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October 26, 2011
CHRISTMAS TREE RESTAURANT IS BACK
For the first time in years, commercial activity in The White Mountains is HOT. Everywhere you look, FOR LEASE signs are coming down, business are opening, and entrepreneurs with fresh ideas and concepts are taking risks with new ventures. One incredible story coming out of this resurgence is the reopening of The Christmas Tree Restaurant located just off Woodland Road, in Lakeside.
Unlike some of these new businesses, The Christmas Tree has a rich history. It all started back in February of 1977 when Carol and Omar Bourassa first opened their business in the old “Fish Homestead” owned by Pearl Penrod. This small restaurant was an immediate success and after a couple of years Carol and Omar decided they needed more space. They contacted the owner of the old Broken Arrow Lodge which was a 9 acre property compete with cabins and a large restaurant which is where The Christmas Tree is located today. Carol and Omar leased the restaurant space for a number of years until they moved to Flagstaff and then to Oregon. In 1986 the owner lost the property to the bank, and Carol and Omar were brought back to the area to reopen the restaurant. After all these years, on December 10th, 1987, Carol and Omar reopened the doors and over the years the restaurant became a local landmark.
In 2006 Carol and Omar sold the restaurant and after two owners the doors finally closed when the recession hit the White Mountains. Now that the area has pulled out of the recession, 3 owners with deep ties to the area have breathed life back into this treasure. The owners consist of Debbie Shadle, Toni Stewart, and Wanda Haumont. Debbie and Toni grew up in the White Mountains and graduated from Show Low High and Wanda owned La Casa Moya restaurant back the late 1970’s. In addition to brining local knowledge, restaurant experience, and connections to their new venture, they also decided to tap into the best resource of all, Carol Bourassa. Carol volunteered to help the new owners open their doors and share her much cherished recipes from the past.
After a few months, the restaurant has been busy and the reviews have been great. The owners attribute a lot of their success to the fact Carol has been involved since day one. In addition to Carol, the new owners have brought back the two original chefs Crystal Newman and Jamie Garcia. The Christmas Tree is located at 455 N Woodland Rd. For reservations, call (928) 367-3107.
The Dow Jones Industrial Average is a stock market index that tracks the 30 largest, publically owned companies in the USA. Institutional traders, the media, and everyday investors watch this index to give them an idea of what is happening with the stock market and the health of their individual portfolios. On July 21st, 2011, the Dow closed at 12,724. On Monday August 3rd, this dropped to 11,896, then again on August 8, and on August 10th it finally hit a low of 10,719 representing almost a 10% freefall. The following Monday this went back to 11,482 at the time of writing this article, we are back down to 11,000. What a ride.
Some investors stayed in while others panicked and pulled out with fresh wounds from the last market collapse. If you analyze the data that has come out of this recent fiasco, the general consensus is the true winners are large institutional traders, stock brokers, and Wall Street, not the everyday investor.
The question is, are stocks a safe bet? When was the last time you opened your 401K or Broker statement and saw consistent double digit returns? For those of you tired of the wild swings and small or negative returns, I would recommend looking towards investing in real estate.
Typically when I talk to people about investing in Real Estate, they bring up 3 common perceived barriers; Current News, Liquidity, and size of investment.
Current News: Everywhere you turn, the media does an excellent job telling you about the horrific stories in the housing market. People are scared about real estate, especially with all the foreclosures and short sales popping up in neighborhoods across the country. This bad news creates opportunities and gives people the ability to buy at “Bottom of the Market Prices”. A downturn gives you the ability to buy anything from residential to commercial properties at historically low prices.
Liquidity: There is no doubt, an advantage to stocks is you are always just a click or phone call away from cashing in your stocks or portfolios. However, any advisor will tell you that your strategy should be to hold for the long term measured in years, not months. In addition to this, the national average for selling a home is 90 days and in some markets it’s a low as 35 days.
Size on Investments: Many people like the low initial investments associated with stocks and mutual funds. You can contribute to a 401K or for a few thousand dollars own stock or shares in mutual funds. What many people don’t realize is the same options are available with real estate. Savvy real estate investors create investing groups called syndicates that pool together peoples money to acquire assets. This allows people to invest a small amount of money to buy something that otherwise might have been out of their price range. Typically these syndicates offer preferred returns starting at 8%.
Don’t let the media or fear of real estate prevent you from investing in Real Estate. Now is a great time to take care of historic prices and boost the returns of your portfolio.
For two days this summer, August 13th and 14th, Pinetop is having its first annual “High Mountain Music Fest” sponsored by The Pinetop-Lakeside Chamber of Commerce (www.HighMountainMusicFest.com). This event will feature 12 bands from across the state, Special Guests like Dave Pratt, Food and Beer gardens, and activities for kids. In addition to the great food and Music, this festival will have a large economic impact on our town.
Festivals and events in small regional destinations play an important role in tourism development and thereby in economic development. An event like the High Mountain Music Fest will attract new tourists, increase the amount of money that is spent in our town, improve Pinetops destination awareness, and also increase our civic pride. The Pinetop-Lakeside Chamber of Commerce does an excellent job throughout the summer sponsoring various festivals and events and despite the difficulty in accurately measuring the true tourism and economic impact, there is no doubt how critical it is to the business community.
Crystal O’Donnell, Office Manager and Events Coordinator for the Pinetop-Lakeside Chamber, estimates that over the July 18th weekend during the Native American Art Festival, the event had over 2,000 visitors. For the White Mountain Music Fest, this number should exceed 5,000 people. This creates a tremendous opportunity for our local business community and also gives the town a much needed boost in sales tax. In a recent state tourism study, it was determined that when people travel to a destination for an event, on average they spend $529.00. Although these figures are subjective, you can imagine how significant these festivals can be on a small community. If you take just the Musical Festival, and assume that of the 5,000 people that attend the festival 20% were unique visitors, meaning they came just because of the festival, this would equate to over a half a million dollars brought into our community.
Events like the Native American Festival, The Mountain Music Fest, The Run to the Pines Car Show, and The Fall Festival are crucial to the viability of town and our business community. I personally commend all the hard work from our local chamber and everything they do to support our business community. If you would like to help volunteer for this event, purchase tickets, or become a corporate sponsor, you can call the Pinetop-Lakeside Chamber (928)367-4290 or visit their website at www.PinetopLakesideChamber.com.
June 10, 2011
What’s Hot in Real Estate?
By James M. Maloney
Genesis Real Estate and Development, Inc.
I have an expression I like to call “The Cocktail Party Mentality”. I use this when referring to the average investor and how they decide what and where to invest. Have you ever been at a cocktail party standing around and someone says, “I just bought 500 shares of a great internet start up and doubled my money in one week.” Or, “A friend of mine put gold in his portfolio and had a 200% gain in two years… more recently, I’m sure you’ve heard this one, “I know a person in Phoenix who just bought a $40,000 home in Cave Creek at auction and now rents it out for a 20% ROI.”. Every so often, there is a new “Hot Topic” in investing either internet stocks, gold, or rental properties. People hear their friends talking about them at baseball games, around the office, or standing around at cocktail parties, and they think, “maybe I should invest in one of these”. Next thing you know, everyone has jumped on the latest investing trend.
Unfortunately, one of the hottest areas investors should be looking at this summer will not be the topic of conversation at this years Cocktail Party, which is buying and holding developed lots. These often overlooked gems are not sexy but they do have the potential for some significant returns if you have the cash and more importantly, PATIENCE.
To explain what I mean, let me back up a little. Back in 2005-2006, if one were to come to The White Mountains looking to buy a developed lot, meaning a vacant track of land in a subdivision or in an area that has all the utilities available, there were not many options. Demand had skyrocketed, and people were building and buying faster than developers could put out product. This didn’t go unnoticed and all over the mountain, developers started buying large tracks of land for future subdivisions. Torreon, Bison Homes, Elk Springs, Walnut Creek, Pine Vista Estates, Cedar Ridge, and the list goes on and on. The problem is, once you purchase land to develop for a subdivision it can take 2-3 years to have a fully developed lot ready to sell. A lot changed from 2006 to 2008/2009. What we are left with is a landscape of partially built subdivisions with hundreds of vacant developed lots for sale.
Developed lots create a great opportunity for investors. Owners of these lots, mostly developers, are really motivated to move them. After incurring large upfront costs to develop the land, they are being forced by investors or banks to start moving some of their inventory. This has led to really aggressive pricing usually well below the original cost to develop them. People have the opportunity to come in a negotiate a deal with a developer to buy several lots at a significantly reduced price. These lots can be tucked away in a portfolio and wait for things to turn around. Once it does, and it most definitely will, demand for lots in these desirable areas will return.
By James M. Maloney
Genesis Real Estate and Development, Inc.
Are you an investor looking to buy an income generating property? Are you a business owner looking to sell your company? Understanding CAP Rates is a fundamental tool that you should be aware of.
Many real estate investors determine the value of an income property by using the Capitalization rate, other wise known as CAP Rate. Wikipedia’s official definition is “The ratio between the net operating income produced by an asset and it’s capital cost (the original price paid to buy the asset or alternatively its current market value)”.
The rate is calculated in a simple fashions follows:
Cap rate = annual net operating income/cost (or value)
To determine net operating income, you would need to take the total gross lease income during one year and subtract all fixed and variable costs. CAP rates are really an indirect measure of how fast an investment will pay for itself.
To better understand how CAP Rates have changed and why they are important, take a recent Wall Street Journal report that showed from 2001 to end of 2007, the cap rate for offices dropped from about 10% to 5.5%, and for apartments from about 8.5% to 6%. At the peak of the real estate bubble in 2006 and 2007, some deals were done at even lower rates. We also witnessed this across the White Mountains where CAP Rates hit historic lows during these times.
Since 2007, the trend of low CAP Rates has reversed as real estate prices have declined faster than rents. This means that CAP Rates have returned to higher levels on everything from Apartments to Medical Office Space.
April 19, 2011
White Mountain Entrepreneurs
By James M. Maloney
Selling and Leasing commercial real estate in the White Mountains has made me aware that our community is full of Entrepreneurs. These small business owners are the backbone of our community. Drive up and down Deuce of Clubs, through Springville and Snowflake, and up White Mountain Boulevard and there is evidence of this everywhere. These businesses were created and grown by local people with good ideas, the ability to work hard, and an appetite for risk.
Despite the recession and several local businesses closing their doors, there have been signs of this Entrepreneur spirit recently. In the last year alone, commercial leasing rates have dropped, and owners of empty space have made concessions to attract new businesses. Entrepreneurs that have been waiting on the sidelines are taking advantage of this new opportunity and signing leases where they can negotiate on things like tenant improvements, free rent to get started, and most importantly, locking in favorable lease terms for years to come.
If you are out there with a good idea and looking to finally start your own businesses, now is a great time to act. There is plenty of good space available across the mountain and landlords that are willing to work with you. Plus there is a tremendous amount of support available from our local communities organizations such as Northland Pioneer College, Mainstreet, and all our Chambers of Commerce.
If you are an existing business and looking to expand, now is also a great time. With interest rates at historical lows, banks are finally looking to loan. I spoke recently to John Lewis, VP of Commercial Banking at National Bank about their criteria. If you are an existing business that has a 2 year positive track record and good credit, you might qualify for SBA financing. If you are looking to purchase real estate that your business will occupy, you could secure financing with as low as 10% down and lock in a rate close to 6%. You could also qualify for a line of credit to help expand operations or hire more staff.
Whether you are a new or existing business, now is a great time to be an Entrepreneur in the White Mountains. I’m looking forward to seeing these FOR LEASE signs replaced with new and familiar names. If you need any further information about securing SBA financing, writing business plans, or rates and availability of commercial space, please feel free to email or call me anytime. (928)367-5263 / email@example.com
Fro more information about investing in the White Mountains, please visit my website at www.GenesisPinetop.com where I periodically write a blog about Real Estate in the White Mountains.
March 2, 2011
White Mountain Commercial New:
By James M. Maloney
Genesis Real Estate and Development, Inc.
Where to Find the Hot Deals of 2011
Look for smaller, lower quality assets that need value add. This is where the bargains will be when buying commercial real estate because for the last couple of years, owners have been holding on and hoping for a market rebound. The continued recession that plagues our real estate market (despite what Mr. and Mrs. Obama tell us) has owners finally coming to the realization that their assets have lost value, and in order for them to sell, they need to significantly drop prices. This is the reality in our current market. Larger, stronger assets have seen price adjustments, but nothing like the smaller assets.
If you’re looking for a significant ROI, there are plenty of opportunities in our region. There are several investment properties with over 10% CAP rates, and 20% Cash on Cash returns. Even with the Dow Jones Industrial Average elevated above the 12,000 mark, returns from the stock market would be difficult to match these local returns. Some of these smaller assets also have very strong tenants with long leases which guarantee these returns. Due to the age of the assets and restraints from banks, people have been reluctant to invest in these properties. However, buyers that have cash can bypass banks stringent financing requirements and take advantage of these significant returns. In addition to cash buyers, many owners of these smaller, lower quality assets are agreeing to owner carry backs with very favorable returns.
For more information about investing in the White Mountains, please visit my website at www.GenesisPinetop.com where I periodically write a blog about Real Estate in The White Mountains.
January 4, 2011
One of the main goals of investing is to buy low and sell high. Often however, investors miss the opportunity to sell at the peak of the market, yet decide to unload an asset for other strategic purposes. At Asset Exchange Company we have worked with clients who have sold real estate for many reasons during different phases of the economic cycle. Some of the reasons our clients have chosen to sell and exchange include:
Shelter Cash Flow – One of the significant tax advantages to owning real estate is depreciation. However, if you’ve owned property for a long time, you may no longer be benefiting from depreciation. In fact, it may be advantageous to sell a fully depreciated property and acquire a new (larger) property to obtain a new depreciation schedule hence sheltering more (or all) of your rental income from taxes.
Harvest Dormant Equity – Many investors have considerable equity built up in their properties. Often, this equity, if leveraged more efficiently, can produce greater returns. For example, a rental home worth $1MM, owned free and clear, may rent for $3,000 per month, yielding a return of 3.6%. Exchanging out of the property and acquiring an apartment building or a small commercial property, for example, may yield between 6-8% on the same amount of equity, effectively doubling the return.
Asset Class and Geographic Diversification – Wall Street has been advocating the benefits of diversification for many years. A diversified portfolio allows an investor to reduce the volatility of a portfolio and either increase return for a given risk or decrease risk for a given return. It may be prudent for you to consider a diversified portfolio strategy for your real estate investments. Real estate investors generally achieve a diversified portfolio by acquiring real estate in different geographic areas, by acquiring different types of real estate, or both. If you own all of your investment real estate in a flood plain, or on a fault line, it may be time to diversify.
Relief of Management Burdens – Tired of dealing with toilets, tenants and trash? It may be time to exchange into an easier to manage property. Triple Net Leased investments or Tenant In Common investments may allow you to own institutional grade property that is professionally managed, providing the same benefits you currently receive without the management hassles. Commercial properties may also be much easier to manage than Section 8 apartment buildings. If you are looking to reduce your management burden, it may be time to consider a 1031 Exchange.
Many investors choose to team up with a partner (or partners) to acquire investment real estate. Doing so has many potential benefits including being able to control a much larger, potentially better property than one could acquire individually.
Often when partners team up to acquire real estate, title to the property is held in an LLC or some other legal entity. This may be done to provide liability protection to the individual owners. It is important to note that if an entity such as an LLC is created to hold title to the property, the underlying LLC owners do not own real estate. The underlying owners merely own membership units.
If the individuals who own the membership units of the LLC wish to do a 1031 Exchange with the property, the LLC may complete the exchange. The LLC will sell the property and the LLC will acquire like-kind replacement property. This works only when all of the underlying owners agree to stay together moving forward.
However, problems can arise when some of the underlying owners desire to go their separate ways or some desire to cash out of the property and pay taxes and others desire to conduct a 1031 Exchange.
In this scenario, one of the best solutions may be to dissolve the entity and have the underlying owners take an undivided fractional interest in the property. The entity should be dissolved well in advance of the sale, so that the individual owners have a sufficient amount of time to prove the intent to hold the property as an investment.
November 30, 2010
Good News, Sunrise Ski Resort is looking to open before Christmas this year. This last storm has provided a great base to add to the snow making. It looks like there is another storm coming next weekend so keep your fingers crossed. For more information, please visit www.Sunriseskipark.com or call (800)772-7669.
SUNRISE GENERAL INFORMATION:
In the heart of Arizona’s magnificent White Mountains, Sunrise Park Resort is a recreational paradise offering a wide range of fun and excitement. In winter, our three mountains offer some of the finest skiing in the Western United States. Our 65 runs promise adventure for skiers of any level. There is also a separate snowboarding area, cross country ski trails and a special childrens’s “ski-wee” area.
The Sunrise Park Lodge, located near beautiful Sunrise Lake, is available for comfortable lodging in the winter and summer seasons. The 100-room hotel offers great dining, indoor pool and whirlpool, lounge and game room. In summer, a marina is open for boat rentals.
You can escape into the wilderness, ski, mountain bike, enjoy our annual festivals and fish to your heart’s content. Or you can simply look out on some of the most beautiful land in Arizona. Summer or winter, when you come to Sunrise Park Resort in the White Mountains of Arizona, you’ll find a land, and excitement, you’ll want to experience throughout the year.
Skiers and Snowboarders alike won’t want to miss the Sunrise Express High Speed Detachable Quad Chairlift. Beginning in the ’97-98 season this lift replaced the primary lift on the Sunrise Mountain and anchors the ten lifts at the area resulting in an uphill skier capacity of more than 16,000 skiers per hour.
For Snowboarders and Skiers Sunrise offers a TerrainPark. Within site of Sunrise Day Lodge, the park features a snow half pipe, implanted wood and metal rails, and a special event area with jumps ranging from beginner to advanced.
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Of all the areas to visit, travelers would be hard-pressed to find a region that offers more – more natural beauty, more history and culture, more recreation, more adventure, more memories – than Arizona’s White Mountains.
Here, sunny skies and four classic seasons enhance a variety of activities. In winter visitors can enjoy sledding or tobogganing, snow boarding, ice-fishing, and, of course, world-class downhill skiing and cross-country skiing. Miles of groomed trails and first-rate facilities draw enthusiasts from around the world.
Spring, too, is a special time. Frozen lakes and streams open themselves to fishermen (some of the best fishing of the year can be found in spring) boaters, hikers and sightseer’s. Meadow grasses turn green and wildflowers dot the landscape. As the earth rejuvenates, so does the spirit.
In summer, with stubborn patches of gleaming snows still clinging to her summits, the White Mountains offer visitors a variety of scenic attractions and an unlimited array of outdoor activities. Some 50 alpine lakes and 800 miles of cold, crystal clear rivers and springs draw visitors throughout the season to this mountain playground.
Autumn is for many their favorite season, when the land and its inhabitants prepare for the coming snows. The White Mountains offer a change of colors to rival any in the nation, with the added pleasure of relative solitude. Wildlife is abundant, trails are not crowded. Hunters and fishermen enjoy spectacular sport, hiking and sightseeing are at their best.
In the White Mountains, whatever the season, whatever your interest, it’s always the right time to visit and you are always welcome!