PRS Real Estate Blog

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April 26, 2014

Is Your Money Rusting?

Most of us have heard the phrase “money now is better than money later”.  This phrase refers to the Time Value of Money, which simply stated is the value of money with relation to time and impacted by inflation or deflation (aka return percentages).

The sad reality is since 1940, the dollar sitting in your pocket has been rusting.  Its value is constantly being corroded.  Assuming an average inflation rate of 3% per year, the $100 bill you have in your wallet  that you’re saving for a rainy day- one month later is only worth about $99.75.  Wait a year and it’s now about $97.08.   So now that you know the value is eroding before your eyes, we need to hurry and spend it as fast as possible- let someone else start eating the loss, right? 

Probably No- I’ll explain.  No for all of those that think they should hurry and buy that new gizmo or gadget, or vacation, or human sized stuffed bunny at Costco.  Trading a depreciating dollar for a more aggressively depreciating asset is like offering to trade an old rusty metal bucket for a brand new paper bag.  The rusty bucket was corroding, but it will still far outlive the paper bag. 

The new coat of rust proof paint lies in investing.  If you said you would invest the $100, you win.  The dollar will continue to go down in value and frankly, we want it to.  If it stops depreciating, it’s an indicator that our economy as a whole is losing value.  Usually our hourly wage is an indication of how the economy is doing.  The last time we saw long term depreciation was during the Great Depression.

For those of you that have enough money in the bank to live off of for another 25-30 years, you simply need to find an investment that matches the rate of inflation.  If that’s not your position, you’re going to have to beat inflation and the older you are, the more aggressively you’re going to have to beat it.  If you’re around age 40 or younger and still believe you’re going to be able to use Social Security to offset your meager savings, I want you to go to the nearest mirror and laugh at the silly person you see.   The working population is declining, but the load on Social security is increasing significantly over then next 10 years.  They’re already capping the increases on Social Security, which is usually less than the rate of inflation.  This means that while it will still likely exist, the comparative value is going down each year and will have to in order for the country to avoid bankruptcy.  The alternative is to raise taxes, but as previously discussed in a prior blog, that reduces GDP, only making the problem worse.  In other words, if the next 25 years go like the last 25 years, we could be looking that $1200/month Social Security Check, being worth the equivalent of a $700 check in today’s money.  Can you live off of that?   With how gas prices have been going, that should be enough to fill your tank a few times a month, plus a happy meal or two for your grandkids.  Sounds exotic doesn’t it?   While those are rough numbers, the point is that if you want to live comfortably later, you have to stop the rusting of your money….now.

Here’s how.

Don’t dos:

  1. Save money, but don’t just put it in a savings account.   .0000014% is a nice way of saying 0% interest on your money.  I would only keep your family emergency funds in here or in a money market account.

  2. Don’t do CD’s (Certificate of Deposit).  A 1.5% rate of return is still a -1.5% loss when factoring for a 3% inflation rate.

  3. Don’t invest into high risk investments if you can’t afford to lose those funds.

  4. Beware of leveraging too highly in any investment.  Leveraging too highly is akin to building a house of straw, with any given market wind you could lose all of your equity instantly.  (I.e.- this was the cause of the recession our country just went through.)

  5. Don’t tell yourself you’ll worry about investing next year.   At age 55, it will be too late and poverty will be hunting you like a pack of wolves.

 

Do’s:

  1. Do keep an emergency reserve of liquid funds that you can access quickly and without penalties in the event of a job loss or financial tragedy.

  2. Research Investments.  Talk to professionals.  Ask them what your “After Tax, After Fee” rate of return will be on your investment.  The further above 3% the better, though remember that the higher and faster the balloon rises, the sooner it may pop and a lot of it was just hot air anyway.  In other words, don’t believe everything you hear and don’t just follow high numbers.  Look for quality investments.    

  3.  Seek professional advice you trust.   I still seek professional advice on frequent occasion from attorneys and accountants.    It’s better to lose a little to due diligence costs than to lose it all in a mistake.  You’ll make it up on the good investments.

  4. Start investing right now.  The temptation will be to start tomorrow, to start next month, next year, next time you get a raise, etc.   The path the financial freedom is simply the one you start walking down.  You can be successful on any of them and as with all paths we choose, the more experience we gain, the better we get at making good choices on those paths.

 

It’s your turn to conquer the world, so take it.    

 

Written by Mark Bitton

 

Nov. 22, 2013

How Interest Rates going up, will impact the real estate market.

Last night I was watching some real estate show on HGTV with my wife.  My TV watching habits usually consist of either Basketball or Football, with little variation, so you can imagine the great sacrifice I made to hand over the remote.  :) 

AS usual, I'm always blown away by the prices people pay to live close to the inner city and the fact that a 2 bedroom 1 bath, 1000 SF, average looking apartment with no parking or garage will cost $500,000.  Where in Pocatello Idaho, $500,000 can buy you a beautiful 5,000+ square foot, 6 bed 4 bath, 4 car garage and an acre to boot.  In Pocatello, we see some differentiation from say the Highland area to West Pocatello, but if you found two similar quality homes with similar specs, the price would only be moderately impacted based on general area.  Specific locations can produce anomalies based on neighborhoods, (take for example N. Harrison in West Pocatello).  However, in Pocatello, we have regions that decrease value, but relatively few that would increase value substantially.  Perhaps the most prominent difference lies in the older homes very close to campus.  Values in this area tend to be well maintained due to both architectural styles and consistently high demand in the apartment sector from the University.  Though keep in mind that this does not mean everything in the area is a good deal.  Demand is never a lone determinant in establishing the quality or performance of an investment.

In bigger demographic areas, there are areas which in real estate we refer to as Central Business Districts or CBD’s.  Generally speaking the closer you get to the CBD’s the higher the value of land, therefore the greater the cost of real estate.  If we used land valuation as the determining factor for where CBDs are, in Pocatello, we would have a tough time finding it as land tends to be fairly equal from Chubbuck down to South Pocatello with slight variations.  This doesn’t mean we don’t have CBDs in our area, it just means we have multiple CBDs and that their demand area radius is fairly small.  In commercial real estate we call this a concentric rings model with the highest value of land usually being Yellowstone Avenue.

So why am I going into all this mumbo jumbo about valuations and Central Business Districts when the title of this blog post is on how interest rates going up will impact our market? 

Because the statement “there are no easy answers” is true in this case as well.  The analysis of CBDs and local markets is called a “microeconomic” analysis.  However when we look at interest rates, they have an impact on a much wider scale, and therefore have a “macroeconomic” impact.  So when you look at the impact of an interest rate, you can’t just look at how it will impact your “microeconomic” area and monthly payments, because macroeconomic aspects will impact all microeconomic centers, while the reverse may not be true.   Because costs of living differ significantly from area to area, increasing the cost of housing, which is the largest consumer cost across the board in all markets, the effect is magnified by each increase of a basis point (equivalent to 1/100th of a percent).

Example:

Area 1

   

Mo. Mtg Pmt

Annual Interest Cost

Avg Home Price

150000

   

Down Payment %

10.00%

   

Yr/Amort

 

30

   

Int. Rate

 

4.25%

($664.12)

 
   

5.25%

($745.47)

($976.27)

         

Area 2

       

Avg Home Price

450000

   

Down Payment %

10.00%

   

Yr/Amort

 

30

   
   

4.25%

($1,992.36)

 
   

5.25%

($2,236.42)

($2,928.82)

 

In an area where the cost of housing is low, a 1% (100 basis point) increase essentially takes $1000/household income out of the economy as each new owner arrives.  However, in a higher cost area, even though they may be paying for the same item, the increase of the cost is now 3x what the lower cost area person would pay.  As debt to income ratios are factored on pre-tax income, the financial impact on the largest cost area is significantly higher, which in turn will force more people to weigh the financial cost to benefit ratios.  The typical response is for them to move to areas further away from a CBD which will lower the cost of housing, but increase the inconvenience for them to get to work.  The key here is that if income does not increase at the same rate that they increase the interest rate, it will in a large economy, force home values to either slow in growth, or to regress and move in a downward price direction, until they reach a the fulcrum of the cost to benefit see-saw, which fulcrum is directly related to the interest rate and the variable costs associated with their moving. 

Fortunately most residential real estate terms are fixed over 30 years.  What this means is that as interest rates go up, the absorption rate of new interest rates will go down as people choose to stay put rather move due to the increase costs associated with moving and buying.  As the cost associated with doing so goes up, higher priced areas will react first as their cost of moving is highest. 

Generally speaking, when interest rates are low and property values are stable, that is when you should be buying homes and apartments for rent.  Assuming the population in a given area is increasing, as costs of ownership increase, including the cost of financing- then rents will have to go up to encourage additional investment into more housing and more housing has to happen to accommodate the needs of a growing population.  Even in the 80’s when interest rates were in the teens, some new construction had to happen to accommodate growth.  Which means people had to pay a premium and property values had to be kept low. 

Of course this is based on the assumption that property values remain stable.  The problem with the last recession was that the values did not remain stable, they dropped significantly, especially where housing prices were high.  Those areas that could maintain high demand of housing suffered the least (think Manhattan).  Florida, Arizona, Las Vegas on the other hand, where demand was more circumstantial than actual, suffered greatly due to the overdevelopment. 

You’re probably thinking at this point that I just refuted myself.  What I’m trying to do is show that a macroeconomic change on interest rates can have different effects on different microeconomic areas and that all factors need to be weighed when considering what will happen in each. 

So what is going to happen to the Pocatello area if residential loan interest rates go up to 6.5% and hold?  The shortest and simplest answer:  I don’t know. 

However, because people dislike the lack of conjecture more than they dislike inaccurate conjecture, here is my theory:

Assuming the average person has a rate of 4.25% right now, on an average home mortgage of $135,000, the annual interest cost for a new owner would be $2,270 more per year to own the same home.  The median household income in Pocatello in 2013 was $38,542.  So this cost in interest increase would take about 5.9% of their gross income.   Because I don’t think the median income has sufficient discretionary income to absorb this hit in one year, we would have to look at two other variables.  1. The median household income in Pocatello is predicted to go up an average of 3.75% per year for the next five years.  2.  The population is predicted to increase by .61% per year over the next 5 years (Below the national average of .71% by the way). 

I think the key indicator is how fast income is anticipated to rise.  Nationwide, the estimate is 3.03%.  So we’re slightly ahead of the national average.  In turn, this means that as long as the increase happens gradually and census predictions hold true, (over 18 months to be exact), home value should stay steady with the same buyer being able to buy the same home throughout.  If they jump faster, prices may go down.  If they go slower, say they take 5 years to get to 6.5%, then home prices should continue moderately increase in the Pocatello area and this is reasonable in my opinion.

Now for other higher cost areas, the problem is that the average home owner needs to already be making an average of 3 times the Pocatello household (which few do) and have to maintain a similar percentage growth in income.  (Yes, this means a widening of the gap between income classes, but that’s not my point.)  The point here is that if income growth slows in a more costly microeconomic area or if the balance between cost of housing and income becomes too lopsided, that area will see another correction in home values.  Look at Detroit for a great example of this.  Detroit lost a lot of good paying jobs from the automotive industry when auto sales slowed down, lowering their median household income.  Even though interest rates stayed steady, the rest of the cost of living did not and as income decreased, home values plunged causing a further exodus of population away from the city, which in turn hurt demand and lowered home values even more.  In the end, cities near Detroit were bulldozing entire neighborhoods to get rid of supply so they could reach a supply and demand ratio that they could recover from and start growing again. 

Bottom line:  If you live or own property in Pocatello, we’re looking good compared to most of the country when accounting for an increase in interest rates.  Especially because I think they will go slowly, mirroring the health of the economy. 

Action Item: What does this mean for you? Go out and buy real estate in the Pocatello area.  Be smart about it and buy stuff that will cash flow, but as long as appreciation doesn’t go over 3-4% in a year, we’re probably going to do quite well.

Sept. 19, 2013

Where the High Returns in Real Estate Investing Hide

For most people, when they invest in real estate, they will get an average return.  I would consider average usually being somewhere between 4-10% on their initial investment.  Most like to think when they walk into an investment, the returns are going to be much higher.  Perhaps in the first couple of months or years they are higher, but then a sprinkler system breaks, followed by a water heater and then some carpet needs replaced and 5 years down the road, the roof had to be redone and all of a sudden, what was supposed to be a 15% ROI has now become the 2.5% ROI. 

A quick side note- If you're thinking that 2.5% is still an okay return, when you consider that inflation averages about 3.1% per year, 2.5% only slows the bleeding.  Ironically, a lot of people don't see inflation as a real thing that impacts them.  As a case in point, think back about 20 years, what did the average candy bar cost back then?  Usually if you walked into a small neighborhood grocery store, unless you went king size or bulk, it was about 50 cents per bar.  Now at the same type of store it's about 80, which is about 2.4% inflation per year.  Gasoline 20 years ago was about $1/gallon +/-.  Now it's about $3.79.  This is about 6.9% inflation per year over 20 years.  We buy a lot more gasoline than we buy candy bars, so the weighted average is huge.  Who would have thought back then that we would be paying more now for a gallon of gas than for a gallon of milk?  Averaging all the increases in commodities over the 20 years comes out to a little over 3%/year average on everything.  Some things have actually come down in price as well, which is what holds this average down.  Look at the technology sector for a case in point.  We buy more tech devices these days, but for item type and quality they are much cheaper than what we used to pay.  For most of us, our smart phone is way more powerful than our best computer in the 90’s.  These are things that all of us buy.  My point is that your cost of living is going up every year, so unless you have all the funds you'll need for the rest of your life, don't settle for a return under or at the rate of inflation.  (This is why bank CD’s are a terrible investment).

So back to the original point of why investments don't turn out how we expected them to and why the majority of investors will only get average returns. 

As the first key and I apologize as I’ve said this many times in past blogs, the problem is almost never the actual investment property itself.  It was failing to consider future expenditures or forecasting higher than reasonable income in the original analysis over the expected hold time that eventually will cause the demise of most spectacular returns.  Poor management leading to high costs and vacancies can take a toll as well.

The second is that in order to find the truly spectacular deals, you have to be in the right place at the right time, under the right circumstances.  As a casual investor, working another job or keeping occupied with other ventures, to be frank- you’re looking at very low odds to find the sweet deal.  I would guess that 99% of the amazing investment deals go to those who are hunting, have real estate connections all over and are constantly putting themselves in the path of potential investments.  In other words, the professional real estate investor buys the cake before it ever makes it to the display case.   They find the 12% cap rate acquisition, usually fix the problems and then sell it to another less aggressive investor for a 7.5% cap rate, netting the difference of a 4.5% equivalent cap rate in equity.   This is how most real estate developers make their money as well.

To be fair, this is perfectly justified.  They’ve taken all the property risk and then turned around and sold the property to an investor that doesn’t want property risk, but is willing to deal with the less risky “market risk” which include vacancy and normal market demand factors.

Because most people are not real estate investment professionals, they won’t find the amazing deals.  For this reason I tend to disagree with a lot of the big real estate investment seminars and their “wholesaling” strategies.  They tend to give investors unrealistic ambitions given the amount of time and resources they have available to allocate to this strategy.   I’ve had a lot of “wholesalers” call me and ask me if they brought me a good deal if I would buy it.  I told them that I would be happy to jump on it if they brought me something that was really a good investment.  I’ve only once seen anybody actually come back to me with a property and it wasn’t a good deal for him, let alone for me after he added his wholesaling price onto it.  His didn’t have a solid analysis foundation, so he really couldn’t tell what was and wasn’t a good deal in the first place.  For those not familiar with the term “wholesaling”, it in essence refers to a person finding a property, getting it under contract or option to purchase and then assigning the contract to another investor for a fee.  My suspicions are that this is technically violating real estate transaction law as it’s difficult to argue that the fee is not a commission, which would require a real estate broker’s license in most states.  Idaho’s real estate commission has said that this type of transaction does require a broker’s license.  If you’re looking to try and wholesale a property, perhaps a better strategy would be to find an equity partner and you purchase the property with them.  Once you own a percentage of the property, then it is fine for them to buy the remaining equity from you.  No state that I know of has laws against the for sale by owner approach.

So now that I’ve put a dampener on all of your ambitions of making huge returns in real estate, you’re asking- is there any way for me, a person that works in a different industry and realistically won’t ever have sufficient time nor interest at becoming a full time investor to make a return of higher than 4-10% on my money?  The answer is yes, but not one without some asterisks. 

You can either wait for the lucky deal or here is my suggested way to get higher returns on your money.

  1. Find a full time real estate investor with a proven track record of successful investments and who goes after aggressive deals.  Ask if they would be open to you jumping in as a passive, capital partner on some of their deals.  Most big investors do use capital partners on a frequent basis.
  2. Many are going to tell you no, as they will only want to invest with accredited investors (those that make over $250k/year over multiple years or have over $1,000,000 in net worth of investments, not counting their home) This covers the investor from SEC liability when something does go wrong.  If they say no, go to the next investor until somebody says yes.
  3. Know that they are likely going to be investing into some fairly high risk ventures and that there is a chance that you could lose as much as you’ve invested or in some cases, more than you originally invested.  Read what they send you.  Generally speaking, the higher the rate of return, the higher the probability that something could go wrong. 
  4. You’re not going to get much of a say in the operations of the investment, so be prepared for that.  Nor do you want to be too inquisitive as it creates more work for the investors and your constant pestering will likely prevent you from being invited to participate on future deals.  Obviously ask questions where you’re not sure if they are being honest, or acting in the partnerships best interest.  But on the day to day items, it’s best to stay out of their way and let them do what they do best.

If you don’t feel comfortable with that approach, nor see dedicating yourself full time to the investment world, then it’s time to adjust your investment goals and make them more attainable by being more realistic on your average rate of return needs, aka your discount rate. 

If on the other hand you do like the approach and would like to learn more, but aren’t sure where to start, feel free to contact me and I’ll give you more information on people and areas where you could start. 

Author:  Mark Bitton

 

Aug. 20, 2013

Real Estate, Business & Management

Recently we've been doing valuation analyses on businesses.  I was talking to a friend about a couple of the businesses and he was asking about the differences between business analysis and real estate investment analysis.  As I've begun to discover- they are strikingly similar. 

The reality of real estate ownership is that, it is a business.  It has customers, vendors, and products to rent.  Certainly there are some significant differences as well from "type" of business, terminologies and risks.  For example, in real estate, when you take the Gross Operating Income and deduct expenses before income taxes, depreciation, interest, etc., you arrive at Net Operating Income (NOI).  In business, they use their own acronym of EBITDA (Earnings Before Interest, Taxes, Depreciation & Amortization).  In other words EBITDA in business = NOI in real estate.  Corresponding ratios have different name, but tell the same stories. 

Some would say that there are greater risks in business than there are in real estate.  That could be true, but as a society we establish values of income streams based on the risks associated.  Because there are both high and low risk investments for real estate and businesses alike, the values of each are more based upon the level of risk, than they are on the type of commodity they represent. For example, in real estate land speculation can be exceptionally risky, which is why the value of land is usually low in an undeveloped state, compared to the value of the land once the finished product is built on top of it.  (Primary markets like NYC perhaps could be excluded).  However, the biggest risk to both real estate and business alike, once reasonable demand is established is not month to month expenses.  The biggest performance enhancer or detractor will be the management in place for the respective asset.  Quality management can increase performance or run investments into the ground.  Even on real estate that is considered to be in a high demand location, poor management will eventually take it's toll.  This is why Class A properties end up on the foreclosure market on occassion as well.

I should clarify before proceeding- quality management cannot fix things like having overpaid for an investment, or having mis-analyzed the potential performance for a property in the first place.  On a residential real estate investment, if I've budgeted $10/month/unit for maintenance each month, I'm likely going to be sorely disappointed with the performance, even if I have stellar management in place.  The reason is that this is accounting for the best months, but not factoring for the water heater that is replaced in year 3, or a furnace that goes out, etc.  Quality management cannot correct bad analysis, unless of course the analysis assumed poor management in the first place, which I have yet to see.   However, Bad management only makes bad analysis that much worse.

I recently went to a local restaurant where I live.  I won't specify the name here, because I hope they will correct the issues and I want them to succeed.  I walked into the restaurant and was impressed by the ambiance they had created.  I thought it was fun, well decorated and appealing to the demographic of families with young kids, which this area (including myself) has plenty of.  After waiting about 5 minutes at the front desk for one of the restaurant staff to appear, I finally started searching for any employee of the restaurant, which took about another minute or so, I finally found one.  Rather than apologizing, they gave me some dumb excuse as to why they couldn't do their job.  No big deal, I still wanted to have fun with my 2 kids that I had brought and they still had the "wow" feeling from the fun decorations.  Next however, we sat down and I finally had to call over our waiter as he was lounging around.  He didn't smile, wasn't even warm and acted as though it was more important for him to look tough than it was to make us feel welcome.  This restaurant had a pizza buffet option, so we elected to do that.  I have come to expect that pizza buffets always have lousy pizza, so I was not surprised when this was the case here as well.  However, the buffet serving tables were dirty, lettuce and condiments were everywhere on the salad bars, the floors needed swept and they were almost out of plates and forks.  Upon leaving, I hadn't had a single person say thank you for coming in or even smile at us that I noticed.  For having a fun ambiance, I considered it a very poor experience.

I emailed them on it to let the owners know they had some serious issues on their management side and hope that they will address it before the place goes dark.  My point here is not to single out a single restaurant, but to address the fact that the restaurant itself could be a big success.  It looked great and had a fun feel to it.  The employees and cleanliness were the problem, which means the management is the problem. 

Contrast that story now with Roy's Restaurant in Hawaii.  I've never been to Hawaii, but I have heard my brother tell this story at least 10 times to different people about their service.  According to his reviews, when you walk in, every employee yells "Welcome to Roys!", no matter where they are at.  That includes Chefs, Receptionists, Waiters, it doesn't matter.  They all want you to know from the moment you arrive, they want you there.  He said the food was great, but the service was exceptional.  The meal was over $50/plate, but he felt like the value was there because the service was incredible.  Now he's a walking, talking billboard for them, letting everybody know that if they have the opportunity to try a Roy's restaurant, they should.  The incredible part about it- Roy's doesn't even have to ask for the referral.  They earned it by how they served their customers. 

What is the difference between the two businesses?  Management.  Yes, attitudes were great at one and not the other.  Yes, the food was great at one and not the other and one was clean, the other no so much.  However, in the end, it is the management that influences these.  If huge corporations like Disneyland and Disney World can get every single one of their employees to put a smile on their face and make your experience magical, is it really that they just had the goof fortune to find so many happy employees or is it that their management knows how to inspire good attitudes.  Roy's restaurant doesn't have just a bunch of incredible employees (though management probably treats them as such), they all exuberate joy and welcoming because...... management inspires them to do so.  I say inspire, rather than force, because forced smiles and attitudes are easy to spot from a consumer.  Day in, day out- genuinely good attitudes can only be inspired.

The same goes for all businesses- do the customers feel welcome and leave happy, wanting to come back, or do they leave mumbling cuss words under their breath? 

Not every business can give the customer what they came in looking for.  In property management, sometimes to represent the owner's best interest, the tenant's demands are not going to be met.  However, that doesn't mean that the tenant shouldn't feel that the property management company cared about them and tried to find a solution that appeased them as well as the owner's.  However, in many management companies, confrontations happen way too often.  Sometimes they are unavoidable, but most of the time, if the employee is inspired, each customers that visits your business, will leave happier than when they arrived or called.

When looking to buy investment real estate or a business, do thorough analysis on the investment in question.  Then do thorough analysis on the management staff.  If the investment is the golden goose, management is the farmer that cares for the goose assuring that it produces consistently.  If the farmer can't inspire the goose, it may be time to switch the farmer. 

Axiom Properties & Development Inc. is a property management company where managers are hired with the mandate to inspire.  Call us if you have any questions.  PRS, Inc. also aims to inspire its Realtors to higher levels of customer service.

Author:  Mark Bitton

 

Aug. 9, 2013

5 sure fire ways to get rich quick

5 Sure Fire ways to get rich quick

So we’ve all had the experience of one day getting a phone call from this vaguely remembered high school acquaintance, who has an intense desire to re-kindle a flame of friendship with you, even where one may have never existed.  And why do they do this?  They want your thoughts on a new business they are starting which almost always goes:  “…. Blah, blah, blah, blah…… no, it’s not multi-level marketing…….blah, blah, blah, blah……. Now all you need to do to get to the gold platinum laser level is get your family, friends, neighborhood………… and 1/3 of the population in your MSA-(said inaudibly). 

Ironically, almost all of us say we hate MLM, but I would guess that the majority of us have done it at one time or another in our lives.  The sad thing about it is that these negative connotations sometimes turn us away from what otherwise may be a pretty good idea.  I knew of one that was selling food storage via MLM, which helped a lot of people become more prepared with food storage that likely would not have made the leap without being involved with the company.  Being an MLM doesn’t make every business a bad idea, what we generally don’t care for is the marketing strategy of the business.

So I’m getting away from my topic, but here’s where I come back.  Why are we initially attracted to the MLM ideas?  Because they all promise the same thing- Get Rich Quick.  The MLM sales approach is usually: “If it sounds too good to be true, it therefore must be true….because the guy above the guy above the guy that sold me on it, drives a BMW.”  Then once you’ve signed up, lost about $500 to $1000 on the idea, you get to hear the choir of family members you tried to sell it to say:  “If it sounds too good to be true, it probably is”.  

Over time we begin to engrain this into our minds that everything that sounds phenomenal and extraordinary can’t be real. Because we failed once after having bought into some business idea that was supposed to end up with us sitting back, soaking the sun’s rays on our 200 ft yacht and instead we’re paying $23/month on a credit card payment to pay off our losses, all "too good to be true" things aren't true at all.  We become the skeptic, the pessimist or in our minds "the realist".

Well folks, the truth is that our Perception is our Reality.   If you think everything is too good to be true, you’re right.  However, if we truly believe nothing is impossible, acknowledge that things are going to be very hard, that we can do hard things and then get to work…... this is not the type of guy you’ll hear saying the words- “if it sounds too good to be true…..”.  The truth is that some people make big money rather than big excuses.  There are people that have made a ton of money in pyramid schemes.  There are people that have made millions in collecting trash.  They have all failed at times, the difference is that they didn’t give up. 

Calvin Coolidge the 30th president of the United States is often quoted as saying , though he may not have originated:  “Nothing in the world can take the place of Persistence. Talent will not; nothing is more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent. The slogan 'Press On' has solved and always will solve the problems of the human race.” 

With that said and without further ado….

Here are 5 Sure Fire ways to get rich quick:

  1. Buy 1 lottery ticket that wins.  Make sure you don’t buy one that loses, just the one that wins.
  2. Learn to count cards without getting caught and then head to Vegas.
  3. Have a rich uncle who has no other descendants, who thought you were the best because of your quirky sense of humor, leave his entire fortune to you.   Understand of course, this inheritance will come with the mandate that you travel the world and wear so much bling that people mistake you as the knock off jewelry street vendor in New York.
  4. Sue the government after wrongful imprisonment, where they forgot about you and left you in a cell for 4 days without food and water.  Which happened because you, out of sheer coincidence just happened to be at the location of a drug bust with a bunch guys dealing and doing drugs, all of which you had no idea was going on. (This appears to be the newest Californian method for getting rich quick.)

 

Or….. maybe 5 is really 1.

 

  1. Change your perception of “Quick”.  Come up with a solid business idea, plan meticulously and then work and fight and claw until it succeeds.   Becoming rich in 10 years by the way, is “quick” when you comparatively realize that most millionaire’s don’t become such until they are close to retirement and this usually because they’ve paid down on assets that have appreciated since they were young.

 

There will always be the kid that created facebook.com, or founded some widget company that took off and made their millions by the time they were 20.  Generally speaking, these guys weren’t just lucky, they had an ingenious idea, some knowledge as to how to do it and then most importantly, they acted on it.  In almost every case, there were close calls, things that almost caused them to fail and then finally the fateful turn where they made it over the hump. 

The point of this blog is that anybody can be successful, anybody can make it big and relatively quick.  The real question is what are you willing to sacrifice to make it happen?

Also understand that finding wealth does not come with the promise of indefinite wealth.  Wealthy people have big ups and downs all the time.   Look at Job in the Bible, he was very successful and then had it all taken from him.  However, after the downturn, he recovered and had much more than what he had lost.  Perhaps the blessings were as manna from Heaven, but maybe not and if not, then perhaps the real blessing was the knowledge of how to earn them back. 

Donald Trump filed for bankruptcy in the 90’s, but it wasn’t even a decade before he was back on top prancing around as a Billionaire.  Most people after having filed bankruptcy, are lucky if they ever get back to their pre-bankruptcy financial station.  The difference is that Donald Trump had already gained the knowledge of how to become wealthy and all he had to do was use this same knowledge to do it again. 

I would say that what we want is not to get rich quick, but to “know how” to get rich quick.   Look at those that do attain fortune without knowledge and look at their high bankruptcy rates of lottery winners, professional athletes, trust funds kids or those who win large lottery sized lawsuits.  The bankruptcy rates generally range from 50 to 80% within 5 years of receiving their money.  Once they’ve lost it, what are the odds they will win another lottery, get held another 4 days in a DEA jail and be considered innocent, etc.?  They still have no idea how to generate wealth and because of this lack of knowledge, money is and will always be a finite resource to them.    

Now reflect on what a captain of industry would do upon the loss of his fortunes.   His story isn’t finished, like Job, his story was only half written when he lost it all.  This is why it is so much more important for us to earn wealth, than to happen upon it. 

Money is not power.  Knowledge is power.  Still want to get rich quick?  Then Go, and be powerful.

 

Written by Mark Bitton

May 27, 2013

5 points that separate great commercial leasing agents from good ones.

So I have to admit, this topic is written to be as much a recruiting tool as it is to be educational to the investor.  Right now Axiom Properties and Development Inc. is looking for a solid agent to partner with to be their primary leasing agent.  This is in part because while we have lots of experience in this field, we don't have the time to dedicate to it to be the top agents in the area for leasing.  So after reading this blog, if you think you fit the mold or know somebody that would, just contact me and we'd love to interview you.

Being a great leasing agent isn't rocket science, but it does require a competency with analysis and a hard work ethic to become a top-tier agent.  Here are the steps to being the best leasing agent in any demographic area:

1.  Have a real estate license.  Optimally you would have a broker's license.   Realistically, to get a basic agent's  license, we're only talking about 2 weeks of somewhat bonehead eduction to become a realtor.  The fact that you only need to have your GED as educational background demonstrates there's not much of a filtering process to who can sell real estate.  Brokers in Idaho have to have 2 years of experience and take an additional 4 weeks of courses, which is somewhat better and provides deeper education.  However, there are plenty of people with advanced college degrees in real estate as well.  Being a real estate agent has major perks, you're for the most part your own boss, the pay can be really good if it's worked effectively and every human being needs your product (shelter).  A commercial leasing agent needs to be above average and have a more than basic understanding of real estate laws, zoning, and be able to market effectively to other leasing agents.  Getting a real estate license provides a basic education on these topics and having a knowledgable and accommodating broker on the back end, will help you learn these more in depth.  Axiom is also willing to train persons and provide back end support throughout the leasing process.

2.  Learn the investment side of real estate valuation.  Good commercial leasing agents don't just market properties and have people come along and rent them out.  By understanding investment analysis, they will know exactly what impact on the property's valuation a new lease will have if they drop or raise the price per square foot per year.  Sometimes an owner will bend to quickly, but with proper analysis a quality agent can show an owner why leasing at a lower amount may be a bad idea and what kind of investment impact that will have on future investors that will look to acquire their property.  Obviously it would have a financial impact on the owner's Internal Rate of Return as well.  Good commercial agents see the digital side of the matrix and are able to foresee future impacts their leasing will have on the owner's investment.  A positive side note here is that they also tend to become successful investors themselves as they continually learn the best approaches to earn their owner's better profits.

3.  Understand commercial leases and how they can be modified to accommodate all parties.  In residential leasing, everybody for the  most part uses the same basic lease structure where the tenant pays the rent and perhaps their own utilities, but the owner covers most of the other costs such as maintenance, building insurance, property taxes, etc.  This is generally called a gross lease.  In commercial leasing, the most common leases are variations of NNN (pronounced "triple Net"), Gross or Percentage leases.  In NNN, the tenant pays all costs associated with maintenance, taxes, insurance, etc. and in a percentage lease the rent amount is tied to the performance of the tenant's business.  All of them can be modified to accommodate specific agreements between tenant and landlord.  Usually we refer to these as "modified" net, gross, or percentage leases, with the most closely associated type of lease being the one modified.  A good commercial agent may see that a new start up business is going to have a harder time paying the lease costs up front, so they may try to help the owner accommodate a new start up by starting a lease at a lower rate and then escalating faster over the lease term.  For example:  We have a tenant that wants to start a new business and would like to sign a three year lease.  The owner wants a minimum of $9/ft NNN.  The tenant is about to walk away because they're worried that their first year will be too tight and likes the location, but needs the lease to be more in the range of $7/ft NNN per year so that they can have sufficient capital to accommodate the losses during start up.  A good leasing agent would come from the approach of lets start at $7/ft in the first year, go to $9/ft in the 2nd year and $11/ft in the third year to accommodate the prospective tenants situation.  They are still able to maintain the $9/ft/yr rate average, but have now accommodated the weighted nature of the tenants business as well.  In some cases, depending on the business, a percentage lease may also be a consideration.   While this may be an overly simplistic example, it's important for commercial leasing agents to know commercial lease types and strategies that accommodate all parties.

4.  How to market commercial space for lease.  In residential real estate, sometimes the marketing strategy is to list the property, put it on the MLS, put a sign in the yard and then sit and wait for a buyer.  Really tough right?  Sadly sometimes this works because their is a more universal demand for housing than for commercial real estate, which is why some really lousy agents are able to stay in the industry longer than they should.  A commercial leasing agent has to be much more assertive.  Good commercial leasing agents will have the property for lease in multiple locations online, will have high quality signage stating the property for lease and will assure that all other commercial agents and clients in their area are aware of the space and then send out "drip" reminders to keep it at the forefront of other agents minds.  The best leasing agents are those that collect lease data from other prospective tenants themselves and market directly to prospective tenants as well as working with cooperating brokers.  This kind of marketing is very time consuming and takes detailed follow up and research skills.  These agents usually will go door to door to each tenant in town that fits the type of leases they are trying to fill in other properties and speak to each tenant individually about their needs, wants, price points and current and desired lease terms.  Once they've built this database, they will note when the leases are about to expire and will market them heavily to move to their location prior to the expiration of the tenant's lease.   Getting to know the prospective tenant database is what separates the great leasing agents from the rest of the field.  Most agents get too busy or have other aspects to their business which draw away their time, making it very difficult to make it into this elite realm of leasing.  I admit this is my own limitation.... I simply don't have enough time to develop and work my own database, which is why we are pursuing an agent that can sell real estate with PRS, Inc and do commercial leasing for Axiom.

5.  Additional resources.  A successful commercial leasing agent is a team player and usually has a solid supporting cast.  At Axiom for instance, you will be working with experts in investment analysis, that understand nuances in commercial leasing and have a strong background in title and brokerage aspects of real estate.  You also have secretaries that are answering the phone for you, making sure that new leads a captured as efficiently as possible.  Most of all, it's important to have  team the will inspire and motivate each other and whom you in turn to when you need backup when you're sick, on vacation or just overly busy.  Simultaneously, great agents need to be very self motivated.  Agents that are passionate about their career and treat it like a business, allocating sufficient funds and resources back into their job can earn well over $100k/year.  If you feel that you fit this mold are fine with the commission mentality of I earn what I produce, then we would love to talk to you about the possibility of working with us.

If you feel you may be interested in this type of career or know somebody who would be a good fit, please have them contact Mark Bitton at Axiom Properties.

My number is (208)233-0740 ext. 107.

As always, thanks for reading and please share and comment on this post.  Thanks!

 

May 7, 2013

5 Benefits of living in Rural Idaho

A little over 3 years ago I moved out to McCammon, Idaho.  Population sign reads a little over 800.  It has a convenience store, a couple of gas stations that service highway traffic and one little restaurant.  Costco and Walmart are about 30 minutes away and where I work in Pocatello in the real estate industry, I can plan on about 50 minutes of round trip commute each day.  In addition this means more miles on my Jeep, more gas consumption and if I want to watch a movie at a theater for date night, make that 2 hours of my day driving. 

Okay, so not everything about rural life is perfect.  On the other hand, living in a bigger town or city isn't all that wonderful every regard either.  City lots by their nature are smaller, meaning you've got neighbors living on the other side of wall or fence that can hear if you're singing too loud in the shower.  If their dogs bark in the middle of the night, you have nowhere to run and hide.  Have you ever tried star gazing when in town as the street and city lights drown out one of nature's most awesome spectacles. Or have you ever just sat out on your lawn on a warm summer night in the city, listening to the distant cricket chirp......in between the thumping bass of your neighborhood's wanna be lowrider, the engine noises of the nearby thoroughfare and the neighborhood grouchy couple yelling at each other and then their kids?  Have you ever walked outside your door and thought to yourself, "wow, what a gorgeous sight".  Assuming you don't have a neighbor that is a super model, you probably haven't. 

So here are the top 5 things I love about living rural. 

1.  The Scenery.  I lived in Pocatello for about 8 years and a couple of other towns in other states for several years before that.  On rare occassion I would come across a Vista in those towns where I would think it was really pretty.  In McCammon, even after 3 years, I am constantly amazed at the beauty of the surround mountains, or the green field as the cows lazily function as ulta quiet lawn mowers.  I'm convinced that mountains, when combined with storm clouds are God's way of painting us his portrait of the week.  Almost every spring as I'm driving to and from Pocatello, I look up at a large mountain with a flat top named Haystack and think, wow that looks a lot like a picture of the swiss alps.  I absolutely love living in an area where picturesque scenery is the norm.

2.  The Commute.  Yes, I really just said that.  Commuting from suburbia to downtown is stop and go, with crowded roads and lots of people wanting to show you their middle finger when you cut them off to make an exit.  Commuting from McCammon to Pocatello is more like taking a sunday drive.  I listen to audio books from Audible.com to and from work, which is both educational at times and relaxing at others.  Cars like to space out about every 200 yards or so as they meander down the road.  It's both a time to prepare for and to wind down from work.  What initially I hated as a wasted hour, has become a time of day that I thoroughly enjoy.   

3.  The Community.  If your natural tendency is to be a jerk, you would hate small town life.  People are going to wave to you regardless of if they know you or not.  I have a four wheeler with a plow on the front to push snow when it snows.  My problem that I don't get to use it that often because my neighbors keep plowing it for me before I can get out there in the morning.  They know I can do it myself, with very little effort, but that's not the point.  Small towns have tighter knit communities where people are looking for reasons to help you out.  In the city, it's more Darwinian, where the strong take care of themselves and the government should take care of everybody else.

4.  The Quiet.  Yes, I hear the occasional train rumble through town, but for the most part, I can sit in my back yard and listen to birds chirping, my kids playing or nothing at all.  It really is nice to hear the sound of silence.  At night I can lay out on the trampoline with my kids and see thousands of stars fill the sky and let the expanses of space fill my mind with wonder.  You know that feeling you have when you're camping underneath the stars, smelling the wild flower scents as the gentle night breeze, while the smoldering camp fire crackles softly and then you hear the grunting sounds of a large hungry grizzly bear as he nears your campsite, well that is what it's like sans the grizzly bear.

5.  Home Values and cost savings.  If you take the same home and move it 20 minutes away from the city, you may now be able to buy it for 20% less than what the home in town would have cost you.  When it comes to gasoline costs, well, yes that's another $5 per work day, $25/week, about $110/month, about $1250/year more than if you lived closer.  If I can save $30,000 on my home purchase, an interest rate of 4% is about $1200/year savings there.  The costs come out about equal.  The reality is that you'll likely save money by living rural.  You don't go to the store for every knick knack, you don't eat out several night's a week and shopping isn't the default entertainment.  However, a bike ride or four wheeler ride around the neighborhood is a cheap alternative.

 

Did you know that 89% of people that read a quote with a statistic in it will believe it? 

If you've ever considered the idea of trying out rural life, it's a really great life.  Call one our agents today and we'll help you determine if the rural life, could be your sweet life. 

Thinking of investing in rural Idaho?  Rural Idaho certainly has it's niche markets, but there can be a lot of pitfalls to investing in small demographic areas.  We can counsel you there as well.

 

Author:  Mark Bitton

 

 

 

May 2, 2013

Why you should buy and sell Real Estate RIGHT NOW.

If you're in the market to be buying or selling real estate, you need to finish this article and then get on the phone and call us.  I don't mean tomorrow, I'm talking about RIGHT NOW! 

Most of us have heard the saying, buy low, sell high.  Well as the nationwide economy starts rolling forward, there will be several things that will happen in the next year or so that will impact a lot of real estate deals.  As demand for real estate increases, assuming that supply does not outpace it (which new building is still relatively low compared to 2005).  This will cause prices to rise and home values will increase.  As home values increase nationwide, this generallyimpacts the monetary value of the US dollar by decreasing it's value, meaning I have to pay more dollars for the same house than a year ago.  This is known as inflation.  Right now with interest rates being held as low as they have been, the biggest risk to the Federal Reserve is inflation.  As they see values starting to increase, they are going to be forced to adjust bond rates, which in turn will raise interest rates in an effort to control the cost of housing and prevent hyper inflation.  The reason this happens is that when people buy houses, the average buyer is looking at the down payment and the monthly payment, as those go up, the number of buyers per price segment have to drop down to the next lowest segment and the bottom segment (cheapest homes) become unaffordable to the lowest segment of would be buyers.  Alternatively, this means you will start to pay more dollars for the same home than you would have when the rates were lower and thereby stabilizes inflation.  The problem in 2006 came when prices started downward due to mass foreclosures and tightened borrowing, which resulted in less demand, too much supply and a deflation spiral ensued.  Certainly it could have been much worse, but thanks to the Fed impacting valuations by reducing interest rates, the bleeding stopped after most areas corrected by about 20-50%. 

Rationally, homes shouldn't cost more than their replacement costs, however because humans are involved, our group mentality approach to valuation impacts values more than supply costs alone do.  In essence, we tend to behave socially more like sharks, feeding like crazy in frenzies, but not willing to take the first bite until somebody else does.   

So why should you move right now?

If you remember the bell curve from economics or algebra classes, imagine the X-axis being the value or the demand for real estate and the Y-axis being the supply of real estate.  The house valuation curve is now, still now on the way up, but the Federal Reserve is just cautiously watching it still.  In other words, prices are still near their lows, so by buying now, you get the benefit of being in the lower price spectrum, but the added benefit of a long term lower interest rate, which has HUGE value.

Should you sell if you own a home?  Yes, especially if you intend to leverage your new home fairly high.  The reason for this is that over the life of a home loan, you will pay a lot more in interest than you will on principal thanks to the 30 year amortization schedule.  By selling at a lower price now than you would be able to in a year or two, you sacrifice a little bit of equity, that you should be able to make up the same percentage of equity by getting your new home for the same reduced percentage.  However, because interest rates are lower now, you would save thousands and thousands of dollars by taking advantage of reduced interest rates. 

We knew the time was coming, and now is the ideal time between the upturn in the bell curve, but still during the lag of corresponding interest rates before they start to mirror the home price curve.

 

I'm not recommending you go out and buy anything on the market.  You want to be smart about it, especially on investments as they will also be heavily impacted by rate adjustments.  

Call us today and let's talk about your situation.  No rule, other than perhaps gravity, (which I read the other day may not even exist) applies to everyone equally.  Our phone number is (208)234-0550.  Or if you want to talk to me directly, call 208-233-0740 or email me at mark@idahoinvestor.com.

 

Author:  Mark Bitton

 

April 18, 2013

How to Correctly Use the Cap Rate

Pocatello, Idaho and the surrounding areas are a great area to live in.  It can also be a great place to invest in real estate.  Cap Rates (short for Capitalization Rates) are a commonly used phrase in the world of real estate investing and while it's not real complicated on how to run a cap rate, if you ask two different real estate agents what the cap rate on a given property is, almost inevitably, they will give you two different rates and fairly frequently, these answers will vary widely.  Today's blog is going to answer why they vary and why you shouldn't necessarily trust either of them.

Definition:  NOI/Price= Cap Rate.  

Okay, so that's simple enough...... so how do people screw it up so badly?  The answer lies within the calculation of NOI.  For those not familiar with NOI, it means Net Operating Income.  We determine the NOI by taking the gross profits from the property and deducting the property expenses, giving us our "Net" difference.  

Here are the top 5 reasons the NOI's from different agents vary:

1.  "Property Expenses"-  When calculating NOI, it is very important that you discern between what is a "property" and what is an "investor" expense.  Property Expenses are always the same for the property, regardless of who owns it.  Things such as maintenance, property taxes, insurance, management fees, legal fees for evictions, etc. are property expenses.  Mortgage payments, accounting or legal fees for the owner, etc. are investor expenses.  When calculating NOI, use only income from the property and expenses from the property.  Leave the investor correlated income and expenses out of it.

2.  "Management Fees"-  I hear this all the time- well don't put that in the analysis because I'm going to manage it myself.  For all those that self manage their properties, I hate to burst your bubble, but you're probably not getting better rates of returns on your property.  What you have is a part time job that you paid to get and your being paid each month to manage.  Even if you still plan to manage a property yourself, nobody's time is worth $0/hour.  If you can make money doing something else, then there is an opportunity cost to you're taking time to manage a property.  The industry standard is to charge an average management fee that a typical local company would charge you to manage your property for purposes of calculating that expense.  There are a lot of other reasons why self managing a property is a bad idea, but that's a topic for another blog.

3.  "Pro Forma"-  Latin, meaning "as a matter of form".  The term is commonly used in the investment world and simply put, means your best guess on predicting future performance.  For buyers looking for an investment, your cap rate should be based "your" first year of ownership.  This means you need to do some research as to what you expect your costs to be, rather than what they have been for the prior owner (I'll get to that in #4).  If you're looking at somebody else's pro forma analysis, make sure their assumptions are in line with what you would guess as well.

4.  "Beware of Owner Analysis"-  What I mean by this, is that the prior owner's intent is to sell the property.  As a result, the likelihood of them disclosing all expenses or things that are likely going to be expenses to you is really high.....................................................................ly unlikely.  Unless past performance is based on reporting from a 3rd party agency, such as a property management company or accountant, chances are good it's inaccurate, by virtue of leaving things out, or adding "investor" income in.  Even so, performance varies from year to year, so when running your proforma analysis- you want to plan for an average year.  It usually will not be right on, but over a 5 year analysis, it should be reasonably accurate.

5.  "Capital Improvements"-  Capital Improvements are repairs/replacements that are not annually recurring and as a result are not included in the NOI.  Another way to look at it, if the IRS allows you to depreciate it over several years, it can be classified as a capital improvment.  Correct procedure is not to include these in the NOI.  The only problem with that is that these are still real expenses to the property and will be a debit on the ledger column for the owner.  At the same time, you're not going to put on a new roof, resurface a parking lot, replace all the carpets, etc. every year.  What I recommend to my clients is look forward over your entire anticipated ownership and try and determine what will need to be done.  If you plan to own the property for 10 years, but the roof has about 5 years of life left, or if you have 4 units and anticipate replacing a water heater and changing the carpet once during your ownership.   Calculate the total cost of all the capital improvements and then divide them over the anticipated holding period.  This I label as a capital improvement reserve and factor the annualized figure it into the anticipated NOI.  

 

Some of you at this point will step back and think that this makes cap rate too complex.  As a result you may elect to  spend your time running easier ratios such as the gross rents multiplier.  Cap rates become easier with market experience.  Sometimes deriving an expense to income ratio for a given property type can eliminate the hassle of determining all of this information until you've narrowed your options down to 3 or fewer options.  This is where having an agent with a solid grasp on analysis comes in.  You don't just want an agent that's good with numbers, but one that can look at a property and help you come to realistic assumptions, or if they're good, just run the numbers for you and be able to explain them.

Case in point on agent involvement-  2 months ago, we were looking into a 48 unit apartment for a client.  The complex was located in Tucson, Arizona for $1.6 million.  On the ad, it was marketed as 9% cap rate.  Because we knew both the price and the cap rate, we could deduce that the NOI on their analysis was $144,000 in the first year of operations.  Upon looking at the actual income & expenses of the property from the prior year, we discovered that in truth, the NOI was closer to $50,000, meaning if we wanted to achieve a 9% cap rate based on their actual performance, we would need to pay $555,555.55.  The price difference was too great and we didn't see sufficient value add (ability to reduce expenses or increase income) potential, so we dropped it and moved on.

This post isn't intended to be a comprehensive look at Cap rates or NOI.  The purpose of the blog is to show common mistakes in published cap rates.  The first key to a successful investment and cap rate analysis is in running it yourself with good information.  The other key is in working with people that know what they're doing.  Bluntly stated, this means that just because a realtor did a good job selling your home, or finding you a new one, it does not necessarily follow that they will be a great agent for an investment acquisition.  Unless you feel sufficiently confident in your own ability to analyze property, make sure you seek out an investment qualified agent.  If you don't want to work with us, I recommend you look for an agent with CCIM (Certified Commercial Investment Member) training, one of the few real estate designations that have any value.  

 

If you have any questions, comments or suggestions on our blog- I love to hear from you!

 

Author:  Mark Bitton, Associate Broker, CCIM

April 13, 2013

10 Fun Activities to Do in the Pocatello Area

Some times I hear people say there is nothing to do in Pocatello.   Well there are a lot of fun activities in our area, so I warn you- if you're a person that enjoys doing nothing, you'll likely find this post quite boring.

These are listed in no particular order.

Activity #1:  Mountain Biking.  Pocatello has several very fun trails on both sides of the valley in which it is nestled.  In the hills above the highland area you can find some roller coaster like trails.  On the west side up city creek, there are several great trails as well for varying skill levels.  If you're open to driving for 15-30 minutes, head south to the Mountains around McCammon and a few over by Lava and enjoy access to a mecca of riding trails.  Great for those wanting to get in or stay in shape, but an absolute thrill for those looking for pure enjoyment.  

Activity #2:  Stephens performing arts center.  Yes, I agree with you that they should work to pull in more performances throughout the year, but hey, it's an amazing theater and hosts some pretty incredible talent.  Check out the events here: http://www.isu.edu/stephens/events.shtml

Activity #3:  Swimming pools.  Ross Park has a great aquatic complex and Lava hot springs (about 30 miles south) hosts an olympic sized pool and beautiful ambiance with all the slides and diving boards/platforms.  If it's during the winter, try the pocatello recreation center.

Activity #4:  Movie Theaters for all budgets.  Pocatello is unique in that it has theaters that cater to all budget levels, with 2 carmike cinemas, one newer, one older and then the Real theatre which is easily afforded by the most budget minded person.

Activty #5:  Skiing.  Within 3 hours of over 10 Ski resorts, several of which are considered World Class, Pocatello is the central location for the avid skiier.  Popular resorts within a reasonable drive are Sun Valley, Jackson Hole, Snow Basin, and then smaller hills such as Pebble Creek, Kelly Cangyon and Targhee provide the closer, budget lift tickets.  If you're into steep, jumps and Moguls, you need to try out Pebble Creek, one of the top mountains in the U.S. for the black diamond skiier.

Activity #6: Hot Pools.  Within 30 minutes you have world famous Lava hot springs.  Rockland also hosts some hot baths as well.

Activity #6: Bowling has multiple locations.  Deleta provides roller skating and arcades.

Activity #7: ISU sports.  ISU sports are going on year round and tickets to events are affordable.  

Activity #8: Outdoor sports such as hunting, fishing, target shooting, etc. are very popular.  Don't expect your neighbor to give up their "secret" fishing or hunting hole, but there are plenty of places within short drives where you can find some of the best in the world.  If you're doing any of these activities make sure you know who's property you're on and that you have permission!

Activity #9: Church activities.  Local churches are constantly holding lots of different activities and from what I understand, everyone is invited to these activities regardless of denomination or faith.  Pocatello religious denominations are very friendly and inviting.

Activity #10: Searching the internet for homes on http://prsidaho.com.  Okay, so I saved the best for last, but seriously, if you haven't spent hours searching on this site for Pocatello Real Estate and homes for sale, well you're missing the whole picture.  Was I running out of ideas and am now in a time crunch, yes, but this is still a good idea if you're looking for Pocatello real estate.

 

To be honest, Pocatello is a haven for the active person.  It has a a balanced 4 seasons and provides and excellent atmosphere for people that like to do things.  If you can't think of what to do, head down to Barry's ski and sports and ask about what rentals they have in stock, bike during summer or ski's during winter.  There's always something to do other than Netflix and ESPN during the day.

 

Let me know your ideas on what activities you like in the Pocatello area.

 

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