07-29-07

Magic Numbers

Strong Start

Subprime Lending Fallout

A Growing Office Empire

Commercial Lenders See Hike in Originations

California Defaults Hit Record High: 17,408

CMBS Spreads to Continue Widening Until Q4

Housing Industry Woes Ooze into Commercial Real Estate

Entity Comparisons

Tax Rates on Taxable Corporate Income

Archives: Past Newsletters www.emeraldbayinvest.com/realestate/newsletter_archive.html

What do I do with LinkedIn?

Linkedin – What is it and what do you do with it?

Linkedin users take on the challenge of explaining all the great ways Linkedin can help you get a better job, get cash for your next big idea or startup, help you find great team members, etc, etc, etc. By JW Najarian

And hundreds of other reasons to look into this innovative site. Every time I send out a request to join with me on LinkedIn I get “REMOVE ME IMMEDIATELY FROM YOUR LIST!!!” requests… Argh! I have to go back and explain that I make no money or points for them joining. I use LinkedIn often and I met my present partners and many associates via this great site. I have at this time around 182 contacts and with three degrees of association that puts me in contact with around 2.5 million of some of the most competent professionals you will find anywhere. By linking with me the new user can start with thousands of connections right away. Recently I have heard that LinkedIn is going public and there are rumors that Google wants to buy this company. They are growing faster than any other business networking site. I have used the other sites and I can see why. LinkedIn is much better at keeping you abreast of what is going on with your connections and has automatically found friends I had forgotten about over the years…

There was a group writing project kicked off in May of 2007 that asked people to write about :Smart ways to use LinkedIn” The feedback is still coming in but if you……………

…are new to LinkedIn and wondering how to use it to help you in your business and career
…have been using LinkedIn a while but felt like you haven’t really been accomplishing anything with it
…are trying to persuade their friends to join LinkedIn and want to communicate the value proposition
…think there’s no real value in LinkedIn (and those who want to rebutt them)

Go to this link and see what others think or see how they are using LinkedIn to increase their success. http://www.linkedintelligence.com/smart-ways-to-use-linkedin

Magic Numbers

As vacancy percentages tick back up, yield management of rents becomes critical to operating incomes.

Source: MULTIFAMILY EXECUTIVE MAGAZINE
Publication date: July 1, 2007

By Chris Wood

Like any good regional manager, Laramar Communities' Paul Hyams thinks about pushing rents every single day. He meets with property managers every two weeks to set rents, and he expects that those managers shop at least two competitive properties every month. At the 1,432-unit Fillmore Center in San Francisco, Hyams is seeing near 100 percent occupancy and consequently has an eyebrow raised, wondering if Laramar's rents there might be too low.

Strong Start

First quarter figures show 2007 going strong.

Source: MULTIFAMILY EXECUTIVE MAGAZINE
Publication date: July 1, 2007

By MULTIFAMILY EXECUTIVE Staff

The national apartment market posted another strong performance in the first quarter of 2007, according to the quarterly “Performance Monitor” by Marcus & Millichap. Vacancy inched up slightly, but sustained effective rent growth provided healthy year-over-year revenue gains for property owners.

Subprime Lending Fallout

By G. M. Filisko
Jul 1, 2007 12:00 PM

Turmoil over subprime lending in the single-family home market is taking a toll on mortgage real estate investment trusts. Through June 19 of this year, the mortgage REIT industry posted a total return of negative 13.40%, a huge swing from the 19.32% return posted for all of 2006, according to the National Association of Real Estate Investment Trusts (NAREIT)....

A Growing Office Empire

Parke M. Chapman

Jul 1, 2007 12:00 PM

As one of the nation's fastest growing suburban office markets, Ontario, Calif. is teeming with new development. With a booming local economy, cranes are rising all over this Inland Empire city of 171,000 located 35 miles east of Los Angeles.

Commercial Lenders See Hike in Originations

June 08, 2007 - June 14, 2007
Provided by Commercial Real Estate Direct in Loopnet News

Commercial mortgage origination volumes during Q1 2007 ran 37% ahead of the same period last year, according to a survey by the Mortgage Bankers Association. That increased volume was driven in large part by the acquisition of REITs, including Blackstone Group's $38.7 billion acquisition of Equity Office Properties Trust, which resulted in some $31.2 billion of financings. Of the major lenders, conduits or securitized lenders saw a 61% increase in volume in Q1 '07, while agency lenders such as Fannie Mae and Freddie Mac saw a 22% increase. When compared to Q4 '06, historically the most active quarter of any year, Q1 '07 saw a 15% decline.

California Defaults Hit Record High: 17,408

Daily Real Estate News

July 26, 2007

The housing downturn and tighter lending criteria are catapulting the foreclosure rate in California to unprecedented levels, according to new statistics.

To Read More: http://www.realtor.org/RMODaily.nsf/pages/News2007072602?OpenDocument

CMBS Spreads to Continue Widening Until Q4

Spreads for CMBS are likely to continue widening until at least Q4 2007. That's how long it will take for new CMBS deals to include commercial property loans underwritten at today's higher standards, according to JPMorgan's CMBS research unit. Investor confidence in the CMBS market continues to be hurt by the subprime residential mortgage crisis that's caused concern throughout the fixed-rate investment market. Meanwhile, CMBS issuance remains at a fever pitch with Q3 2007 volume expected to reach as much as $60 billion and break the record high of about $47 billion set in Q2 2007. Issuance is expected to drop $40 billion in Q4 2007 partly as a result of improved underwriting standards in the loans in new CMBS deals.

Visit Commercial Real Estate Direct at www.crenews.com for up-to-the-minute commercial real estate news.

Updated: Trouble in the Debt Markets: Housing Industry Woes Ooze into Commercial Real Estate

Plunging Housing Market Intersecting with Peaking Commercial Market Puts Economy at a Crossroad

July 25, 2007

Written by Mark Heschmeyer

The big question everyone seems to be asking (but no one really knows the answer) is will the spillover from rising housing loan defaults and foreclosures and plunging housing demand eventually drag down the overall economy?

There's no question that lenders and credit ratings agencies have tightened their underwriting as a result, which is having at least a moderate cooling effect on the commercial real estate sector.

Sub-Prime Lending’s Effect on Commercial Real Estate

Simple RE has an interesting post exploring the connection between conduit lending and the sub-prime mortgage meltdown.

(The observations are attributed to Dan Smith, Managing Director of RBC Capital Markets.)

So here is where the connection between sub-prime residential and the commercial loans lies; the investors who bought (and are being hurt) by the sub-prime residential mortgages are the same investors who are buying the highest risk pieces of the commercial pools. When the sub-prime market took such a large hit, the investors buying the riskiest pieces of the commercial mortgage pools walked away from the table. The conduits were left holding on to the riskiest loans.

Entity Comparisons

Common Entities

This table provides an at-a-glance reference to how the most common business entity types compare in a number of key characteristics. To compare all entities use the Entity Comparison Tool or view the entity comparison table in PDF format.

Characteristics	Sole Proprietorship	C Corporation	S Corporation	Limited Liability Company
Formation	No state filing required.	State filing required.	State filing required.	State filing required.
Duration of Existence	Dissolved if entity ceases doing business or upon death of the sole proprietor.	Perpetual	Perpetual	Dependent on the requirements imposed by the state of formation.
Liability	Sole proprietor has unlimited liability.	Shareholders are typically not responsible for the debts of the corporation.	Shareholders are typically not personally liable for the debts of the corporation.	Members are not typically liable for the debts of the LLC.
Operational Requirements	Relatively few legal requirements.	Board of directors, annual meetings and annual reporting required.	Board of directors, annual meetings and annual reporting required.	Some formal requirements but less formal than corporations.

Partnership Entities

This table provides an at-a-glance reference to how partnership-related business entity types compare in a number of key characteristics. To compare all entities use the Entity Comparison Tool or view the entity comparison table in PDF format.

Characteristics	Sole Proprietorship	General Partnership	Limited Partnership	Limited Liability Partnership
Formation	No state filing required.	Agreement between two or more parties. No state filing required.	State filing required.	State filing required. In CA & NY the use of LLP is limited to accountants & lawyers.
Duration of Existence	Dissolved if entity ceases doing business or upon death of the sole proprietor.	Dissolves upon death or withdrawal of a partner unless safeguards are specified in a partnership agreement.	Perpetual	Dependent on the requirements imposed by the state of formation.
Liability	Sole proprietor has unlimited liability.	Partners have unlimited liability.	At least one general partner has unlimited liability.	Partners are not typically responsible for the debts of the LLP.
Operational Requirements	Relatively few legal requirements.	Relatively few legal requirements.	Some formal requirements, but less formal than corporations.	DE, GA, PA, TX & VA require an LLP to carry insurance or an escrow account to cover liabilities.

To see the complete comparison: http://www.bizfilings.com/learning/corptypes.asp

Tax Rates on Taxable Corporate Income

Corporate Income Tax Rates--2007, 2006, 2005, 2004, 2003, 2002, 2000

        Taxable income over     Not over      Tax rate

          $         0        $    50,000        15%

               50,000             75,000        25%

               75,000            100,000        34%

              100,000            335,000        39%

              335,000         10,000,000        34%

           10,000,000         15,000,000        35%

           15,000,000         18,333,333        38%

           18,333,333         ..........        35%

Personal Service Corporations

Personal service corporations are subject to a flat tax of 35% regardless of their income.

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Hello, things are getting busy. There are so many great opportunities out there. I really enjoy your emails of support and have enjoyed all the great feedback and especially the phone calls. There is nothing like talking about what is going on.

The biggest complaints I am receiving is the fact that my database is not segmented by people who want the newsletter or deals or both and also my database is not sectioned according to location so I have invited many east coast or Canadians to west coast or specific Los Angeles events.

I will be sending a questionnaire out soon to get the information I will need to do the correct segmentation. I will also be using a new service so you can easily opt out of receiving what I am sending. This will allow me to put more graphics on my pages as well.

I am looking for more deals and I am also here to help you with any commercial lending needs you may have. If you just have a question let me know.

I have had a lot of requests for information on the Mastermind I have been mentioning. I apologize for not getting back to many of you. The Mastermind is still a little up in the air, but is coming together fast so as soon as I get the plan finalized I will be announcing just what I am doing. Thank you for your patience.

This newsletter is for my investor friends. It is not part of Pathfinder Mortgage Corp or their associates. I am a commercial real estate lender and an investor. .

If you have projects you are working on and would like my help. Please contact me to discuss.

If you know of someone who might like to receive this newsletter please have them send me an email requesting that I add them to my database.

I am not a financial expert, lawyer or guru of any kind. The information here is strictly for review. I make no claims for the accuracy of any of the stories, information or news articles.

“You only live once, but if you work it right, once is enough.” ~Joe E. Lewis

Kind Regards

JW Najarian

www.emeraldbayinvest.com

818-353-9100