ABSOLUTE REAL ESTATE AUCTION – HALL SCHOOL FACILITY

Click on video to take a virtual tour

https://youtu.be/pWzMP6NeFMs

THURSDAY, SEPTEMBER 27, 2018 AT 10:30 A.M. ON-SITE AUCTION

3191 NORTH STUDLEY ROAD, NORTH PLATTE, NEBRASKA

DESCRIPTION: +/- 5.24 ACRES – INCLUDES +/- 22,642 SF BUILDING
LEGAL: ROSEDALE RANCH INC. SUB. OF W1/2 OF NW1/4 23-14-30 TRACT A 5.24 ACRES.
LOT DIMENSIONS: Approximately 705’ x 324’
ZONING: A1 – Agriculture / Conditional Use List Available
TERMS OF THE AUCTION: $5,000 earnest deposit on the day of the auction and balance is paid in full on or before October 31, 2018. Property will be purchased “AS IS”. Possession will be conveyed on date of closing. Title will be conveyed by Warranty Deed free and clear and evidence of marketable title will be by commitment for policy of title insurance. Title insurance premium and escrow closing fee shall be shared equally by purchaser and seller. Any financing
necessary for the purchase of the property must be arranged prior to the date of the auction. The auction of the property will be ABSOLUTE without limit or reservation. Plats and building drawings available. All additional closing documents can be viewed at www.cisnorthplatte.com.
Open House Every Wednesday From 4 to 6 PM and 8:30 AM On Auction Day

Robert L. Stefka, CCIM, Broker
Robert P. M. Stefka, CCIM, Associate Broker

Commercial Investment Services
Stefka Agency, Inc.
308-532-1332

 

 

Providing Rentals For The Senior Citizen

Not all retired people want to own their own home. Many prefer to be tenants. Many feel that the proceeds from the sale of their old home can be used to supplement their pension and social security, rather than reinvested in another home. The money can be used for travel, visits to children and grandchildren or for medical expenses. For living quarters, these senior citizens prefer to be rent payers, not owners. A modest-sized apartment suits their needs and, as tenants, they are relieved of any worries about maintenance and repairs.

Construction Design

Developers and investors are finding a huge, and relatively untapped, market for rental units designed specifically for the older tenants. These are architecturally sound structures designed with the special needs and concerns of the elderly in mind. For example, these buildings have wider than usual front doors to accommodate canes and wheelchairs, handrails in the aisles, fewer stairs and more ramps and inclines, and better than usual security systems with intercoms and spotlights. Inside the apartment units, there would be conveniences that the elderly appreciate (hand grips at the tub and toilet, electrical outlets at waist level, and cabinets that don’t require bending or stretching to reach).

The Rents

When planning the investment in the rental market for the elderly, one financial objective should be to provide units that rent in a price range that is affordable for social security payment recipients. The upper end of the price range can be met by those elderly who have a private pension in addition to their social security payment. The lower end of the range should be affordable for persons who rely primarily on social security payments to meet living expenses. Any of these tenants
who have a nest-egg from the proceeds of the sale of a prior home can plan to use some of the money to upgrade into the rental unit that they prefer.

The Tenants

Elderly tenants are financially dependable because they have a dependable monthly income. They are stable tenants because they are usually not interested in moving. They almost never move because they “need more space”. They usually are quiet (no late parties) and they take pride in keeping their unit looking nice.

All of this adds up to few vacancy problems, few rent collection problems, and fewer maintenance expenses.

Well-Planned Landscaping

Property managers must watch the nickels and dimes as well as the dollars that are spent on the property. Save one dollar in operating costs and (assuming a 10% cap rate) value of the property increases by $10. That is why good real estate managers are always looking for new ways to economize. In addition to saving money, we are always looking for a way to invest a little in the property for a good return.
A well-planned landscape has a recovery value of 100% to 200% in increased rentals at the typical suburban office building. In addition, the owner gets back more than just dollars spent; the landscaping dramatically influences an owner’s positive image in the community.
A well-maintained lawn, pruned shrubs with splashes of colorful flowers help an office building have “curbside appeal”. It says to prospective tenants, visitors, clients, and the community at large that the building’s owner is stable and intends to stay around a while. Clients instantly have confidence that “these people can handle my needs”.
When a property has poor grass, weeds, and unimaginative shrubs, it sends the message that the owner doesn’t care. The owner is often perceived as someone who probably takes short cuts. And if the owner neglects the landscaping, prospective tenants wonder will the details of the leases, repairs, and overall maintenance of the building itself also be neglected?
Good Design
Overplanted landscapes are as hard on the eyes as sparse ones. A good design will combine the factors of function, balance, and symmetry. Function, for example, considers such things as the placement of walkways, parking lot access, and building entrances. Things like trash receptacles can be screened by planting evergreens and hedges. A good design might include:
Repetition. This is the repeating of a plant or a theme to give the impression of one continuous landscape and tie the property together.
Focal points. An area is highlighted by a tree, garden, or sculpture for visual appeal and eye direction.
Balance/scale. Plants are placed symmetrically and sized in proportions so as not to overpower or diminish an area.
Compatibility. Species of flowers and shrubs are selected that will complement the colors, textures, and forms in both the landscape and the building.
Long Range Planning
The professional landscaper will select trees and bushes that will not obstruct traffic when they are fully grown. Fast maturing shrubs can detract from the overall design unless they are carefully thought out in advance.
The owner has other options to choose in addition to natural growing plants and flowers. He can select stonework, cascading water, and lighting accents to create a favorable impression for the building.

Your Real Estate Investment

Knowing what you can do in some investment situations can be the difference between an annual profit or loss in your currently owned commercial property or the one you intend to acquire. How you acquire it can be important.
The professional commercial real estate broker is in the position to represent a client in real estate transactions by setting up sales, exchanges, leases, purchase and sales of options, and management of real estate. This real estate practitioner stays aware of current tax laws and court decisions in order to structure transactions, but does not give legal or tax advice (unless he/she is also an attorney or a certified public accountant). In any complex transaction that might result in changes in any owner’s legal or tax situation, the other members of the “consulting team” should be the owner’s attorney and/or tax advisor. We always recommend consulting with these professionals during the planning and closing of major real estate transactions. All can affect taxes and estate planning.
We are the heart of your professional team, creating the real estate transactions that will be needed to expand your estate. Let’s get together to evaluate your present portfolio of properties, or review your plans for future acquisition.
Starting with your present position and your goals for the future, we can set out moving directly toward achieving those goals.

Investing In Industrial Properties

Investing In Industrial Properties
If you haven’t considered industrial properties as an investment vehicle, it may be time to take a look. Warehouse and distribution (W&D) properties are of interest because their standard layout suits a wide range of users, in contrast to specialized manufacturing facilities. Industrial properties look good for the following reasons:
• The market for industrial property is doing well with vacancy rates nationwide below those of other commercial buildings.
• There is a shift in the location and nature of demand, caused by changing technology and trade patterns, that will present investment opportunities.
• Institutional investors who have portfolios that are light in industrial assets are acquiring W&D properties for diversification.
With any kind of investment, of course, there are always risks. The most significant is the potential for rapid functional or geographic obsolescence. Because of this, investors must carefully analyze factors such as location, construction, ceiling height, and the number and location of docks, as well as other factors.
The Healthy Property
The turn-down in real estate did not affect industrial property as much as other properties because this property did not encourage speculative building; as much as 30% of the cost of W&D properties is in non-depreciable land, so they held limited appeal for tax-motivated investors. Foreign investors have largely avoided the W&D sector because it lacks the “trophy quality” that makes offices, hotels, and resorts attractive. As a result, warehouse development was driven more by demand than by capital seeking an outlet. Also the size of the properties discouraged many institutional investors who prefer to invest in larger properties than the typical $1 million to $10 million W&D property.
Choosing The Investment
Choosing the right property may be a little more difficult. Certain factors may be driving the W&D market toward greater efficiency, changing how and where business will be done:
• Inventory control systems. Computerization and techniques such as bar coding can insure faster and more reliable deliveries from shipper to destination. Combined with just-in-time systems, it reduces inventory and space requirements.
• Automated space. Using robots in W&D facilities will grow over time, encouraging more efficient use of space.
• Regulations. With the trend toward deregulation during the past decades, there has been a reduction in delivery costs by trucks and planes, causing a shift away from rail and water. This widens the possible locations for W&D facilities and encourages the construction of fewer and larger facilities. Since trucks and planes speed deliveries, the amount of inventory stored and the space needed can be reduced.
Investment in W&D facilities must be very carefully thought out because of the conflicting needs for greater demand for space while using existing space more efficiently.

The Land Under A Business–The Most Valuable Asset

Anyone who owns a home that was located in a hot housing market a few years ago knows that the land can be worth more than the actual home. Now many companies are figuring out the same about their own real estate holdings. Many entrepreneurs spend their adult lives building a business up so that it can be sold at their retirement or passed down to their heirs. Now many of them are finding that the land under the business is worth far more than the business itself. Major retail firms are in this category. A lot of companies will be more attractive for their hard assets than their actual sales, particularly during a recession.
The Lessor’s Benefits
When land values soar, strategies must change. An example could be the developer of upscale homes who wants to keep the ownership of the valuable land as an investment. The use of the land lease can widen the market by reducing the purchase price of the house. In certain parts of the country, the value of the land equals the value of the house. Leasing the land can cut the purchase price nearly in half. With this type of land lease, there is usually a provision for a rent increase halfway through the lease term in accordance with the results of a reappraisal of the land.
The Lessee’s Benefits
The land lease results in the following benefits for a builder or developer:
1. She/he can acquire a valuable parcel of land with very little cash investment.
2. This leasehold that is acquired is an asset that can increase in value, and then could be used as security for a loan, or could be sold for a profit.
3. The rental payments are fully deductible by the lessee. If he/she had purchased the land instead of leasing it, only the interest portion of the payments would be deductible.
4. With a subordinated land lease, the lessee-developer gets the equivalent of a 100% loan on the land.
Land Rent and the Term of the Lease
Usually, a developer-lessee will attempt to get the longest possible term in the lease because the shorter-term land lease would have a smaller market for resale. A long-term land lease is generally a net lease under which the lessee pays the carrying costs, including real estate taxes.
When the land rental is a fixed amount, it is a percentage of the fair market value of the land when the lease is executed. This lease will often include a provision for reappraisal of the land at fixed intervals, with new adjustments in the rent. In some cases, for instance with a shopping center, the landowner might demand a share of the percentage rentals over and above the fixed land rent. (Much of the income in the shopping center will come from percentage overages from the sub-lessees.)
A Subordinated or Unsubordinated Lease
If the owner of the land will not subordinate the to a leasehold mortgage, the developer should get a reduction in rent because the unsubordination will cause his or her financing to be more expensive. Subordination could be the most important item in the terms of the lease. Even a short subordinated lease might be better than a longer unsubordinated lease, even though the longer lease is more salable.
The landowner may or may not allow the interest as owner-lessor to be subordinated to the interest of a leasehold mortgagee. When there is a subordination to the mortgage, the lender, in effect, gets a fee mortgage on the land rather than a leasehold mortgage.
When the lease is unsubordinated, the landowner-lessor has first rights over the lender in case the lessee-mortgagor should default. With these terms, the lessee could find that he/she cannot get a loan, or can get one only at a higher rate of interest. Without the subordination, the mortgage is, in effect, a second lien since the lessor’s claim on the rents takes precedence over payments on the mortgage.
The objections of an owner to subordination of the lease could be as follows:
1. He/she could lose the property if the lessee defaults on the leasehold mortgage.
2. Subordination reduces his or her possibility of mortgaging the fee interest in the land, which would be a logical move for the lessor.
If the subordination were part of the terms, the landowner would record the right to receive any notice of default from the leasehold mortgagee and the right to cure the default. The expense would be reimbursed to the owner by adding the amount to the lessee’s rent obligation.

Considerations In Ground Leasing

Landowners may choose the ground lease as a way to benefit an easy and risk-free investment vehicle and as a way to secure the long-term appreciation of the property. Sometimes a ground lease can put the lessor at risk. That is because the deal centers on the concept of sharing economic returns. The lessor becomes a partner of the lessee because the total rent is usually determined by the lessee’s net operating income or net cash flow. If the lessee does well, the lessor does too. However, if the lessee’s business is a loser, so is the lessor.
Therefore, the lessor must consider the financial feasibility of the project. Independent analysis should show that the project represents the correct improvement of the site and that the projected payments will actually be received by the lessor.
There are at least four things that a prospective land lessor should remember before entering into a transaction:
• In most land lease transactions, the economic return to the lessor ultimately reflects the underlying performance of the real estate operated by the lessee.
• The lessor’s evaluation of the deal must focus on the quantity of income projected pro forma but also must include a clear assessment of the likelihood of actual receipt of projected rent.
• Because the conditions and complexities of a land lease can mask the risk associated with achieving the projected rent levels, accurate assessments of the strengths and weaknesses of the real estate is essential.
• Land lease provisions must be tested against the current fee value of the land.

Restructuring Troubled Property

In any market, good or bad, there are always problem properties. Most are only troubled or problem properties because of the current ownership. Some may be neglected only because the present owner has failed to do fairly simple things that can solve the problems. Buying property and solving problems is a profit-making business.
Have you seen: An empty office building. A remodeled apartment house or hotel that has an excessively high level of vacancy. A large tract of undeveloped land that no developer has become serious about wanting to develop. These are examples of troubled property–property that is a definite financial burden to continue to hold but which also is unattractive property to some prospective buyers. Unattractive, that is, until very recently.
The timing now seems right for investors to obtain troubled property. The pressure on owners and lenders with troubled property to get out from under the on going burden is also high. The result is that syndicates have been formed to seek out and buy up troubled properties.
High Risks Not For Everyone
Knowledgeable property developers and managers (especially those familiar with empty or near-empty office, hotel, and apartment buildings) caution that buying troubled property requires taking a very high risk. The financial returns are uncertain and may be a long time in coming, if they come at all. This type of investment is not for everyone; it’s for those who can afford high risk situations.
The profits can come from any one or a combination of circumstances.
• A market turnaround caused by a boom in the local and/or national economy.
• An improved system for promoting and operating the property. Some syndicates are being formed solely to manage the troubled property with an option to buy when and if it hits a specified profit level.
• Purchase of the property at a bargain price, often combined with imaginative and untraditional financing techniques. Some lenders are asked to share the financial risks by accepting a low initial interest rate in return for a big share of the profits later on. Sometimes the seller of the troubled property is asked to retain a financial stake in the property and to help turn it around. The seller’s experience and involvement in the project from the start can be valuable.
• Including the troubled property in a larger development plan. An office building that sits empty might become part of a new industrial park with hotels, conference facilities, and residential apartments, all of which are successful.
Take another look at troubled properties in your area. With fresh new ideas and a re-structuring of the mortgages, the troubles may go away, leaving a profitable investment for you.

Be Aggressive In Getting Commercial Tenants

At all times, good or bad, we must aggressively search for replacement tenants. A month’s rent from a vacant unit can never be recovered. Just running expensive advertising for this space can be nonproductive. A better way might be to have a professional management company that keeps all local brokers who specialize in leasing informed of the advantages and amenities of the building.
Here are some other ideas:
• Don’t scare away potential tenants with marketing gimmicks like free rent. This kind of offer can give the tenant a negative impression and start him/her looking for the things that must be wrong with the building. The professional approach is to stress the positive features of a building and work with potential tenants to match the criteria the tenant feels are most important to him.
• Make sure the management company you choose is experienced and professional. They must know the building intimately and be able to communicate and show the benefits and amenities to potential tenants with enthusiasm. A truly professional company will manage the building as exclusively as if this building was the only property they manage.
• First impressions are most important. The outside of the building and landscaping must be perfect. Don’t make the mistake of many owners who cut the landscaping budget to save money. This is the worst place to save.
• A good management company will look over your property for any deferred maintenance, and advise you about problems that need to be corrected. They will advertise and publicize vacant space through the proper media and in cooperation with other brokers.
We are here to help enhance your property and its value. Please give us a call.

Who Will Buy When You Want To Sell?

If you are new to investing in income property, you may have made a choice in advance of the type of investment property that you wish to own. There are many good types of investment properties: apartments, office buildings, shopping centers, high rise parking garages in downtown areas, warehouses, resort rentals and many others.

Each of these takes a different type of management. Any and all should be under professional management during your ownership. Good management will ensure a profit for you when the investment is sold.

Even before buying the commercial property, you should consider who might be willing to buy it when you want to sell. The specific buyer doesn’t need to be identified, but the type of purchaser should be. Will it be an individual, a syndication, an institution, or a pension fund?

Think about it! If you cannot think of potential buyers now, why is the property being purchased?

By identifying the type of potential future buyer, an investor in a property can better concentrate on what features such a buyer will most likely want. Then the investor is able to operate the property with the management company in such a way as to enhance the attractive features, thereby maximizing the property’s value to the most likely type of buyer. Here are a few examples of resale factors for particular properties.

  • Apartment buildings are usually purchased by pension funds and insurance companies only when they are Grade A properties. Syndicators look for Grade B or higher properties. Wealthy individuals are the most likely prospects for apartment buildings that need to be upgraded and modernized.
  • Office buildings are typically purchased by users (a bank, an insurance company, or a corporation that intends to occupy all or a major part of the building for its own operations). Foreign investors increasingly seek fully tenanted, income-producing office buildings for long-term investment.
  • Resort properties (time-share units, beach front condominiums, and campgrounds) generally have a weak resale market. Sale by auction is a distinct possibility and that often results in bottom-dollar prices.

Other Resale Considerations

In addition to identifying potential purchasers, an investor must determine carefully the appropriate time to sell, the economic outlook, potential tax considerations of a sale of investment property, and other uses for the money that a sale would bring. And an investor-owner should make every effort prior to offering the property for sale to ensure that the financial and physical condition of the property justify the maximum possible price. In a shopping center, for example, the rental income stream, cash flow, and occupancy level should each be at the highest possible level. When they are, a greater number of potential buyers will emerge.

Like-kind exchanges are often a tax-wise alternative to resale of investment property. Savvy investors keep alert to exchange possibilities as part of their focus on resalability of a property.

New Storage Facility in North Platte

CIS welcomes the newest member of our storage facility group. Bloedorn Avenue Storage is a fully secured outdoor storage facility. Surrounded by a security fence, PIN pad entry and security lighting. The space sizes run from 10 x 20 up to 10 x 40 to accommodate all of your storage needs.