Vancouver Business Journal

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WSU Vancouver: Enhancing the business community for 25 years

WSU Vancouver: Enhancing the business community for 25 years

25 years ago, Washington State University opened its Vancouver branch on the Cla...

Maruichi Northwest to invest $30 million in port steel mill

Maruichi Northwest to invest $30 million in port steel mill

A new steel mill is coming to the Port of Vancouver USA’s Centennial Industrial ...

Tidland Corporate Center sold for $3.3 million

Tidland Corporate Center sold for $3.3 million

Tidland Corporate Center, a 64,000-square-foot industrial building and 6.03-acre...

Introducing the Accomplished & Under 40 Class of 2014

Introducing the Accomplished & Under 40 Class of 2014

The Vancouver Business Journal is pleased to announce the Accomplished and Under...

East county bridge proposal causes contention within freight industry

East county bridge proposal causes contention within freight industry

After $200 million taxpayer dollars were spent on the botched Columbia River Cro...

Angels bringing ideas to light

Angels bringing ideas to light

Most new businesses come to being with a great idea. How to get that great idea ...

Education & Workforce Development

WSU Vancouver: Enhancing the business community for 25 years

WSU Vancouver: Enhancing the business community for 25 years

25 years ago, Washington State University opened its Vancouver branch on the Clark College campus. From the very beginning, the university has been closely tied to Clark County’s business community, and those partnerships have grown even stronger over the last quarter-century.

WSU-Vancouver Chancellor Emile “Mel” Netzhammer joined the campus in July 2012, and has glowing praise for the relationsh...

Food & Agriculture

County, wine industry approaching smoother waters

County, wine industry approaching smoother waters

A learning experience. That is how both vineyard/winery owners and county officials seem to view the past few years, as they sought solutions that would encourage the development of wineries in the county while mitigating impacts to neighboring parcels. And, like many learning experiences, it was sometimes fraught with mistakes, misunderstandings and frustration. But Marty Snell, Clark County comm...

News Briefs

SWWDC and partners receive grant to train long-term unemployed individuals and veterans

The Southwest Washington/Portland Metro Area will receive nearly $8.5 million in grant funds to train 850 long-term unemployed individuals and 150 veterans for jobs in manufacturing and information technology.

Spotlight

ExecuTech Lease Group: Putting the personal touch into equipment leasing

ExecuTech Lease Group: Putting the personal touch into equipment leasing

Many restaurants and small businesses use a cash register and a separate terminal to handle sales, while another PC handles timecards and inventory management. But as the business grows, so does the need for a full-scale point of sale (POS) system. Such a system in a restaurant, for example, integrates everything from placing an order to a credit card swipe into one piece of equipment. But this ty...

The real estate developer’s recipe for success

It may be odd to talk about how one might approach development activity when we are in the depths of a real estate market abyss, unless we discuss the issues for purposes of enabling a company to better prepare itself for times like these in the future.

It may be odd to talk about how one might approach development activity when we are in the depths of a real estate market abyss, unless we discuss the issues for purposes of enabling a company to better prepare itself for times like these in the future.

The Federal Reserve is engaging in such proactive preventative measures, proposing now to adopt rules cracking down on shady lending practices in an attempt to prevent a future mass mortgage crisis.

Never mind the hypocrisy of the Fed’s recent liberalization of its own lending practices that will certainly cost all taxpayers dearly in years to come – bailing out investment firms, Freddie Mac and other institutions … but enough about the Fed.

Real estate developers can, to a degree, determine their own fate. I asked an officer of a successful residential development company how the company is doing amid the current slowdown, and he replied, “Better than most of our competitors. We should survive – we’ve made it a policy to never borrow our equity.”

You might ask, “What did he mean by that?” In essence, he meant that they project realistic end-product sales prices for their proposed projects or lots, determine realistic land acquisition and construction/development costs and having determined the prospect for profit margin between the realistic sales price and realistic costs, they limit their borrowing to the costs – or less.

They do not, as some foundering contractors and developers may have done, build a “reasonable profit” component into the loans they obtain similarly to the way a residential lot owner’s loan for construction of his own house would include funds for the reasonable profit of his hired builder.

Successful developers do not see the bank loan as their end game, disbursing funds from it for new Cadillac Escalades for each of their family members and counting on 100 percent lot sales to pay off the bank before the loan matures. Their end game is the sale or lease of the developed property for profit – profit being the amount of money they take in from sales over and above their loans and other costs.

Projecting sales and profit takes real skill, planning, and self-control. It is more than pitching a project’s value to a bank at the project’s maximum potential value based on escalating lot prices in an upswinging market, borrowing the maximum amount possible and assuming the debt will be covered by prompt sales – which in manic times appear infinite. Project pro formas should not be substituted by blind trust that the bank’s crystal ball is accurately forecasting the project’s successful payoff of the debt.

There are various methods for evaluating a proposed development and limiting risks. It is conservative borrowing, however, that seems to distinguish the surviving developers – not superior salesmanship to a banker who may, himself, be running to the Fed for a loan, having guessed wrong on projects before.

David W. Meyer is an of-counsel attorney with of Bullivant Houser Bailey PC. Meyer can be reached at 360-737-2301 or This email address is being protected from spambots. You need JavaScript enabled to view it. .

Opinion

Focus Column

Local restaurants master recipe for good health

Local restaurants master recipe for good health

Six local restaurants are discovering that good health is good business.

Dragonfly Café, Farrar’s Bistro, Mighty Bowl, ...

Revival of cooperatives

Revival of cooperatives

Agricultural cooperatives are a quiet but massive force in our national economy, producing nearly $4 billion annually an...

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