low. This was proven to me by the ease of purchase. I had no serious difficulty finding the money to secure these investments. Now all of my properties were in the Washington D.C. metro area. The D.C. metro area is an absolutely fabulous place to live or visit. I love the culture, the sites and seafood, the history, and not to mention it's the capitol!
Well now that same real estate portfolio that I had created would be worth less than half of what it would have appraised for just 3 years ago. Lucky for me I sold it. Most people did not, And now with real estate agents reporting day on market times going in to the five and six hunreds ... it's not pretty.
So I guess my question is, what happened to the value? I still truly feel that there aren't many places on the planet to live that are much nicer that the D.C. Metro area. You see I have live in quite a few places, so I can say that. I've lived in; MD,WV,SC,OK,VA,FL,GA,NY,DC, and Germany. I've visited quite a few coutries and states as well. With all I've seen, I can say with confidence that the Washington DC area holds it's own. It really is breath-taking.
My value is not gone. People all over the planet would love to purchase those same properties that I once owned. They would love to have a vacation home in the same zip code as the U.S. Commander and Cheif. So what's all of the fuss about? Well for the first time in history, America is so broke that we can't even afford our own land. I'm afraid that there are plenty of foreign investors waiting in the wings for this very moment. If foreign investors really knew first-hand what has hapened here, they would be buying up high-value propery by the billions.
Wait a minute.......THEY ARE!!
The current mortgage failure is not only a threat to our economy, it's a HUGE threat to our national security. My mission over the next twelve months will be to educate myself and others to the advantages of using our TSP, TSA or 401-k accounts to purchase leveraged properties as a tax-deferred investment instrument.
Saturday, March 01, 2008
THE REAL ESTATE MARKET IS BURNING
RUN TOWARDS THE FIRE!!!!
By:Eugene O. Smith, Jr. March 01, 2008
CEO Mestizo Media Group, Inc.
It's probably the first time in history that advice like that has qualified as "GOOD" advice.
The truth is "the HOUSING BUBBLE" has burst, which means home prices are at historic lows.
Economist are predicting that it's going to get worst before it gets better.
HERE IS WHAT THE WALL STREET JOURNAL HAD TO SAY IN 2005:
If you want to be scared out of your wits these days, you basically have two choices:
go watch Steven Spielberg's latest, or listen to the hysterical warnings of
economists and journalists about the imminent popping of our so-called housing bubble.
Wall Street Journal
COMMENTARY
By NEIL BARSKY
July 28, 2005; Page A10
Now in Spring of 2008, the bubble is looking more like a mushroom cloud!
That is awful news for home-sellers, real estate agents, and even mortgage companies...
BUT IT'S EXCITING NEWS FOR SAVVY INVESTORS!!!!!
Investing in real estate offers HUGE benefits:
TAX SHELTER: Many people believe that depreciation is the best real estate tax deduction of all.
The IRS REQUIRES real estate investors to depreciate their investment properties.
Depreciation is a "paper loss" required for estimated wear, tear and obsolescence.
FINANCIAL DIVERSIFICATION:
Leveraged Property
You can also invest in leveraged property through your retirement account.
For instance, if your IRA has $40,000 in cash and you're interested in investing in a property
selling for $200,000, the IRA can assume the $160,000 mortgage to complete the purchase.
I haven't even mentioned FORECLOSURES yet!!!
THIS OFFER CONTAINS:
104 page E-book INCOME FOR LIFE
INCOME FOR LIFE IS THE FREE Report That Reveals the Amazingly Simple Investing System
That Total Real Estate Rookies Have Used to Become a Millionaires!!
And in addition to showing you how to invest WE'RE going to teach you how to make
extra money to invest in real estate.
Create new streams of income from home in your spare time!!
So much income you'll have to invest it in real estate!
Act now before this offer goes up in flames.
We treat our private investors and syndicates as such. Your trust is of the utmost importance and our credibility is at stake. All of your information is kept secure, and in no way do we sell, trade, or rent your infomation.
Monday, February 25, 2008
YOUR REAL ESTATE BUSINESS- ONE WEBSITE IS NOT ENOUGH
By Marylyn B. Schwartz
RISMEDIA, Feb. 25, 2008-Broker/owner, entrepreneur, techno-savvy geek (that’s a compliment), and all around great guy, Larry Vecchio, Better Homes Realty, New Jersey, has been ahead of the curve in real estate initiatives and trends for many years. Rather than wait for real estate to catch up with technology, he brought technology full speed ahead into his real estate company long before many others acknowledged that the Internet would revolutionize the industry.
MBS: “Larry, why do you believe that your company outperformed many of the bigger, more established companies in your market places during the toughest times of 2007?”
LV: “We understood that consumers would go to non-real estate websites to shop. We saw the trends that promised to drive more and more traffic to sites such as Yahoo and Trulia. Many sought free and unbiased information devoid of the pressure of being contacted by an agent or having to input personal information. We took our clue from the trends and developed our websites Homesin(your town name here).com. In addition, we created the site: homesofdistinction.com, which further solidified our marketing initiatives and helped us to reach out more effectively to the consumer than had been done prior.”
MBS: “That’s quite an interesting concept. You seemed to foresee a trend that wasn’t quite as clear to others. Where did you come up with the idea for homesin(yourtown).com? I know that you own that domain name in all of New Jersey as well as in other places around the country.”
LV: “I wish I could tell you that it came to me in a burst of genius, but it is far simpler than that. I was setting up a website at the Asbury Press, and I asked the young lady who was assisting me where she would look if she wanted to find a home. She said ‘I would look up homes in my town.’ That was the kernel that grew into the formidable network it is today.”
MBS: “You wanted to generate more leads for your agents, yet we know that leads are often in abundance, whereas quality leads and lead conversion eludes us. What are your thoughts relative to the importance of lead generation?”
LV: “I feel there are three levels of leads; now, someday and never. The question becomes what to do with each group. It goes without saying, ready is ready. For the someday, the effectiveness of the company’s auto e-mail system and drip campaign are key. There is no point in creating web domains everywhere if you don’t have the backup systems to control the leads. Truth is that many companies rely solely on their MLS’s tracking program. While something is better than nothing, I believe that we are responding to an ever more sophisticated consumer who expects state-of-the-art technology. We cannot rest on our laurels nor depend on outside resources to control our profitability.”
MBS: “You recently joined a franchise not known in our area but well established in California, Better Homes Realty. How did that come about?”
LV: “With the re-entrance of the Better Homes and Gardens Realty brand, having a name like Better Homes VRI New Jersey Real Estate was creating a challenge. I did not want to join the BH&G family but had a well-respected name brand to protect. I learned about this franchise in Northern California and picked up the phone and called the owners. I flew out to the west coast and we negotiated a partnership that allowed me to be the sole proprietor of the brand east of the Mississippi. It is our belief that we have a powerful opportunity here and will bring this brand to the forefront over the next couple of years. We’re focused on building an Internet Co-op of brokers in every market who will share opportunities and generate leads.”
MBS: “You have already begun that process, correct?”
LV: “Indeed. Right now, an agent elsewhere in the U.S. can join our Internet Co-op and for a modest monthly fee is able to use the Homes of Distinction web domain name and post unlimited listings. Imagine being able to offer your sellers that banner? It has cache as well as allowing the agent autonomy for creating a marketing plan in consultation with the seller. The agent is not bound by highly restrictive brand protections. We are working on a program for mortgage brokers as well. It is a Mortgage Purchase Leads Internet Co-op. We are on the cutting edge relative to helping the mortgage industry become lead generators for Realtors® rather than it always being the reverse.”
MBS: “What are the immediate challenges you see for the industry?”
LV: “Agent training is crucial. We need more skilled professionals, not just more recruits. There are opportunities for growth in acquisitions. Lots of good producers, frustrated by the flood of unskilled recruits entering the business over the past few years, went off and started their own firms. Once the market cooled, they began looking to merge with or be acquired by a company where excellence and teamwork are benchmarks. They want a company where they benefit from the Internet leads generated while being able to “do his/her own thing.” What they want is mentoring and not managing. It is my belief that if we don’t develop more effective systems to lure the consumer, the so-called “free listings” being offered by the non-real estate, third party companies will cost a fortune in lost revenue down the road. Free now equals profitability decline later.”
MBS: “We look forward to seeing how your innovative initiatives will help us all be more effective and competitive within the industry!”
Marylyn B. Schwartz, CSP, is an expert in real estate and corporate sales training/management and team development. She is president of Teamweavers and a trainer for Leader’s Choice.
For more information, visit www.marylynbschwartz.com, or e-mail teamweaver@aol.com.
RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.
RISMEDIA, Feb. 25, 2008-Broker/owner, entrepreneur, techno-savvy geek (that’s a compliment), and all around great guy, Larry Vecchio, Better Homes Realty, New Jersey, has been ahead of the curve in real estate initiatives and trends for many years. Rather than wait for real estate to catch up with technology, he brought technology full speed ahead into his real estate company long before many others acknowledged that the Internet would revolutionize the industry.
MBS: “Larry, why do you believe that your company outperformed many of the bigger, more established companies in your market places during the toughest times of 2007?”
LV: “We understood that consumers would go to non-real estate websites to shop. We saw the trends that promised to drive more and more traffic to sites such as Yahoo and Trulia. Many sought free and unbiased information devoid of the pressure of being contacted by an agent or having to input personal information. We took our clue from the trends and developed our websites Homesin(your town name here).com. In addition, we created the site: homesofdistinction.com, which further solidified our marketing initiatives and helped us to reach out more effectively to the consumer than had been done prior.”
MBS: “That’s quite an interesting concept. You seemed to foresee a trend that wasn’t quite as clear to others. Where did you come up with the idea for homesin(yourtown).com? I know that you own that domain name in all of New Jersey as well as in other places around the country.”
LV: “I wish I could tell you that it came to me in a burst of genius, but it is far simpler than that. I was setting up a website at the Asbury Press, and I asked the young lady who was assisting me where she would look if she wanted to find a home. She said ‘I would look up homes in my town.’ That was the kernel that grew into the formidable network it is today.”
MBS: “You wanted to generate more leads for your agents, yet we know that leads are often in abundance, whereas quality leads and lead conversion eludes us. What are your thoughts relative to the importance of lead generation?”
LV: “I feel there are three levels of leads; now, someday and never. The question becomes what to do with each group. It goes without saying, ready is ready. For the someday, the effectiveness of the company’s auto e-mail system and drip campaign are key. There is no point in creating web domains everywhere if you don’t have the backup systems to control the leads. Truth is that many companies rely solely on their MLS’s tracking program. While something is better than nothing, I believe that we are responding to an ever more sophisticated consumer who expects state-of-the-art technology. We cannot rest on our laurels nor depend on outside resources to control our profitability.”
MBS: “You recently joined a franchise not known in our area but well established in California, Better Homes Realty. How did that come about?”
LV: “With the re-entrance of the Better Homes and Gardens Realty brand, having a name like Better Homes VRI New Jersey Real Estate was creating a challenge. I did not want to join the BH&G family but had a well-respected name brand to protect. I learned about this franchise in Northern California and picked up the phone and called the owners. I flew out to the west coast and we negotiated a partnership that allowed me to be the sole proprietor of the brand east of the Mississippi. It is our belief that we have a powerful opportunity here and will bring this brand to the forefront over the next couple of years. We’re focused on building an Internet Co-op of brokers in every market who will share opportunities and generate leads.”
MBS: “You have already begun that process, correct?”
LV: “Indeed. Right now, an agent elsewhere in the U.S. can join our Internet Co-op and for a modest monthly fee is able to use the Homes of Distinction web domain name and post unlimited listings. Imagine being able to offer your sellers that banner? It has cache as well as allowing the agent autonomy for creating a marketing plan in consultation with the seller. The agent is not bound by highly restrictive brand protections. We are working on a program for mortgage brokers as well. It is a Mortgage Purchase Leads Internet Co-op. We are on the cutting edge relative to helping the mortgage industry become lead generators for Realtors® rather than it always being the reverse.”
MBS: “What are the immediate challenges you see for the industry?”
LV: “Agent training is crucial. We need more skilled professionals, not just more recruits. There are opportunities for growth in acquisitions. Lots of good producers, frustrated by the flood of unskilled recruits entering the business over the past few years, went off and started their own firms. Once the market cooled, they began looking to merge with or be acquired by a company where excellence and teamwork are benchmarks. They want a company where they benefit from the Internet leads generated while being able to “do his/her own thing.” What they want is mentoring and not managing. It is my belief that if we don’t develop more effective systems to lure the consumer, the so-called “free listings” being offered by the non-real estate, third party companies will cost a fortune in lost revenue down the road. Free now equals profitability decline later.”
MBS: “We look forward to seeing how your innovative initiatives will help us all be more effective and competitive within the industry!”
Marylyn B. Schwartz, CSP, is an expert in real estate and corporate sales training/management and team development. She is president of Teamweavers and a trainer for Leader’s Choice.
For more information, visit www.marylynbschwartz.com, or e-mail teamweaver@aol.com.
RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.
Saturday, February 23, 2008
SO WHO IS EUGENE SMITH
I help companies solidify a corporate image, both online and off. I tend to focus my talents on web-based branding, but I've had success using more traditional marketing strategies as well. I excel in the creative process, and have found that the earlier I am involved the better the results.
I am here to Manage your (SEM) Search Engine Marketing by shaping your web-presence. I'll bring you closer, by making you more available to your target. Then launch campaigns that will make you valuable to the exact demographic that you are seeking.
What is search engine marketing (SEM) and why is it important?
SEM is the understanding of how a target site relates to other websites. Some SEO techniques allow a site to show up for relatively low competition keywords, but as the number of sites on a given keyword becomes more competitive, SEM allows a business to coordinate hundreds, or even thousands of sites to increase the relevancy of how a search engine views it. SEM can also include pay per click (PPC) or unpaid organic results.
What is search engine optimization (SEO) and why is it important?
SEO is the process of analyzing elements on a site so the code maximizes the use of keywords contained on the site when viewed by search engines. While text elements are visible to human eye, the code within a site is also important for showing up in keyword searches: this includes structure, HTML code, directories, images and content on the site. The selection of the keywords that raise a site is HUGE to businesses, as the importance of those keywords could potentially send thousands of viewers to a site daily.
So what’s the major difference between SEO and SEM?
Search engine optimization (SEO) is primarily done with code work on a target site. It includes images, text, and information on the site.
Search engine marketing (SEM) is primarily done with work not on the site. It includes link-building, business partnerships, and other online marketing efforts.
Specialties:
Search Engine Optimization (SEO), Search Engine Marketing (SEM), Public Relations, Campaign Design, Mortgage Finance, Commercial Lending, Residential and Commercial Real Estate, Lease-Purchase, Real Estate Lic., Short-Sale, Bridge Loans, Land Development, Rehab Loans, Interior Paint Contracting
ONLINE REAL ESTATE MARKETING - THE IMPORTANCE OF WORKING WITH PROFESSIONALS
Commentary by Israel Rothman
RISMEDIA, Feb. 21, 2008-As a real estate professional, have you ever heard any of these familiar phrases?
“I can’t get in touch with my Web designer, who wants more money every time I want a simple edit; then he never gets it done.”
“My Website has disappeared because the domain was not renewed; I cannot renew the domain because my e-mail was not used to register it.”
“We don’t rank anywhere on the search engines and never get any hits; we paid $2,500 for SEO, and were ranked on Google for exactly one day.”
If any of this sounds familiar, you are not alone. The fact is that most of the best products and services on the Internet are either free, or so inexpensive that anybody can afford them. It’s the expertise to make it all come together to get results that is rare; it is a constantly changing target.
It is time for all of the do-it-yourselfers and self-proclaimed experts out there to admit that Internet marketing has become mainstream advertising. It is extremely competitive and can make or break your business. The marketplace is changing so quickly that only professionals can compete. Do-it-yourself advice will not help you; it will only waste your time and money.
The Internet marketing arena has finally matured enough to need consumer reports, rankings and ratings for the vendors, so that non-tech-savvy advertisers can determine who to believe, who can be relied upon, and who to buy from.
Standards of pricing, performance and reporting need to be established-a difficult task in a marketplace where Google changes the rules so often that the skills of the professors who teach the courses are outdated before they teach their next class.
Compounding the problem is the abundance of misinformation proliferated by amateurs and “experts” who can’t keep up.
My prediction: in the future, as in the past, it will be the reputation of the business-to-business vendor that determines who wins and loses in the new marketplace. Only a true team of professionals working together can keep up with the changes on behalf of their clientele.
Israel Rothman is CEO and founder of SocialMediaSystems.com LLC.
For more information, contact him at israel@socialmediasystems.com.
RISMEDIA, Feb. 21, 2008-As a real estate professional, have you ever heard any of these familiar phrases?
“I can’t get in touch with my Web designer, who wants more money every time I want a simple edit; then he never gets it done.”
“My Website has disappeared because the domain was not renewed; I cannot renew the domain because my e-mail was not used to register it.”
“We don’t rank anywhere on the search engines and never get any hits; we paid $2,500 for SEO, and were ranked on Google for exactly one day.”
If any of this sounds familiar, you are not alone. The fact is that most of the best products and services on the Internet are either free, or so inexpensive that anybody can afford them. It’s the expertise to make it all come together to get results that is rare; it is a constantly changing target.
It is time for all of the do-it-yourselfers and self-proclaimed experts out there to admit that Internet marketing has become mainstream advertising. It is extremely competitive and can make or break your business. The marketplace is changing so quickly that only professionals can compete. Do-it-yourself advice will not help you; it will only waste your time and money.
The Internet marketing arena has finally matured enough to need consumer reports, rankings and ratings for the vendors, so that non-tech-savvy advertisers can determine who to believe, who can be relied upon, and who to buy from.
Standards of pricing, performance and reporting need to be established-a difficult task in a marketplace where Google changes the rules so often that the skills of the professors who teach the courses are outdated before they teach their next class.
Compounding the problem is the abundance of misinformation proliferated by amateurs and “experts” who can’t keep up.
My prediction: in the future, as in the past, it will be the reputation of the business-to-business vendor that determines who wins and loses in the new marketplace. Only a true team of professionals working together can keep up with the changes on behalf of their clientele.
Israel Rothman is CEO and founder of SocialMediaSystems.com LLC.
For more information, contact him at israel@socialmediasystems.com.
Wednesday, February 20, 2008
SELF-MARKETING -8 STEPS TO MAKE AN EFFECTIVE PLAN
By Brian Wildermuth
RISMEDIA, Feb. 20, 2008-Effective and consistent communication is essential in building a successful real estate business. In fact, many highly successful real estate agents actually say they are in the “communication and information business,” yet for most agents, marketing and self-promotion is an afterthought–something that is done on impulse or with no consistent purpose.
An agent, upon hearing a story from one of their colleagues that they acquired a listing after sending out the latest sports schedule, might rush out and send a sports schedule to their farm or sphere and expect the same results. The typical result of an unplanned approach to marketing is one of great disappointment and potential abandonment of any future marketing at all.
What is missing is a plan. Most agents shy away from marketing, because they lack any formal training or know-how.
Here are a few steps to building an effective, hassle-free marketing plan:
1. Define your offering. There are nearly 1.2 million licensed Realtors in the country. You need to let your clients and prospects know what makes you unique. Start by writing down everything you would want your past clients to say about you when referring you to another potential client. This will help you define your service promise.
2. Know your audience. Whether you are farming a local neighborhood or staying in touch with your sphere, it is important to gain as much information about your clients and prospects as possible. At a minimum, you should know the basic demographics of your target audience - the average age, income, and family composition. Knowing this will help you deliver the correct message.
3. Design a theme and/or message. Once you know what you are offering and who you are offering it to, you can develop a consistent message that will help you keep your name top-of-mind with your target audience.
4. Decide on a budget. Most agents spend less than 10% of their annual revenue on marketing. Statistics show that in order to make any kind of meaningful impact on your target audience, you should be spending 25-30%. Either way, a pre-determined budget will help you allocate the funds necessary to carry out your message.
5. Determine the frequency of communication. Experts suggest that more than 3 times per month is too much, and less than 4 times per year is pointless. Whether you communicate once per quarter or twice per month, the key is to stay consistent.
6. Select your pieces. Selecting your marketing pieces in advance will save you a lot of stress and strain throughout the year. There are multitudes of options out there from catalogues to online marketing centers. The key is to ensure that your look is consistent with your message.
7. Choose the proper media. A balanced approach is your best bet to getting your message across. Mix up your delivery between direct-mail, e-mail, personal visits, and your website.
8. Implement and measure. Develop a marketing calendar spreadsheet that includes the following information: the specific marketing piece, the date and method of delivery, the projected cost, and a column for recording client responses. This will keep you on track and provide you with a basic yardstick for how well your plan is working.
©2008 SharperAgent
Brian Wildermuth is the co-founder and president of SharperAgent, and a national speaker in the field of real estate marketing.
For more information, visit www.sharperagent.com.
RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.
For more ways to optimize your best practices, see:
RISMEDIA, Feb. 20, 2008-Effective and consistent communication is essential in building a successful real estate business. In fact, many highly successful real estate agents actually say they are in the “communication and information business,” yet for most agents, marketing and self-promotion is an afterthought–something that is done on impulse or with no consistent purpose.
An agent, upon hearing a story from one of their colleagues that they acquired a listing after sending out the latest sports schedule, might rush out and send a sports schedule to their farm or sphere and expect the same results. The typical result of an unplanned approach to marketing is one of great disappointment and potential abandonment of any future marketing at all.
What is missing is a plan. Most agents shy away from marketing, because they lack any formal training or know-how.
Here are a few steps to building an effective, hassle-free marketing plan:
1. Define your offering. There are nearly 1.2 million licensed Realtors in the country. You need to let your clients and prospects know what makes you unique. Start by writing down everything you would want your past clients to say about you when referring you to another potential client. This will help you define your service promise.
2. Know your audience. Whether you are farming a local neighborhood or staying in touch with your sphere, it is important to gain as much information about your clients and prospects as possible. At a minimum, you should know the basic demographics of your target audience - the average age, income, and family composition. Knowing this will help you deliver the correct message.
3. Design a theme and/or message. Once you know what you are offering and who you are offering it to, you can develop a consistent message that will help you keep your name top-of-mind with your target audience.
4. Decide on a budget. Most agents spend less than 10% of their annual revenue on marketing. Statistics show that in order to make any kind of meaningful impact on your target audience, you should be spending 25-30%. Either way, a pre-determined budget will help you allocate the funds necessary to carry out your message.
5. Determine the frequency of communication. Experts suggest that more than 3 times per month is too much, and less than 4 times per year is pointless. Whether you communicate once per quarter or twice per month, the key is to stay consistent.
6. Select your pieces. Selecting your marketing pieces in advance will save you a lot of stress and strain throughout the year. There are multitudes of options out there from catalogues to online marketing centers. The key is to ensure that your look is consistent with your message.
7. Choose the proper media. A balanced approach is your best bet to getting your message across. Mix up your delivery between direct-mail, e-mail, personal visits, and your website.
8. Implement and measure. Develop a marketing calendar spreadsheet that includes the following information: the specific marketing piece, the date and method of delivery, the projected cost, and a column for recording client responses. This will keep you on track and provide you with a basic yardstick for how well your plan is working.
©2008 SharperAgent
Brian Wildermuth is the co-founder and president of SharperAgent, and a national speaker in the field of real estate marketing.
For more information, visit www.sharperagent.com.
RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.
For more ways to optimize your best practices, see:
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