Vancouver Business Journal

Wed07302014

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More businesses helped by WSU Vancouver program

More businesses helped by WSU Vancouver program

Since 2011, more than 100 small businesses in the Vancouver area have received c...

Workforce Development: A return to personnel investment

Workforce Development: A return to personnel investment

It is a common reaction to economic downturn: companies understandably tighten t...

Aerospace grant to fuel expansion of Clark College

Aerospace grant to fuel expansion of Clark College

Clark College is growing its presence in the Columbia River Gorge thanks to a st...

Local alliance ready to shape state health care reforms

Local alliance ready to shape state health care reforms

Backed by local industry leaders, members of the Southwest Washington Regional H...

Self-taught filmmakers driving local industry

Self-taught filmmakers driving local industry

Ask a local about the film scene in Southwest Washington, and you’re likely to b...

Legal marijuana sales underway in Washington state

Legal marijuana sales underway in Washington state

A year and a half after voters legalized recreational marijuana in Washington st...

Banking & Money Management

Challenges & successes in local lending

Challenges & successes in local lending

Reaching the two-year mark is a milestone for small businesses. Not only can owners celebrate the survival of their life’s work, but doors to one of the most vital resources – capital – also begin to open up.

G6 Airpark in Vancouver recently reached this milestone. The local business is a trampoline park, a place where children and adults alike can play on wall-to-wall trampolines. But for owner ...

Education & Workforce Development

Workforce Development: A return to personnel investment

Workforce Development: A return to personnel investment

It is a common reaction to economic downturn: companies understandably tighten their budgets; non-essential or slow-to-return investments get nixed pretty quickly. During the Great Recession, this was the case not only in Southwest Washington, but throughout much of the nation, as investing in a company’s most valuable asset – their employees – fell victim to the reigning in of purse strings.

Wit...

News Briefs

Subaru delivers one-millionth car to Port of Vancouver

Subaru of America and the Port of Vancouver recently celebrated a milestone as a red 2015 Forester became the one-millionth Subaru vehicle to cross the port’s docks.

Spotlight

Wacom eyes continued growth of product lines

Wacom eyes continued growth of product lines

As Doug Little is being interviewed, he motions to the ball-point pen taking notes in my hand.

“You’re using a pen [and paper] right now, but you could be doing that with our tablet,” he said. Little is the senior public relations manager for Wacom Technology Services, a Tokyo-based company whose headquarters for the Americas are located in Vancouver.

Wacom specializes in creating a more intuiti...

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

Improve payment processes by making them more integrated

Improve payment processes by making them more integrated

You’ve probably heard the saying that there’s nothing good that cannot be improved on. In the changing world of payables...

Don’t let your business become a victim of bank fraud

Don’t let your business become a victim of bank fraud

Your bank or credit union is the lifeblood of your business and critical spoke in the wheel of daily commerce. To their ...

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