In my last Blog I discussed use of Lease Analysis integrated into IWMS to provide the cost side of an ROI prediction tool. Cost is only half the data needed however, an accurate and trusted prediction of sales is equally important.

Sales prediction modeling is a tool used by real estate organization with multiple revenue producing sites whether it is direct sales, cell phone contracts, walk-in patients, investment clients, or tuition payments. In all cases a picture of “the customer” must be produced, usually based on past location results or a client defined picture of their customer.

Building these prediction models is an art and requires a sophisticated statistician as well as knowledge of the industry and available data. There are a number of companies that specialize in producing these models and some, like the market leader Buxton, have software tools that include their models providing a visual, usually map-based, view of market opportunities. Many clients also have analysts inside their walls to build and maintain their models. In-house models, like cost estimation models, are very often built in MS Excel and then loaded into some mapping technology like Streets and Trips for use by a few users with seta licenses for that software. In-house models, while likely accurate at some moment in time, generally do not take advantage of the most up to date data and rarely utilize the most up to date technology for disseminating the results of the model.

To come up with a trustworthy and accurate ROI Prediction for any site you need to have an accurate sales prediction model. The quality and accuracy of the model comes from years of experience building models for companies in retail, restaurant, hospitality, healthcare or whatever specific sector your company is in. There are few companies who are capable of providing a really meaningful and accurate picture of “the customer”. However when you invest in developing a model that fits your organization you should make the most use of it. Most real estate organizations will use the sales prediction model and, using a combination of tools usually involving MS Excel, compare the sales prediction per site to estimated cost to figure out the ROI or IRR for that site. This process is rarely real-time, usually involves multiple steps and is often open to error through human keying and re-keying.

As far as I know there is no real estate software solution on the market that has both a time-tested cost projection tool and an accurate sales prediction model fully integrated into it in a real-time manner. If it does exist it is likely custom built for the customer (which means expensive).

Having a real time ROI on every site under consideration would allow for quick, effective decision making on site acquisition and would allow those negotiating leases to see the real-time impact of a change in lease terms on the site ROI. This would give any company a strong advantage in good or bad economic times and, if used over the long term, should substantially increases overall location profitability.

Shameless Plug

My last Blog discussed how Lucernex had labored to overcome the common problems associated with simply integrating desktop MS Excel based financial models for lease cost analysis and sales prediction.

Having solved the cost side of the equation with Lx LseMod online, we set our sights on overcoming the sales prediction side. Last week we announced a partnership with Buxton, the premier predictive modeling firm in retail, restaurant, hospitality, healthcare and government.

One of the most important goals of this relationship was to bring the technology containing predictive models inside the Lx IWMS Location Performance Management Solution allowing Lucernex to provide a real-time ROI prediction tool for every site under consideration. In its first version, the ROI predictor will focus on leased properties followed quickly by an ROI predictor for owned properties.

To learn more go to the Lx Location Analysis page.

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Previous IWMS related Blogs

What is IWMS anyway?
IWMS? It’s Location! Location! Location!
The Power of Location Management
IWMS – Why so expensive?

Lucernex is so confident that we can replace SLIM easier and more accurately than anyone, we will convert data from standard installations of SLIM for free!

To get more information on our SLIM, REM, Siteseer or Retail Lease replacement program, go to our Lease Administration replacement program page. We also have an Accruent SLM replacement program for current users of Accruent SLM (largely Lx IWMS v 3.81) who want to upgrade to Lx IWMS v7.

You can also schedule a meeting with us to see Lx Contracts at ICSC RECon in May.

It is a big step for many companies to implement an IWMS and to simply establish a single source of all location data. It can advance a companies effectiveness substantially with that first step of IWMS use. Once this has been done successfully though, users of IWMS systems start to come up with ideas of how the system can be used to further improve their internal processes and evaluate success. By having all the data in one place, hopefully organized by location, users can begin to apply decision tools to make better decisions.

Without doubt, one of the most important decisions that can be supported by a location-centric IWMS is site selection and lease renewal. For most companies with large portfolios of revenue generating real estate, the selection of the right site is the key to their success and deciding whether to keep a lease or move to a better site is just as important.

To make that decision a manager of real estate needs to evaluate a number of factors; most importantly current or projected revenue and expected cost. A real estate manager with an ROI estimate that they can trust can quickly and effectively make good decisions that can lead to successful sites.

However most IWMS solutions don’t really provide the appropriate data to produce a trustable ROI. To do this effectively an IWMS must have sales prediction that is accurate and complete, thorough cost predictions.

Some IWMS solutions that serve companies with revenue generating locations effectively may include the ability to integrate a prediction engine or an in-house model to produce trustable sales prediction. These models are very often developed in-house over years of trial and error, often in the form of complex MS Excel financial models. Sometimes the models have been produced by a vendor that specializes in producing highly accurate sales prediction models that customers can integrate into user friendly mapping tools like Buxton’s Scout. Either way, Location-centric IWMS solutions can usually utilize the results of a sales prediction model though, in some cases, this can be a very expensive integration.

An accurate and trustworthy prediction of total cost is even tougher to get into an IWMS. Once again time-tested models of cost typically are developed in-house using MS Excel or come from a vendor like Lucernex’s Lx LseMod solution.

Building and maintaining the sales prediction model and the cost model can be a difficult proposition. Without a professional software organization applying tested development and quality assurance procedures maintaining integrity in a model can be very difficult. To make matters worse, a mistake in what is typically a very complex cost model may not get discovered until an audit at which time it is way too late. Lucernex has been called on numerous times to provide our Lx LseMod Corporate Lease Analysis product after some disaster caused by a “minor” error in a model that resulted in years of inaccurate reporting.

For several years now we have seen this same issue play out in organizations looking at IWMS solutions or just after implementing our IWMS. The power of having that trustworthy ROI is enormous and an obvious value to any location-centric real estate organization so Lucernex and other IWMS vendors would often try to move the clients sales and cost modeling tools inside our IWMS or integrate the results into the IWMS for reporting or dashboard views.

The problem with this strategy is three fold:
1. it can get very expensive. Replacing a client-modeling tool usually means some amount of customization even for highly configurable tools. Integrating it is often just as expensive as few IWMS providers have tools to effectively integrate Excel models,
2. Even if you effectively integrate an Excel model you often lose the real time value of the data,
3. Once you introduce integration, especially with a desktop tool like Excel, or you introduce customization, you have an interface to maintain over time, which is both expensive and risky.

At Lucernex we struggled with the best solution for this problem for years in our attempt to provide a trustworthy ROI model for each site under consideration inside our Location Performance Management IWMS. We tried a number of different methods including all of those listed above. About 9 months ago we endeavored to take a huge step forward in solving this problem, which led to our purchase of Least Cost Solutions (maker of LseMod ). LseMod has been the leading tool in corporate real estate since 1995 for every type of real estate portfolio manager out there whether its retail, industrial, corporate, education, hospitality, healthcare, finance and banking or economic development. However, buying LseMod did not solve the problem either because it too is an MS Excel financial modeling tool. So we had the expert modeling tool but had not really improved the process by much as it was a separate desktop based tool that required integration just like a client Excel modeling tool.

In the second quarter of 2010 we will have finally solved this problem. We have successfully integrated Lx LseMod into our IWMS Lease Analysis module as a server side application with the integrity and flexibility of both products intact. Furthermore, in developing this technology we figured out how to launch any client Ms Excel model as a web ready, server-based application inside our IWMS. This will mean clients will now be able to use their time tested financial modeling tools or our Lx LseMod tools inside their Lx IWMS to produce real-time, trustworthy and thorough cost prediction including GAAP and SOX impact and a host of other critical factors.

So we have solved the cost side of the ROI prediction puzzle. In my next Blog I will tell you how we are solving the Sales prediction side and taking another great stride towards putting the “Performance” in Location Performance Management.

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Previous IWMS related Blogs

What is IWMS anyway?
IWMS? It’s Location! Location! Location!
The Power of Location Management
IWMS – Why so expensive?

DALLAS, TEXAS, (March 22, 2010) — Lucernex Technologies, an innovative developer of business intelligence software for real estate management and development, today announced that it has entered into a partnership with Buxton®, the industry leader in customer analytics. This new partnership will provide clients of Lucernex and Buxton® with a wider array of software solutions that both manage the real estate lifecycle process and provide detailed financial models for customer behavior.

“We are pleased to announce this partnership that will mutually benefit Lucernex and Buxton clients by providing a web-based real estate software solution with integrated GIS, mapping and customer analytics from the best prediction modeling company in the business,” said Joe Valeri, president of Lucernex Technologies. “Thanks to this new alliance, real estate professionals will be hard-pressed to find a more comprehensive, effective solution than the one we are offering.”

This new partnership with Buxton®, combined with the recent acquisition of LseMod, has enabled Lucernex to achieve its long-term strategic goal of offering its clients products that provide site by site return-on-investment indicators so they may make the best possible site, location and lease decisions. The alliance also extends Buxton’s real estate modeling capabilities to any of Lucernex Technologies’ clients who are seeking new business opportunities for existing products and services.

“Partnering with Lucernex allows Buxton to offer its clients software solutions to better manage the real estate development lifecycle,” said Charles Wetzel, president and chief operation officer of Buxton. “This unique software tool addresses real estate development and location management from the top down which is something we’re pleased to be able to offer our client base.”

About Lucernex
Founded in 2000, Lucernex Technologies provides real estate developers and facility managers with powerful software tools to guide them through the real estate development process. For nearly a decade, Fortune 500 companies in the commercial real estate, hospitality, retail, construction and engineering industries, both in the United States and Europe, have been utilizing Lucernex Technologies software solutions every day to better manage the development lifecycle. As an innovative leader in Integrated Workplace Management System (IWMS) solutions, Lucernex continues to grow its customer base by applying its Web-based software expertise and real estate development insight to provide advanced tools and services for business. For more information, please visit www.Lucernex.com

About Buxton
Since 1994, Buxton® has been the industry leader in customer analytics for the retail industry. Its focus now includes healthcare organizations, consumer packaged goods manufacturers and city governments. Buxton® draws from its individual- and household-level data to determine lifestyles and buying habits to clearly identify an organization’s best customers and find more like them anywhere in the U.S. Among its 1,900 clients are retailers Weight Watchers, New Balance Shoes, Sally Beauty Supply and West Marine.

For more information, visit www.Buxtonco.com

Media Contact:
Lindsay Hebert
Devaney & Associates
410-296-0800
lhebert@devaney.net

# # #

Recently I had very good conversation with an old brokerage buddy in California, Jack. He was really freaking out that his real estate career was heading in directions he was not prepared for. See he’s been a “Tenant Rep” for 20 plus years and now is competing for Landlord Rep and Sublease deals just to make ends meet!

Tenant deals are few and far between in his market. He’s finding himself reinventing his game almost daily. All part of this economy I said, I hear this happening over and over all over the place. I told him to relax it’s all very relative to each other and he’ll be fine. After all he survived the dot bomb and more in years past. Of course he also has the best tools in the trade to make him the expert I talk so much about as well. Now I’m not saying Tenant Rep is the way of the past but it’s just one of the many expert options you must now offer your potential clients in order to secure new business.

This economy is driving more Tenant Rep agents to start looking and working for Landlords and doing more sales. You can’t be as selective as you once were in your real estate careers in this type of market. Even large Commercial Real Estate houses are branching out from just being Tenant Rep houses to being full service type houses. They are bringing on more agents to handle Industrial, Retail and more deals.

I suspect more mergers and acquisitions are coming forth within the commercial real estate house markets too. Just as we are seeing portfolio’s being snatched up almost weekly. I’m even seeing more international money filtering in as owners of larger Class A buildings in this country are trying to dig out financially. I do suspect that “Sale Leasebacks” are going to really be the BIG buzz word this year. There will also continue to be upticks in the vacancy ratios for Office, Industrial and Retail –personally I think more companies are looking at larger spaces now to take advantage of such low leasing rates. Therefore the balance of ratios will continue.

So yes we have all become a Jack of all trades in this economy. I believe you should prepare yourself like you would for an earthquake or other natural disaster. Get your arsenal ready for whatever business comes your way, BE PREPARED. Having the tools and resources at hand will make your life easier, your business grow and your wallet fatter.

Shameless Plug

Lx LseMod applications include lease analysis products for Tenant Rep, Industrial, Retail, Lease vs Buy, Sublease and Landlord which provide detailed reports and scenario analysis that help you Win More Business!

Lx LseMod Corporate applications provide detailed GAAP/SOX impact analysis and complete Sale Leaseback analysis with flexible reporting to meet any clients needs.

GAAP Sublease Accounting

Summary of GAAP/FASB Accounting for a Loss Associated with a Sublease

Our interpretation of GAAP sublease analysis according to FASB accounting rules is as follows:
Overview: Start by determining the net present value of all rental costs including write-offs of depreciation and subleasing costs, offset by the sublease income (the NPV write-off). The Income Statement (Profit & Loss statement) is then charged the NPV write-off and it is charged an interest expense based on a declining balance of the NPV write-off, the accretion interest expense. The declining balance is determined by taking the net monthly costs (including sublease income) and the interest expense and deducting that cost from the NPV write-off.

Steps are as follows:

1. Determine a start date for the sublease analysis, e.g. if the space is vacated in January 2004 and put on the market for sublease, then the analysis starts January 2004.
2. Determine the remaining lease obligation for the balance of the term from the start date above (rent, operating expenses, taxes, i.e. what was committed to when the lease was executed).
3. Determine the net book value (NBV) of any assets that will be written off as of the start date above, e.g. un-depreciated leasehold improvements.
4. Make sublease assumptions including

• Timing, when space will be subleased
• Rent and Free Rent
• Operating Expenses and Taxes (Subtenant’s base year?)
• Commissions
• Tenant Improvement costs paid by the Sublessor associated with the sublease
• Other costs associated with the sublease

5. Calculate the total cost of the space, include the write-off of the assets on the start date and any Commissions and Tenant Improvement costs paid by the Sublessor
6. Calculate the total income from the sublease, i.e. rent and any operating expense reimbursement.
7. Determine the Shortfall that is the difference between the cost of the space and income.
8. Determine the present value of the Shortfall using a risk-free discount rate (the NPV write-off).
Note 1: The discount rate may not be the same rate as the corporation uses for internal analysis.
Note 2: Lx LseMod calculates the present value monthly based on a beginning of month payment.

9. Determine the Beginning Balance for calculation of Accretion Interest Expense. The Beginning Balance is the Present Value minus the Cash Shortfall in the current month.
10. Determine the monthly Accretion Interest Expense. This expense is the Interest on the Beginning Balance in step 9 above. The Interest rate is the same as used for the present value calculation in step 8.
11. Re-set the Beginning Balance for the next month by taking the previous month’s balance and reducing it by the Cash Shortfall in the current month.
12. Continue this process until the balance is 0.
13. At the end, all costs net out to 0 on the Income Statement (P&L).

Costs booked against the Income Statement include the following:

a. NPV Write-Off including Depreciation
b. Accretion (Interest Expense)
The net effect of GAAP subleasing is what we used to call “funny money” accounting. However, it does impact the Income Statement (P&L), which in turn impacts taxes, which impacts the After Tax NPV.

Examples See a report example to the right or view a detailed example. You can also view many other financial analysis report examples of Sublease and Lx LseMod Lease Analysis reporting.

Sublease GAAP Monthly Report

Notes

A: If the original lease costs booked to the Income Statement (Profit & Loss statement) were based on GAAP accounting (i.e. the rent was spread evenly over the term), then the calculations of the loss must be based on the GAAP rent, not the Cash Flow rent.
B: Lx LseMod Corporate Lease Analysis includes the option to create a GAAP rent analysis as well as a GAAP sublease analysis.

Disclaimer – The summary above represents our interpretation. It is NOT intended to replace information received from tax accounting professionals.

To see the actual FASB write-up, go to http://www.fasb.org/st/
scroll down the page to Statement No. 146, “Accounting for Costs Associated with Exit or Disposal Activities.”

Shameless Plug

Lx LseMod Corporate Lease Analysis is the market leading application for Corporate lease analysis, providing GAAP sublease impact analysis within detailed P&L and Cash Flow projections. Companies like GE, MetLife, American Express and Robert Half use Lx LseMod Corporate for lease analysis making it the most trusted name in corporate lease analysis.

Intended for Corporate Real Estate Managers and Tenant Rep Brokers.

Importance of P&L?

First and foremost, in a corporation the cost charged to a manager’s budget is the PreTax P&L, not the Cash Flow. Since performance evaluations and bonuses are based on budgets, it is important to know how the impact of an action (e.g. leasing space) impacts the budget.

Profit & Loss (P&L) is what companies use when reporting financial results. A company’s P&L is perhaps more important than its Cash Flow. It shows whether or not a business has achieved its primary objective – earning a profit.

You have probably heard people say, “Profitability is key.” Profitability is different from Cash Flow. Profitability is the number reported to Wall Street and quoted in newspapers in earnings per share (EPS).

Cash Flow represents the cash coming in (sales/revenues collected) less money actually spent (salaries, rent, costs of doing business, paying off money borrowed, etc.).

A company can be profitable, but have a negative cash flow. Alternatively, a company may be losing money on paper, yet have a positive cash flow.

Although it is rare, large real estate transactions can impact a company’s profitability, and what they have reported to Wall Street analysts, and ultimately, the stock price.

A company’s key financial metric can vary over time and in any particular fiscal year. The key metric can range from the Net Present Value of the AfterTax Cash Flow, to how much Capital is required in that year, to what is the PreTax P&L impact in the current fiscal year.

Corporate managers are measured (and bonused) based on their P&L performance. Typically this measurement does not include taxes, since corporations actually keep another set of books for paying taxes, thus the real measurement is the Pretax P&L. It is important for a corporate real estate manager or an operating business unit manager to be sure the costs for an action being proposed or taken is within their budget, and their budget is a Pretax P&L, not a Cash Flow.

P&L vs. Cash Flow

In accounting for rent on a P&L basis, companies have three choices – Cash Flow, Effective Rent, and GAAP Rent. Cash Flow rent uses whatever the actual cash paid for rent to generate the rent costs on the P&L.

Effective rent takes the Base Rent and any rent abatement input (free rent), determines the average rent and uses that to generate the base rent costs on the P&L. Rent increases are added to the effective rent to generate the rent shown on the P&L.

GAAP rent takes the Base Rent, rent abatement and any increases (or decreases) and then determines the average rent and uses that number to generate the rent on the P&L. The increases must be a known amount or a known percentage. For example, if rent goes up 3% annually, GAAP rent could be used; however, if rent goes up by the CPI (which is an unknown amount and can vary), GAAP rent should not be used.

Since taxes are based on the P&L, one needs to account for the rent properly in order to calculate the taxes correctly, which is necessary to compare the true Net Present Value of the AfterTax Cash Flow.

Two additional key differences between P&L and Cash Flow are Capital/Depreciation and Timing. Companies (and the IRS) categorize costs as Expense and Capital.

Capital is typically a one-time cost and if it has a useful life of more than one year it may be capitalized. Note that different companies have different rules about what is capitalized vs. being “expensed,” assuming a useful life of more than one year (furniture for example). Typically the break point is determined by the cost. The IRS rule is an asset is capitalized if the life of the asset is greater than one year and the cost is greater than $100. However, companies have agreements with the IRS that increase the $100 rule; in some cases as high as $25,000.

When a cost is Capitalized, the total cost is NOT shown in the first year in a P&L analysis. Instead, the cost is depreciated and spread out over some period of time. Note that there are a number of ways to depreciate the costs such a straight-line, double declining balance, etc. The tax department in a company determines the approach, and the approach may be different between the Tax Return and what is reported to Wall Street as the P&L. For simplicity and ease of understanding, using straight-line depreciation (that is dividing the cost by the number of months of its useful life) is typically best for corporate real estate financial analysis.

Timing is everything. The P&L does not show Capital as a lump sum, but instead shows the cost as depreciation over some period of time. Assume you are spending $1 million to construct the interior improvements for a 10 year lease, thus the depreciation would be $100,000 per year ($1 million divided by 10 years).

In a Cash Flow analysis, the $1 million shows as a cost in the first year, but in a P&L analysis, only the depreciation, the $100,000, shows as a cost in the first year. So, in comparing the Cash Flow to the P&L analysis, the Cash Flow is $900,000 higher than the P&L ($1 million less $100,000).

Relationship Between P&L and Cash Flow

There are three fundamental parts to a companies financial reports – the P&L, a Cash Flow statement, and the Balance Sheet, and they are all related.

Assume you sell a widget for $1,000 and your cost of selling the widget is $600. In a typical P&L report, the $1,000 is recorded as a sale and $600 is a cost, leaving a profit of $400. This profit is shown as soon as the product is shipped, not when the bills are paid and the sales revenue collected.

In a simple transaction, the $1,000 is shown on the Balance Sheet and Cash Flow Statement as an Account Receivable and the $600 cost is shown as an Account Payable.

When the customer pays and the $600 cost is paid, the Cash Flow statement is updated to show the the additional $400 and the Balance Sheet is updated to show the $400 as cash and as retained earnings.

The key is timing – on the P&L, the profit is shown as soon as the product is shipped. However, on the Cash Flow and Balance Sheet the net cash is not shown until all bills are paid and the customer has paid for the product.

Special Considerations

Taxes are based on the P&L, not on Cash Flow. Consequently, you need to calculate the P&L before you can calculate the taxes. And, to calculate the P&L, you need to categorize costs as Expense or Capital, and then show the depreciation of the Capital costs in the P&L calculation. The P&L does not show Capital as a lump sum, but instead shows the cost as depreciation over some period of time.

When calculating P&L, it is vitally important to measure the P&L based on a company’s fiscal year for reporting financial results.

The fiscal year can be a calendar year, January through December, or it can start at any month in a year. For instance, most Japanese-owned companies have a fiscal year that starts in April and ends in March, while the federal government has a fiscal year that starts in October and ends in September.

Showing a P&L analysis in Lease Years (Year 1, Year 2, etc.) can be extremely misleading. For instance, if a lease starts in October and a company has a calendar year fiscal year, then only three months of the P&L costs will impact the first fiscal year, not twelve months if an analysis uses Lease Years.

For instance, in the earlier example of a $1 million capital expenditure depreciated over 10 years, on a P&L basis only three months of depreciation would show in the first year, a $30,000 cost vs. a $100,000 cost in a Lease Year analysis.

Financial Metrics

The key financial metric in corporate real estate financial analysis depends on who is measuring and priorities. Usually when companies say that “Cash is King!” the key metric is capital.

Profitability is key. If profitability is the most important metric, then measuring and comparing the Pretax P&L impact is most important. Sometimes the key is the first year P&L impact, other times managers want to compare the P&L by year.

It is important to note that other than retail, corporate real estate is a cost to a company and there is no profit unless space is purchased and later sold assuming appreciation of the asset. When space is leased, the cost goes right to the company’s bottom line. The theory is that the occupants of the building (staff, manufacturing, etc.) will generate a profit that will offset the cost of the real estate. Consequently, most P&L and Cash Flow analyses for corporate real estate do not include any profit and just show the occupancy cost of the space.

Click to enlarge

In general, CFOs make comparisons based on the Net Present Value of the AfterTax Cash Flow. However, depending on priorities, they may also compare the P&L impact and the capital required. Business unit managers who are charged back the cost of their space look for the Pretax P&L impact in both the current fiscal year and over the term of the lease.

The Bottom Line

Companies have at least two bottom lines – the bottom line for P&L (the number reported for profitability) and Cash Flow (the actual cost that represents money actually spent).

When doing a financial analysis, one needs to look at both numbers. Depending on a company’s priorities at that time, the P&L can be more important than Cash Flow.

For individual managers, whether corporate real estate managers or the business unit manager, the Pretax P&L represents the cost that is charged to their operating budget. The Pretax P&L is the budget cost with which they are measured by management, and frequently a key measurement in their bonus plan.

So, help yourself and your customers by being sure to calculate the P&L impact as well as the Cash Flow when comparing properties and doing your financial analyses.

Shameless Plug

Lx LseMod Tenant Rep Lease Analysis is the market leading application for lease analysis with easy to use input screens, powerful free emailing and full color client configurable reporting. Brokers from all major houses including NAI, JLL, CBRE, Studley, GTZ, Cassidy Turley and many independent brokers user Lx LseMod Tenant Rep to win more business and wow their clients.

So many brokers are competing for deals with the same companies every day. I can bet that each company with a lease renewal or relocation on the horizon is about to get 20 calls a week from an almost begging the agent to get an appointment.  With an already skeleton crew or perhaps nearly busting at the seams these companies are looking for the best guy or gal to get the job done quickly, efficiently and thoroughly for them.  There is no time to be reviewing broker’s resumes or interviewing 5 top agent commercial houses.  These CEO’s and CFO’s want to find someone who can solve their problems overnight. It’s the receptionists that file those stacks of resumes and business cards, but there is always one that catches the eye……………..

New agents today are nearing starvation to land a deal, while the “Old Dogs” still keep slamming deals out of the park.  Makes you wonder how they do that……..repeat business is key of course but reinventing yourself in today’s competitive market is critical to be in front of the pack. Don’t be fooled those “Old Dogs” are learning new tricks too.

Recently I saw on my local news channel a story about a guy in Denver, Colorado with a sign saying willing and able to work “I’m a professional who wants a job”.  I thought how clever of him and HEY he made the news!!  I’m sure he resorted to this after months of interviews and taking all the free classes offered by unemployment to reinvent himself.  Not a bad way to make yourself stand out in the crowd of many looking for work, I think. So how do you set yourself apart from the rest of the rat race in brokerage? Many new agents look at the “Old” dogs and wonder how they get those big $100K deals over and over again. What’s the secret?  Honestly the secret is simple. They use easy to use analysis tools like LxLseMod or Argus programs to provide reports showing detailed cash flow associated to all cost in a relocation, investment or renewal.  These guys and gals have learned along the way how to spend their time and having to create homegrown spreadsheets is not how they want to get more business. Plus the idea of producing your own and client point out a mistake. Oy!!  I would not even want to think about that conversation!! These types of programs provide the key points like rent escalations, free rent, constructions costs, moving, buy-out penalties, parking costs etc.  As we know in lease transactions each one is unique and might require specific detail. Can you imagine having to produce multiple types of homegrown info? I assure you I’d be brain-dead after the 3^rd or 4^th go round. These “Old dogs” have zeroed in on the tenants main objective; to discover what the pain is going to be too relocate or renew. Period!! These types of tools make them the “Experts”  in their market and they get repeat and new business this way over and over again.

Reinventing yourself means changing your old cold calling ways. Invest in a tool or tools; LxLseMod Tenant Rep for example can help you become the “Expert” in your market for let’s say R&D, Industrial or even Corporate representation. The key today in successful deal landing is to empower yourself as the industry leader. So now you’re thinking when I’m out pounding the pavement and leaving my business card for potential prospects to contact me, how is my card going to stand out from the rest?  Imagine instead leaving a one page report showing a mock relocation/renewal side by side with all your contact detail on the report vs your 2 x 3 business card and a few pages about how great you are and who you have done business for blah blah blah……yeah you can see it now can’t you. That one page report just became your new resume and business card. That one page report shows the prospect exactly what you THE EXPERT that can provide by servicing their needs in relocation, purchases or renewals. Now YOU stand out in the crowd!!