# 4, 1 (Week 4) Second Scenario: "Building Owner: Commercial Property" The long-time owner of a small commercial building, Mr. Switzer, had done a cost-revenue ratio analysis of building costs/maintenance versus his present lease revenue and realizes that he no longer makes a profit but is barely breaking even. Property taxes are increasing, and growing inflation is another of his concerns. He lives upstairs by himself above the stores on the second floor and is retired; He has no family, but a small devoted dog that is his faithful companion. Switzer describes himself as a self-educated individual and a "visual person" who likes watching TV, looking at old maps, charts, and diagrams- and more recently the internet. On the main floor, at street level, he leases two commercial spaces (shops)- both the same size. The Tattoo Shop has strong sales and many clients. The Book Store has been struggling and is barely managing to get by. Kim Gara runs and owns both shops and pays $2000.00 a month to Switzer for each space totaling $4000.00 a month. Each long-term lease (7 years total) expires in 6 months and Switzer wants to either renegotiate at a higher rate or failing that he is worried that might be forced to sell the building. Switzer's calculated some numbers on the back of an envelope and found out he needs to makeanother $440.00 a month to meet his building cost and personal budget totaling $4440.00 per month Switzer has three friends, and he asked each one for advice on what to do: - Friend 1 told him to charge only $440.00 extra a month- to not risk losing the long-term leases paid by Kim Gara since "good building tenants are hard to find these days", and then at the end of each year calculate the new costs and add them to a new lease agreement; - Friend 2 told him to have a long-term lease and increase the lease at the end of this and every year according to what the Canadian government's inflation rate is announced at; - Friend 3 told him to sell his building and invest the money and use it to rent an apartment and live off the interest/money. The small building is old and needs a lot of renovation but would sell for $900,000 (Switzer owes no money on the building) where it is located on the edge of Surrey, British Columbia. You are a retirement consultant working in Vancouver. Switzer saw a TV ad where you were happily walking a dog. He liked that and contacted you- you agreed to help. He has asked you for advice, because your service can him research, problem solve, and come up with a good option financially. Switzer has asked you to research the "important facts" and help him come up with a "best choice". He wants to understand (a) the "Canadiannumbers" around inflation and how it works; (b) the basic tasks and costs of selling a property in British Columbia; (c) the essential basics/idea of investing money "for a person of his age" in order "live off of it" (if he were to sell his building). Task 1: Gather/research the information that you feel will help Switzer; Task 2: Explain and show how/what will you present the information of Assignment One to Switzer in a way/format that will be most effective for his understanding: he indicates he is a "visual" learner. ___________________________________