Comments Off on Commercial Office Buildings | Sale or Lease | I-79 Technology Park Fairmont, WV
5000 NASA Blvd, Fairmont, WV
Located within the I-79 Technology Park, 5000 NASA Blvd is a 114,055 (+/-) square foot building with multiple office suites available ranging in size from 1,622 (+/-) to 14,740 (+/-) square feet. This building is separated and identified as North Tower and South Tower. There are two elevators within each tower. The I-79 Technology Park houses multiple office buildings and is HUB Zone Certified. The property offers signage availability, and ample courtesy parking for visitors and employees.
The High Technology Park is located within the heart of the I-79 High Technology Corridor just south of Fairmont, West Virginia. The location of the I-79 Technology Park places it within one day’s drive of 60% of the U.S. population and some of the Nation’s largest cities including New York, Boston, Washington, Chicago, Atlanta, Charlotte, Philadelphia, Baltimore, Pittsburgh and Indianapolis. Access to I-79, Exit 132 can be achieved by traveling 0.8 mile southeast. The building and park are highly visible from traffic traveling in both directions along I-79.
Located within the I-79 High Technology Park, 1000 Technology Drive (Innovation Center) is a 102,723 (+/-) square foot building with multiple office suites available ranging in size from 779 (+/-) to 6,337 (+/-) square feet. The I-79 Technology Park houses multiple office buildings and is HUB Zone Certified. The property offers high security, high end finishes, reception desk attended during office hours, free parking, conference/training room with WIFI, projector, fitness center, group fitness classes, large outdoor courtyard.
The High Technology Park is located within the heart of the I-79 High Technology Corridor just south of Fairmont, West Virginia. The location of the I-79 Technology Park places it within one day’s drive of 60% of the U.S. population and some of the Nation’s largest cities including New York, Boston, Washington, Chicago, Atlanta, Charlotte, Philadelphia, Baltimore, Pittsburgh and Indianapolis. Access to I-79, Exit 132 can be achieved by traveling 0.5 mile southeast. The building and park are highly visible from traffic traveling in both directions along I-79.
Comments Off on Our Second Location is Finally Official!
Our Second Location is Finally Official!
Black Diamond Realty is proud to announce that we have officially closed on an office building along N Queen St in Martinsburg WV. Our talented Graphic Designer/Office Manager, Andrea Icenhower is permanently servicing this office along with David Lorenze and Kim Licciardi who travel from our headquarters in Morgantown WV. We are excited about the expansion of our business and will continue to uphold our commitment of ensuring the success of our clients and community. Stay tuned for more updates on the renovations of our office space and official address.
In the meantime, our Black Diamond Realty team is available and ready to help serve you. Please call Black Diamond Realty’s Martinsburg (304.901.7788) office to speak to Andrea and set up a consultation to discuss your commercial real estate needs.
Why the Eastern Panhandle?
Our team sees a growing need in the Eastern Panhandle for a specialized commercial brokerage firm. The Eastern Panhandle community is rich in history. Serviced by I-81, WV’s Berkeley and Jefferson Counties represent an abundance of growth, serving as the main connection between the Washington, DC / northern Virginia area and the beautiful mountains of West Virginia. We are excited to expand our team and our approach to the area.
Andrea’s Big Move to Jefferson County
In the beginning of August, our Graphic Designed/Office Manager Andrea and her husband Michael Icenhower packed up a Uhaul and moved to the eastern panhandle where Andrea will head the new office. Andrea recently joined the Leadership Jefferson program which is sponsored by theJeffersonCounty Chamber ofCommerce –Jefferson Co Chamber Facebook – The Primary goal of Leadership Jefferson program is to educate current and future community leaders about JeffersonCounty’s assets, opportunities, and hurdles, to strengthen the sense of community and ensure a prosperous future.
Andrea and her other classmates will continue to meet through June 2023 to learn more about the community and to meet businesses in the area! The class of 16 will continue to work together on a class service project! We can’t wait to see what they come up with!
Comments Off on Fear. Uncertainty. Challenging Economic Times.
Fear. Uncertainty. Challenging Economic Times.
For many Americans, these feelings and beliefs have embedded themselves into our cultural fabric. Reminders of uncertain, and for many, challenging times are plentiful. Gas pump prices have soared over the past 12 months. A gallon of milk is 11.2% higher in the same time period. Your favorite morning coffee tastes a little less fulfilling with the higher price tag. Our society has shifted from one cultural extreme to another – enduring a long stay-at-home mandate that stressed the core of human interaction needs to an economy flooded with out-of-control inflation. Why is this happening? What comes next? Our team of experts has thoughts and ideas. Before reading further, please know these thoughts, beliefs and predictions may make you uncomfortable. They are observations and beliefs; not a crystal ball reading. Time will tell how things play out.
Inflation is the new frowned-upon visitor knocking on doors around the country.
Most of our nation’s current inflation can be pinned to two primary factors. The first factor is stimulus money. The federal government injected over $5 trillion into America’s money supply over a 24 month period via Covid relief funds. This amount represents roughly 27% of the current money supply in circulation. More money in citizen pockets led to increased spending. The higher velocity of spending creates inflation. To combat this velocity, the federal government utilizes one of its key control levers, interest rate fluctuation, to control spending habits. The goal of increasing interest rates is to decrease spending in an effort to slow down the economy. The Feds recent rate increases illustrate the government’s concern that inflation is running too hot. The impending challenge is the Fed’s interest rate hikes are only geared toward addressing the demand (spending habits) side of the equation. It does not address the supply side. The Fed faces an unprecedented task of reining in high inflation with 40% additional money in play.
Simply put, our dollars today are significantly less valuable (lower purchasing power) than they were 12 months ago. Stimulus money aims to help those most in need; those individuals most vulnerable and lowest on the earning potential food chain. The irony is disheartening… Our government over-injected for short-term benefit, thereby creating a long-term inflation challenge. The band aid (government stimulus checks) has been pulled while the wound has intensified. Printing money and more government spending is it the answer to stop the bleeding.
The second factor is energy costs.
Under President Biden, an extreme focus on sustainable, clean energy has resulted in an under supply of oil and gas. In the long run, most agree this will be better for our planet and the sustainability of our nation. Others will point out this goal is a multi-decade process to reach a level of production and reliability to avoid power shortages and blackouts. In the short term, President Biden’s regime eliminated the ability to drill on most federal lands. The recent stay-at-home mandate also resulted in lower power consumption which led drilling companies to halt operations. Sanctions placed on Russia are also in play. The following article goes into great detail about how high energy costs greatly affect inflation: https://www.nytimes.com/interactive/2022/06/14/business/gas-prices.html
Where are we heading? How will commercial real estate valuations be affected?
It is impossible for any individual to look into their crystal ball to decipher the outlook 1, 3 or 5 years out. Nonetheless, our team has put together a list of educated guesses.
Our team believes the federal government will continue to push interest rates higher. The government’s goal is to decrease inflation by slowing our economy. Black Diamond Realty projects a 1.5-2.5% increase over current rates within the next 9-12 months. If you are facing a refinance event within the next 2-3 years, lock in rates now. Most likely, they will not be lower 2-3 years from now.
As interest rates continue to rise, CRE valuations will experience downward pressure. The following two sub-bullet points explain why.
Cost of borrowing funds, a buyer’s expense, directly ties into debt service coverage ratios. Many banks seek a minimum 1.2-1.25 DSCR while amortizing loans over 15, 20 or 25 years. We anticipate banks will quickly enter a period of greater scrutiny in which “stress testing loans” will become more laborious similar to policies and procedures observed following 2008-09’s Great Recession.
Cap rates will go up. As the cost to borrow funds increase, a similar rise can be expected to cap rates. Institutional grade deals should retain value while more mom/pop tenants and shorter lease terms will pose greater risk and a corresponding heightened cap rate.
A transition from “cash is trash” back to “cash is king” in the CRE marketplace. Cash has been trash for the past dozen years. Bank and government loans could be achieved at rates slightly above historical inflation figures. This provided tremendous purchasing power to less sophisticated and lower capitalized individuals. Black Diamond Realty observed many deals 90-95% leveraged with creative financing and bank loans leveraging the asset. It is anticipated some investors will still highly leverage assets but we predict at a much lower frequency. Greater cash down will become a returning norm. Cash offers with quick closes will carry greater weight. In summary, rising interest rates will make cash more powerful in the months and years ahead.
Real estate will remain one of the greatest wealth building tools known to mankind. The deal structure and valuations are changing but the fundamentals behind real estate investing’s power remain intact. Real estate is a tangible asset. Historically, real estate has been a tremendous investment tool to hedge against inflation. This centuries long truth will remain strong albeit with changing deal structures and valuations compared to the past half decade.
Please note that statements based on forward-looking estimates may not materialize; there are no guarantees of future economic performance.
Warren Buffet has profited billions with a simple, straightforward investment strategy. Fear creates irrational decisions which lead to opportunities. “Buy when there is fear in the market.” The world’s current fear, uncertainty and challenges will result in tremendous buying opportunities.
The fundamentals of successful commercial real estate investing is changing. Our team of experts recommends keeping the following tips in mind.
Create a 12 month rainy day fund. Calculate your monthly expenses and multiply by 12. Make sure you have this money “set aside” in the event you need to draw from it.
Have some of your liquidity positioned in relatively low risk investments which will allow you to access cash any moment an investment opportunity presents itself.
Take advantage of one of the greatest wealth building tools offered by the federal government – IRS Code 1031. Lever up into larger, higher cash flow and appreciating assets.
Know the asset class you are investing in. Understand the current fundamental strengths, weaknesses, opportunities and threats (SWOT) for each sector of commercial real estate that you are considering.
Look for stabilized, cash flowing opportunities while not shying away from value add plays if the ROI and time/effort required make sense for your personal situation.
We live in a world of challenges. Fear and anxiety are at all time highs for some. We survived the 1973-81 recession and will certainly overcome the present day’s hurdles. The United States has proven, many times over, to be a dynamic and resilient culture with the ability to overcome adversity. Proceed with caution, be prepared to pounce and consistently monitor opportunities. Buckle up. Remember rainbows only show after periods of rain. Challenging times present wealth building opportunities.
Our Black Diamond Realty team can help guide you. Please call Black Diamond Realty’s Morgantown (304.413.4350) or Martinsburg (304.901.7788) office to set up a consultation with one of our experts.
Comments Off on Leveraging Real Estate Gains: The Power of a 1031 Exchange
Nine out of 10 US millionaires have found tremendous financial success in real estate investment. Read the seven reasons why 90% of millionaires choose to invest in real estate and why you should too in this article.
The federal government’s rules and regulations offer favorable incentives including annual depreciation and interest expense deductions. These tax deductions encourage investors to deploy money into real estate. The most favorable, generational wealth building tool can be found in Section 1031 of the IRS code. According to IRS.gov,
Whenever you sell a business or investment property and you have a gain, you generally have to pay tax on the gain at the time of sale. IRC Section 1031 provides an exception and allows you to postpone paying tax on the gain if you reinvest the proceeds in similar property as part of a qualifying like-kind exchange.
A 1031 exchange allows a real estate seller to defer paying taxes so he or she can leverage capital gains into a larger asset with presumably greater cash flow. The IRS essentially allows an investor to ‘kick the can down the road’ and reinvest the government’s money via a 0% interest loan. The taxes do not disappear, but an investor has the opportunity to leverage the government’s money into larger assets. The 1031 program rewards investors while encouraging further investment in real estate.
This is one of the greatest wealth building tools that exists, because there is no limit on the number of times an investor can utilize a 1031 tax exchange. The federal government is also flexible on the definition of a like kind property. For example, you can sell an apartment building and purchase an office building, land, industrial building, or an asset in a different sector of real estate. To qualify for a 1031 like-kind tax exchange, there are important rules and regulations that must be met. Identification timeframe and the process are two key items to understand.
The government offers two primary identification methods for a 1031 exchange. Both methods require the seller to utilize an intermediary to quarterback the process. Some intermediaries specialize in only 1031 transactions. Other investors choose to utilize their preferred real estate attorney, whose firm is capable of handling a 1031 transaction. To execute a 1031, it is imperative the exchanger (seller of relinquished property) hire an intermediary who handles the 1031 transaction, before the relinquished property closes. A 1031 is considered null and void if the seller (of the relinquished property) takes position of the funds from the relinquished asset sale. More information about the top ten identification rules for a 1031 exchange can be found here.
The traditional 1031 method allows for a 45-day requirement to identify and designate property to purchase, once the relinquished property has sold. There are two “identifying” rules that govern how many properties can be identified. The first rule allows an exchanger to identify up to three properties to purchase. The second method allows an exchanger to identify as many properties as desired, up to 200 percent of the value of the relinquished asset. The second timeframe rule pertains to total days to purchase the replacement asset(s). From the sale of the relinquished asset (property sold), you have 180 days to finalize a transaction to purchase a replacement property or properties.
The second method to execute a 1031 occurs when the exchanger buys “replacement assets” before the relinquished property is sold. A reverse 1031, as implied, is effectively the reverse order of a traditional 1031. This option takes more time and is more cumbersome from a paperwork/process standpoint. The replacement asset(s) are purchased first and held by an intermediary. Then, the 1031 applicant has 180 days to close on the asset. Why would anyone utilize a reverse 1031? Black Diamond Realty recently experienced a situation, whereby a client secured a purchaser for a parcel of land and the client wished to defer capital gains tax payment. So, the client secured two replacement properties via a purchase and sale agreement. The land contract needed to be extended multiple times. After six months, the seller of the replacement assets (our client was the buyer) applied pressure for the multifamily properties to sell immediately. In addition, our client wanted to close on those assets, because we were in a rising-interest-rate environment. Our client closed on the two multifamily “replacement assets” before finalizing the sale of his land (cause for the capital gain to be in play), resulting in a reverse 1031 being executed.
Black Diamond Realty recommends you consult with your accountant or tax advisor and a real estate attorney before finalizing your like-kind exchange strategy. BDR has many on-market and off-market replacement opportunities. So, please utilize our team as a resource. Wealth building tools have been created to incentivize folks to invest in real estate. Be aware of their availability and utilize them to meet your investment goals.
Comments Off on The Real Way McDonald’s Makes Their Money—It’s Not Their Food
McDonald’s sells a lot of food. Like, a lot of food. We’re talking enough food to serve more than 70 million people every day, with more than 75 burgers sold every second.
That shouldn’t be too surprising, considering McDonald’s is one of the largest fast-food chains in the world. But their menu actually isn’t what generates the company’s multi-billion dollar profits. The real best-seller? Real estate.
There are more than 36,000 McDonald’s locations worldwide, but only about 5 percent of them are company-owned. The rest are franchised out, meaning they’re run by individuals who McDonald’s has contracted to operate them. In those situations, the company only spends money on the real estate of that location. The franchisee is responsible for all the costs of running the restaurant while also paying McDonald’s for rent (which adds up to an average of 10.7 percent of their sales), a $45,000 franchisee fee, and a monthly service fee equal to 4 percent of gross sales, Business Insider reports. With multiple means of collecting revenue at relatively minimal costs, it’s no wonder McDonald’s relies so heavily on franchises.
“We are not basically in the food business,” former McDonald’s CFO Harry J. Sonneborn reportedly told investors. “We are in the real estate business. The only reason we sell 15 cent hamburgers is because they are the greatest producer of revenue from which our tenants can pay us rent.”
Being able to hand off the costs of running the restaurants is a primary key to McDonald’s success. According to Wall Street Survivor, in 2014, the company made $27.4 billion in revenue, with $9.2 billion coming from franchised locations and $18.2 from company-owned locations. But after you factor in the total costs of running those locations, McDonald’s kept only 16 percent of the revenue from locations it owned directly compared to the 82 percent of the franchise-generated revenue. Here are 17 more things McDonald’s employees won’t tell you.