Real Estate Management

at the Corporate and Worldclass level.

Managing property at the million sq ft level and above puts you in a very lofty class - world class in fact. Having what it takes to operate at that level is beyond all but a small percentage of the real estate firms or corporate real estate offices.

World Class Real Estate measures corridors in miles or kilometers. And that is at one location.

When you can spend a full day walking the property and not get to all the places you need to see you are at the World Class level.

We count elevators by the dozen.

Power loads are enough to make the local electric company call when our demand drops.

Security is a 24 hour 7 day requirement.

Water usage is measured in thousand gallon per minute flow rates.

Managers and owners working at this level require training, skill and a vast knowledge of many different technologies. Skills taught in few places and often learned the hard way.

Here we have collected a directory and resource - a reference point - for those at that level.

And of course, those who would like to be at that level.

Do you run at these levels? If you do, or want to, let us know.

Welcome to the Multi-Million SqFt Club!

Donald Trosper

Becoming A Battle Hardened Real Estate Veteran Without All The Scars:
Chris Anderson, PhD
1475 As part of a new web site that we just launched, www.GetPreconstructionDeals.com, I get repeated requests asking if a particular deal is good or not. While we can't answer this for individual projects, we can certainly look at what HAS to get done by the investor to dramatically increase the odds of a successful transaction.

Step 1 is always to determine the fair market value(FMV). As a real estate investor, you can always buy properties at the FMV. My question is why would anybody want to do that? Through careful selection, you can always find properties that are priced below FMV, regardless if they are existing or if they are a preconstruction project. The best way to determine FMV is to work with someone already familiar with the area or determine yourself through local websites showing recent sales histories.

Step 2 is to then determine the market trend for the area for which there are two critical pieces: 1) is the average price increasing AND 2) is the volume of sales increasing. If both are moving in your favor, then you have the comfort of knowing that the right trend is in place to keep prices moving forward. In stock market investing, there is the saying that the trend is your friend and traders frequently observe price and volume data to confirm the trend. If a hotly priced real estate market shows signs of dropping in volume, be very careful.

Step 3 is to learn about supply, especially in the preconstruction marketplace. In some areas, there are very few projects on the books and in others, there are 15,000+ units expected to emerge within 1 zipcode, in 1 year. Same is true for investing in houses. In you are competing with a bunch of new houses that are coming on-line, then rapid price escalation may be limited. For most savvy investors, they like to see lots of demand with very little supply which is nothing more than common sense.

Step 4 is to make your OWN opinions of the macro conditions of the local and regional marketplace. So, for example, if you are a strong believer that real estate is overvalued in the target area, why would you ever consider investing? On the other hand, if you believe that market forces will continue to escalate in the market, then why would you not be actively looking? As an example, some people believe that the graying of America is just now starting to drive people to warm, more attractive climates. Even though property values are high in these areas right now, are we going to see 20+ years of additional migration to them? You have to decide for yourself because we won't know the answer for another 20 years!

Step 5 is one of the most important risk management tools available to the investor in real estate. Each property has typically an inherent rate at which it can be rented, even if that is not your intent. By looking at rental rates, relative to the amount of principle, interest, taxes, and insurance (PITI) that you will have to pay, then you can understand the amount of cashflow that may be required to support the property. If your objective is to produce cashflow, then you need to be cashflow positive very quickly. If your objective is capital gains and the cashflow is negative, then you now understand what you may have to support on a monthly basis if things don't work out.

Deferred maintenance then becomes our Step 6. For an existing property, how much maintenance has the previous owner neglected that you will need to catch up? Be careful here since this can be one of the major places to get nasty surprises.

And now I saved the best for last: Step 7 is to determine your own personal risk tolerance. Some new investors look at a deal and only see the positive. This is a huge mistake. EVERY REAL INVESTOR I KNOW HAS LOST MONEY IN A DEAL but they gladly will do more. Why? They understand their risk's going in, they understand how to limit their downside, and the gains are much larger than the risks they are taking. If you were standing beside them and saw what they saw, you would gladly take the risk as well and rapidly ignore any small losses that you experience.

Hopefully this has given you a good start at learning how to analyze a potential opportunity. Obviously each of these steps requires additional work or training but they are what separate the new investor from the seasoned, battle tested veterans.

About the Author

Chris Anderson is a leading authority on preconstruction real estate investing. Get his 4 day e-mail course and a 33 minute video free today! Visit www.GetPreconstructionProfit.com & www.GetPreconstructionDeals.com. In addition, Dr. Anderson is the on-line training coordinator at the Van Tharp Institute, a group dedicated to providing world class training for investors and traders.