Commercial RE
Investor Newsletter

September 1, 2007 Brought to you by JW Najarian

In
this issue

·
Bush Outlines Aid for Mortgage Holders

·
The Richest (and Poorest) Places in the U.S.

·
Linkedintelligence

·
Markets Where a Flipper Can Make a Buck

·
The 10 Best Cities to Be a Renter

·
Conferences

·
Falling Construction Prices, Upside and Down

·
Commercial Real Estate, Come On Down

·
Fifteen Tips For Better Sales Letters

·
CRE Investors Lower Return Expectations

·
An Uncommon 1031 Deal

·
1031 Do's and Don'ts

·
Are you a Dealer or Investor?

·
The Best and Worst Credit Cards

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Past
Newsletter Archives

Bush Outlines Aid for Mortgage Holders

Friday
August 31, 1:27 pm ET

By Deb Riechmann, Associated Press Writer Bush Outlines Proposals to Help
Homeowners with Risky Mortgages Keep Their Homes

WASHINGTON (AP) -- President Bush outlined ways the federal government can
help troubled borrowers keep their homes Friday in an effort to address
rising foreclosures fueled by the mortgage crisis.

The
administration's first attempt at dealing with a wave of defaults is not
aimed at bailing out lenders, however.

Read
More: http://biz.yahoo.com/ap/070831/bush_housing_slump.html?.v=1

The
Richest (and Poorest) Places in the U.S.

by
Les Christie

Thursday, August 30, 2007provided by CNN Money

Maryland knocked New
Jersey out of the top spot this year, while Mississippi
and West Virginia were the poorest states
in the Union.

Maryland is now the wealthiest
state in the union, as measured by median household income, according to
the latest stats from the Census Bureau.

Read More: http://money.cnn.com/2007/08/28/real_estate/wealthiest_states/index.htm?section=money_realestate

Linkedintelligence

As most of
you know I am an avid user and believer in LinkedIn as one of the best
tools for networking. Lately I have been trading some great emails with
Scott Allen. Scott runs a site called Linkedintelligence.com. Scott is a
compelling writer who Coauthored "The Virtual Handshake: Opening Doors
and Closing Deals Online". I have read many of the articles on his
site and highly recommend you check it out. You can find out more about
Scott at http://www.linkedin.com/in/scottallen

Markets Where a Flipper
Can Make a Buck

Source: Forbes, Matt Woolsey (07/26/2007)

Flipping went out of fashion last year, leaving thousands of flippers in
trouble in many areas, but an analysis
by Forbes magazine shows that there are markets all over the country
where investors can still turn a profit if they pick their properties
wisely.

Forbes calculated whether a market is ripe for flipping by using data from
Moody's Economy.com to calculate a market's rate of sales against
inventory, and to determine supply and deman d. Then it looked at current
and new-home construction numbers through the end of 2008, based on data
from the National Association of Home Builders; the magazine sought out
markets where planned new home construction is low.

Then Forbes used price appreciation data from the NATIONAL ASSOCIATION OF
REALTORS® to get a sense of short-term market direction. Finally, it
examined Moody's figures on investor share. The higher the share of
investors, the more sellers outweigh buyers, which is bad news in a bearish
market.

The results identified the following markets as the best candidates for
flipping. Here are the best
markets, along with the price in each market that would make a home a
candidate for a quick turnov er.

1. Seattle,
$385,000

2. San Francisco,
$759,000

3. Raleigh, N.C., $225,000

4. Houston,
$150,000

5. Austin, Texas, $175,000

6. San Antonio,
$150,000

7. Boston,
$389,000

8. Los Angeles,
$590,000

9. New York,
$489,000

10. Portland, Ore., $295,000

The
10 Best Cities to Be a Renter

Source:
Forbes, Matt Woolsey (08/30/2007)

Much like a buyers' market in the residential sector, the best renters'
markets occur where supply is abundant, price growth is flat, and renters
can get the best value for their dollar.

Forbes magazine calculated the best
renters' markets by starting with rental pricing data from real estate
investment firm Marcus & Millichap. From there it calculated
capitalization rates – the percent of a property's value acquired in
yearly rent. The higher the cap rate, the more lucrative it is for investors.
The lower the cap rate, the less a renter has to pay to rent a more
valuable property.

Next, using data from the Bureau of Labor Statistics, it calculated how
much of a resident's salary goes into rent. Finally, cities were ranked on
the relative tightening or loosening of vacancies in the rental sector
based on data from the NATIONAL ASSOCIATION OF REALTORS®.

Here are the cities that Forbes concluded are the top 10 renters’
markets:

1. Atlanta

2. Denver

3. Phoenix

4. Las Vegas

5. Tampa, Fla.

6. Houston

7. Cincinnati

8. Indianapolis

9. Sacramento, Calif.

10. Dallas

Conferences

Developer
Conference

September 11-12, 2007

The Omni Shoreham

Washington, DC

http://marketing.hanleywood.com/Web/Conference_Web/2007_Developer/index.asp

Multi-Housing World

September 5-7, 2007

Rosen Shingle Creek Resort, Orlando,
FL

http://www.mhw.com/mhw/1312/index.jsp

Multi-Family Executive
Conference

October 2-4, 2007

The Venetian

Las Vegas, NV

http://marketing.hanleywood.com/Web/Conference_Web/2007_CONF_MFEC/index.asp<
BR>

Falling Construction
Prices, Upside and Down

By
Elaine Misonzhnik

Aug 29, 2007 2:37 PM

Traditionally, a slowdown in the housing market is a bad sign for retail
since shopping center development trails residential construction. The
current downturn, however, has provided an unexpected upside. After years
of steep inflation on construction materials because of the dizzying pace
of residential construction, prices on items such as gypsum, plastics and
ceramic tile have fallen back while those for cement and pre-cast concrete
have posted only moderate gains.

That means retail developers won't have to break the bank on new project
construction. The downside? Sustained concerns over the housing slowdown
also mean that retail spending may drop, which might make any further
retail development extraneous.

Read
More: http://retailtrafficmag.com/news/Construction_Retail_Trends_001/

Commercial
Real Estate, Come On Down

By Steven Pearlstein

Friday,
August 24, 2007

Here's the next shoe to drop as a result of the bursting of the credit
bubble: commercial real estate.

It won't be anywhere near as dramatic as the fallout in the residential
real estate market. But, at the same time, it won't simply be a temporary
disruption in financing followed by a modest correction in pricing that the
industry is now predicting.

In markets like Washington, New York, Boston
and San Francisco, the last four years have
been among the best the industry has ever seen -- falling vacancy rates,
rising rents, soaring values and a ton of new development. Now, that's all
about to come to a grinding halt as financing becomes more expensive and
more restrictive, the economy slows and a big slug of new inventory hits
the market.

"It's over," one local developer told me this week. "It was
a great ride, and now it's over."

Read More: http://www.washingtonpost.com/wp-dyn/content/article/2007/08/23/AR2007082302102.html

Fifteen
Tips For Better Sales Letters

Aug 20,
2007 1:54 PM , Aug 20, 2007 1:54 PM,

By Ernest Nicastro

Boost sales or qualified leads with a skillfully crafted sales letter.

One of the most important factors in the success of your direct mail
package is your sales letter. In many cases, particularly with small
businesses, the sales letter may be the entire package. But given
the right list and the right offer, a skillfully crafted sales letter can
be all you need to turn a substantial profit— or pull in a large number
of qualified leads. Here are 15 tips that virtually guarantee you a more
effective letter.

To see all 15 tips: http://smallbusinessreview.com/marketing_and_sales/tips_better_sales_letters/

CRE Investors Lower Return
Expectations

By Parke M. Chapman

Aug
29, 2007 11:44 AM

New research finds that investors’ return expectations softened
during the first half of 2007 despite growing evidence that commercial
property fundamentals were improving during that period. The disconnect
suggests that improving operating fundamentals weren’t enough to
quell investor concerns about shifting winds in the real estate capital
markets.

Last Thursday, for example, CB Richard Ellis released a survey showing that
five of the 10 largest global office markets posted 20% increases in asking
rents during the 12-month period that ended at midyear. Occupancy rates
also ticked upwards in each of the 10 office hubs where vacancy was already
in single-digit territory before midyear 2006.

"Rent increases of more than 20% in bellwether cities like London, New
York and others significantly underscore the continued strength of the
global office market," says Ward Caswell, director of U.S. Research at
Los Angeles-based CB Richard Ellis (NYSE: CBG).

Read More: http://nreionline.com/news/CRE_Investors_Lower_Return/

Renter
Issues?

Check
out these sites out: www.renterscheck.com
and www.residentcheck.com

Wow what a difference a good website makes!

An Uncommon 1031 Deal

By Michael Fickes

Aug 1,
2003 12:00 PM

The $148 million Puente Hills Mall in City
Of Industry, Calif.,
looked like an ideal investment for a pension fund or REIT. But when the owner
decided to sell, 32 individual real estate investors pooled $56 million in
a tenant-in-common (TIC) structure and snapped the mall up before anyone
else knew it was on the market.

To
date, the Puente Hills purchase ranks as the largest acquisition ever made
by a TIC group. Participants call the deal a model that will foster the
growth of TIC investing and enable individual investors to compete for
major pieces of commercial real estate.

"This
transaction dealt with ground-breaking issues and created a model that can
be replicated," says Richard Walter, president of Faris Lee
Investments, the Irvine,
Calif., broker that initiated
the deal.

Read More: http://nreionline.com/finance/netlease/real_estate_uncommon_deal/

1031 Exchange Do's and Don'ts

By Rochelle Stone

Aug 1,
2007 12:00 PM

Real estate investors must be wise not only in choosing their purchases,
but also in selecting the professionals who help them negotiate their
acquisitions. That's why the recent failures of two 1031 real estate
exchange companies created a stir among some investors as well as experts
in the business of transferring properties.

Fo r the first time in memory, millions of investor dollars have been
jeopardized because of poor management practices, causing more than a
flutter in the financial hearts of hundreds of investors. While these
problems may be resolved, they serve as a stern warning to us all.

Benefits of 1031 exchanges

Although a part of the nation's tax code since 1921, 1031 exchanges did not
enjoy wide popularity until about 30 years ago, thanks to a Ninth Circuit
Court case known as the Starker ruling that focused on section 1031 of the
tax code.

Investors today routinely use the 1031 exchange process to leverage the
sale of investment real estate or personal property. As of 2005, more than
$200 billion of real assets changed hands through this mechanism, and
millions of investors have benefited by preserving their equity. How so?

Read
More: http://nreionline.com/mag/real_estate_exchange_dos_donts/

Are
you a Dealer or Investor?

It seems so clear cut. I buy and hold property as an investment strategy
thus I am an investor. I flip properties for fast profit which makes me a
dealer. What if you flip a couple of properties to come up with capital to
purchase an investment property? If you were considered a dealer your gains
would be taxed as ordinary income. What does this mean? It means you would
pay much higher taxes on your gains.

Investors are entitled to:

1. Long term capital gain, taxed at lower capital gain rates.

2. Exclude their gains from "active" income, subject to social
security taxes.

3. Depreciation deductions, which create immediate tax saving.

4. Defer t axable gains with the 1031 exchange and pay no taxes on the
sales profits.

5. Defer taxable gains with seller financing via installment sale reporting
(IRC 453)

6. Use a capital gain to fully offset capital losses.

Tax Tip: For purchased property, lower long term capital gains results from
holding the property for one year and one day.

Dealer disadvantages:

1. Dealer property profits (even long term) are taxed at higher ordinary
income rates.

2. Dealer property profits are active income subject to social security
taxes.

3. Not allowed valuable depreciation deductions.

4. Dealer property profits cannot be tax deferred with a 1031 exchange.

5. Dealer property does not qualify for installment sale reporting under
IRC 453.

I pulled this information from Albert Aiello’s Goldmine Tax
Strategies. Al has a section on how investors can completely avoid dealer
status with 18 strategies.

Many of you already know Al and like him as I do, but some of his
information is dated so always check with a competent professional. Tax
laws are subject to change and vary according to individual circumstances.
I am not in the business nor do I specialize in tax, legal or other
financial advice.

You can find Al’s stuff at: http://www.mrlandlord.com/mllshop/albertaiello.html

The
best and worst credit cards

Most
major credit cards earned mediocre ratings, while cards issued by credit
unions received the most kudos, a survey shows.August 31 2007: 11:36 AM EDT

NEW YORK
(CNNMoney.com) -- When it comes to swiping plastic, consumers gave high
ratings to American Express, Discover, as well as to cards issued by credit
unions in a report released Thursday rating the best and worst credit
cards.

In
a survey of more than 36,000 cardholders conducted by Consumer Reports,
five of the largest MasterCard and Visa issuers, JPMorgan Chase, Bank of America, Citibank, Capital One, and HSBC
- which together control about 80 percent of the market earned mediocre
rating scores.

The
card issuer USAA Federal Savings, which scored 95 points out of a possible
100, earned the highest rating. The Navy Federal Credit Union and other
credit unions followed suit with high scores. The top three rated issuers
charged interest rates between 9 percent and 11 percent.

Read More: http://money.cnn.com/2007/08/29/pf/credit_card/index.htm?postversion=2007083111

COMMENTARY

Looking for people to submit articles. I would like some
of the professionals that receive this newsletter to contribute some great
tips or maybe impart some great information.  I know there are many of
you out there that have been investors for some time and have l earned some
great stuff.

Success:
To laugh often and much, to win the respect of intelligent people and the
affection of children, to earn the appreciation of honest critics and
endure the betrayal of false friends, to appreciate beauty, to find the
best in others, to leave the world a bit better, whether by a healthy
child, a garden patch, or a redeemed social condition; to know even one
life has breathed easier because you have lived.  This is to have succeeded!
~Ralph Waldo Emerson

Kind
Regards,

JW Najarian

[email-masked]

JW
Najarian

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