O’REILLY series – Buying a home

October 15, 2010 By Leave a Comment



Oreilly buying a home It’s no secret the O’reilly book series is pretty exciting for all of us “closet geeks” (and freely open geeks). Startup Addict Musings agreed to do an O’reilly “missing manual” series post once a month on several O’reilly books on various technology topics of our choosing for review. The “Buying a home” book was a bit off topic for the typical O’reilly series. However, because we are currently in a buyers market and I have a real estate background as a broker and real estate developer, I figured it may be a good fit for review.

Honestly, I didn’t have high hopes for the book but to my surprise it was extremely informative and thorough, which is probably why O’reilly placed it into “the missing manual” series. It will bring a novice up to speed very quickly on the nuisances and pitfalls of a real estate deal. For professionals and real estate agents the book could be used as a refresher and checklist. My personal favorite was some of the more unconventional funding sources that can be used for a specific type of property. I was also nervous the book may take away from the value of a Realtor for the DIY (Do-It-Yourself) crowd of buyers, but it actually validates why you need a buyer’s agent in a real estate transaction rather than going it alone. Trust me from personal experience of helping dozens of buyers, you want a Realtor on your side.

O’reilly gets a thumbs up from Startup Addict Musings this round.

The book is available for purchase for $14.95

Filed Under: Book Reviews, Real Estate Tagged With: , ,

how do you get a green card

September 26, 2010 By 1 Comment




The EB5 visa program continues to get national media attention and provides an attractive way for foreigners to get their green card. More and more EB5 regional centers are being introduced intensifying the competition for foreign investment dollars. The EB5 visa program is an immigration program that allows foreign investors to obtain a green card for $500,000 dollars of investment in a United States approved EB5 project, as long as the investment will create 10 American jobs.

I just recently returned myself from a 10-day visit to Shanghai, Beijing, Nanjing, Hangzhou, Guangzhou and Shenzhen meeting with migration brokers for an EB5 approved mixed use real estate project in the state of Vermont called Prospect Place .

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I posted about doing business in east Asia last year when I attended a Vermont trade mission delegation with Governor Douglas. The EB5 program answers the “how do you get a green card” question but is not as easy as it sounds and takes enormous commitment and perseverance to solidify the EB5 Funding and ensure all the project criteria is met for the foreign investor. There are close to 110 regional centers in the United States approved by USCIS and more coming online all the time. Most principles setting up regional centers overlook the resources necessary to properly run a regional center and keep track of how investors get a green card. For more information on the EB5 industry and trends feel free to visit a new website we launched EB5-VISAS.com

Filed Under: Real Estate, Real Estate Development Tagged With: , ,

CCIM program

March 7, 2009 By 2 Comments

I’m waiting for a flight and figured I would plug the value of the CCIM program for real estate professionals. I just completed the CI 101 financial analysis course this past week in Fort Myers and was extremely pleased with the course material, networking opportunities with colleagues and the instructors of the course. CCIM stands for Certified Commercial Investment Professional and a prestigious designation that only 5% of all licensed real estate professionals carry. It is a grueling program covering Financial, Market, User and Investment analysis as it relates to Industrial, Office, Retail, and Multi-family sectors (the 4 food groups of commercial real estate).

If you are thinking about heading into commercial real estate now may be the time to go for your CCIM designation by joining the candidate program. You will need a substantial portfolio of completed transactions and the financial chops to endure, but the reward could be significant. The commercial real estate market is just starting the decline residential has experienced, so don’t dilly-dally.

Filed Under: Real Estate Tagged With: , ,

Why did the credit crisis happen

October 9, 2008 By Leave a Comment



First there was the housing crisis, which was not unlike the dot com blow-out. Over indulgence eventually will take its toll. Then we experienced the credit crisis and now we are all in a full blown financial crisis. Will the stock market ever stop dropping? Will the Federal government ever give us back the $700 Billion with interest or appreciation, if so when? So that’s where we are today…but lets back up to the credit crisis phase…why did that happen?

The big institutions like Bear Stearns and Lehman brothers (and others) starting buying up all the risky loans made during the housing boom and packaged everything up into mortgage backed securities. These were sold on the open market with high return (and high risk). In order to hedge the risk and make the securities more palatable to the buyers an insurance policy was sold along with it called a credit-default swap. There was only one catch, it was called a “swap” and not an “insurance policy” for one for important reason…regulation. A swap is not regulated and insurance is. Insurance is not only regulated but requires ample and provable capital reserve in place to cover the default, no matter how great or how many. So this loop hole was exploited with a finacial instrument called swaps and unfortunately had inadequate reserves to cover defaults in large numbers.

Again, you still ask the question how did this happen? People who are smarter than the rest of us…crazy formulas and algorithms from the brightest minds in the world came up with formulas to predict a certain amount of defaults and balance risk and reward. The one catastrophic flaw was you can NEVER model human behavior. As a result here we all are, wallowing in a bowl of our own financial piss. Capitalism that attempted to be to capitalistic. I remember asking myself about 7 years ago when I jumped head first in real estate development and eventually into brokerage “how real estate prices continue to escalate at these prices when salaries are not keeping pace?, something is eventually gonna give.” While I was fortunate to be part of the biggest real estate run in history I am now witnessing the monumental blow-out.

I do have strong faith is this country, I’m an entrepreneur, I’m a proud citizen and as always I think we small business owners and innovators will be the phoenix from the ashes of a conglomerate corporate America that got too fat and too greedy. Rome fell in 800 plus years, I hope America can make it more than 250 years. Serious changes need to take place in this country in terms of credit, spending, debt and energy independence.

I’m not trying to come off as a know it all or a Monday morning Quarterback, hindsight has 20/20 vision or any other platitude you can think of. However, I am trying to insert my voice of short-term reason to a long-term problem.


Filed Under: Real Estate, Splattered Thoughts Tagged With:

Home Prices and Commodities

September 23, 2008 By Leave a Comment


I always enjoy reading Lawrence Yun’s columns from Realtor magazine. He is the chief economist for NAR (National Association Realtors) and has an above average record in advice and market predictions. His latest column is about hedging inflation by simply owning a home. It’s no mystery unless you have been asleep for the last three years that the housing situation in this country is in peril.

Yun makes an interesting comment stating previously built homes (three year old commodity materials) and market pricing for commodities will eventually force home pricing upward. This concept hits close to home for myself being in the real estate development and construction trade. The producer price index for construction is up 39% in the last five years with virtually no end in site. Steel, concrete, and energy (especially oil derived products) continue to soar. Once the glut of housing inventory clears and the financial markets stabilize pricing has no place to go but up. A home five years ago was roughly $130 a square foot for standard specification construction and now hovers around $170 a square foot for the same house (in New England anyway). Why the difference? It’s simply the cost of construction (the bundled commodities that go into the construction of a home).

Currently new construction pricing is at a premium to existing home pricing because of material prices. As we move forward this will only inevitably take the existing home sale price upward. So, the next time you’re thinking about buying long on steel, gold or copper you might just want to look at the four walls that surround you.

Let me know your thoughts on the correlation.

Filed Under: Real Estate Tagged With: ,

Biodiesel demystified

September 9, 2008 By 1 Comment

Being in the construction and real estate industry Biodiesel has come on strong as an alternative energy source. This time last year the general population barely heard of the word. Now, more than ever it is on every companies road map, especially in construction.

There are some misconceptions and myths regarding what biodiesel is and isn’t. Let’s see how you stack up on a few questions that are common fallacies.

Q: Biodiesel has no standard formula.
A: False - Biodiesel actually meets the ASTM (American Socitey for Testing Materials) specification.

Q: Biodiesel is too young and has not been tested properly.
A: False – Rigorous testing has taken place by Universities and the US Dept of Energy & Agriculture.

Q: Biodiesel is very similar to ethanol.
A: False – Ethanol acts as a gasoline additive, whereas biodiesel is derived from chemical processing from plant oils, animal fats etc…

So there you have it Biodiesel demystified, half my readers will think this post is boring, but I wanted to share what will be in heavy equipment by 2012

Filed Under: Going Green Tagged With:

Triple-Net Leases NNN

July 8, 2008 By 2 Comments



I have been working on several commercial real estate projects that utilize triple-net leases (NNN). A tip out of the gate is be careful the prospective tenants possess a clear understanding of triple net leases and what is involved.

There is really not a tremendous amount of mystique behind the NNN, other than a symbol for additional expenses paid by the tenant beyond the rental or lease payments. In a triple-net, the lessee will usually pay a monthly rent along with all taxes, insurance, and operational / maintenance expenses that occur from the use of the property. The lessor (investor) is responsible for capital improvements on the building, such as roof replacement or major structural components. Again, be very clear in the terms of the lease agreement who has responsibility for majors building systems like mechanical, HVAC, Electrical, as well as major repairs.

I’m sure all of you real estate entrepreneurs looking to jump into commercial real estate development with triple-net leases are asking about financing at this point. A common method is for the investor to form a LLC to hold the real estate and use a credit tenant lease method for financing. The investor borrows money to finance the property and pledges as security the rents to be received from the tenant.

This is an excellent method for obtaining construction money if you lack assets or collateral to pledge. However, this will require a creditable tenant with an executed long-term lease in place and a bank or conventional financing institution to go along with it. Also see non-recourse debt.

For other resources check out:
Investopedia
CIRE Magazine


Filed Under: Real Estate Development Tagged With: , , ,

Biodiesel from algae

July 3, 2008 By Leave a Comment



solix
Biodiesel from algae continues to be all the rage. One company I stumbled across has as much potential as Sapphire Energy, Live Fuels and Green Fuel Technologies in my opinion. Solix is a Biofuel company that descended from U.S. Department of Energy’s Aquatic Species Program started in 1978 to explore ways to produce Biodiesel from algae. Solix’s answer of “why algae?” is one of the simplest I have researched.

Algae can be found almost everywhere — oceans, ponds, swimming pools, and common goldfish bowls. And while not truly plants, these single-celled organisms have the same photosynthetic ability to convert sunshine into chemical energy. For some species of algae, this chemical energy is in the form of oils very similar to common vegetable oil. What’s the big deal? These oils can be processed and used to produce Biodiesel.

In the current marketplace, Biodiesel from algae offers tremendous strength over conventional petro-diesel. Petroleum-based diesel fuel is at a competitive disadvantage in the $70 – $100 a barrel range. We’re around $146 as of this posting for a barrel of crude. In December 1996 the spot price for a barrel of crude was $25.390. This is the same year the U.S. Department of Energy closed the Biodiesel from algae program with the final results of the program stating “the high cost of algae production remains an obstacle”.

The other major strength for algae is lowering the United States dependency on petroleum products. Foreign oil dependency needs to be dramatically reduced or eliminated for the United States to continue as a global leader in the world market.Theoretically, algae can yield 1,000 to 20,000 gallons of oil per acre. This could mean 20 million acres of non-agricultural soil could generate enough Biodiesel to replace imported oil.

Solix Biofuels

GreenFuel Technologies

LiveFuels

Filed Under: Going Green Tagged With: , ,

Algae-based fuel is startup central

June 15, 2008 By 6 Comments


algae-based gasoline

Algae based fuel startups are now running the gamut of most biofuels. Ranging from biodiesel, gasoline, jetfuel to ethanol (a lot cheaper than the corn derivative to boot). Fortune Magazine did a nice piece on “The next big thing in energy: Pond scum? stating the trials and tribulations of Cambridge, MA based GreenFuel Technologies. The business model behind GreenFuel is capturing CO2 emissions from contaminating companies and promoting algae growth that can be used for fuel as an end product.

The curious setup is an experimental bioreactor that takes the stuff of pond scum – algae – grows it like mad, and turns it into “biomass” that can be processed into fuel for cars and trucks. Even better, the GreenFuel system could help to clean up coal too.

Another company according to VentureBeat a Flordia-based self-funded startup called Algenol Biofuels, will produce nearly a billion gallons a year of ethanol by 2013. The startup just signed a deal with a new Mexican company called BioFields to build a refinery.

Also Sapphire Energy a San Diego startup claims it has created an actual crude oil like substance that can be processed and transported by existing refineries and burned in your actual gas tank…..WOW! Talk about shaking up the oil industry.

So what is driving all the algae based startups?

Exorbitant energy prices for one, but the real impetus is probably DARPA (Defense Advanced Research Projects Agency) a federal program launched last November to enable the cost-competitive production of military jet fuel from both cellulosic and algal sources.

Two quotes from Fortune sum up the program nicely:

In a move that galvanized biofuels entrepreneurs, The director of the program, Douglas Kirkpatrick, says he thinks major questions about algal fuels’ technical feasibility will be answered in “the next three to five years.”

That sounds about right: Algae-energy research is bubbling with new ideas and talent and is beginning to get backing from venture capital. “In the past the money in this area went only to academics,” says Matt Caspari, CEO of Aurora BioFuels in Alameda, Calif. “Now it’s reaching entrepreneurs who are applying technologies that didn’t exist ten or 15 years ago.”

The algae fuel push is not just for the venture capitalist and startups, Shell is throwing some weight behind algae to produce diesel fuel as well. This space is getting hotter than an algae plume in the Sahara desert.

Filed Under: Going Green Tagged With:

Carbon Emission Reduction is next commodity!

June 8, 2008 By 2 Comments

global-warming.jpg
We all know that “green” is the new “black” and social responsibility for climate change is becoming everyone’s duty. The reality is carbon emission reductions and other climate change agenda will be a result of the next financial revolution and windfall profits rather than a social duty to reducing our carbon footprint on the planet. It’s not a surprise big business and investors are flocking to this sector. According to Fortune magazine “Carbon Finance comes of age”

Last year traders bought and sold about $60 billion worth of emissions allowances, mostly in Europe and Japan, where governments regulate greenhouse gases. If, as expected, regulation comes to the U.S., this country’s carbon-trading market is expected to be worth $1 trillion annually by 2020. That’s why investment banks, utilities, industrials, and hedge funds – among them GE (GE, Fortune 500), Goldman Sachs (GS, Fortune 500), J.P. Morgan Chase (JPNV.L), and AES (AES) – are rushing into the business of carbon finance.

The new wave of carbon reduction is regulated by the Kyoto Protocol regulated by the United Nations under a program called Clean Development Mechanism or CDM. Thirty-six industrial countries (not including the U.S.) have agreed to reduction of greenhouse gas emissions over time. The key ingredient is that polluting nations do not have to reduce the pollution at the actual source but rather, in part, by financing “clean development” projects in other parts of the world.

Both Fortune Magazine and a recent radio piece on NPR explore interesting examples of how a Carbon Emission reduction CER functions as a commodity.

Take a Company X that gives off the harsh HFC23 gas, a product that is almost 12,000 times more potent than 1 ton of carbon dioxide (as far as global warming goes). Company X has a few choices:

1. Apply for credits under the CDM (which is a red tape nightmare) to obtain reduction money
2. Contact a company like EcoSecurities and have reduction method not only funded but a monthly income based on how many CERs are produced.

A great example of a successful CDM would beWorld Bank seals record CDM China deal from Carbonpositive.

Although the creation of a CER credit is interesting both the CDM and CERs are plagued byadditionality . This is when the reduction would have happened anyway, without the financial incentives offered through the CDM. Wikipedia states the following:

A crucial feature of an approved CDM carbon project is that it has established that the planned reductions would not occur without the additional incentive provided by emission reductions credits, a concept known as “additionality”.

CERs through the CDM can cost up to a couple hundred thousand dollars for compliance. Certianly not making the effort for everyone. The little guy can still fit into the equation with Verified Emission reductions (VERS).

From the EcoSecurities site VERS are the following:

In voluntary carbon markets, activities that reduce GHGs produce Verified Emission Reductions (VERs), that can be sold to companies or individuals wishing to voluntarily reduce their impact on the environment. Purchasing VERs can be an effective means of offsetting the part of a company’s carbon footprint where it is not in a position to reduce its emissions directly.

The existence of a voluntary market for emission reductions can support smaller-scale, sometimes village-level activities – which cannot withstand the costs of compliance with Kyoto (certifiers, validators, consultants etc.) but deliver real emission reductions and significant sustainable development benefits.

Examples of technologies that would produce VERS:

• Windpower
• Geothermal power
• Solar power
• Run-of-river hydroelectricity
• Biomass electricity generation
• Energy efficiency
• Animal and agricultural methane capture and utilization
• Landfill gas to energy
• Forestry

The reason is trend is so interesting is the wave of startups that will flourish from the value-chain of reducing carbon emissions. Startups will be at every stage of the game and revenue streams will go beyond just the gas reducing business model through subsidies, credits and a commodity exchange. We had the dot-com run, we had the real estate run and now we have the carbon reduction run. The best part is we are at the ground floor.

Filed Under: Going Green
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