Archives for February 2018

Legislative Update February 15, 2018
Legislature Passes $6.3 Million Budget, Crime Bills, Capital Projects
From Connie Hettinga, 2018 RANM President and Tim MacEachen, 2018 RANM Legislative Committee Chair
With the approval of a bi-partisan budget, several crime bills and a long list of capital projects, the 2018 New Mexico Legislature ended its 30-day session at noon today (Thursday, February 15).
The $6.3 million budget passed after a conference committee worked out an agreement. HB2 now goes to the Governor who reportedly is pleased with the overall money bill.
The budget includes:

• pay raises for state employees, public school employees, and faculty and staff at universities;
• an increase to the Albuquerque district attorney’s office to help fight crime;
• $44 million for road maintenance and improving highway rest stops;
• $5 million to the state’s Economic Development Department;
• $150,000 for development and implementation of a targeted marketing campaign aimed at attracting retirees to move to New Mexico (supported by RANM); and
• restoration of the state’s reserves to about 10 percent.

Combating crime in New Mexico also was front and center at the New Mexico Legislature and lawmakers approved an omnibus crime bill. HB19, which goes to the Governor, increases penalties for convicted felons who possess a firearm; provides bonuses for experienced police officers to help retain them; would make it more difficult for persons with drunken-driving offenses to remove the ignition interlock device or qualify for a driver’s license; and would reduce penalties for various nonviolent crimes, designed to ease jail/prison overcrowding.
Lawmakers also approved a bill, HB306, that will pay for over 700 capital projects around the state. The $179.8 million bill, which includes $142.4 million from severance tax bonds, includes:

• $5.1 million for a new Vital Records and State Facility in Santa Fe;
• $1.5 million for Santa Fe Airport parking facility expansion;
• $8 million for school bus replacement statewide;
• $1.5 million for improvements to the State Fairgrounds in Albuquerque;
• $680,000 for police response vehicles in Albuquerque;
• $1.4 million for improvements to Roswell International Air Center;
• $2.5 million for a firefighter training burn building in Socorro;
• $5 million to design, construct, and equip a fuel farm at Spaceport America in Sierra County;
• $1.1 million for Soledad Canyon Road improvements in Las Cruces;
• $700,000 for improvements at the New Mexico Museum of Space History in Alamogordo;
• $2.4 million for a bridge replacement in San Juan County and
• $326,350 to design and construct a city hall in Ruidoso Downs (Lincoln County).

Here is what happened to other bills of interest to the real estate industry:
RANM was in support of several bills that would remedy the brine well problem in Carlsbad. RANM supported SB226, a bill that earmarks part of the motor vehicle excise tax to the State Road Fund. Dollars generated in this bill will help pay for filling in the cavity, created by an old brine well, that threatens a major part of Carlsbad. If unchecked, this could cause a major sinkhole and threaten significant property, including the main road from Carlsbad to Carlsbad Caverns. The Governor has signed this bill.
Two other bills supported by RANM, HB180, an education bill, and HB110, a bill that dealt which would have prohibited reentry by renter if a judgment is rendered against the renter, did not get out of their respective committees.
A property tax bill opposed by RANM, HB163, also did not get a committee vote. This bill was opposed by the Farm Bureau and Cattlegrower’s Association as well as the Assessors. RANM was opposed to the bill because of the disclosure requirements.
RANM supported several bills that provide funding for water and wastewater projects. The following water bills passed in both chambers without a dissenting vote:

• HB65 – Appropriates $1.1 million (non-reverting fund) from the Public Project Revolving Fund to the Wastewater Facility Construction Loan Fund for use in 2019 and subsequent years to provide matching funds for federal Clean Water Act of 1977 projects and to carry out the purposes of the Wastewater Facility Construction Loan Act.

• HB66 – Amends the Wastewater Facility Construction Loan Act to expand the availability of funding for “eligible projects” beyond wastewater facility projects and authorize funding assistance for “interstate agencies” and other “qualified borrowers.” The bill also makes reconciling changes to other sections of the act while leaving the substance intact.

• HB93 – Appropriates $1.8 million from the Public Project Revolving Fund to the Drinking Water State Revolving Loan Fund for use in FY 2019 and subsequent fiscal years (non-reverting appropriation) to provide matching funds for federal Safe Drinking Water Act projects and to carry out purposes of the revolving fund act.

The Governor can sign or veto bills. The Governor also can choose to ignore action which is known as a “pocket veto”, defined as an indirect veto of a legislative bill by the governor by retaining the bill unsigned until it is too late for it to be dealt with during the legislative session. Such bills not acted upon by March 7 are pocket vetoed.
To review any of the bills mentioned in this update or any bill introduced, go to the New Mexico Legislature’s website at,
https://www.nmlegis.gov/
By: REALTORS® Association of New Mexico (RANM)

Last January, I hosted a group of clients for a duck hunt on the Texas coast. Huge groups of redheads flock together during the late season, and when they commit to the decoys, the hunter who takes careful aim can fill his bag with drakes in a hurry! One of my companions, however, was not having a productive hunt. Opportunities were abundant, and he was shooting aggressively, but his shots rarely connected. When he did hit a duck, he was just as surprised as we were! But, more often we heard the words, “%$#@, I should have aimed better!” He failed to follow the proven “ready, aim, fire” model.
Unfortunately, this sounds too much like how many real estate agents approach the land business. Abundant opportunities, lucrative commissions, and time spent outdoors tend to attract these folks to the land business. But many operate their businesses in a reactive fashion, simply taking what the market gives them. While they may feel busy, their business is unpredictable and it leads to the high percentage of agents who fail to make it past five years in this business. Strategic planning for your land sales business boils down to a few simple steps: set clear, written goals (ready), identify the specific activities to get you there (aim), then execute the plan (fire). Top agents who do take time to strategically plan have a more predictable business and, consequently, they operate with more clarity. Core business and operational decisions become much easier with a predictable business. Hiring, debt, expansion, marketing, and scheduling are much easier if you can confidently predict the results you will likely achieve.
As you plan your business empire, you should start by considering where your leads will come from. Use a simple spreadsheet or one of the many software programs available online to track your lead sources by percentage and volume. By identifying your core sources of business, you can confidently plan your activities, make better marketing decisions and bring in the proper leverage to maximize the potential of these lead sources. Additionally, this will force you to calculate the cost of these leads, which will come in handy when doing your pro forma. Knowing the sources of your business is the first step to clear planning.
Now, let’s look at three basic components of a productive and clear business plan. Remember, this is a plan for you to follow, not a 50-page textbook that requires a Ph.D. to interpret! The idea of a business plan is to clearly lay out the specific steps and activities required to reach your goals, and to project profitability once you reach them. The three basic components we will look at are: the Financial Model, or pro forma, the Organizational Model (who does what), and a one-page plan with written goals and the clear steps to accomplish them.
Top business people know their numbers and track them closely. The Financial Model or pro forma is where you write down how much income you would like to net, and calculate all the costs associated with getting to that number. According to the Millionaire Real Estate Agent model, start with your desired net income, then back into the total sales required to support this goal.
For example, if I want to net $300,000 in annual income (before taxes), I would write down $300,000 + $87,600 (29.2% cost of sales) + $87,600 (29.2% operating expenses) to get my total required gross commission income (GCI) = $475,200. Now I know how much revenue I will need to bring in to support my income goal and I can calculate how I will get there. To do this, divide $475,200 (GCI) by your average commission rate to get the necessary total sales volume. In this example, I would need to close $15,840,000 in sales volume to reach my goal. Next, I will need to know my average sales price to calculate the number of transactions needed to reach my goal. My average sale has been tracking around $2,000,000. $15,840,000 divided by $2,000,000 tells me I need to close 7.9, or 8 transactions at my average commission rate to reach my goal. Now, I simply plug in the percentage of listings I expect to close (65%) from the appointments I expect to win (70%) to get the number of listing appointments I will need to set. In this example, I would need to go on 18 listing appointments in order to predictably win 12 so that I could expect to close 8 property transactions. If they average $2,000,000 and I earn my average commission rate that will determine my GCI. After expenses and cost of sales, I will reach my income goal of $300,000. *see chart on page 4 of the Millionaire Real Estate Agent Business Plan
The success of any sales business boils down to the right amount of quality leads. The Financial Model showed me how many leads I need to generate to reach my financial goal; now I can build a plan to get there. We have found a simple, single-page business plan to be the most effective way to do this. The COB and CEO of the largest real estate company in the world can fit theirs on a single page, so we can too! The single-page business plan requires extreme clarity on the goal and the specific things that must happen in order to accomplish the goal. In his book The ONE Thing, Gary Keller asks the question, “What’s the ONE thing I can do such that by doing it everything else will be easier or unnecessary?” This clarity allows you to line up your dominoes and start with the most important task first. Focus on the big rocks, the things that only you can do, and break them down into action items.
We start with a written five-year goal, a written one-year goal, three top priorities that absolutely must happen to ensure the one-year goal is met, and five strategies to accomplish each priority. We creatively refer to this exercise as the 1-3-5 goals sheet. Going back to my example from the Financial Model, I would write my one year goal of $300,000 net income and roughly $16,000,000 in sales volume. My five-year goal is a stretch goal, but for the purposes of this exercise it won’t matter unless I hit my one-year goal. Next, I need clarity on what the three things are that must happen to support my goal. These are my top three priorities, and I write them down as well. First, I know I will need $24,600,000 in listing inventory (12 listing agreements at a $2,000,000 average) to predictably close $16,000,000 (65%). Then I break down my five strategies to get there. Secondly, I know I will have to nail lead generation, and third, I will need a solid marketing plan. Each of these gets the same five detailed strategies. If I have clarity on these big rocks, I can dig into each of them and hold the activity (and the person attached to it) accountable for producing the results.
Now that I have completed my Financial Model and I have clarity on the core things that must happen to support it, my final step is the Organizational Model. This is where I bring in leverage and assign who does what in the business. I cannot do everything, and in fact I shouldn’t. There are things I do poorly, like administrative work and bookkeeping. There are others who do those very well, and by delegating to them, I am released to do the things I do well – like lead generation and interacting with clients. Leverage is freedom for business owners. It allows you to scale by staying in your strength zone and working on the business, rather than in the business. Leverage could be defined as strategically removing yourself from every aspect of your business based on your skill set and the value of your time. For most real estate agents and business owners, the logical first hire is an executive assistant, followed by a buyer agent and maybe a second assistant. Draw a simple org chart with clarity on who does what and who they report to. As your business grows, you add future hires under them and build a job description or “missing person’s report” for these future hires. Hiring for the future with a big goal in mind changes the way you hire and lead people. Success through people is one of the hardest things for most entrepreneurs to master, but for most, it is the single largest factor in their ceiling of achievement.
If you own or operate multiple businesses like I do, then simply do these steps for each business and combine the results. With multiple businesses, you would also consider shared resources, shared employees, and weigh any direct ancillary benefits of one business to another. For example, a farm management company and a land sales company might complement each other quite well by maximizing the client opportunity and sharing administrative expenses.
Lastly, you will likely not nail this on the first or even the hundredth try! So inspect what you expect, monitor your progress regularly with good accountability, and make adjustments as you go. What you focus on expands. Have a predictable written plan and focus on the detailed activities that will produce the results you desire.
Go get ‘em!
By: Kasey Mock (RLI)
Click here to view source article.

The latest Voice for Real Estate video looks at recent stock volatility, a victory on marketing service agreements, why a Supreme Court ruling on environmental reviews of water bodies is important, and what’s in the budget agreement enacted into law two weeks ago. Access and share.
By: NAR
Click here to view source article.

Too many of the nation’s malls have been flailing for years, but there now appears to be consensus in the development sphere that the best way forward is to transform many of them into major mixed-use and walkable communities that will serve as a base camp for residents, businesses, and visitors.
At least, that option is viable for some malls, says Doug Beiswenger, managing partner of LBG Real Estate Cos in Newport Beach, Calif. In July 2017, LBG purchased the Hilltop Mall in Richmond, Calif., for an undisclosed amount and has just launched its plan to redevelop the property.
“I think it’s very location specific,” says Beiswenger. “We look at a lot of malls across the country, and there are a lot where there just may not be a market to develop a mixed-used community.”
The man spearheading the transformation of the former Valley View Mall into a new community called Dallas Midtown, Scott Beck, CEO of Beck Ventures, agrees that creating new communities out of whole cloth is the answer for many distressed malls — but not all. “To me, it really depends on where these malls are located,” he asserts. “To simply say, ‘This is a mall, so we can do a mixed-use redevelopment’ isn’t accurate.”
What’s making today’s mall turnaround projects work? Beiswenger and Beck say the idea of mixed-use communities blossoming from underperforming malls is viable in locations where several factors have come together.
“My personal opinion is that there are a number of malls that are in a fairly in-between situation, where they just don’t make sense to create a mixed-use development of the property,” says Beiswenger. “You need a mall that’s gotten to a point that it’s time to do that, but you also need that population density and income to support that transformation.”
That’s what attracted Beiswenger’s company to the Hilltop Mall, which is currently performing anemically. It’s about 70 percent leased, and its maintenance and aesthetics have long been neglected. “The problem with this mall has been that the previous ownership, which was foreclosed on, hadn’t put any capital into it,” he explains. “And malls are a capital-intensive endeavor.”
Despite that, this site is a beauty in the eyes of developers like Beiswenger. “We’re looking for properties like Hilltop that have that population and a certain level of average household income of that general population,” he says. “The Hilltop property is very ideal for infill with an existing dense population with excellent income.”
It’s also 20 miles from downtown San Francisco and 25 miles south of Napa. “The city of Richmond is about to open a ferry that will go from the port to the ferry building in downtown San Francisco in 26 minutes,” notes Beiswenger. “We also have a freeway on and off ramp on the I-80 that’s named after Hilltop. This is in the East Bay of California, and you simply can’t replicate this sort of opportunity.”
That may be why Beiswenger’s team is now inundated with interest. “Since we purchased the property, we’ve received a tremendous amount of press, and we have all types of uses coming at us — retail, residential, hotel, office, medical office,” he rattles off. “The longer-term plan is to revitalize the mall and make that an excellent operation and then to develop areas of the mall that are no longer needed for parking. The property is zoned for almost 10,000 housing units, and those would all be a medium- to higher-density product with a combination of rental units and ownership. We envision a dense, truly walkable mixed-use community.”

The answer is “Eatertainment”

About 1,700 miles away, Dallas Midtown meets Beck’s primary criteria for success — it’s in an urban area. The property sits in north Dallas about halfway between the city center and the Oklahoma border, and it’s flanked by 635 on the south and the Dallas tollway to the west.
“If a mall is in the center of an urbanized area, this type of redevelopment is very possible,” asserts Beck. “If the mall isn’t in the center of an urban core — maybe it’s in a tertiary market or off the beaten path — I think it becomes much more difficult to justify high-density, mixed-use development.
One factor that’s brought this issue to a head is that while mall owners have been slow to act, some now have no choice. “I don’t think the delay in redeveloping failing malls has to do with the fact that smart real estate people didn’t know what the answers were,” says Beck. “It’s been more about creating a situation whereby the capital or ownership group is forced to react.”
Beck’s company purchased Valley View out of bankruptcy in 2012, where it was encumbered by $250 million in mortgage-backed securities. “What forced the issue was that the mall had gotten to the point where it had lost so many tenants, and then the recession started,” Beck explains. “The former owners walked away. All of the sudden a new buyer like us enters, and we don’t have that debt anymore.”
Mall owners are also backed into a corner because brick-and-mortar retail’s decline is accelerating, not slowing. “The rate at which online sales are cannibalizing retail consumer goods is also forcing the issue,” adds Beck. “Financial institutions and investors want to know from mall owners what their answer is to repositioning due to retail sales going down.”
Beck’s answer for Dallas Midtown is what he calls “eatertainment.” He’s referring to restaurants combined with more service-oriented and “activities” tenants as opposed to tenants with goods for consumers to buy.
The groundbreaking for the first phase at Dallas Midtown took place in June 2017, and it’s expected to be completed by 2020. The $4B project will include nearly 1,000 studio to three-bedroom apartments across three different buildings with rents from about $1,1K-$3K. A 440-key high-rise hotel with 50k square feet of meeting space is planned, but Beck’s company is keeping the brand under wraps for now.
For the retail, the two main anchors are an athletic facility on one end of the street with a luxury, dine-in movie theater on the other end. The apartments, hotel and office space will be stacked on top of 200,000 square feet of eatertainment, which Beck says will be much less focused on retail and more on tenants like restaurants, bars, lounges, coffee shops, and service-oriented business like nail salons. The plan also includes a 20-acre park billed as the equivalent to a Central Park in Dallas, a trolley to the Dallas Galleria, luxury condo units, and more.
Market dynamics will dictate each phase. For instance, Beck is like so many others today chasing after the Amazon HQ2 facility. If Dallas Midtown lands that behemoth tenant or a handful of smaller tenants with similar space needs, the second phase could be completed in six years. If not, the project will likely evolve over 10-15 years. “It’s perpetual timing,” says Beck. “The timeline depends on market dynamics, as it does for all these projects.”
By: G.M. Filisko (NAR)
Click here to view source article.