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Naqa Capital Management

Capital Formation and Capital Placement

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Creating Value is Critically Important to the Success of Your Real Estate Investments and Business

Posted on 28 September, 2012 at 0:44 Comments comments (419)
Creating Value is Critically Important to the Success
of Your Real Estate Investments and Business
If you think about it, ultimately the real estate rental
business, and all other businesses for that matter,
comes down to creating value...making a profit.
Right?  We all want to make money - isn't that why
we engage in business activity - to make money?
If it isn't about making money, then why not sit on
the beach - or - relax in the mountains without all
the hustle and bustle, the stress and all the crazi-
ness that goes along with trying to make money?
Why not?
Well the reality is, we need to make money to
survive.  We need money to pay our bills, and
eventually, at some point, we need money to
retire.  You know, living the lifestyle that we
choose.
So, I think we can agree, we need to make money.
And....to make money, we need to create value -  
whether - as an employee - or - as an entrepreneur.
If you're an employee - working for someone else,
you need to create value for your employer to keep
your job. You need to help your employer provide
superior products and services so that your
employer can provide value to its customers and
investors.
And, if you're an entrepreneur - working for yourself,
you need to create value for your business..... to
keep your job.  You need to create value for your
customers so that they continue to buy your
products and services.  You need to create value
for you and your investors so that you can grow
your business - and .....create more value.
No matter what you do, you need to be a value
creator - you need to be creating value for every-
one up and down the chain from employees, to
customers, to vendors, and to investors.  Deep
down, we are all value creators in one sense or
another.
And, if the purpose of any business is value
creation, it follows that the mission of any
company should be to continually be creating
value.  
For example, Apple products are on most
people's shopping list. Let's talk about Apple.  
Apple's primary mission should be to create
and market new and innovative technology
products that create value to its consumers,
thus increasing the value of Apple's stock -
making money for its investors - creating
value!
Let's take another example.  We are real
estate entrepreneurs. A real estate invest-
ment companies primary mission should
be to create - or - recreate - and market
innovative space for rent to its "rental
customers."  The increased value to the
"rental customer" allows for rents to rise
and go higher, thus increasing the value
of the property - making money for the
company and its investors - creating value!
So what are you saying, Craig?
Well, at the very core of value creation, we
must create value for everyone involved,
especially for the end user - the customer.  
Value is created by customers paying more
for products or services - or - in our case -
renters paying more for space because of
the quality or innovative way we have
positioned our properties in the marketplace.  
Real estate investors create value when they
provide quality and innovative rental property
product that achieves higher revenues,
which translates into valuations that exceed
acquisition pricing.
Ask yourself, how can I create my rental
space that adds value to my customer? How
can I do that?  Look at your rental space from
the eyes of your customer.  Create rental
space that makes life easier and better for
your customer.  Do this, and you will create
value that translates into higher rents and
higher value. You're a Value Creator.
I hope this tip serves you. I look forward to
helping you reach for the stars!
Craig Haskell


 
This message was sent to [email protected] from:
Value Hound Academy | 23005 N. 15th Ave, Suite 201 | Phoenix, AZ 85027
 

8 Greatest Traits of a Top Real Estate Investment Turnaround Leader

Posted on 30 January, 2012 at 23:25 Comments comments (1149)
8 Greatest Traits of a Top Real Estate Investment
Turnaround Leader
As value creators, many times we buy under-performing
properties that need an infusion of new management
and capital to add value to a real estate investment.  
The better we are at turning around a struggling asset,
the more income and value we will create.  
Having turned around hundreds of properties over my career
and written a book on the subject, I have uncovered the most
important ingredients to look for when hiring a turnaround
management leader.  Finding the right company and person
to execute a turnaround is the most important decision you
will make on your new investment that will directly affect
your bottom line. Why?
Well, because it is important that the traits of the turnaround
leader inspire confidence in the ultimate renewal of a
struggling property.  Not only must the turnaround leader
be self-confident, they must project it.  Most leaders do
not fit a mold but have their own style.  
Successful turnaround leaders seem to sense which task
merits the highest priority, are able to seize the initiative,
and devote enormous energy to driving the property
operation and themselves to task completion.  
They consistently are dogged in their pursuit of objectives
and the accomplishments of goals, while maintaining the
flexibility to change intermediate goals as the situation
develops.  They are very determined and competitive people.
Top 8 Traits of a Turnaround Leader
1.  Tough minded: 
Very few turnaround people refer to
themselves as nice guys.  Generally, the turnaround person is
thought of as the tough person because they are dealing with
tough situations.  Since problems are coming up quite often,
the turnaround leader must be tough minded.
2.  Highly Competitive: 
Turnaround leaders hate to lose.  They
enjoy dealing with challenges so they can get a rush when they
overcome them.  They will not allow obstacles to get in their
way as they pursue a goal.  Turnaround leaders will grind out
everything to win.
3.  Entrepreneurial Instinct:
  Entrepreneurial instinct, coupled
with strong professional management skills, is a rare combination
among most business turnaround leaders.  Some leaders have
one of these characteristics, while others have the other
characteristic.  Few have both.  
Turnaround people need both characteristics to do an effective job.  
They need good professional management skills in order to
evaluate and cope with the multifaceted problems facing a
troubled property.  Also, they need entrepreneurial skills in
devising, searching out, and seizing opportunities during every
stage of the turnaround.
4.  Skilled Negotiator: 
Many of the problems that have been
created over time will require some sort of negotiated solution.  
All through the turnaround process, the negotiation skills of
turnaround leaders are tested.
5.  Action Oriented:
  Turnaround leaders move decisively but
do so using reality, not fantasy.  Meeting the challenge of
accomplishing goals requires constant action and relentless
behavior.  In fact, most turnaround leaders have better results
when put in a situation when there are many problems.
6.  Motivator: 
These leaders have the ability to raise the level
in others so that their goals are achieved.  They understand
that they can’t do everything themselves and motivating others
can create faster results.
7.  Creative:
  Because of the many problems, turnaround
leaders have the ability to see outside the box so that they
can creatively solve problems.
8.  Communicator:
  Understanding the process and
communicating it to the stakeholders is an asset many
leaders have.  Part of being a good negotiator requires
the skill of influencing others to your point of view.  Most
good turnaround leaders have this trait.
Make sure the turnaround leader you hire for your next
underperforming property is an experienced and successful
turnaround leader.  Hiring a management company or person
who has experience running stabilized properties may not be
the best candidate for a turnaround property.
Use the 8 Traits of a Turnaround Leader mentioned in this
article, to assess and evaluate the management company
you hire on your next real estate investment turnaround
acquisition.
I hope this serves you. I look forward to helping you reach for the stars!
Craig Haskell

5 Biggest Lessons Learned from Value Hound Interviews in 2011

Posted on 23 January, 2012 at 22:20 Comments comments (859)
5 Biggest Lessons Learned from Value Hound Interviews in 2011
As we go forward into this year with lots of big goals to build our
real estate business, I want to look in the rear view mirror to
expose some big lessons learned in 2011 from interviews we
did with the industry’s smartest minds and most successful
dealmakers.  These lessons will uncover critical ideas and
strategies to help you make more money in your real estate
business.
In 2011, we spoke to over 40 of the top leading real estate
entrepreneurs on how they are capitalizing on today’s
distressed real estate market.  What is behind their dare
to be different mentality and how are they making things
happen? What were the common characteristics among
these entrepreneurs? What lessons can we learn from them
so that we can be more successful with our deals?
Top 5 Lessons
1.  Focused Plan:
  All of the real estate entrepreneurs we interviewed
are VERY focused at executing a strategic business model.  They are
experts within their product niche whether office, multifamily, retail,
industrial or self storage.  They are experts within the markets they
invest.  They are experts at executing a finely tuned investment
strategy.  They are focused on only chasing ONE rabbit versus
chasing lots of rabbits all over the world.
Michael Brennan of Brennan Investment Group preaches that he is
an industrial guy.  To be successful buying industrial properties you
have to be a guy who likes dealing with people at industrial sites.  
Michael’s focused on being the best industrial guy in his space.
In our interview with Carlos Vaz, The Conti Organization, he told us
that he only buys value add multifamily properties in the state of
Texas.  If you bring him a self storage deal that has a 30 IRR, he
wouldn’t know how to underwrite the deal, so he would pass.  By
choice, Carlos sticks with his value add multifamily deals with
15 IRR’s instead of going outside his expertise.  Carlos doesn’t
chase rabbits.
2.  Patience:
  I know this may sound elementary, but successful
Value Hounds only buy great deals because they are PATIENT.  
They do not buy deals until they can be bought at their price and
on their terms.  Many times, it might take two years pursing a deal
before they can buy it at their price and terms.
In my last article, I wrote about real estate entrepreneur, Chad
Carpenter.  He was pursuing a value add office building for
almost two years.  Chad was patient until he finally bought the
property on his price and terms.  Because Chad was patient,
when pursing this office building, he made $4 million within 18
months….like a wise old owl.
3.  Relationships: 
Building strong and lasting relationships with
everyone one in your universe is the engine that drive your
business.  Ultimately, uncovering deals and dollars comes down
to the relationships you have developed.  The best deals are found
off market, and the only way to learn about these deals is from
your strong relationships.
In a market where investors were having a tough time buying
properties, Gary Sabin of Excel Trust, bought over 20 retail
properties totaling in excess of $500 million because of the
relationships he had built over the years.
Carlos Vaz moved to a new city with no money, few contacts
and little experience syndicating value add multifamily properties.  
In about 3 years, he built his company to almost 4,500 units
because of the relationships he built with investors.
Building, developing and growing your relationships is paramount
to your success uncovering great deals and finding the dollars
to get your deals done.
4.  Repetitive Action. 
Real estate entrepreneurs continually
execute the same business model over and over again through
repetitive action. They continually refine and improve their
business model so that it becomes more efficient and profitable.
It’s an on-going pursuit of fine tuning their expertise.
Real estate entrepreneur Jerome Fink of The Bascom Group
exemplifies this trait.  Jerry refers to his company as the
“merchant builder” in the repositioning of multifamily properties
space.  Over the last 16+ years, his company has done over
200 property renovations all over the country.  Each time they
do a renovation, Jerry continually improves his business model
through repetitive action.
5.  Personal Development. 
Every one of the real estate
entrepreneurs we interviewed are continually trying to personally
grow and improve themselves.  They are not complacent or
content with the status quo, but continually strive to be the best.
Make 2012 a great year by following the tracks of the industry’s
most successful real estate entrepreneurs.  Start today to
implement some of these big lessons so that you create a
life that matters…one that improves the quality of your life,
as well as, the life of others around you.
You are on a journey to build and grow your business so
enjoy the trip.
I hope this serves you. I look forward to helping you reach for the stars!
Craig Haskell

Turn Around Action Plan

Posted on 9 November, 2011 at 1:36 Comments comments (397)

Landlord turnaround action plan
The 8 Key Ingredients of a Turnaround Action Plan that Will Entice Your Banker or Investor to Become a Believer

How to create a convincing story that will influence and persuade your banker or investor. Use this 8-Step guideline to help you sell your story so that you can secure time and money to turnaround your property.
Your property has been suffering over time creating cash problems and you need financial help from others.
These eight key ingredients will help you put together and very convincing story on how it would be in your bankers or investors best interest to work with you.
Your story will include information about what happened to cause the financial problems, what's happening now, and what's going to happen as a result of your new strategy plan.
1. Summary of the Financial Requirements: This section of the action plan is normally a brief statement what the property is seeking based on its internal capabilities. The statement would qualify the amount, timing, and type of funding desired.
The types of funding could include equity, long term debt, short term debt, or a line of credit. A brief discussion would then follow, explaining how the new injection of funds would be utilized to put the property on solid footing.
2. Discussion of the Property: The property discussion section of the plan normally tells the reader how long the property has been owned and provides historical and financial data showing, at a minimum, an income statement.
Its purpose is to demonstrate that the business was well managed prior to the crisis. A discussion of the property particulars including capital improvements generally follows.
3. Management and Ownership: This section of the plan should include detailed information about the ownership, and the management company.
Particular emphasis should be given to experience and success in dealing with this type of property. Keep in mind that potential investors are concerned about the ability of management to effectively utilize the new funding they will be providing.
4. Causes and Nature of the Financial DifficultiesWhat Happened: This is a difficult section of the action plan to write because it will demonstrate how well you, as management, understand why you got into trouble.
Are you problems due only to outside forces in the economy? Did management inadequacies play a great part in creating the financial problems? The cause of your losses must not only be identified but be quantified.
The potential equity or debt investors must believe that the causes of your losses were “one-time” occurrences and that the root of the problem has been corrected.
Unfortunately, if your property has had poor accounting and management reporting system, it will have great difficulty developing the information needed for this section of the plan.
The first step is to identify the external causes of the problem. The external problems could include:
  • A slow down in the economy
  • Soft rental market
  • City construction in front of your property
  • Governmental changes
  • Shift in the local market demographics
The second step is to identify the internal causes of the problem. The internal problems could be:
  • Poor financial controls
  • Incorrect marketing
  • Poor management
  • Poor pricing
  • Heavy resident turnover
The list is endless, but it is important to clearly identify in your plan the significant causes of the loss in order to take the next step. Don't be shy; put all the good and bad into your plan so that potential investors can feel comfortable that you've at least found the problems.
5. Industry Outlook: This section of the action plan is designed to give external support to your analysis and conclusions regarding external causes of the problems; discussed in an earlier section of the plan.
Include detailed charts of the supply and demand of apartment units in your regional as well as local trade area. Also, include information on new construction developments planned in the coming year.
Properly written, this section of the plan can reassure potential investors that someone besides the management agrees with the industry outlook.
6. Competitive Market Analysis: A detailed market survey of all the apartment buildings that are competitors is the focus in this section. Communicate your understanding of the local market and how your property competes in the market in this section. Pay special attention to pricing, marketing, concessions, and occupancy in your comments on the survey.
7. Current Financial SituationWhat's Happening Now: In this section of the plan include a detailed cash flow statement and income statement showing how the property currently is performing. Your cash flow statement should show the financial problems with which the business must deal. Also, include a detailed summary of all the capital improvements that have been done to the property in the last 12 months.
8. Strategy to Solve the ProblemWhat's Going to Happen: Many fine books have been written about this subject. Potential investors now understand the nature of the property, how you are organized, what created the financial problems, where the property currently stands, and what the overall industry outlook appears to be. This section of the plan will tell them your strategy to fix the problems.
All strategies outlined in your plan should focus on generating cash flow. Your property is struggling and cash flow should be the focus if you want to generate interest from potential lenders and investors.

12-month Property Cash Flow Forecast
Since cash flow is the result of the strategies you will implement in your plan, a detailed 12 month cash flow forecast should be included. Also, include any other forecast and assumptions that support your strategic plan.
Putting these eight key ingredients into your plan will help you gain the upper hand in dealing with your lender. You will be proactive with your information and it will come across as if you have a good handle of the problems and how to solve them.


















Chuck Congdon - Real Estate Investing Made Real

Posted on 9 October, 2011 at 19:05 Comments comments (827)

CPA Information for Real Estate Investors

Posted on 1 October, 2011 at 1:23 Comments comments (2451)
It is very important to have accountants as part of your investment team. Read some of Keystone CPA, INC articles.

DSNEWS

Posted on 26 September, 2011 at 3:54 Comments comments (487)

Investors Comps Online

Posted on 23 September, 2011 at 21:35 Comments comments (2450)

Top 3 Real Estate Deal Killers

Posted on 23 September, 2011 at 20:34 Comments comments (2254)

Private Lender

Posted on 28 August, 2011 at 2:27 Comments comments (278)

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