How do you secure your children’s financial future?

My soon to be 5th grader, Tyler, is preparing for football camp this week.  As a concerned and excited parent, of course I am doing all I can to protect him including making him trail run, lift weights and eat right.  I am buying him all sorts of protective gear so he a can hustle out on to the field to hit hard and be safe.  Recently,  it dawned on me that due to circumstances out of his control, his financial future may look entirely different than mine.  And I feel the need to help protect him from that too.  So, what sort of global trends can we identify now in order to proactively respond to help kids get a head start?  It’s a large topic, but I’ll break it down into three areas worth thinking about:

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1) The devaluing of the US dollar:  Ever since Nixon decoupled the US dollar from Gold in August of 1972 as its valuation standard, the US dollar train has been on a devaluation collision course.  We are the unlucky recipients of a government that has been spending out of control since Nixon enacted this historic event.  As the dollar loses its purchasing power, the wages of the average American can not keep up with their required spending power.  The end result: Inflation that outpaces wages.

Answer: Invest in tangible assets of which the value and cash flow component rises with inflation.   i.e. Long term cash flow real estate, oil and gas wells, and multinational large cap companies which pay good dividends.

2) America’s wealth gap:  According to Emmanuel Saez, a professor at the University of California, Berkeley, during the post recession period of 2009-2012, the rich snagged a greater share of total income growth than they did during the boom years of 2002-2007.   The illustration below helps put this wealth gap into perspective.

Answer: Provide your children with the street and entrepreneurial smarts to create their own wealth.  Don’t teach them to work for other people and their money, yet teach them to have their money and other people work for them.  Introduce them to books early on like Jeff Olsen’s, Success for Teens. http://www.amazon.com/Success-Teens-About-Using-Slight/dp/0979034159

3) The environment: Recently a CNBC article highlighted an “economic time bomb” which may cost the world $60 trillion due to the world’s fast changing climate.   http://www.cnbc.com/id/100912062.   Since the Arctic ice has been recorded in 1979, last summer marked the lowest levels of ice on record.  Now, I am no environmentalist, but the ramifications are pretty alarming.

“However, the Arctic’s pivotal role in regulating the oceans and climate means that as it melts it is likely to cause climatic changes that will damage crops, flood properties and wreck infrastructure around the world, according to research by academics at the UK’s  University of Cambridge and Erasmus University Rotterdam in the Netherlands.”

Answer: For a long term investing horizon like Tyler’s, my answer to this threat would be to purchase real estate  in cooler mountain regions.  If Florida, Arizona and Texas are recording extreme heat like never before and sea levels are predicted to rise, it would make sense that the acquiring cash flow commercial real estate at higher elevations might provide a hedge against this threat.

As an investor, you want to choose your options carefully.  There are many alternatives to the stock market for you to invest.  Resort Realty Capital is currently searching for value-add and opportunistic real estate acquisitions in 12 Rocky Mountain markets through our broker partners.  If you would like to learn more, please contact us.

Start your 2012 tax planning now!

By the time January 1, 2013 rolls around, it may be too late to take advantage of the current tax rates from the Bush era.  To refresh your memory, the Bush tax cuts were enacted in 2001 and 2003 and scheduled to expire in 2011.  President Obama signed legislation in 2010 that temporarily extended the Bush tax cuts through 2012.  It is unlikely that the Bush tax cuts will be extended again until the election is over, and even then it’s anyone’s guess as to what will happen.  So call your accountant and get your parachute ready, it’s time to start planning for the so called fiscal cliff.  Here are a few of the impending changes:

1) Individual Income Tax Rates:  Ordinary income tax rates will increase for most individuals in 2013.  Also, qualified dividend income will be taxed at ordinary income as opposed to the current long term capital gains rate.  Also, there will be a marriage penalty for many taxpayers by pushing them into the 28% tax bracket. 

Tax Brackets (2012 Dollar Amounts) Marginal Rate
Unmarried Filers Married Joint Filers    
Over But Not Over Over But Not Over 2012 2013
$0 $8,700 $0 $17,400 10% 15%
8,700 35,350 17,400 70,700* 15% 15%
35,350 85,650 70,700* 142,700 25% 28%
85,650 178,650 142,700 217,450 28% 31%
178,650 388,350 217,450 388,350 33% 36%
388,350 388,350 35% 39.6%

2) Long Term Capital Gains Rate:  The maximum rate on long term capital gains is scheduled to increase from 15% to 20%.  Additionally, tax payers in the 10 and 15% ordinary income tax bracket currently pay no long term capital gains tax.  They will be subject to a 10% long term capital gains tax in 2013.

Maximum Rates 2012 2013 2013 (including Medicare contribution tax)
Long-Term Capital Gain 15% 20% 23.8%
Qualified 5-Year Capital Gain 15% 18% 21.8%

Possible Strategy: Consider disposing of assets such as stocks, real estate and businesses which have a long term gain to avoid the possible tax increase.

 3) Dividend Income Rates: Bush created a special category of dividend income called “qualified dividend income” which allows dividend income received from domestic corporations and some foreign corporations to be taxed at the long term capital gains tax rate.   In 2013, this QDI will be taxed at the ordinary income tax rate. 

Maximum Rates 2012 2013 2013 (including Medicare contribution tax)
Qualified Dividend Income 15% 39.6% 43.4%
Ordinary Dividend Income 35% 39.6% 43.4%

Possible strategy:  Owners of closely held corporations should consider taking a higher than usual dividend payment in the current 2012 tax year to avoid the higher rate next year.

4) Medicare 3.8% Contribution Tax: A new 3.8% tax on ordinary income is going into effect in 2013 as a way of paying for Obamacare and will take place regardless of the extension of the Bush Tax Cuts.  This tax comes into play if your AGI or adjusted gross income exceeds $200,000 for unmarried individuals, and $250,000 for married couples.  Please consult your accountant on this issue, as it is quite complicated.

Possible strategy: Investors in pass-through entities such as partnerships, LLCs, and S corporations should also review the tax distribution language in the relevant entity agreement to ensure that future tax distributions will account for this new tax.

The above represents just a small portion of the changes that are going into effect for 2013.  I hope it helps you to start thinking about your tax planning strategy moving forward.  It helps to make sure your parachute is in proper working order before you are forced to jump off the fiscal cliff!  

As an investor, you want to choose your options carefully.  There are many alternatives to the stock market for you to invest.  Resort Realty Capital is currently searching for value-add and opportunistic acquisitions in 12 Rocky Mountain markets through our broker partners.  If you would like to learn more, please contact us.

Facebook Foolery?

If you are one of Facebook’s 835,525,280 users world-wide, it is likely that the recent Facebook IPO or initial public offering did not affect your Facebook experience in the slightest.   You kept posting pictures, liking pages, and staying in touch with friends and family.  But for those who invested in Facebook’s IPO, the effects of their investment were not so positive, i.e. they invested in Facebook foolery.  The capital markets flat out rejected Facebook’s public offering leaving investors losing almost 40% on their investment within a few short months.

Facebook’s IPO was one of the most hotly and sought after IPOs in the world’s history.  With over 800 million subscribers, you would think with this many “eyeballs” (as they say in internet terms), Facebook would overcome any negative stock sentiment and not experience a resulting -39.08% decline since it first started trading on May 18th, 2012.  But, a couple of things went wrong:  1) Nasdaq failed their client by not executing the IPO properly, and 2) Morgan Stanley overpriced their client’s IPO.  The end result is that as of July 30, 2012, Facebook is trading at 36 times revenue, a stock rich for even the height of the dot.com bubble in 2001.

I find this rejection by the capital markets an interesting paradigm on how the stock market is completely out of the average investor’s control.  There is a saying that Wall Street is a river of money.  A few get to swim in it, a few more get to stand by the river side and splash water around, and the rest of the world can only see it from miles away.

As an investor, you want to choose your options carefully.  There are many alternatives to the stock market for you to invest.  Resort Realty Capital is currently searching for value-add and opportunistic acquisitions in Breckenridge and 10 other Rocky Mountain markets through our broker partners.  If you would like to learn more, please contact us.

JOBS act: Chalk one up for President Obama

If you have not heard, the JOBS act was signed into law in April by President Obama.  JOBS stands for “Jumpstart Our Business Startups.”  Part of this legislation includes a provision for crowdfunding which is intended to allow small startup companies to raise much needed seed money to grow without having to obtain that capital from accredited investors. This is exciting news for the small investor who can soon get in on ground floor opportunities that would otherwise be off limits due to the red tape required for such offerings.

While the Securities and Exchange Commission is highly skeptical about the possibility of fraud, they are still mandated to finalize the exact rules in early 2013.  Crowdfunding, in theory, would work with you as the investor buying shares of stock from a company that is listed on an SEC approved investment portal.  Such portals exist today (http://www.crowdsourcing.org/directory), however, they are restricted to selling to only accredited investors.   The JOBS act now opens true equity funding to the masses.  So, how do you profit in these deals and mitigate your risks at the same time?  Three rules to follow are: 1) invest in who you know,  2) invest in what you can touch, and 3) be realistic about risks/returns.

1) Invest in who you know:  Invest only in companies to which you are referred by a trusted source.  Having been a part of an internet startup back in 1999, the investors who participated in our stock offering were introduced to us by my business partner’s brother, who was also our investment banker.   All parties involved trusted each other.   One suggestion is to utilize Linked-In to cross check the founders’ names to see if you can make a connection back to yourself.

2) Invest in what you can touch: If you can drive to a location, whether it’s a production facility, a commercial real estate shopping center, a large tract of land, or an office with real people, and put your hands on your potential investment, the chances are greater your investment will be around longer than just a company with a website.

3) Be realistic about risks vs. returns:  If you are reading a prospectus online which purports to provide a 25% return on your money in the first year, and every year after, be prepared to lose all of your money.  If it sounds too good to be true, it could be another Madoff scheme.  It is up to you to determine how much risk you are willing to take, so be prepared to analyze the upside along with the downside along with understanding the business model and how returns are generated.

In 2011 an estimated 452 crowdfunding platforms worldwide (but mostly in Europe and North America) raised nearly $1.5 billion, according to a May report from Crowdsourcing.org. That study estimates volume will hit $2.8 billion in 2012.  This number is projected to grow exponentially once the SEC finalizes the rules.   Remember, it is up to you to do your homework, as the Dr. Jekyll side of crowdfunding is very real.

Resort Realty Capital is currently searching for value-add and opportunistic acquisitions in Aspen and 10 other Rocky Mountain markets through our broker partners.  If you would like to learn more, please contact us.

Darren Nakos, CCIM
Resort Realty Capital
111 Main Street
Frisco, CO 80443-0630
(720)-663-1430

THIS IS NOT A SOLICITATION FOR INVESTMENT – THIS INQUIRY IS TO FIND OUT IF YOU ARE INTERESTED IN RECEIVING ADDITIONAL INFORMATION. NEITHER RESORT REALTY CAPITAL, LLC, IT’S AFFILIATES AND REPRESENTATIVES MAKE ANY REPRESENTATION REGARDING THE RISKS OF INVESTING IN COMMERCIAL REAL ESTATE. YOU SHOULD CONTACT YOUR OWN PROFESSIONALS TO MAKE THE DETERMINATION AND ASSESS THE RISK OF INVESTING. AS WITH ANY INVESTMENTS, THERE ARE INHERENT RISKS AND NO GUARANTIES OF RETURNS. PLEASE CONSULT WITH YOUR OWN PROFESSIONALS IN DETERMINING THE RISKS ASSOCIATED WITH INVESTING IN COMMERCIAL REAL ESTATE.

 

Romney’s Alternative Lifestyle!

All signs are pointing towards Mitt Romney becoming the GOP elect candidate for the upcoming 2012 presidential election against incumbent Barack Obama.    It’s no surprise that Mr. Romney’s wealth status and success at Bain Capital has been highly scrutinized.   Whether you agree with his political views or not, there is no doubt that Mitt knows how to make money in a capitalistic society such as ours.  What you may not know is Mitt has been living an alternative financial lifestyle.   No, its not what you might be thinking as far as alternative lifestyles go.   Mr. Romney uses his traditional IRA to buy alternative investments or non-traditional assets such as real estate and private equity.

Pensco Trust Co., a self-directed IRA custodian based in San Francisco used the information about Mr. Romney’s IRA to remind investors about how non-standard, high-return assets can help IRAs swell in size.  In a news release, Pensco Trust noted that multi-million dollar IRAs aren’t uncommon and that it holds several IRAs each with more than $100 million.

So, why do people buy non-traditional assets with their IRA?  Because regular IRAs are limited to investments in stocks, bonds and mutual funds.  Self-directed IRAs, on the other hand, are specialized accounts that allow their holders to invest in anything except for life  insurance, collectibles and investments that would personally benefit them or close family members, as restricted by the IRS.

As millions of baby boomers approach retirement, pensions are unsustainable and Social Security’s future is uncertain at best.  That leaves many people depending heavily on their retirement accounts to fund their retirements.  ”As people live longer, you know, retire at 65, live to 85, that’s 20 years they’ve got to provide for themselves,” Tom W. Anderson, CEO and founder of PENSCO Trust Company, a self-directed IRA custodian, said. “No longer can you just park your money in a retirement account and expect to get by.”

Here are three more reasons to look into self-directed IRA’s:

1) Diversification:  One example is that real estate within self-directed IRAs can be purchased in cash. If the real estate is a rental property, the rental income generated is pure profit back into the IRA which allows the purchaser to have consistent cash flow off the retirement investment.

2) Leverage: Account holders are allowed to use leverage, meaning a bank will lend money to the IRA using the real estate as security and not require a personal guarantee. This can be a great wealth-building tool.

3) Invest in your core competency:  If you understand private equity, you can invest in business from start-ups to publicly held companies.  If you understand real estate, you can access limited partnerships, or purchase real estate outright.  The options are many, however self-directed IRAs require extensive due diligence and knowledge, because the account holders themselves make each investment decision, unlike traditional IRAs.

I personally am looking forward to the upcoming election.  Candidates whose views empower people to make their own financial decisions about their own futures will provide our country with a sense of pride and accomplishment and will lead to a stronger economy.

Resort Realty Capital is currently searching for value-add and opportunistic acquisitions in Aspen and 10 other Rocky Mountain markets through our broker partners.  If you would like to learn more, please contact us.

Darren Nakos, CCIM
Resort Realty Capital
111 Main Street
Frisco, CO 80443-0630
(720)-663-1430

THIS IS NOT A SOLICITATION FOR INVESTMENT – THIS INQUIRY IS TO FIND OUT IF YOU ARE INTERESTED IN RECEIVING ADDITIONAL INFORMATION. NEITHER RESORT REALTY CAPITAL, LLC, IT’S AFFILIATES AND REPRESENTATIVES MAKE ANY REPRESENTATION REGARDING THE RISKS OF INVESTING IN COMMERCIAL REAL ESTATE. YOU SHOULD CONTACT YOUR OWN PROFESSIONALS TO MAKE THE DETERMINATION AND ASSESS THE RISK OF INVESTING. AS WITH ANY INVESTMENTS, THERE ARE INHERENT RISKS AND NO GUARANTIES OF RETURNS. PLEASE CONSULT WITH YOUR OWN PROFESSIONALS IN DETERMINING THE RISKS ASSOCIATED WITH INVESTING IN COMMERCIAL REAL ESTATE.

 

Egg Nog, Santa and Taxes?

It is that time of the year where holiday cheer and giving helps everyone reflect on what is truly important.  Family, good friends, and paying Uncle Sam as little tax as possible for 2011. Yes, it is time to make some year end tax decisions to minimize how much you need to pay the governments so you can spend more on your family and those less fortunate.

Last month, our bi-monthly Life’s Financial Navigator was hosted by Alison Dunnebecke, CPA Tax Partner at Hein and Associates, LLP in Denver.   Alison has over 27 years of professional experience providing public and private companies with a wide range of tax compliance and tax planning services, including federal and multi-state tax matters.  The topic was year-end tax planning for 2011, and I thought I would share some of the highlights.  Please consult with your accountant before you make any decisions.

For individual tax update and planning:

1) Consider distributions from “C” corporations while the 15% preferential rate still applies;
2) Consider selling stock at a gain in 2011 or 2012 to take advantage of the 15% rate;
3) If you have a transaction that is an installment sale, file for an extension until 10/15/2012 to have additional time to consider electing out of installment sale treatment if rates have been increased.  It may be best to pay taxes up front if you have the cash available; and
4) If you have any input on year-end bonuses, consider whether you should take them in 2011 or 2012.  It may be more of an impact in 2012/2013 when the Bush-era tax cuts are set to expire.

For charitable deductions:

1) Consider donating appreciated shares of stock;
2) Deduction is equal to FMV of stock;
3) Capital gain is not recognized by donor;
4) Subject to 30% AGI limitation;
5) If you re-buy stock with cash that you would have donated, you basically are getting a stepped up cost basis in the stock.

These were just a few of the highlights that Alison talked through. If you would like to see the entire presentation, please let me know or call Alison at (303) 298-9600.

We wish you and your family a very happy holiday season!

Darren Nakos, CCIM
Resort Realty Capital
111 Main Street
Frisco, CO 80443-0630
(720)-663-1430

Resort Realty Capital is currently searching for value-add and opportunistic acquisitions in Aspen and 10 other Rocky Mountain markets through our broker partners.  If you would like to learn more, please contact us.

THIS IS NOT A SOLICITATION FOR INVESTMENT – THIS INQUIRY IS TO FIND OUT IF YOU ARE INTERESTED IN RECEIVING ADDITIONAL INFORMATION. NEITHER RESORT REALTY CAPITAL, LLC, IT’S AFFILIATES AND REPRESENTATIVES MAKE ANY REPRESENTATION REGARDING THE RISKS OF INVESTING IN COMMERCIAL REAL ESTATE. YOU SHOULD CONTACT YOUR OWN PROFESSIONALS TO MAKE THE DETERMINATION AND ASSESS THE RISK OF INVESTING. AS WITH ANY INVESTMENTS, THERE ARE INHERENT RISKS AND NO GUARANTIES OF RETURNS. PLEASE CONSULT WITH YOUR OWN PROFESSIONALS IN DETERMINING THE RISKS ASSOCIATED WITH INVESTING IN COMMERCIAL REAL ESTATE.

 

What do Aspen real estate and John Denver have in common?

They are both loved by the world and Coloradans in particular.  In fact, last week I had lunch with a dear friend of the late John Denver.  I was very interested to hear, among some of the stories, that there is a performing John Denver artist in every country around the world carrying on the John Denver songs for the fans.   You have to agree that John’s folk song, “Rocky Mountain High” still gives you goose bumps each time you hear it.

As far as Aspen real estate, while Aspen has not been impervious to the downturn, they have had an impressive rebound.  Consider the following facts:

1) At a time when development land is being picked up from banks for pennies on the dollar, Base Mountain Village a train wreck of a development, is now witnessing a bidding war.  The unfinished 20 acre project is located at the bottom of Skico’s largest mountain, Snowmass Ski Area, just outside of Aspen. It ran into financial trouble in April 2009 when Related Cos. defaulted on a $520 million acquisition and construction loan from Hypo Real Estate Credit Corp.  According to The Aspen Times, three other companies are also thought to have submitted bids: East West Partners of Vail, Real Capital Solutions of Louisville, Colorado, and Related Cos.

2) Home sales in the Aspen area are surging even though the housing market is in a slump nationwide. Real estate officials say annual sales from 2009 and 2010 will be easily topped this year. Real estate officials say total sales topped $1 billion in October, an increase of 19 percent over the same period last year.  In September alone, 86 real estate transactions were valued at more than $137 million. Source: AP

3) Aspen Ski Company, aka SkiCo posted an increase in 1.7% over the previous year in number of skier visitors to Aspen.  Most of the increase was from season pass holders vs. destination travelers.  Colorado continues to gobble up the largest share of the skier and rider market. Its resorts log 20.4 percent of annual visits nationwide. California is next highest with 12.1 percent. Vermont’s share is 7.1 percent while New York is at 6.9 percent. Utah rounds out the top five states with 6.8 percent of the market.

All in all, the Aspen real estate market is proving to perform ahead of the competition.   On the personal side, if you have never visited Aspen, I would highly recommend it. You may even spot a famous person in the lift line or perhaps a John Denver look alike!

Also, please join us for our bi-monthly education series called Life’s Financial Navigator at the Denver Athletic Club on November 16th with our guest speaker, Alison Dunnebecke, CPA, Tax Partner at Hein & Associates in Denver.  Alison will be discussing year end tax planning and topics  such as planning ideas for closely held businesses including a discussion of tax benefits relating to business assets, use of automobiles, retirement plans, other business deductions and available credits. Alison will cover the current rates in affect and when they are due to expire. She will also touch on “what’s new in Washington” and IRS exam activity, along with personal tax tips for individuals.

Resort Realty Capital is currently searching for value-add and opportunistic acquisitions in Aspen and 10 other Rocky Mountain markets through our broker partners.  If you would like to learn more, please contact us.

Darren Nakos, CCIM
Resort Realty Capital
111 Main Street
Frisco, CO 80443-0630
(720)-663-1430

THIS IS NOT A SOLICITATION FOR INVESTMENT – THIS INQUIRY IS TO FIND OUT IF YOU ARE INTERESTED IN RECEIVING ADDITIONAL INFORMATION. NEITHER RESORT REALTY CAPITAL, LLC, IT’S AFFILIATES AND REPRESENTATIVES MAKE ANY REPRESENTATION REGARDING THE RISKS OF INVESTING IN COMMERCIAL REAL ESTATE. YOU SHOULD CONTACT YOUR OWN PROFESSIONALS TO MAKE THE DETERMINATION AND ASSESS THE RISK OF INVESTING. AS WITH ANY INVESTMENTS, THERE ARE INHERENT RISKS AND NO GUARANTIES OF RETURNS. PLEASE CONSULT WITH YOUR OWN PROFESSIONALS IN DETERMINING THE RISKS ASSOCIATED WITH INVESTING IN COMMERCIAL REAL ESTATE.

“Darren, where do I put my money?”

We recently held our first presentation of Life’s Financial Navigator at the Denver Athletic Club in an attempt to answer such a question.   Our speaker, Jerry Paul, a former INVESCO fund manager, was able to impart his knowledge on the state of the US economy and the headwinds that we are still facing.   The focus of the presentation was on two main topics, debt and savings.

From a debt perspective, the bank, consumer and government debt will take time to reduce.  While consumer defaults may reduce leverage, bank balance sheet recovery will take longer as a result.   The Federal Reserve  is likely to maintain  a low-rate policy into 2013 and maybe longer.  As we have seen, this may not directly correlate into a lower interest rate for such instruments as credit cards and commercial real estate loans. However, such instruments as home mortgages have benefitted.

On the savings side, household net worth has fallen from $64.2 trillion in 2007 to $58.1 trillion at the end of Q1 2011.   Jerry’s recommendation was that consumers need to build their balance sheets by 1) increase savings rate to 6% from 0% pre-recession levels, 2) reduce their debt service via lower debt balances or lower interest rates, and 3) extending their working careers.

So, how do you answer that ever elusive question, of “Where do I put my money?”  Much depends on your risk tolerance and timeline of when you will need it, but here are a few ideas:

1) Go Global on Equities:  Find sources of growth using a global view, such as Asia and emerging middle class markets.  Focus on multi-national companies with a strong dividend strategy.

2) Go Pro on Fixed Income:  Call Jerry Paul CFA directly at 303-956-7821.  This is not an area to go it alone!  There are considerations such as credit spread risk, duration risk, illiquidity, and closed end fund arbitrage.  I would leave this up to an expert, however there is always a bull market somewhere.

3) Go Local on Real Estate:  Utilize your retirement funds to invest in real estate through a self-directed IRA in part or entirely.  There are some incredible buying opportunities in this market.  Make sure you are partnered with an expert in their region and product type.  These down markets are where fortunes are made.

As crystal balls go, there is no such thing.  However listening to experts in their respective fields is a recipe for success.  Don’t go it alone, as you can’t be an expert in everything.

Resort Realty Capital is currently evaluating several opportunities to profit from these market conditions.  If you would like to learn more, please contact us.

Darren Nakos, CCIM
Resort Realty Capital
111 Main Street
Frisco, CO 80443-0630
(720)-663-1430

THIS IS NOT A SOLICITATION FOR INVESTMENT – THIS INQUIRY IS TO FIND OUT IF YOU ARE INTERESTED IN RECEIVING ADDITIONAL INFORMATION. NEITHER RESORT REALTY CAPITAL, LLC, IT’S AFFILIATES AND REPRESENTATIVES MAKE ANY REPRESENTATION REGARDING THE RISKS OF INVESTING IN COMMERCIAL REAL ESTATE. YOU SHOULD CONTACT YOUR OWN PROFESSIONALS TO MAKE THE DETERMINATION AND ASSESS THE RISK OF INVESTING. AS WITH ANY INVESTMENTS, THERE ARE INHERENT RISKS AND NO GUARANTIES OF RETURNS. PLEASE CONSULT WITH YOUR OWN PROFESSIONALS IN DETERMINING THE RISKS ASSOCIATED WITH INVESTING IN COMMERCIAL REAL ESTATE.

 

So you think you can negotiate?

I often believe that my children are better negotiators than I am.  Even though small fry are without formal power or authority, kids seems to get the lion’s share of what they want.  Why is this so?

Number one:  Kids have high aspirations.  They are not carrying around years of baggage and rejection that limits their willingness to ask for the sky and then some.  Number two: Children understand the decision making process in the family organization.  They know how to work the system; they know who is soft, and who is not.  They are so intuitively smart in this area.   And Number three: Kids understand that “no” is an opening bargaining position.  They understand that it takes a while for their parents to get used to a new idea.  So, they will wait and wear you down with ferocious tenacity.

Our lives are full of negotiations every single day.  It is a way of life, whether you know it is happening or not.    For many of us, life is an ongoing process of trying to influence others, whether it is your friends, boss, client, landlord, car dealer, real estate seller and even a loved one.  Here are six tips I use to negotiate, that have helped me over the years.  (I hope my wife Amy is not reading this.)

1) Listen, do not talk.  If the other side is willing to talk, let them.  Take notes, and do not interrupt.  You will learn a lot about their position, and they will think you are the nicest person in the world for listening to them.

2) Create long pauses of silence.  This makes the other side nervous; they think you are contemplating your next big move.

3) Be humble.  It is OK to say I don’t know the answer to a question or problem.  It is Ok to say, “I am just not that smart in this area.”  It will bring down the defensive walls that have been built up, and will lead to a more human approach to reaching agreement.

4) Like Herb Cohen says, “Care, just not that much.”  This is so true, as it makes the appearance that you have other options.  My favorite word in business is “options.”

5) Create a win/win.  Negotiating is often a way to resolve conflict.  At times, some conflicts need not be dealt with, but avoided.  You will know when this happens.  If it needs to be dealt with, creating a win/win is the only remedy.  Be prepared to concede to make the outcome a win for everyone.  At the end of the day, it pays to make sure both sides walk away from the table with just a little buyer’s and seller’s remorse.

6) Understand your opponent completely.  Do your homework, and know everything there is to know.   You can Google them, call people that they know on LinkedIn, and call old employers or employees.  You never know what kind of treasure trove you may find.

So the next time your children are relentlessly negotiating their way to more dessert, remember that life is one big negotiation.  Take the emotion out of it, and treat it like a game, and you will be far more successful in the process.

Finally, if you will be in Denver on September 21st, please join me for Resort Realty Capital’s educational series called Life’s Financial Navigator, which will be held at the Denver Athletic Club at 7:15AM through 9AM.  Breakfast will be provided.  The fee is $15.00 but as my special guest, it is free.

Speaker: Christopher B. Pelley, CEO & Managing Director for Capital Investment Management and Jerry Paul, former SVP and Global Partner for INVESCO funds group.

We are pleased to announce Christopher B. Pelley, CEO & Managing  Director for Capital Investment Management and Jerry Paul, CFA (Chartered Financial Analyst) will be speaking on the latest macro-economic  financial issues facing United States investors. With 30 years of financial services experience, Mr. Pelley and Mr. Paul will provide their unique and broad perspective on navigating the current investment landscape both from a practical and psychological view. Chris’s bio can be found at www.cimcodenver.com/our_team.html.

(Disclaimer: Securities offered through First Allied Securities, Inc., a registered Broker/Dealer, member FINRA/SIPC)

What makes Breckenridge an exceptional resort investment?

In anticipation of the upcoming winter snow gently piling on Breckenridge’s Main Street, there is no denying that Breckenridge is one of the most magical ski resort towns in the world.   It has the vibrancy of Vail and Aspen, without the price tag of those resorts, making Breckenridge more accessible to all people who love the mountains.    As a private equity real estate company, Breckenridge is near the top of the most desirable resort towns in which to invest.  It has the big three: 1) driving distance to a major metropolitan area, 2) an excellent family oriented ski mountain owned by Vail Resorts, and 3) a well run government with plenty of financial resources to reinvest into the community.

Breckenridge Ski Resort boasted over 1,750,000 skier visits in 2010.   This is no surprise given that the Denver front range megalopolis consists of a population of 4.3 million people and is as close as 72 miles to Breckenridge.  The front range area includes as far south as Pueblo CO, and north to Cheyenne, WY, with Denver, Colorado Springs and Fort Collins making up the lion’s share of people.

Additionally, Denver International Airport is the largest international airport in the United States by land size.  So far this year, January-March 2011, Denver International Airport is the ninth busiest airport in the world by passenger traffic with 12,873,681 passengers.  Those are the kinds of numbers that make real estate work!!

Vail Resorts (NYSE: MTN) runs Breckenridge and three other ski resorts in Colorado, as well as two in Lake Tahoe and a summer resort in Wyoming.  Vail Resorts Development Company (VRDC) is the wholly owned real estate development company that Vail Resorts uses to develop all of its company-owned real estate, which includes several projects slated for Breckenridge.  One in particular is the Breckenridge Gondola Lot Master Plan, which calls for several parking lots, a hotel, and retail.  This is a project that has been on hold for a few years, but once completed, will provide tremendous opportunity for the north side of Breckenridge.

Established in 1859, the historic town of Breckenridge is a home rule municipality that is the county seat of Summit County, Colorado.  With an operating budget of $21 million, the town is now sitting on $18 million in a reserve savings account.  That is very healthy considering most towns are scrambling to balance their recession battered budgets.  This puts them in the cat bird seat to withstand another downturn or re-invest into the town.

While all this seems rosy, we are noticing that the commercial real estate market is lagging and still suffering from the last few years of recession.   Opportunities to buy real estate at a discount direct from owners or banks are evident.   Resort Realty Capital is currently evaluating several opportunities to profit from these market conditions.  If you would like to learn more, please contact us.

Darren Nakos, CCIM
Resort Realty Capital
111 Main Street
Frisco, CO 80443-0630
(720)-663-1430

THIS IS NOT A SOLICITATION FOR INVESTMENT – THIS INQUIRY IS TO FIND OUT IF YOU ARE INTERESTED IN RECEIVING ADDITIONAL INFORMATION. NEITHER RESORT REALTY CAPITAL, LLC, IT’S AFFILIATES AND REPRESENTATIVES MAKE ANY REPRESENTATION REGARDING THE RISKS OF INVESTING IN COMMERCIAL REAL ESTATE. YOU SHOULD CONTACT YOUR OWN PROFESSIONALS TO MAKE THE DETERMINATION AND ASSESS THE RISK OF INVESTING. AS WITH ANY INVESTMENTS, THERE ARE INHERENT RISKS AND NO GUARANTIES OF RETURNS. PLEASE CONSULT WITH YOUR OWN PROFESSIONALS IN DETERMINING THE RISKS ASSOCIATED WITH INVESTING IN COMMERCIAL REAL ESTATE.