Sean Dreznin, Commercial Investment Real Estate Agent

I have included two pictures this morning...

They should speak for themselves... but just in case... On the one hand we start off with the odometer of my truck here in chilly Akron... Yes that dash represents NEGATIVE... Two pairs of gloves on and my fingers are still going numb...

The second picture represents Mother Nature throwing us a bone... A beautiful sunrise on the way into Downtown Akron this morning.

NOI stands for NET OPERATING INCOME.

To get to NOI, you must first start with the Gross Income (rentals, laundry, etc) minus % for Vacancy which leaves the Adjusted Gross Income. Taking this number, you then apply the operating expenses (i.e. - Management, Maintenance, repairs, utilities, reserves, etc) which leaves you with your Net Operating Income. (i.e.-Income before Mortgage Debt)

Below find a brief numerical example...

GOI - $100,000

Vacancy - 10% - ($10,000)

ADJ GOI - $90,000

OP EXP - ($45,000)

NOI - $45,000

Now the rule of thumb throughout the industry (especially in Northeast Ohio) is 10% capitalization rate of NOI.

In this case that would make the above example property worth approx. $450,000

Now depending on factors such as location, condition, types of units (1 Bdrm, 2 Bdrm, etc) this CAP RATE scenario needs to be flexible... Such as a 9% scenario which places value at approx. $500,000 and thus the mirror image at 11% CAP RATE places the value at approx. $410,000.

Now, other options exist when looking at investment property, especially multi-family, such as comparables, GRM and price per unit, but for now I digress and we will discuss some of those options in the near future.

I am the tie that binds a deal together! I am not over-confident, in fact, I am simply stating the view from my perspective. A promise that is in the below video from the 2:25 moment and on, sums up how I feel about an agents role in catalyzing a transaction!

"You will never see a player, play as hard as I will the rest of the season, and you will never see someone push the team as hard as I will push everyone the rest of the season, and you will never see a team play harder then we will the rest of the season...God Bless."

I closed an in-house multi-family deal yesterday on a 15+ unit Apartment Building. Now, each deal is a challenge unto itself, whether the obstacle lies with the property, the financing, the buyer, the seller, their attorneys, the agent (Let's hope not) or even the appraiser...

This transaction was simply a battle of attrition between Buyer and Seller and I was the sacrificial lamb... Seriously though, I was proud to mediate the deal and ultimately get it done with a satisfying feeling of accomplishment and gratification from all parties involved. The road to success was a winding and certainly vertical one at that.

Staggered negotiating, random and seemingly small requests in contradiction to the size of the deal, miscommunication between all involved and of course "Line drawing, in the Sand"... my favorite euphamism!

All in all, the Buyer and Seller are smart, rational folks who both knew where they wanted to be when the dust cleared and although we took some new and previously unexplored paths to get there, mission accomplished!

I imagine if deals were easy, everyone would be selling real estate and the economy would be flying high again. The transactions are out there, but you have to go and get them, they won't come to you anymore as in the past. Reputation is a strong asset, but so is hard work and determination!

I wish all of you the best in 2009.

This year, pain to replace gain...

Nary a bright spot in CoStar Group's first ever state of the Market/Industry Outlook...

The pain felt throughout the U.S. housing market over the past two years is going to catch up with commercial real estate in 2009 when the country will begin to see spikes in office vacancy rates climbing as much as 300 to 400 basis points with many markets expected to experience severe negative net absorption.

That was the assessment of Andrew Florance, founder and CEO of CoStar Group Inc., as presented in the company’s first-ever 2009 State of the Office Market review and outlook delivered this afternoon from its Bethesda, MD, headquarters and webcast to CoStar clients across the country.

Florance’s presentation laid out the economics and fundamentals detailing the impact of the financial meltdown on commercial real estate, finding little upside to report with all indicators projecting continued:

Constraint in the credit markets, Dearth of investment and construction activity, Corporate space contraction, and Falling property values.

The outlook is now for the current recession to take a higher toll, for a longer time, on commercial real estate than did the dot.com bubble burst of 2001-2002. Rather than try to reproduce the entire presentation or beat the dead horse that is the economy, here is recap of just some of the highlights.

CONTRACTION

INVENTORY BUILD-UP

MORE DISTRESSED PROPERTY

GO GREEN - Now I knew this last one would throw you a bit.... So for the complete article, please go to:

http://www.costar.com/News/Article.aspx?id=82F65EB97E014D8671AC245889156995&ref=100