In my last blog, I wrote about extending the American Dream to average folks who didn’t have a lot of money to invest.

That dream – for most of this country’s great history – has centered on owning a home. But with the sub prime issues, some are questioning whether or not that dream is real.

Of course owning a home is only part of building wealth. Despite all the doom and gloom being reported about real estate (I can’t help but be reminded of the great Mark Twain quote, “Reports of my death have been greatly exaggerated” after hearing his death had been published in a newspaper.), commercial real estate is seeing cash returns of 5% to 8%.

Of course that’s not guaranteed and those returns aren’t without some risk. But I believe the risk-reward ratio is very good for commercial real estate.

What’s more, analysts have not reported any material reduction in commercial real estate rents.

So in my estimation, the dream is very much alive, attainable and most certainly real. And I believe commercial real estate is doing its part to keep it alive.

Labels: cbre, commercial, dividends, investing, ray wirta

One of the most satisfying aspects of starting a new venture is reaching milestones – especially milestones that pertain to sales.

We’ve just hit the two-thirds sold mark in Firewheel Village.

This is particularly rewarding because it shows me investors see the value in our offering. And that’s the heart of what I envisioned when I began creating Nexregen – value, especially for the investor who doesn’t have a lot of money to invest.

When I was Chief Executive Officer of the largest real estate services company in the world, CB Richard Ellis (CBRE), I regularly saw very wealthy investors make millions from their investments in commercial real estate.

So when I began brainstorming for Nexregen, my goal was to build a legacy of broadening possibilities for average folks to realize the American Dream.

And now, with this milestone, I can see this all coming together. It’s exciting – not only for me, but for our investors, too.

Labels: cb richard ellis, cbre, commercial, commercial real estate, milestones, millions, ray wirta

The more twists and turns I read about in the stock market these days, the more I am reminded about my entrance into investing. I was just 22-years-old, a tanned surfer just out of California State University looking to hook into the American dream. My first investment was in a little four-plex in California. Even though I had a degree, I didn’t have much money or experience, nor did I have a true understanding of investing. Still, I took the plunge and I’ve never regretted it for one second.

The decision to invest gave me enough footing to start my journey through a wonderful and productive life. From that moment on I have been captivated by this industry and what it has offered me: wealth, happiness and plenty of stimulation. I am living the American Dream.

Leading up to creating NEXREGEN, I often think back to the days when I invested in that four-plex. It was the foundation for opening the door of opportunity to all who think investing is only for the rich and privileged. It is not. NEXREGEN is proof.

Labels: cb richard ellis, cbre, commercial, commercial real estate, firewheel, investing, investment, nexregen, properties, ray wirta

We in the commercial real estate business are watching the current lending markets very carefully. The sub-prime lender meltdown has affected home prices and home sale nationwide.

What is the effect on commercial real estate? Lending policies have clearly changed. Interest rates are higher; loan sizes (relative to underlying real estate values) are smaller; and fewer transactions are occurring.

This is in spite of the fact that the key barometer of commercial real estate – i.e., overall economic health and the resultant demand for office, industrial and retail space – remains strong.

We were fortunate to make it under the wire in terms of our mortgage financing for Firewheel Village. We funded the loan in May, and our key loan terms would not be available in today’s lending environment. These key terms include:

• Interest rate of 5.70%, fixed for 10 years
• Loan size relative to property cost = 77%
• Loan payments are “interest only” for the entire 10 year loan term, meaning that we just pay interest and not principal to our lender every month. This allows us to have more cash available for dividend distributions and reserves.

The re-pricing of real estate because of the credit crunch does extend beyond the housing market. Commercial real estate values are being impacted. Sellers that are not in a hurry to sell are sitting on the sidelines.

What is the implication for Nexregen and Firewheel Village? We have very favorable financing in place for the next 10 years, so there is no near-term flashpoint of having to refinance or sell the property. Our forecasted holding period is from 3 to 7 years, depending upon market conditions. We will be looking for the best window of opportunity to sell, starting 3 years from now.

Will the current credit crunch still be lurking in 3 years? Will the demand for commercial real estate be strong in 3 years? No one has the answers to these questions. Again, however, it is our game plan to monitor the sales markets starting 3 years from now, and sell when we can generate the best possible return for our shareholders.

It is important to emphasize that the majority of our compensation as investment sponsor is “back-end” weighted. Our interests and those of our shareholders are aligned; we want to make as much money as possible both for your sake and ours. In the meantime, we intend to ride out the current credit crisis.

Let’s Build Wealth Together. That is what it all comes down to.

Labels: cb richard ellis, commercial, credit, finance, harold hofer, ray wirta, real estate, sub-prime