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Real estate outlook 2016: Create your deals

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Okay, a new year is upon us. The last several of them have been fraught with volatility and uncertainty, but that doesn’t mean you have to be volatile and uncertain.

I’ve been in this business a long time, so I think I’m safe to make a few recommendations that will help you prosper in the months ahead.

Create the deals

The continuing search for yield will be a major theme this year.

And most people won’t find it. Instead, they’ll have to create yield the way I do it. You have to get out there and make it happen. Create the deals.

It isn’t going to be easy. You’ll probably have to start changing your business plan now.

For example, I’ve been meeting with a bunch of new family offices that are looking to do real estate deals.

Pay it forward

The number one thing you’ll need to do this year in the real estate business is pay it forward. I do it by helping at least a couple of the kids every year who are graduating from the many university real estate programs.

I help them get a foothold in the industry, but then I continue to help as much as I can as they move ahead in their careers. It’s the right thing to do, and it always pay dividends.

Sell – or not

Now, on the more technical site, Otto Travieso, CCIM, of Real Capital Partners, LLC, told me that if you need to sell, now is the time.

That’s absolutely true. But, if you have great cash flow in a great location, I think it’s time to add some debt. I don’t think rates will skyrocket, but they are heading up.

Retail

Retail is still good, but be careful. Check on the credit worthiness of current and potential tenants. Watch the slow-pays and no-pays. Try to focus on goods and services that can’t be provided online.

Office

I like office in the right location. Not so much in the wrong location. In the “donuts” – those self-contained environments where people live, work and play, I want to be right there. And I might even build more if there isn’t enough space next to the apartments and hotels.

Apartments

Pick and choose. Make sure you have the right operator. If you own a good property, put some long-term debt on it and make it an asset of a solid family office structure. Something for the kids to inherit.

Condos

Condos will be okay in South Florida and will continue to evolve. Watch for interviews with Carlos Rosso of Related Group and Gil Dezer of Dezer Developments about this subject in the coming weeks.

Those are the high points. Click here to listen to the audio of my commercial real estate outlook 2016.

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