Set Phasers to “Green”

On the off chance that you are a Star Trek fan, you can appreciate the title of today’s piece. If not, allow me to briefly explain.  Whenever Captain Kirk sensed trouble, he would tell the crew he was with to “set phasers to stun.”  Or, if the alien was bad enough…kill. Today, though, we are not talking about phasers, but phases, and those phases refer to environmental examinations.

So, you are touring an investment property that is in the warehouse district. The building looks good from the outside, there is adequate parking, and the roof was even replaced the prior year. Oh, did I mention that the price was right in your wheelhouse? What could possibly derail the transaction? Inspector Gadget could…

Environmental site assessment phases help classify probable or existing environmental contamination liabilities. These assessments fall under due diligence and help give an accurate picture as to the amount of work needed to be put in to bring the property to a proper, healthy level.  Let’s look at the differences between the two phases of inspection.

Phase I helps build the scope and framework for the property in question. It includes interviewing the current owners for work that has been done. There are a lot of records to review, looking into whether there were hazardous materials used on site. Phase 1 also allows for research with the local government for history with the property, reviewing adjoining properties and comparing the current condition to the original site plan. The goal is to decide if the property was contaminated in the past. If warranted by the report, a Phase II assessment can be ordered. Cue up the intense music…

Phase II ESA will confirm the presence of hazardous materials on the property, helping protect a potential buyer, lender, investor, or another interested party on the transaction from environmental liability.

Another difference is Phase II assessments are unquestionably more intrusive than Phase I. In Phase I ESA (environmental site assessment), evaluators record things like deeds, aerial photographs, surveys, maps, and other essential documents and even examine records of other nearby properties. While Phase II assessment will assess more things like subsurface soil borings, groundwater monitoring well installation, minerality tests, drum sampling, sampling of dry wells, floor drains and catch basins, transformer/capacitor sampling for Polychlorinated Biphenyls (PCBs), testing of underground storage tanks and much more.

The Phase II goal is to assess actual presence of environmental contaminants. For example, if a Phase I determine if a vapor encroachment condition is likely to exist at the subject property, the Phase II will further highlight potential remedial actions that may be required to clean up the property. Determining actual costs to clean up potentially dirty land can help hold a transaction together or allow you a way out.

Just as in Poltergeist, the movie, having a more thorough inspection of the grounds may have helped “unearth” their eventual problem of the ancient Indian burial ground, your environmental tests can help save you from numerous future EPA clean up expenses. So, set your “phases” to Green, and best to you in closing that transaction!

Contact Howard Freedland for all of your commercial real estate needs!
📱 561.888.2735
✉️ Howard@EchoFineProperties.com
www.EchoCommercialProperties.com

Restaurants – Echo Commercial Tip of the week

My stomach is rumbling, but where should I go to eat? The changing landscape in commercial real estate – restaurants – today on the Echo Commercial Tip of the week.

This week, Burger Fi and Anthony Coal Fired Pizza & Wings announced that they may need to file for bankruptcy or even cease operations throughout the United States. This adds to a troublesome list of businesses that have announced concerning financials or are trying to restructure. Burger Fi has 102 locations and Anthony’s has 60, and when added to the distress of Rubio’s, Tijuana Flats, Red Lobster, Bucca di Beppo and World of Beer, we have several chains that could potentially lead to a ton of vacancies.

How does that affect us? There is always a demand for restaurant space in key areas. Delray, West Palm Beach and Jupiter vacancies could potentially be filled, but at what cost? The turn-around time for a remodel can be lengthy, and the lease rates, which were at a premium in recent times, may take a hit in the interim, causing additional financial stress to the landlords, and subsequently the banks.

Keep your eyes on additional chains announcing financial stress, as it is a good indicator of how the economy is shaping up. That will help you make good decisions if you choose to enter that sector with your latest and greatest restaurant innovation. Call me for restaurant availability. I am Howard Freedland and this has been your Echo Commercial Tip of the Week.

Contact Howard Freedland for more information on Commercial Properties!
Phone: 561.889.2735
Email: Howard@EchoFineProperties.com

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Pens Down!

If the pen is mightier than the sword, then we are all out there fighting with butter knives. Commercial loans are tougher to come by, and bankers are being extra-cautious.
See why on my newest installment of the Echo Commercial Tip of the week!
Contact Howard Freedland for more information on Commercial Properties!
561.889.2735
Howard@EchoFineProperties.com

What We Don’t Know

Every day, I am asked what I know about the real estate market in South Florida. People want to know what types of properties are best for investors. They want to ask if I have a good idea what company to use for an inspection. Lately, people are asking my opinion of what is going on with the craziness surrounding the recent NAR settlement. Should we wait to buy until the settlement is enacted? Will this cause the prices to drop? Will it mandate what color I must paint my industrial complex? Well, I am Howard Freedland with Echo Commercial Properties, and today, I focus on what I don’t know.

One: Should I stay or should I go?
If you want to invest, the same rules apply. Find a property that is worthy of your investment…and negotiate for it! The settlement will not change things in the commercial world, as commissions have always been negotiated at the beginning of each transaction, and many of us have buyer representation agreements in place to protect our work. Clear, honest communication will always win out over speculation. I don’t know if this agreement will improve profitability of any deal…just that how you get to the final number may change a bit.
Two: Will you save money after the settlement is finalized?
You might, but at the end of it, someone will need to perform work on a buyer’s behalf, and that person will need to be paid properly for doing it. Nothing worth anything in life is free. If people are positioning themselves to benefit from this, remember, you get what you pay for. This settlement is not to say that the work done by some agents is superfluous, just that the numbers may be negotiated. Trust me when I say that there are several things good agents do for their compensation, and if you think you can shave that down, try. But you may, indeed, be hurting yourself in the long run.
Three: Will building colors be mandated? Yes…everyone will have to paint their warehouses yellow, multi-family is brown and offices will now need to be green. Remember when I titled this piece “what I don’t know”?
Bottom line is that the NAR settlement will make agents more accountable to all parties in a transaction, and that some of the aspects of compensation can be negotiated. It will increase buyer representation agreements being used, and it will not require you to paint your building. Remember, at this point, this case is still evolving, and it is smarter to say what we don’t know…yet. I am Howard Freedland, and this was the Echo Commercial tip of the week.

Contact Howard Freedland for more information on Commercial Properties!
561.889.2735
Howard@EchoCommercialProperties.com
https://www.echocommercialproperties.com/

1031 Exchange – An Investment Tool in Real Estate

At first glance, when you see the numbers 10 and 31 put together, you might think that we were talking about October 31st, or Halloween. After all, it is an awesome celebration…when else can you go to someone’s home and demand candy? However, this combination of those numbers is a fantastic investment tool in the world of real estate. Yes, I am referring to the 1031 exchange. I am Howard Freedland with Echo Commercial, and this is your tip of the week.

A 1031 exchange is a swap of one real estate investment property for another which allows capital gains taxes to be deferred. The name is derived from Section 1031 of the IRC or Internal Revenue Code. It has a lot of detail to it, so reviewing it with a proper financial advisor is very important.

The Basics

-A 1031 exchange is a tax break. You can sell a property held for business or investment purposes and swap it for a new one that you purchase for the same purpose, allowing you to defer capital gains tax on the sale.
-Proceeds from the sale must be held in escrow by a third party, then used to buy the new property; you cannot receive them, even temporarily.
-The properties being exchanged must be considered like-kind in the eyes of the IRS for capital gains taxes to be deferred.
-If used correctly, there is no limit on how frequently you can do 1031 exchanges.
-The rules can apply to a former principal residence under very specific conditions.

Now, there is always fine print, and that is where things have the chance to go sideways. If they do, the government can claim 15-25% in taxes – not to mention your Halloween candy – so pay attention to those details.

Those interested in profiting the most will learn about rules on the following categories:

-like properties
-what is a principal residence
-the special rules for depreciable property and depreciable recapture
-the 2017 Tax Cut and Job Act which eliminates the exchange of personal property from qualifying 1031 exchanges
-THE TIMELINE! Know your 45 and 180 day rules, which run concurrently
-the Reverse Exchange

The bottom line is that like any investment, it is the investors responsibility to understand all that goes into the tool that they invest in.

So, in review, the 1031 exchange can become a very positive investment tool to use. Consult with your financial advisor and CPA so that you understand the tax implication on any investment tool you choose. Otherwise, instead of enjoying your “Halloween” you will find yourself crying over your candy as you receive a hefty tax bill. This has been Howard with Echo Commercial Real Estate with your tip of the week

If you would like assistance with securing a particular commercial real estate investment, contact Howard Freedland today!
📱 561.889.2735
✉️ Howard@EchoCommercialProperties.com
www.EchoCommercialProperties.com

So, you have grown your business to a size that needs some square footage and maybe even frontage. How do you sort through all the possible locations to choose from?  Howard Freedland offers a few tips on how to land that new storefront.

Question 1:  WHAT TYPE OF COMMERCIAL LEASE IS BEING OFFERED?

Knowing what type of commercial lease is being offered is one of the most important items to consider when looking at properties for your new office space. Is the lease triple-net, modified gross, or any other of the many types?  The type of lease determines how your rent bill will be calculated.

Next, WHAT IS THE MINIMUM LEASE TERM?

A lease term length can be a decisive factor in your property search. Typically, commercial properties offer lease contracts with a minimum term length of at least a year. Many contracts require a 3-to-5-year commitment. Longer terms can be restrictive, while shorter terms allow you to be more flexible if you don’t want to be tied down to a property for a certain amount of time. However, long-term contracts give you more negotiating leverage and security with predictable rental costs.

Third, WHAT AMENITIES ARE INCLUDED?

This is one of the most essential questions to ask when leasing office space. Understand what building services are included in your monthly rent, such as repairs and maintenance, cleaning assistance, electricity, heating and air conditioning. These additional costs can have a huge impact on your decision, especially if you’re on a strict budget.

Next, you want to ask WHAT INSURANCE COVERAGE IS REQUIRED?

Often times, commercial landlords require a certain level of insurance coverage. Be sure to ask what type and amount of insurance coverage is required by the lease, as it may add a costly fixed expense.

You want to be visited by customers, so HOW MUCH PARKING IS ALLOTTED TO THE RENTER?

If you have multiple employees, you’ll want to make sure you have enough parking for everyone. It’s best to find out the parking situation when you’re viewing a corporate rental space to understand how that will affect your team.

Make sure to ask:  IS THERE ROOM FOR EXPANSION?

If you plan to expand your team or services in the future at the same location, be sure to ask about what available space is offered in or near the building.

Sixth, CAN YOU MAKE CHANGES TO THE OFFICE SPACE LAYOUT?

Before signing a lease on a commercial building that you plan to rearrange, it’s best to ask whether or not that is acceptable. Some building owners may require that you leave the building layout the way it is or optimize the space within their guidelines.

After all that, what about Exclusivity?

Will the landlord protect your type of business? Do you need to worry that a business just like yours will open in the same plaza as yours? Best to delineate what is and is not acceptable before signing so you don’t end up competing with someone in your backyard!

So, look forward to growing your business the right way! Make sure you are armed with the right information, and that you are not afraid to make your landlord work for you. This has been Howard Freedland with the Echo Commercial Tips of the Week!

For assistance with your commercial acquisition, please reach us at 561-889-2735 or howard@echocommercialproperties.com

Howard Freedland is our Echo Commercial Properties Real Estate Specialist. As an independent wine broker, Howard has executed international deals with corporations and conglomerates. While working with Echo Fine Properties, Howard is a part of a team currently managing the interests of national and international companies wanting to secure land and property in South Florida. All of his prior business experience has brought him to this point as a professional, effective real estate leader. You can contact him on 561.889.2735 or Howard@EchoCommercialProperties.com.

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Due Diligence and Closing the Transaction

Welcome to Part three of our series “What do ya do?” where we have explored what it is we do as agents to add value to the transaction. In this section, we look at the final steps to finishing the transaction positively. After searching for our clients, we negotiated a price and terms for the sale. Now, it is time to “Do the Due”. No, not Mountain Dew. We mean due diligence.

Previously, we recorded a piece focusing on this topic. Now, we investigate how it relates to a close, how clients utilize the results found through the process and ultimately, come to terms on whether to close on the property. I am Howard and this is part three in our series by Echo Commercial.

Due diligence is the period in which a company can inspect, examine and test all aspects of the property. We spoke a great deal before about environmental examinations, and there are several other categories of inspections. These can include title and survey reviews, physical analysis of the building and property and zoning checks to confirm that the buyer can do what they want to do on the property.

Often, the longest part of this phase is dealing with the government on permitting and zoning. While environmental and structural exams can be done in weeks, we are reminded regularly that government moves at the speed, and efficiency…of government. We do our best to know the individual players in each municipality so that we might be able to help the process come to a quicker conclusion.

After the due diligence phase is done, we look for a “clear to close.” This is the directive that both parties are satisfied with the deal, and that the title and closing officers have deemed the transaction clean. Before we break out the celebratory beverages, we need to prepare both parties for the closing process.

Preparation for closing includes following a long checklist of items needed regarding:  financing, an owner’s affidavit, sales proceeds forms, payoff statements, invoices requiring payment, confirmation that there is no additional work or construction going on the property, 1031 information, if applicable, organizational documents for the buyer…trust me, there is more…just appreciate that there is a lot that must be accounted for.

So, there you have it. A successful close and everyone is happy! Celebration time, indeed. Wait…we are forgetting an important part of what we do.

Our next step, perhaps our last step for the time being, is to help the new business owner market their new acquisition. Echo Commercial offers several items to our clients so that they can get a leg up on launching their business.

For one, we have a long list of service purveyors that do everything from build-out to painting, HVAC to pest control. Also, we have an in-house video team that can produce an interview style advertisement. Yes, the same talented, good-looking guys that produce our videos here! Echo commercial is proud to produce and amplify the message, so we help drive people to the new location. Helping with the launch is just another thing that we do here. If you would like assistance with securing a particular real estate investment, I can be reached at 561-889-2735 or howard@echocommercialproperties.com.

Howard Freedland is our Echo Commercial Properties Real Estate Specialist. As an independent wine broker, Howard has executed international deals with corporations and conglomerates. While working with Echo Fine Properties, Howard is a part of a team currently managing the interests of national and international companies wanting to secure land and property in South Florida. All of his prior business experience has brought him to this point as a professional, effective real estate leader. You can contact him on 561.889.2735 or Howard@EchoCommercialProperties.com.

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