Monthly Archives: October 2024

Welcome to the Q&A session of ECMP’s live event. In this live session of ECMP, we brought together top real estate experts to answer critical questions from the audience about commercial real estate, investment strategies, and how to navigate an ever-changing market. Whether you’re just starting or are a seasoned investor, this session provides actionable advice on how to thrive in today’s complex economic landscape.

This section captures real questions from the audience, answered by our experts—John Sebrook, Douglas Berkou, and Amit Grover.

🔥 What You’ll Learn in this Session:

1. How to Get Started in Real Estate:

• Learn from seasoned professionals about the first steps to take as a new real estate investor, including the importance of specializing in a specific sector like retail, residential, or industrial real estate.

2. Strategies for Growing Your Portfolio:

• Discover proven methods to roll profits into new investments without spending unnecessarily. Our experts share tips on how to reinvest, build wealth over time, and avoid common mistakes, such as spending profits on short-term gains.

3. Managing Property Taxes and Maximizing Profits:

• Understand the importance of fighting property tax hikes and how to work with local governments to secure tax incentives for your projects. Our panel shares insights on why hiring a tax consultant can save you money over time, especially during downturns.

4. Investment Choices: Residential vs. Commercial:

• Find out why the experts recommend investing in multi-family housing, self-storage units, and mixed-use developments as safer, high-return options. You’ll also learn why industrial properties are gaining popularity and offer lucrative opportunities.

5. How to Handle Depreciation and Leverage Tax Benefits:

• Maximize your real estate’s tax potential with strategies for handling depreciation and phantom income. Our experts explain how to take advantage of accelerated depreciation to reduce your tax liabilities, but also the potential downsides if not managed properly.

6. When to Sell or Refinance:

• Learn the indicators for when to refinance your property instead of selling, and why holding onto cash-flowing properties can be more profitable long-term. This segment covers why refinancing allows you to pull equity out for new investments while still keeping valuable assets.

7. Hedging Against Market Downturns:

• Prepare for market volatility with proven strategies to hedge your investments against economic downturns like the 2008 financial crisis or the COVID-19 pandemic. Our panelists emphasize the importance of location and market strength in choosing resilient real estate investments.

💼 Key Takeaways:

1. Specialize Early: Focus on a niche like retail or industrial real estate to build expertise and grow your portfolio faster.
2. Fight Property Taxes: Regularly challenge property tax assessments to keep your profits high, and consider hiring a consultant to maximize savings.
3. Refinance Instead of Selling: Keep cash-flowing assets by refinancing properties to fund new projects, rather than selling them outright.
4. Diversify Your Portfolio: Invest in multi-family housing, self-storage, or mixed-use developments to reduce risk and increase returns.
5. Long-Term Focus: Real estate wealth is built over decades. Reinvest your profits and avoid short-term thinking to create sustainable success.

🎤 Audience Questions and Expert Responses:

Q1: How should I start in real estate as a new investor?

• Asked by Dr. Niva Thompson

Doug’s Answer: 

“Specialize in something! Whether it’s residential, leasing, shopping centers, industrial buildings, or land, you need to find what you love. Personally, I started with retail because I could build shopping centers anywhere, unlike industrial spaces, which are limited to port cities like Atlanta or Miami. Wealthy people don’t spend—they roll their money and reinvest. Start small, build up, and remember—real estate wealth takes time.”

Tip: If you’re just starting, begin with smaller residential investments, roll your profits, and specialize early in areas like retail or multifamily housing, where scalability is possible. 📈

Q2: How do property taxes impact real estate investments, and should investors push back on taxes?

• Asked by Amber Conner

John’s Answer: 

“Always fight your property taxes. During downturns like COVID, rents dropped, and vacancies increased, yet property taxes stayed high. Hire a consultant to help reduce your taxes—many work on a contingency basis. Developers aren’t making massive margins like people assume; construction costs have tripled, interest rates are high, and taxes are squeezing profits.”

Doug’s Follow-Up: 

“Cities think developers are rich, but margins are razor-thin. You must keep showing the city your properties are worth less now and fight to adjust taxes accordingly.”

Tip: Always consider hiring a property tax consultant and fight for reductions, especially during market downturns. This can save you substantial amounts over time. 🏢

Q3: Should I invest in residential or commercial properties for stable income?

• Asked by Zulpe

Doug’s Answer: 

“It depends on how much money you have. If you’re starting small, consider residential investments. I’d avoid offices right now, but look into industrial properties, as they’re growing fast, and the commissions are huge. On the commercial side, focus on properties that produce immediate income—don’t buy raw land that sits idle and incurs taxes.”

John’s Answer: 

“I’d recommend multi-family housing or mixed-use developments with SBA loans. These allow for non-recourse loans (you’re not personally liable). You can also explore self-storage units, which have less management and higher profit margins.”

Tip: For new investors, residential properties offer stable returns, but multifamily housing and industrial spaces are growing fast and can offer long-term gains. Consider SBA-backed loans for development projects. 🏘️

Q4: How should I approach depreciation when investing in real estate?

• Asked by Sam Brown Parks

Doug’s Answer: 

“Depreciation is your tax friend for the first 10 years. You can get a lot of tax write-offs as you mostly pay interest early on. But watch out for phantom income—after 10 years, you’ll start getting taxed on money you aren’t making. Be cautious with accelerated depreciation too. If you use it and sell the property, you’ll owe a recapture tax.”

Tip: Understand depreciation schedules and plan for long-term investments. Use accelerated depreciation only if you plan to hold the property long-term. This maximizes cash flow while minimizing taxes. 💡

Q5: When should I sell a property?

• Asked by Amit, Falconview Properties

John’s Answer: 

“Don’t sell—refinance! Pull out the equity and reinvest in new properties. If you sell, you lose a cash-flowing asset. Right now, Atlanta properties bought 10 years ago have skyrocketed in value. Why sell when you can refinance, keep the property, and build a portfolio?”

Doug’s Answer: 

“I only sell when the property becomes a headache—high taxes or troublesome tenants. At 65, I sold 15 centers because I wanted more cash flow and fewer management headaches. But if the property is performing, refinance and continue building wealth.”

Tip: Hold onto appreciating properties and refinance for more liquidity. Selling can trigger taxes and deprive you of long-term income potential. 🔄

Q6: How do I hedge against downturns like 2008 or COVID?

• Asked by Crystal

Doug’s Answer: 

“Good real estate will always bail you out. Focus on location and market strength. A property next to Walmart in a small town will perform better than one next to a small local retailer. When I started, I had no money, so I focused on small towns where I was the only buyer. Position yourself in places where you have a competitive edge.”

John’s Answer: 

“Continue to educate yourself. Every phase of your career should build on the last one. As you grow, learn about new ways to finance projects, involve investors, and manage risk. Keep learning, and keep evolving.”

Tip: In a volatile market, invest in high-demand locations and properties with stable tenants like Walmart or grocery stores. Diversify across multiple properties to reduce risk. 📉

📍 Why This Session is Essential:

This session provides insider knowledge on navigating the real estate market, particularly in areas like Atlanta, which continues to offer growth opportunities through opportunity zones and affordable development. Our experts share their secrets to building wealth, avoiding costly mistakes, and positioning yourself to succeed in any economic climate.

Welcome to a special episode of ECMP, where we delve into the effects of elections on commercial real estate with insights from seasoned professionals. With over 50 years of combined experience in real estate development, investment, and shopping center management, our expert panel shares how presidential policies and local governance shape real estate markets.

In this live event, we explore:

• Election impacts on real estate in Atlanta, GA, and beyond.
• Commercial investment strategies from experts who thrived through past elections.
• How rising interest rates and policies influence the real estate market, from retail spaces to multifamily housing.
• The future of malls and the importance of mixed-use developments for long-term success.
• Learn how seasoned developers overcome challenges in the real estate sector using smart strategies and joint ventures.

🔑 Key Takeaways:

• Election implications on interest rates, local zoning, and tax benefits like 1031 exchanges.
• Understanding the housing shortage and its effects on Atlanta’s commercial landscape.
• Expert strategies for shopping center redevelopment and maximizing ROI.

📍 Panelists:

• John Sebrook: Real estate developer and investor with 25 years of experience in New York and Atlanta markets.
• Douglas Berkou: Co-owner of Timber Development Corporation, having developed over 43 shopping centers across 19 states.
• Amit Grover: Host and real estate expert guiding the conversation on commercial real estate strategies.

🏙 Why Atlanta?:

As a rapidly growing hub for commercial real estate, Atlanta offers unique opportunities, from affordable land to opportunity zones that attract developers. Hear why these experts believe the future of real estate lies in multi-use developments and suburban expansions.

🏙 Case Studies Mentioned:

• Kennesaw Mall: Transitioning to a mixed-use development to avoid further losses from the retail decline.
• Opportunity Zones in Atlanta: How tax incentives are attracting developers to revitalize underutilized areas.

📊 Key Statistics:

• 40% of U.S. adults are unemployed (beyond official statistics), influencing the commercial real estate sector.
• 20% vacancy rates in malls and shopping centers post-pandemic, leading to innovative redevelopment solutions.

🎯 Takeaways for Investors:

1. Protect your downside: Always buy properties below market value and prioritize securing financing before development.
2. Joint ventures: Collaborate with construction companies to reduce costs, especially in high-interest environments. This strategy is particularly effective in the Atlanta market.
3. Focus on suburban expansion: With downtown areas like Atlanta becoming saturated, opportunities lie in suburbs like Gwinnett and Kennesaw.

🎤 Key Questions Addressed:

1. What are the biggest concerns about the upcoming elections for commercial real estate?

• The experts discuss how election cycles bring uncertainty in policies affecting interest rates, zoning laws, and commercial investment. But one key takeaway is that local municipalities (not just federal government) have more influence on zoning and real estate approvals, which is critical for developers and investors.

2. How do interest rates and inflation impact commercial property development?

• Rising interest rates increase borrowing costs, making new developments more expensive. The experts advise focusing on multi-use developments to protect against downturns, especially in markets like Atlanta, where mixed-use properties with residential components are performing better than stand-alone commercial spaces.

3. What strategies should investors adopt post-election?

• Our panelists, John Sebrook and Douglas Berkou, stress the importance of hedging risks by diversifying into shopping centers in smaller markets and using joint ventures to reduce upfront costs. They also highlight the importance of opportunity zones, especially in growing cities like Atlanta where tax incentives are available.

4. What’s the future of shopping malls in a post-COVID world?

• Shopping centers need to evolve. The experts explain that adding multifamily housing to malls can help them survive, as online shopping has reduced the need for traditional retail-only spaces. They point to examples like Kennesaw Mall and Gwinnett Place Mall in Atlanta, where mixed-use developments are helping bring life back to these once-struggling properties.

📺 Watch Now for Actionable Insights:

This episode is packed with value for investors, developers, and anyone interested in understanding how elections, economic policies, and local regulations affect the real estate landscape. Whether you’re a seasoned pro or just getting started, these experts will help you stay ahead of the curve.