Giving Back: More Than a Strong Balance Sheet

Giving Back Can Mean More Than a Strong Balance Sheet
Investment in commercial real estate provides property owners with a unique opportunity to enrich their greater community as well as their investment portfolio. Many cities have areas that could benefit from revitalization projects. Investors can play an integral role in the transformative change movement and turn around these oft-struggling regions. For those who might consider such an endeavor, there are three key questions to ponder.

What is a revitalization project? A revitalization project requires a focus on investment in a struggling or underutilized area to bring about positive change that will benefit the greater community. As an investor in these areas, you can find undervalued properties that have the potential to increase in value.

Investment in a revitalization project does not provide a quick return, particularly for those who come in during the first phase. The return for investors increases exponentially during the mid-phases, as other investors take notice of the positive impact the project is having on the immediate area and look to get in on the action.

More interest in an area generates increased market value. By carefully allocating investment capital, a prudent investor can put the equity earned from investment in phase one of the project toward the purchase of an additional property during a later phase.

How does participation in a revitalization project benefit an investor’s portfolio? This investment provides investors an opportunity to enrich their community as well as themselves. Investors can find good value and lower competition in these struggling regions. As the community improves, the profits that the building generates will also increase. This process can be expedited by repurposing the building for multiple uses. The right mix of retail, office, and residential space can accelerate community growth by providing additional opportunities for employment, market stability, and consumer confidence.

Another benefit involves utilizing the equity from properties obtained during early phases. This can be used to either fund later phases or purchase additional properties to further accelerate project growth. In turn, the investor is rewarded with a balanced monthly cash flow, increased reputation in the community for future development projects, and a solid portfolio.

What methods are used to measure the positive impact of the investment on the community? Community improvement can be tracked using several metrics, including crime rate, unemployment, and median wage. These statistics can provide a measurable basis on which to quantify the impact your investment is making in the area.

Another method used to measure the impact of your investment within the community is to follow market trends in the surrounding areas. As the stability of the phase – one community continues to increase, adjacent properties will become more appealing to new investors who may not have the capital to invest in the immediate project area.

Furthermore, municipal investment in the supporting infrastructure is another key indicator of the success of your investment within the community. It is important to work with municipal figures throughout the project. By showing key decision-makers quantifiable statistical evidence, you can reduce the time and money required to clear up any metaphorical roadblocks to project growth.

Navigating Nepotism: Stormy Waters Ahead

If you own or run a small business, you may be tempted to hire a friend or family member – either because you actually need the help or because the person needs a job.

While there are advantages to having a buddy on your staff, there are also challenges. For starters, friends and family may assume privileges or try to take advantage of their relationship with you. They may intentionally or inadvertently undermine your authority or blur the boundary between personal and professional realms.

Additionally, monetary discussions with friends and family members can be extremely awkward, and performance reviews are often difficult. And even if you try to avoid showing favoritism, other employees may perceive nepotism.

Of course, there are exceptions, and some family businesses thrive. But before hiring a friend or family member into your business, be sure you are hiring for the right reasons.

Additionally, be sure the person’s skill set, experience, and work ethic fit the position. Always set performance expectations in advance and be frank and up front about salary and bonuses. Lastly, go into the situation prepared to hold the person to professional standards.

Ultimately, you should always hire the person who is best for the job. If that is a friend or family member, be aware that the time may come when you have to make a decision that they won’t like, and this may result in a damaged relationship that lasts a lifetime.

Want a Strong Q4? Pay Attention to These Biz Trends

Fueled by technology, business is changing more rapidly than ever before. Entrepreneurs should be aware of key trends and predictions that will affect small businesses for the rest of this year and into 2019.

Cybersecurity: Small businesses have become prime targets for ransomware and attacks on mobile banking and card transactions. As cashless payments continue to grow, mobile wallets like Apple Pay, Samsung Pay, and Google Pay are seeing greater adoption, as are various app, browser, and person-to-person payment platforms.

Marketing: More and more, consumers are seeking customized content and offerings. Advances in technology, such as individualized email messaging, allow small business to provide the personalization their customers desire.

Social: Social media advertising has become more competitive and more expensive. SMEs can benefit by using apps to link single posts to multiple sites. This will streamline their postings to reduce time spent on social media marketing. Partnering with micro-influencers – those with under 100K followers – has also proven beneficial for SMEs.

Gen Z: This generation is beginning to make its presence known in the consumer and workforce spaces. Gen Zers are independent and tech-savvy. Personalization is key to attracting the attention of this cohort.

Finance: The economy is doing well, but uncertainty around tariffs and the threat of a trade war loom large. Also, look for interest rates to tick up.

The workplace: More and more employers are turning to mobile workforces and freelancers for noncore tasks. A large number of SMEs allow employees to work remotely. This strategy can reduce payroll costs and increase the employee pool to include nonlocal talent. For in-house employees, SMEs are offering wellness programs (both physical and mental) and bolstering anti-harassment policies.

Putting strategies in place that address these key business trends will help you stay on top of your game and ahead of your competitors, in 2018 and beyond.

Three Things to Consider before Buying a Marina
Marinas offer a unique and exciting opportunity for investors who want to live the dream of working by the water. However, with this opportunity comes the challenge of balancing the numbers and living the dream. Before you launch into this endeavor, it’s important to consider the following three things.

Scarcity is one of the greatest obstacles to marina ownership. Waterfront investment opportunities are not plentiful in most areas, and competition for existing sites can be high. Potential owners may need to closely evaluate whether upfront investment costs can coexist with current investing strategies. Capitalization ratios can be significantly lower than those of more traditional real estate investment options.

Capital costs need to be fully understood before you invest. These include line items such as site upgrades, repair and maintenance costs associated with maintaining the facility, day-to-day operational costs, predicted income from slip rates, and occupancy – with an eye toward seasonal fluctuations in usage. For safety reasons, maintenance must be kept up to date without having a detrimental impact on the use of the site. This includes covering expenditures during the off-season when there is less income.

Engineering assessments will ensure that the marina you are considering is in a location that will allow it to survive and thrive for years to come. Marinas are highly impacted by severe weather and the surrounding environment. A detailed engineering report can let the potential owner know how well the marina will stand the test of time.

SA Realty Watch Group
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Employee Relations
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This newsletter and any information contained herein are intended for general informational purposes only and should not be construed as legal, financial or medical advice. The publisher takes great efforts to ensure the accuracy of information contained in this newsletter. However, we will not be responsible at any time for any errors or omissions or any damages, howsoever caused, that result from its use. Seek competent professional advice and/or legal counsel with respect to any matter discussed or published in this newsletter.
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