How many people do you know who, while still in high school, got permission for an off campus lunch hour so he could inspect the work his three landscaping crews were doing while he was in British Lit.? Or, who earned his pilot’s license before he could drive a car and planned to fast track into being an airline pilot at FIT, on the profits he made selling his own business? Or, who found college a little too boring compared to the intriguing world of real estate development, which he began to master before he was twenty-two? Now, in spite of the deep slide in the market, Kirk Kessel seems to find a way to continue to stay on top of the industry, as his Carpenter/Kessel Homeselling Team with Century 21 Spectrum, which specializes in beachside and luxury real estate, remains a top producer in Brevard County.
SPACECOAST LIVING: You pursued a number of enterprises on your way to real estate sales and development. Who influenced or served as a mentor to you?
KK: George Best took a real gamble on me, while I was still in my teens. Or I suppose you could say he saw some raw talent that he knew he could develop. In the early 80’s, he had most of the corporate relocation business for Harris, which gave me a fabulous intro into the market. Since my clients were referred to me by their employer, I had instant credibility, even though I was only 19. Also, I was working with them primarily as a purchaser not a seller; so again, the learning curve was tipped in my favor. George groomed me to take over his business so he could pursue other interests.
SPACECOAST LIVING: What lessons did Best teach you then that you carry with you today?
KK:First, George emphasized integrity – that honesty wasn’t the best policy, but the only policy. That builds a foundation of trust which is critical to any lasting business enterprise, especially in real estate. Secondly, to constantly look out for the interests of your client; it is as simple as the sage admonition to, “Do for others as you would want people to do for you.” Finally, the importance of actually getting to know your client and helping them make the journey from what they want to what meets their needs and doesn’t become a financial millstone around their neck.
SPACECOAST LIVING: Where do you see the market in Brevard County today?
KK:The most critical factor that everyone is looking at is the future of the Space Center. If the layoffs are even close to what is projected we could be looking at an extremely soft or even declining market for the next eighteen months, but it could be much longer.
SPACECOAST LIVING: Are there other factors?
KK: Yes, one of the biggest is that banks aren’t loaning money. Though they have received billions in federal bailouts to stabilize and stimulate the economy, what is being stabilized and stimulated are the banks’ bottom lines; homeowners, investors and developers are having trouble getting or renegotiating loans. I have had banks want to reevaluate the terms of loans and the question is not whether I am current, but whether – because of changes in the property values – do they consider me creditworthy? Though I am paying on time, because my balance sheet has changed they are not willing to negotiate with me, but will sell my properties for fractions of their values to others.
SPACECOAST LIVING: You are selling properties. Who is buying?
KK: As you know “cash is king” and people that have resources can make out handsomely in this market. Also I find that doctors, lawyers in large established practices, and corporate executives can get loans of up to 95% LTV (Loan To Value) and great rates, so they are buying. In many cases they are purchasing new homes, while still waiting to sell their existing properties. Realize that just as the home that was valued at $300,000 can now be bought for $190,000, the estate home that was worth $2 million can be picked up for $1.2 or less.
SPACECOAST LIVING: There has been a lot of finger pointing about who is to blame for the current situation. Who do you see as being responsible?
KK: Frankly everyone got greedy; banks wanted to make loans, investors were capitalizing on the bull market and consumers made more money in one sale than they could make in twenty years investing in CD’s. When I met seniors who were talking about “flipping houses” I knew it was time to reevaluate. Basically, it is like musical chairs: eventually the music is going to stop. But this time not one, but three chairs were removed and the music is stopping a lot more than usual.
SPACECOAST LIVING: Though you are a part of a successful real estate group marketing waterfront properties, you seem to gravitate towards the development side. Why?
KK: What could be more fulfilling than creating something of lasting value? Of discovering what people are looking for and designing a product that meets that desire? People intuitively gravitate towards beauty; order what we would call ‘nice’. It doesn’t matter what economic strata they are from, that attraction is there and as the cliché says, “If you build it they will come.” However, the process is not as fun as it used to be. Part of that is because I’m getting older and part is because so many companies are not expanding right now and it is challenging to get the kind of retailers that can anchor large projects.
SPACECOAST LIVING: What are you advising the real estate consumer or what is your approach to real estate investment?
KK: If it is a home purchase, you will probably have to hold the property for five years to see a good return on the investment. Currently, it may be a viable option to rent, while waiting to see what happens in the market and in your personal financial situation. Undeveloped land has to be viewed almost as a land bank, there is inherent value there, but it may take some time before you see a profit.
When making a major commercial property investment, I first work to sell off portions of the property so that I get my invested capitol back as soon as possible. When investing in an existing building the immediate question is the cash flow and credibility of the tenants. Is it a new restaurant that is starting up or is it a bank or well-established medical group? That spells the difference between steady lease revenue or a crisis. Due diligence is required when analyzing any investment: what is the potential return, how much will my maintenance and management overhead costs be?