November 2012 - Sequoia Market Update

November 2012 Sequoia Market Update
Contents

Want Exceptional Cash Flow? - Rick Ferris

Recent Deals by Sequoia Realty Corp.

               - 9354 Mentor Ave., Mentor - 23,000 Sq. Ft. - PENDING SALE

New on the Market at Sequoia Realty Corp. 

               - 168 N. St. Clair., Painesville - 13,434 Sq. Ft. - For Sale @ $695,000

Tax Tips: New credits encourage business expansions, by Peter A. DeMarco

November 2012 Sequoia Market Update

Want Exceptional Cash Flow?

Greetings Friends,

Now is an advantageous time for earning outsized cash returns on new real estate investments.  What is so unique about this time?  There are two major components.  The first is historic low interest rates.  The lowest in 70(?!) years!  Rates on quality investment properties are about 4.75%-5.5%.  That is amazing.

What amplifies the cash flow from borrowing at these historic low rates, is CAP rates of 6.5% to 9%.   Basically that means that if you choose to pay all cash for a property, the return to you will be 6.5% to 9%.  So, if instead of paying all cash, you borrow some of the money--often 70-75% of it--then your return on your cash invested is increased.  Often, you can achieve 10% or even more with your Cash-on-Cash return!

At the same time, you are paying down the mortgage and probably, the property is increasing in market value.

With the stock market so volatile and the returns from bonds and savings, pitiful, it is an excellent time to be putting funds into commercial real estate before the market fully recovers.

Every indication that I have is that the market has already recovered about 15% from its bottom (probably in 2009).  It still has another 15% ahead to come back to typical investment returns.  In addition, construction costs continue to increase, so the advantage of existing properties over new construction is often 2:1.  That is, new construction can be twice as expensive as buying existing.

We have identified the opportunities.  Call me to review how we can increase your cash flow and take advantage of this market aberration.

I look forward to talking with you!

PS.  If you have money out there at 2%, let's look at pumping up that return to 10% or 12%! Call me!

Sincerely,

Rick
Richard Ferris, CCIM, MBA
President
440.946.8600 x103
Rick@SequoiaRealty.com

Recent Deals by Sequoia
Property Address - Sq. Ft. - Leased/Sold

9354 Mentor Ave, Mentor - Enterprise Plaza - 23,000 Sq. Ft. - PENDING SALE

4304 Maple St, Perry - Industrial Building - 24,000 Sq. Ft. - PENDING SALE

38264 Willoughby Parkway - Industrial Building - 18,000 Sq. Ft. - PENDING SALE

Justing Way - Vacant Land - 7.40 Acres - PENDING SALE

268 Richmond St., Painesville - Retail - 800 Sq. Ft. - Leased

9952 Johnnycake Ridge Rd., Concord - Retail - 2,721 Sq. Ft. - Leased

9952 Johnnycake Ridge Rd., Concord - Retail - 5,284 Sq. Ft. - Leased

9411 Mentor Ave., Mentor - Dental Office - 2,400 Sq. Ft. - Leased

891 E. 222nd., Euclid - Retail - 740 Sq. Ft. - Leased

7757 Auburn Rd., Concord - Industrial - 1,500 Sq. Ft. - Leased

38014 Euclid Ave., Willoughby - Retail - 874 Sq. Ft. - Leased

9417 Mentor Ave, Mentor - Retail - 4,800 Sq. Ft.- Leased

29176 Euclid Ave, Wickliffe - Retail - 500 Sq. Ft. - Leased

1155 E. Wyandot Ave, Upper Sandusky - Retail - 1,811 Sq. Ft. - Leased

9393 Mentor Ave, Mentor - 8,000 Sq. Ft.  - Leased

26471 Center Ridge Rd, Westlake - 4,800 Sq. Ft. - Leased

New on Market/ Price Reduction
Property Address - Sq. Ft. - Type - Lease or Sale Price

9258 Chillicothe Rd., Kirtland - 2 Commercial Buildings
12,000 Sq. Ft. on 1.44 Acres
PRICE REDUCTION!! $750,000 to $535,000!!!!

28928 Euclid Ave, Wickliffe
Wine Barrel Restaurant & Convenient Store
7,440 Sq. Ft. on 0.55 Acres
PRICE REDUCTION!! $390,000 to $298,500!!!

38878 Mentor Ave., Mentor- Commercial Land
2.58 Acres - For Sale @ $395,000

168 N. St. Clair., Painesville -  Commercial Property
13,434 Sq. Ft. - 0.60 to 2.24 Acres - For Sale @ $695,000

7338 Mentor Ave., Mentor - Coffee Shop w/ Drive Thru
1,050 Sq. Ft. - For Lease @ $1,500/mo

28831 Euclid Ave., Wickliffe - Auto Related Shop
5,748 Sq. Ft. - For Sale @ $319,000

38010 Euclid Ave., Willoughby - Imagine Building
29,074 Sq. Ft. - Retail - For Sale @ $1,700,000
3,200 Sq. Ft. - Retail/ Office - For Lease @ $10.00/ Sq. Ft.

S/L 18 & 19 Euclid Chardon Rd., Kirtland - Land
2 Acres - For Sale @ $300,000

30440 Lakeland Blvd., Wickliffe -  Office/ Retail
2,588 Sq. Ft. - For Lease @ $9.95/ Sq. Ft.

22199 St. Clair., Cleveland -  Auto Related Shop
3,010 Sq. Ft. - For Sale @ $169,000

894 E. 222nd St., Euclid - Office/ Retail
650 Sq. Ft. - For Lease @ $600/mo

8666 Tyler Blvd., Mentor -  Industrial Space
2 Units w/ 1800 Sq. Ft. - For Lease @ $750/mo

181 Erie St., Conneaut - Commercial
2,340 Sq. Ft. - For Sale @ $155,000

368 Blackbrook Rd., Painesville Twp.
Professional Office
2,129 Sq. Ft. - For Lease @ $10.00/Sq Ft

9010 Tyler Blvd., Mentor - Well Kept Office Space
875 Sq. Ft. - For Sub-Lease @ $650/mo

8810 Tyler Blvd., Mentor - Office Condo w/ Warehouse
1,910 Sq. Ft. - For Lease @ $1,250/mo
 

Euclid Ave., Euclid - Land
3 Parcels w/ 0.38 Acres - For Sale @ $12,900

902 High St., Fairport Harbor - Retail/ Office
4,800 Sq. Ft. - For Sale @ $200,000
750 Sq. Ft. - Retail/ Office - For Lease @ $350/mo

Tax Tips: New credits encourage business expansionsBy PETER A. DeMARCO4:30 am, July 9, 2012

In a valiant effort to address Ohio's persistent unemployment, the state has given business owners some good cause to reconsider their growth prospects.
The state Legislature has approved and Gov. John Kasich signed into law tax breaks and other incentives meant to reward companies for creating jobs.
Those of greatest interest to small businesses include a tax credit for companies that put vacant commercial properties to work and another credit for companies that employ more telecommuters.
House Bill 18 provides a tax credit to any business that chooses to put to good use an otherwise abandoned or vacant property. The law authorizes a grant equal to $500 per employee to a company that occupies a building or piece of property that has been vacant for a year.
The bill rewards companies that increase their payroll by hiring new full-time employees or that employ either 50 employees or 50% of its Ohio employees at the vacant facility. To qualify for the $500 grant, an employee must be employed full time at the vacant commercial space and must have caused the company's total payroll to increase as a result of leasing or purchasing the space.
They will not qualify if they are employed more than 60 days before the company secured the property, but they must be employed for a full year and must earn at least minimum wage. An employer may qualify for the grant only once, but there is no limit to the number of qualified employees for whom the employer can claim the grant.
In a separate law, House Bill 327, the Legislature established a refundable job creation income tax credit for companies with telecommuting or home-based employees.
The credit can be claimed against commercial activity tax, corporate franchise tax, personal income tax and the insurance premiums tax, with some restrictions about how each type of tax can be credited.
The bill establishes a six-year trial period during which the Ohio Tax Credit Authority may grant job creation tax credits to employers based on employees who work from their Ohio-based homes and whose pay rate is at least 131% of the federal minimum wage. That means an hourly wage of $9.50.
Employers are not eligible for the credit until the total number of employees they have added after the law is enacted reaches 200. Employers applying for the credit must not address both home-based employees and other employees in the computation of income tax revenue for the purposes of the same tax credit agreement.
The company would need to apply separately to receive credit for a given project that includes both home-based and non-home-based employees.
The law also requires state officials to study the effect of the at-home tax credit over the six years, no doubt to determine if it has the intended effect of stimulating job growth.
In addition to the credits for expansions involving vacant properties and telecommuters, the Legislature also passed a motion picture tax credit to inspire film-makers to consider Ohio locations for their productions and an incentive to inspire private-sector projects in local communities to spruce up and occupy vacant properties.
It remains to be seen whether the incentives will have a meaningful impact on Ohio's economy, but it demonstrates the creativity that Ohio's leaders are applying to try to jumpstart the economy.
Any small business owner that was perhaps teetering on an expansion plan should take note of the incentives and consider their potential impact.______________________________________________________________________________Peter A. DeMarco is vice president and director of tax services for the regional accounting and business consulting firm of Meaden & Moore, headquartered in Cleveland.