How to Win the Commercial Real Estate Acquisitions Game

Syndicated Post By Jeremy Cyrier

An investor called the other day and complained, "I've talked to a bunch of brokers, but can't find the deal I want. Can you send me a list of what you have for sale?"

We sent our list and asked the investor what he wanted. He said, "You know, a good deal. Something that makes sense. All I'm seeing out there are opportunities that are either overpriced or gone before I had a shot at them."

If you're an investor, here's some bad news. Investors call our office, make the same requests, get a list of what's on the market and complain about the unavailability of deals. We offer to talk through the requirement, but most say they're happy calling brokers because they'll get access to more deals that way.

Maybe, but aren't you just looking for off-market deals in on-market locations?

Remember, sellers hire brokers to represent them in the sale of their property. They want the advantage of exposure to the largest audience and to sell their property for more than they could on their own, which means when you're calling brokers, you're talking to the people that owners want you to.

Out of our own interest as an owner advisory firm, please keep calling brokers. We encourage it and we like the calls. It makes our owners happy because it proves that we're giving them great exposure and will eventually sell their property for the best price.

There are some investors, however, who refuse to limit themselves to the brokerage world. For those who choose to go off-market, we won't lie to you. It's hard work and it costs money, time, and energy.

One client came to us and required an industrial building in the greater Boston 93/128 interchange market. Out of 50 potential properties in existence, we sourced 6 sites that could be purchased, and the client selected 3 to seriously consider. Of the original 6, 20% were listed for sale by the owner or with a broker, while the rest of the properties were off-market.

The trick to sourcing and winning the acquisitions game is to know what you want, identify where it exists, and then work through the market one commercial property at a time until you find the motivated seller willing to work with you in a transaction. It's not difficult. It just takes time and energy to stick with program until you get the results you need.

Jeremy Cyrier, CCIM believes that actions without meaning are worthless. He is the President of MANSARD, a Massachusetts commercial real estate marketing and brokerage firm and is a member of the CCIM Institute faculty. You may reach Jeremy at Jeremy@Mansardcre.com or at http://www.masscommercialproperties.com.

Article Source: How to Win the Commercial Real Estate Acquisitions Game

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Why Commercial Real Estate Is Not a Hammer and Nail Business

Syndicated Post by: Jeremy Cyrier

You've heard the expression, "When the only tool you have is a hammer, everything looks like a nail." When you have one formula for capitalizing on commercial property investments, you try to make your deals work one way.

A broker called to ask how we sold a commercial property investment he had competed against us to list. We sold the investment for 35% more than he estimated based on his review of the property's numbers. It didn't add up.

He took the owner's gross income, subtracted the vacancy/credit loss and operating expenses to derive the net operating income. He applied a market cap rate to the deal, derived the commercial property's income value, made his recommendation and hoped to be hired for the listing.

They didn't like his price.

Here's why his hammer didn't work:

The owners were debt-free on this specific commercial property.
There were 3 stakeholders hoping to sell the investment for an above market value.
Cash flow was important to one because she was retiring during the sale.
The debt market was frozen and deals were difficult to finance.
One of the owners sought to pay off a primary residence mortgage with the sale proceeds.


After our stakeholder interest analysis, we presented a solution to the owners that allowed them to convert their equity to cash flow with an installment sale. To achieve above market value, we sold the commercial property with below-market financing terms that gave the new owner ample cash flow to operate the property, pay his annual debt service, and time to secure new financing once the property was stabilized at its highest and best use.

The recurring cash flow supported the owner looking for a retirement income. We bypassed the debt market because the sellers carried the paper. And we required the new owner to make a 17% down payment, which extinguished the other owner's mortgage obligation and paid for the cost of sale.

If you haven't done an investment deal lately or are having trouble finding the "right" opportunity, start by looking at the property investment strategies you've been using. Is there a pattern in your deals that could be your hammer and nail?

To get different results, you have to try different things. Put your hammer away and ask questions in the deals you're considering. You may find new information and new opportunities that will become new ways of making your investment goals come to fruition.

Jeremy Cyrier, CCIM believes that actions without meaning are worthless. He is the President of MANSARD, a Massachusetts commercial real estate marketing and brokerage firm and is a member of the CCIM Institute faculty. You may reach Jeremy at Jeremy@Mansardcre.com or at http://www.masscommercialproperties.com.

Article Source: Why Commercial Real Estate Is Not a Hammer and Nail Business

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Are Mobile Home Parks A Good Investment?

By Jo Amick

Mobile Home Parks- Substance over Looks?

As an investing strategy, mobile home parks are not known for their glamour (looks), but for their cash flow (substance!). It's amazing how we can overcome our apprehension and hang-ups when it comes to investing in a mobile home park when faced with a great investment opportunity. Now, there are some beautiful mobile home communities; fantastic landscaping, paved roads, new homes that are well-kept. But that's more the exception than the rule.

I have learned that mobile home parks are among the many great real estate investment opportunities out there. As an investor if you have preconceived notions about certain properties, you could miss out on a great deal. This reminds me of a conversation I just had.

Recently I was speaking with someone I used to repair the HVAC at a rental property, and he was sharing a story about a friend of his who had the opportunity to buy a mobile home park, and asked Charlie if he would like to go in on it with him. Charlie hesitated and then declined the offer, thinking he did not have several hundred thousand dollars to invest, and was not exactly thrilled at the prospect of owning 'trailers'. The investor decided to go it alone and buy the park himself. All I knew of the details was about 20 plus units. He did call Charlie later to tell him that the seller was highly motivated, and he got the whole park for about $40,000. At this point, Charlie- not knowing any of the numbers (OE, NOI, upside potential anyone?) was already kicking himself. "If I'd have known that, I'd have written him a check for 20 grand on the spot!" were his exact words to me.

What changed his mind? The price, of course! That mobile home park looked at little shinier, a little brighter at that price! And although you never know a deal until you really look at the details. I thought he was probably right in that he had made a mistake.

So what's the moral of the story? Never mistake Substance by going for Looks. As an investor, the key is in the numbers. There are a lot of incredible deals out there, and you have to keep your eyes and ears open to catch them. Don't let your built-in biases hold you back. You could miss the opportunities that can change your life.

Jo Amick invites you to learn to earn high and even INFINITE returns investing in commercial real estate with a group (on money you used to have sitting in pathetic CD's at 4% or less) when you become a Select Member with America's #1 Real Estate Network today! Join us for an upcoming educational presentation online to get information or to get started now: http://www.hisrealestatenetwork.com/713

Article Source: Are Mobile Home Parks A Good Investment?

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Picking and Paying Your Jerry Maguire

Nice video by John Warrilow on the importance of cultivating relationships with business brokers and mergers and acquisitions professionals.

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How to Win at Commercial Real Estate Negotiation

http://www.sxc.hu/profile/Mattox

A Syndicated Post By John Highman

Commercial real estate is a category of property that is structured around income performance. It is the lease that provides the stability to the income performance. When you get the lease correctly structured and agreed, the property will be a performing asset. Poorly leased properties with random lease documentation on average achieve lower sale prices when purchased by an investor.

If you are a property investor, you will be very interested in the structure of the relevant property lease and the stability of the sitting tenant. If you are a real estate agent, it is important that you develop lease controls and processes that optimise the tenancy outcome for the landlords that you serve.

The lease on a property will impact the cash flow for many years, hence careful control and decisions are part of the process.

To lease a commercial property, it is not just a matter of making decisions regards rental and lease term. The critical elements of the lease document will include important points such as:

1. The type of rental paid is actually more important than the level of rental. This rental type can be gross or net rental and the recovery of outgoings from the tenant will be impacted by the choice of rental. The net income for the building is driven from the decisions taken by the landlord in this regard.
2. The initial lease term should be carefully considered and this is done at the commencement of the lease when the tenant is found. Usually this lease term will be a number of years based on the negotiation between the tenant and the landlord. In most property types, it is not desirable to have lengthy lease terms which restrict the landlord from future property decisions. This has to be balanced against the landlord's requirement to do the lease deal in the prevailing market at the time. A landlord should always retain control over the asset and not randomly give lengthy lease terms without careful consideration on the future of the investment property.
3. An option for a further lease term. Many tenants prefer and seek to have an option for a further lease term. This gives them stability in the business operation. It does however restrict the landlord from future property decisions and any associated strategies such as redevelopment or refurbishment. This then suggests that the option for a further lease term should not be given without careful consideration.
4. The incentive given for any initial lease term may exist and may vary by type. When property markets become less active or frustrated by the economy, tenants will ask for an incentive as part of taking up a lease; the landlord will have little choice. The incentive can be a variety of methods including cash, landlord fit out, reduced rent, or rent free period. The choice that the landlord makes is largely dictated by the impact of the incentive on the landlord's taxation position. For example, a landlord funded fit out may be an item of expense which may create depreciation under local taxation laws. The landlord needs to check this out with their accountant. It could be that the landlord will see the depreciation as more useful than a rental reduction or rent free to the tenant.
5. The permitted use for the premises should be clearly outlined in the lease documentation. What you should be seeking to do is control is direct the way in which the premises are used. This is critical when it comes to future occupation and potential assignment of the lease. It is to the landlord's advantage that the property is used specifically for an agreed purpose. This then prevents any conflict with the tenant mix in the property. When the tenant mix is poorly controlled, it will impact the rental and destabilise the property. As you would expect, this is critical in a retail shopping centre.
6. The outgoings recovery is of concern to the landlord and the tenant. The outgoings that are recovered from the tenant should be clearly detailed in the lease document. When a property is sold in the future, the recovery of outgoings will be of great interest to the buyer of the property. They will be seeking to maximize their net return and recover as much from the tenants as possible.
7. The controls imposed on a tenant during fit outs are important if you want happy tenants in the building. When a fit out is commenced for a sitting tenant, it is in the landlord's interest to control the trades people on site and the approval processes for the fit out works. This will allow the landlord to achieve the quality of fit out construction that complements the building whilst not upsetting other tenants in close proximity. Part of this will be the due regard to the structural drawings and design of the building. Any tenant fit outs should be approved by the landlord before the works are commenced. It may also be that the local planning authority should approve the fit out design and drawings before they are undertaken.

John Highman is an expert in investment real estate strategy, property performance, and tenant mix analysis and strategy. He is an author and coach that helps property investors, and real estate agents improve their retail, industrial, and commercial real estate opportunities and targets.
John has specialized in major commercial, industrial, and retail property for over 30 years. He knows what works and what doesn't. He gives you the 'good oil' on getting active and achieving results.

You can get John Highman's free tips and tools in commercial, industrial, and retail property at http://www.commercial-realestate-training.com

Article Source: http://EzineArticles.com/?expert=John_Highman 

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Getting the Real Truth in Commercial Property Inspections

Syndicated Post

By John Highman

When looking at a new commercial or retail investment property for the first time, it is wise to have some form of checklist and system which assists you in the process. We have created this checklist to help get you on the right track.

When inspecting the property is almost like having your own due diligence process underway. Do not believe everything you see and certainly investigate anything of question. Anything of importance that someone tells you about the property should be investigated.

Having a keen eye for property detail and a diligent record keeping process as you walk around is the only way to inspect investment property. It is remarkable how these records have to be revisited at a later time for reassessment.

So let's consider the following as some of the basic issues to review in your property inspection process.

1. A copy of the land title records is fundamental to your inspection before you even start. As part of this process, also seek out a copy of the survey records and any existing leases or licences. Also seek out any unregistered interests that may not appear on the title to the property. If in doubt seek a good property solicitor to help.
2. Take care to understand the location of the property boundaries and look for the survey pegs relevant to the survey plan. If in doubt seek a good surveyor.
3. Within the property land title there can be a number of easements, encumbrances, and other registered interests which need fully investigating. These interests can impact the price that the property achieves at the time of sale and can also impact of the method of lease occupancy. If any registered interests exist on the property title, a copy of the relevant documentation is the first stage of the investigation which should then be followed by questions.
4. Local council records may also have impact on the property. Are there any orders or notices that have been issued or are outstanding on the property, and can these things be of concern to the potential investor?
5. The zoning for the property and the zoning activity or changes in the precinct can impact a property. As part of this process, it is wise to include neighbouring properties and inspect them to ensure that they have little or no effect or impact on your subject property.
6. Copies of the local town plan will help you understand current planning issues. A discussion with the local planning office or planning officer can put you on the right track and explain any current issues or matters that may arise. In this process, it is wise to keep records of the discussions and the findings.
7. If copy of lease documentation is available for neighbouring properties then seek it out and review it. It is always good to know what the neighbouring tenants are doing and how long they will be there.
8. The local topography and plans across the immediate area will help you understand the fall of the land and the impact of any slopes and natural drainage. Look at the location of any water courses and flood plains. Seek out the history of any flooding in the area.
9. Supply of electricity into and across the area should be understood. If your property is an industrial property then the supply of energy to the property will be strategically important to any industrial tenant. If any easements or encumbrances exist across the property for electricity, then seek to understand the rights and obligations that these documents create on the property owner.
10. Services and amenities to the investment property will impact the future operations and interest from the business community. To the question to ask here is the nature of these services and amenities and whether they are well maintained.
11. Look for changes in road and transport corridors that impact the property or region. Any change in roads can dramatically shift the way in which property is used.
12. Look for the location of public transport and its potential to enhance your property function. Many businesses need stable and frequent public transport to help employees access their jobs.
13. Look at the community and business demographics of the region. The growth patterns for the last 5 to 10 years will help you understand the future of the property.
14. Other property valuers in the area are a good source of market intelligence. They can usually tell you the history of the area and the current business sentiment. Rental levels, incentives, and sale prices per square metre are valuable elements of market intelligence. They will all have impact on the yield that the property presents to any property investor.
15. Look around the area to see how many other properties are currently available for sale. Seek details of these properties and the prices being sought. If these properties have been on the market for a long time it will give you an idea of just how acceptable the regional prices and business sentiment is at the time of your inspection.
16. Look around the area to see how many properties are currently vacant. With reference to each particular vacant property, get details of the rental being sought and the time that the property has been on the market. You will need to form their own judgment on whether these rentals are relevant and reasonable in the current marketplace.
17. The supply and demand of vacant space by property category is an investigation to be undertaken in the region. What you want to know is exactly how much space is coming into the market in the future and how much space exists now for tenants to occupy.
18. Check out any new property developments that could be in the early stages of consideration and development approval. The key question here is the impact that these properties may have on your property.
19. The history of the area is always of high value to you. In commercial, industrial, and retail investment property, the history that you are after is the last five years. It is remarkable how much information you can glean from regional property sales and rental trends. Given that commercial and retail investment property works on the cycle of rise and fall, it is the history that can open up your understanding of what's been going on and where things are headed.
20. With any property investigation, and particularly with properties that are complex and large, it is wise to seek out the comments of architects and engineers. What you need them to do here is comment on the structural integrity of the property and its future usable life. Also seek to identify how the property may be expanded or refurbished when times require.
21. Chase down the tenancy schedules for other properties in the area. Whilst these are not always easily obtained, they are of high value. They will tell you so much about the activity in other properties and buildings that may impact your future leasing strategy or property sale. What you do not want is a significantly high vacancy factor near your property when you are trying to lease it.
22. Review the local precinct for the larger businesses and how they operate. In doing this, you can understand who are the major business players and the major employers. Having these companies in the area is good thing, but losing them can be a major threat to the region. We call this the business stability factor. It should form part of your investment property assessment for the future.
23. Review the other major tenancies in the area and see how they operate. They can both stress and enhance the area depending on how they operate and the times of day that they do so. Of prime example is a transport company that has vehicle access peaks at certain times of the day. This can challenge the other businesses in the area and how they operate.
24. Walk around the precinct and the property taking many photographs for later investigation. It is surprising how useful photographs become for the reassessment of the property inspection. Walking through the streets in the region allows you to get a feel for the function of the streets and the neighbouring properties. It puts you in greater perspective for the services and amenities, and the function of all local surrounding businesses. A tip in the keeping of digital photographs for later evidence is the reversion of the important photos to 'gif' type files. This format is not easily changed and therefore more stable as court evidence of critical matters.
25. Knock on the doors of the other local businesses and talk to them about how things operate locally for them. Other tenants and businesses in the region will tell you so much and put you on the track of challenges and problems in the region.

Inspecting the commercial investment property is very much a physical process. In only this way can you completely connect with the property function before you form an opinion of its suitability for your plans, pricing, rental, or occupancy.

John Highman is a prominent investment real estate speaker and coach that helps property investors, and real estate agents globally to improve their commercial real estate property performance. He himself is a successful real estate agent that has specialised in major commercial asset sales and leasing for over 30 years.

You can get John Highman's free tips and tools in commercial, industrial, and retail property at http://www.commercial-realestate-training.com.

Article Source: http://EzineArticles.com/?expert=John_Highman

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Commercial Real Estate Success - The First Step

Syndicated Post by Darin Garman Platinum Quality Author

"The gem cannot be polished without friction, nor man perfected without trials." -- Chinese Proverb

One of the things to help you reach your commercial real estate and your wealth goals in the next year is really decide which track is best for you at your current place in your "investment life."

I have a lot of investors contact me with the same question, especially in recent months...

"How do I get into some great commercial real estate properties that will start building my wealth ASAP?"...Or something to that effect.

First, decide what your track is. What do I mean by track? I mean deciding how to proceed based on where you are AND what your expectations are.

Be realistic with this and schedule some time to work on planning for your wealth goals this year. If you are reading this article, I can guarantee you have heard 1,000 times to write down your goals. But I would make another suggestion that is critical to your success - write down what you DO NOT WANT from your investment business.

For example, on my list I have the following items:

I do not want a large amount of unnecessary overhead expenses.
I do not want to be a "hands on" landlord.
I do not want to be involved in the day-to-day property management operations.
I do not want a large number of employees.

You get the picture. What you will find is identifying what you DO NOT WANT is just as important as identifying the goals you want to achieve.

The reason this is so critical is if you choose a wealth goal that violates one of your "DO NOT WANT" list items, you will not achieve it. Many investors fall prey to what I would call 'other people's goals" - whether those be of a spouse, business partner, or friend. I have even seen very experienced investors make this mistake.

Make sure you include these items in your planning:

1. Make a list of "DO NOT WANT" items for your commercial real estate business.
2. Make sure your "WANT" list does not violate these rules.

This is one of the best way to get to your goals, faster. No question about it. So, decide where you really want to be and GET SERIOUS about accomplishing all you can in THIS YEAR. Remember, if you are not where you want to be at this point you have no one to blame other than yourself.

Do you want to learn more about investing in commercial properties? Click the link below for my FREE 7-Part Investment e-Course. I'll also send you my FREE special report and teleseminar access "How to Buy Apartments and Commercial Real Estate With No Or Low Money Down."

Download it free here: Commercial Real Estate.

Article Source: http://EzineArticles.com/?expert=Darin_Garman

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Real Estate is Like Golf

Follow the Wheel Estate Cam for more.

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How to Find the Right Commercial Real Estate Broker

Syndicated Post by Darin Garman

One of the things that can really catapult your success investing in apartments and commercial real estate is working with the right commercial broker. Finding a great deal is really all about the numbers, and getting more deals across your desk. Working with the right commercial broker will not only save you time, but make you a lot of money by getting opportunities in front of you.

So the question is, "How do you find the right commercial broker?"

I will "bottom line" this for you and make it easy. Make sure you find a broker that does nothing but investment real estate and specializes in it. DO NOT use a broker that is a "jack of all trades," meaning going from an open house on a Sunday to chatting with you about the 320 unit property on Monday.

You want someone that does nothing but spends time in the investment real estate world.

Why?

The specialized knowledge that a commercial broker has will be able to get you more GOOD opportunities to look at and because they know the market will be able to identify properties that can be very profitable. A good broker can also assist you in developing ways to purchase the property where you are making money at the closing table too. Plus they will help you avoid some of the common investment mistakes, as well.

This, more than any other of my "rules" is violated, and the investors that do violate this many times pay for it too. Make sure that you are not one of them.

Do you want to learn more about investing in commercial properties? Click the link below for my FREE 7-Part Investment e-Course. I'll also send you my FREE special report and teleseminar access "How to Buy Apartments and Commercial Real Estate With No Or Low Money Down."

Download it free here: Commercial Real Estate.

Article Source: http://EzineArticles.com/?expert=Darin_Garman

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Hayek vs. Keynes Rap Anthem

Found via bloodhoundblog.com. Also check out: econstories.tv - the creators of the video.

It's the economy, stupid ;)

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Should You Renovate to Attract and Retain Tenants?

Are you a small independent landlord trying to rent your properties? Consider renovating them. A recent survey indicates that over half of small, independent landlords are renovating vacant properties in an effort to differentiate themselves from the competition and attract tenants. Renovations don’t just help you attract new tenants; they help you retain current tenants as well.

“With so many homes and apartments sitting empty, landlords want their properties to stand out from the competition,” says Tracey Benson, president of The National Association of Independent Landlords. “Even if landlords have no rent coming in, they need to bite the bullet and make improvements to put their properties on renters’ short lists.”

The Association recently conducted a survey of landlords across the country and found that over half (52%) of smaller, independent landlords who expect the difficult rental market to continue are renovating their vacant properties. Over three-quarters of these landlords (76%) are doing so in an effort to attract tenants, while 42% of respondents said they are renovating to keep current tenants from moving.

But you don’t need to install high-end accoutrements like granite counters, stainless steel appliances or laminate floors to attract or retain tenants. Even low-budget investments like new carpeting or a fresh coat of paint can make a difference.

“Just about any improvement will make a property look better than one that hasn’t received much TLC,” Benson says.

For more information on how to attract or retain tenants in your apartment properties, or to learn about available properties, give our Century 21® office a call today.


Source: Century 21® USA

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7 Time Management Tips For Small Business Owners

Guest Post

Are you a small business owner who is always late in meeting deadlines? Or are you the kind of business owner who does not have time for his family and always feels the pressure of doing more in less time. Then please keep on reading. Being self employed is really great but it also demands you become more organized. This article is going to cover the tips which would help you to manage your time in much better way so that you can become more efficient and therefore more productive.

Learn to say no: You should learn to say no to all unnecessary business meetings or enquiries from customers who are not really interested in your services. Unnecessary business meetings and customer enquiries take too much time that could be saved if you start filtering them and ignoring the less important ones.

Make a list: Making list of tasks that you want to do in one day and to arranging them according to their importance and allocating a fixed amount of time to each task saves a lot of time that used to get wasted in thinking about which task to do after completion of any other task.

Set small goals: Day to day you should set smaller goals which are easily achievable instead of setting long term goals. For example, if you want to read a book having ten lessons, rather than setting your target to read the whole book in ten days, set a goal of one lesson a day. Reading one lesson a day has a better chance of being achieved than reading whole book in ten days.

Avoid wasting time on social media websites: We never notice but most of us use to waste lot of time checking emails, surfing social media sites, reading blogs etc. Set a fixed amount of time to read your emails, twitter, forums etc.

Complete task in one shot: Never leave the tasks without completing them. We have a habit of delaying tasks that are either tough or are not of our choice. But leaving them without completing them and resuming them again wastes your valuable time which you have to spend every time to make yourself ready to start the work exclusively for each specific task.

Use technology/outsource: Many free applications are available which can easily handle almost all kinds of business operations. You can use such applications or outsource your administrative tasks so that you can focus easily on creative ways to grow your business.

Be flexible: It is very common to face unpredicted situations where you have to give your attention to other activities which are not related to your business. For example: taking care of an ill family member or attending a family function. Try to keep your schedule flexible so that you can easily adjust to such things without sacrificing already scheduled tasks.

Rudo Barr is working as an internet marketing executive for Fortepromo which creates high quality promotional products that help companies to promote their brands. 

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Five Fool Proof Ways to Brighten Up Your Commercial Property

This looked like a great post for the end of the year; great tips on brightening up your commercial building to keep and attract the best quality tenants.

Enjoy!

Syndicated Post

1. On Cleaning Up and Success Team

So far, I have viewed and analyzed no less than 3,000 properties internationally. And I have discovered that most owners tend to overlook this very simple but vital task. Shocking, isn't it?

Irrespective of whether you are planning to rent out or sell your property, clean it up completely. This means the interiors as well as the exterior. Of course, unless you enjoy physical work and don't mind getting your hands dirty, you can always engage others. There are freelancers available through outsourcing website who wants to earn some extra bucks. It is recommended that you work with a "Success Team" to keep your properties in tip-top condition and make your investments more fool-proof and blissful. Ideally, members of your success team should include plumbers, electricians, handymen, painters, cleaners and other professionals like lawyers, valuers, real estate negotiators, property managers and interior designers. There are also professional cleaning companies with the equipment that can make your place shine like brand new.

Humans are very visually oriented. Thus, they are impressed by what they see, making it paramount that you clean up thoroughly. Yes, that means top to bottom, left to right, and inside out. Most buyers and tenants want a property that has been well taken care of.

2. Trim Overgrown Trees and Shrubs

Where applicable e.g. landed industrial and semi-detached commercial shop offices that come with trees and/or bushes at the front, side or back of the building. By trimming overgrown trees and plants, it instantly brightens up your property, makes it more attractive and opens up more space.

3. Repaint with Lighter Colours

This is weird but true. Using a different colour does give a different effect to the same room. To prove a point, the next time when you see an advertisement by companies marketing paint, pay close attention. The paint boys spend thousands to show you how a colour can make a world of difference in life. Using lighter colours like white and beige to paint your property makes a given space look brighter, bigger and wider. (To get more space, you don't always have to break any walls or buy more land. Just paint with a light colour!)

4. Bring in More Natural Light

Use your own creativity, or observe what your neighbors have done. Explore and discuss with interior designers about ways to bring in more natural light. It could be as simple as enlarging existing windows, or putting in more windows; using more glass doors and partitions; replacing roof tiles with transparent tiles or skylights etc. The outcome are astonishing!

- You do yourself a favour, by adding more value to your property;
- You do your tenants a favour, helping them save on electricity;
- You are also helping preserve Mother Earth, by reducing global warming and reducing the depletion of our natural resources.

5. Add More Lighting Points

Where appropriate, add more lighting points. With commercial properties, it is almost universal that tenants prefer bright places - unless they are in the business of "candle light" dinners. By creating a brighter and more spacious look, you can dramatically improve the attractiveness of your property.

Mike has been writing articles online for nearly 2 years now. Not only does this author specialize in personal investment, productivity, you can also check out his latest website on ftd flower delivery which reviews on FTD Flowers Delivery

Article Source: http://EzineArticles.com/?expert=Mike_Milanez 

 

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Top 3 Expenses Most Often Missed by New Investors

When calculating return on an investment (ROI) or internal rate of return (IRR) there are a number of expenses to take into account and surprisingly, there are a few that get overlooked entirely. I've noticed that, particularly new investors (and often brokers who should really know better!), miss a few essential expenses far more often than I would have expected.

When working on calculating an ROI or IRR, you always need to start with a reconstruction of the net operating income (NOI). A basic worksheet should look something like this but may be more or less sophisticated based on the asset class:


In researching properties for buyer clients, I always ask for a copy of the income and expenses from the owner or from the broker as reported by the owner if the property is listed. A complete picture of the income and expenses, along with all other pertinent physical, demographic, and economic information about the property and the market, is the only way to properly analyze a property on behalf of my client. Omissions or errors here have a direct impact on the valuation of the property and are therefore essential.

I almost always receive a list of the monthly rents or an annual summary of the gross income - though not everybody seems to grasp the concept of total gross income and often it takes a couple of calls to get all of these figures. I usually get a summary of the expenses as well, though often there are a number of glaring omissions. Either by design, because the numbers are too large and the person providing the information is hesitant to be open with me, or by mistake because they don't actively track their expenses or have a poor record keeping system, or simple ignorance.

The top 3 most often missed expenses are basic to the operating expenses of any property, but they are sometimes the most difficult to obtain. They are:

1. Property and liability insurance.
2. Repairs and maintenance.
3. Vacancy and credit losses.

Why are these left out so often? As I said, these are real numbers that have a direct impact on value, so if there is a particular expense or expenses that would negatively affect value, some sellers will intentionally make it difficult to discover them. Most often though, they are missed through simple ignorance.

Property and liability insurance.
While not necessarily a large expense in itself, if you are looking at a smaller investment where every penny counts, missing an expense of this nature can have a very serious impact on future profitability - even if such an omission is innocent.

Repairs and maintenance.
Usually this one is omitted intentionally. Why? "Because the roof is only 4 years old, and the paving is only 2 years old...what else do you think needs to be done?!" From the inexperienced buyer's perspective, it often is left out for the very same reason - there is sometimes a mistaken belief that just because repairs have recently been made that there won't be any further repairs needed for the foreseeable future. Maintenance items like, snow removal and grass cutting are often ignored by first time investors because they intend to do the work themselves and therefore don't feel it's necessary to account for those expenses. But isn't your time worth anything to you? Even if you plan on doing the work yourself, you should be compensated for your time!

Vacancy and credit losses.
This is the most often missed expense in my experience. If the building is full, why should you account for vacancy? There are a couple of reasons: 1) Your tenants are not invincible - one of your tenants could step in front of a bus tomorrow and you'd be looking for a new tenant. If the property is a small one, and one of your tenants just decides to leave or goes out of business, you could be looking at significant carrying costs while you re-lease the space. 2) In the long term, some credit losses are unavoidable. Even with the best of tenants with the best of intentions, occasionally things don't work out the way everyone hopes and there's just too much month left at the end of the money. 3) The last, and maybe the most important, is that when you apply for financing on any investment property, the bank or lender you use WILL include a vacancy allowance to account for lost income that could affect their ability to collect your payments. Go into the financing application process well informed or you could be in for a rude awakening.

So there you have them, my top 3 most missed expenses by new investors. Tell me what you've experienced as a buyer or as an advisor; ever run into these or other items that have put the brakes on a deal you were hoping to close?

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How to Use Internal Rate of Return as a Measure of Real Performance in Commercial Real Estate

Ever wonder which metric is the best way to analyze a piece of real estate? Me too! There are so many to choose from. Cap rates, ROI, gross rent multipliers, net rent multipliers, leveraged rates of return, yields, etc., etc. ad nauseum. The problem I see with most of these is that they look at a snapshot in time for a given asset and don't take into account increases or decreases in income over time.

Enter the realm of IRR or 'internal rate of return'. The internal rate of return shows the rate of return over a period of time and takes into account variables in income over that period. Rather than looking at just one point in time, you get a picture of the return you should expect during your entire anticipated holding period.

Let's look at a very simple example:

123 Any Street, Peterborough, Ontario is a hypothetical office building of 21,000 square feet with a projected first year net operating income of $105,000. Prevailing market cap rates indicate you should be looking at 8.5% as your 'going-in' rate. This puts a hypothetical value of $1,235,000 on the property (give or take a few dollars). Pretty simple, income divided by cap rate equals value.

What if you did some digging into the rent roll and discovered that one of the tenants, who occupies about 4,000 square feet of the building and therefore generates 19% of the net operating income, had a lease that was coming due in two years, and further that you found that they did indeed plan to move out at the expiry of their lease and have purchased land for construction of a new building two blocks away? That's a significant drop in future income and therefore will have a direct impact on the value of the real estate today. A future event will have direct impact in the present.

As the new owner of the building there would be some period of time when the space might be vacant, and there would be some cost associated with releasing the 4,000 feet including: leasing commissions, build-out for a new tenant, advertising, etc. The series of cash flows over the first five years of ownership (assuming a sale at the end of the fifth year at a similar cap rate) might now look like this:



You can see that there is a substantial difference in the IRR of the two scenarios. This doesn't mean that the property is a bad purchase, it just gives the investor a better picture of the real performance of the property and provides a more realistic idea of actual return over time. Other factors that would change this picture include things like: the effect of financing, rent escalations, economic factors, changes in future cap rates, and competition in the form of new buildings coming onto the market to name just a few.

If the IRR is within range of your expected rate of return then you can move onto doing more due diligence for the property. If it is well below what you expect, then you need to either negotiate a lower price, or keep looking for another property that does meet your investment criteria.

Have you ever used this method of comparison before? Did you find it useful? Let me know, I'd be interested to hear some real world examples.

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28 Qualities, Skills and Traits That Commercial Real Estate Brokerage Clients Watch For: The Good, The Bad, and The Ugly

Today, a review of the 28 things that commercial brokerage clients look for when choosing, working with, and firing(!) agents. Over the last week or so you've seen these lists in several posts, but I thought it would be a good idea to gather all of these ideas into one resource page that can be accessed easily.

The Lists:

Top 7 Skills and Qualities Investors Look For in a Broker:

1. Direct solicitation of potential buyers.
2. Quality communications and follow through.
3. Accuracy and quality of financial analysis.
4. Negotiation skills.
5. Quality of investment package.
6. Quality of research.
7. Team assigned to their transaction.

The Top 7 Things Tenants Look for in a Commercial Real Estate Broker:

1. Understanding of their business.
2. Open communications and accessibility.
3. A relationship built on trust and concern.
4. Financial/analytical skills and structuring advice.
5. Collaboration and a team approach to their needs.
6. Understanding of the market and opportunities.
7. Accompaniment on building tours.

The Top 7 Things Clients Look for When Selecting a Commercial Real Estate Broker:

1. Relationship with Broker.
2. Prior experience/performance.
3. Reputation of firm/brand identity.
4. Understanding of their business/objectives.
5. Personalized approach/solutions.
6. Fee structure.
7. Knowledge and advice.

The Top 7 Things That Frustrate Brokerage Clients:

1. Lack and poor quality of communications.
2. Lack of accessiblility to their broker.
3. Sloppy work, inaccuracies and poor research.
4. Feeling that they are just a commission source.
5. Brokers not knowing when they are "over their heads".
6. Lack of interest in their business needs and goals.
7. Lone Rangers and "listing-only" solutions.

So, you say, what's the point? Well, looking at each of these in turn and thinking about what they mean to existing and potential clients, we can see that there a number of solutions and, more importantly, opportunities presented in them.

I give you, The Profile of a Customer-Centric Brokerage Company. *Insert cheesy dramatic music here*

Many thanks to CEL&Associates Inc. who actually gathered the data and did the research to come up with all of these lists and the following outline of a customer-centric brokerage company.

A Customer-Centric Brokerage Company should:

1. Possess a real-time 360 degree customer profile.
2. Embrace a continuous feedback process.
3. Hardwire the voice of the customer into all decisions.
4. Invest in talen, training and professional development.
5. Share knowlege of the customer.
6. Commit to service excellence.
7. Possess customer service standards.
8. Build valued and lasting customer relationships.
9. Include customers in company values.
10. Tie commissions to customer satisfaction.
11. Celebrate those who achieve customer satisfaction.
12. Involve customers in solutions.
13. Continuously seek customer feedback.
14. Possess a thorough knowledge of customer needs.
15. Exceed customer expectations.

Some powerful, and some surprising ideas. Stay tuned for more on these topics as I plan on dissecting a number of these ideas in more detail. Have a great weekend, and let me know what you think!

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The Top 7 Things That Frustrate Brokerage Clients Most

So far we've looked at what investors value most in their broker, what tenants value the most in their broker, and what clients value most when selecting a broker. Today, the other side of the coin, the things that really make clients blood boil.

Warning! If you are a commercial real estate broker and you do any of these things, even occasionally, you're sabotaging your business in ways you probably can't even imagine!

The List:

1. Lack and poor quality of communications.
2. Lack of accessiblility to their broker.
   
3. Sloppy work, inaccuracies and poor research.
4. Feeling that they are just a commission source.
5. Brokers not knowing when they are "over their heads".
6. Lack of interest in their business needs and goals.
7. Lone Rangers and "listing-only" solutions.

What really frustrates you when you hire a real estate agent, particularly a commercial broker?

Source: CEL&Associates Inc.

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Top 7 Things Clients Look For When Selecting a Commercial Real Estate Broker

What's the difference between a client and a customer? Well let's take a look at the definitions (from thefreedictionary.com):

Customer:
n. cus·tom·er
1. One that buys goods or services.
2. Informal: An individual with whom one must deal: a tough customer.

Client:
n. cli·ent
1. The party for which professional services are rendered, as by an attorney.
2. A customer or patron: clients of the hotel.
3. A person using the services of a social services agency.
4. One that depends on the protection of another.
5. A client state.
6. Computer Science A computer or program that can download files for manipulation, run applications, or request application-based services from a file server.
[Middle English, from Old French, from Latin clins, client-, dependent, follower; see klei- in Indo-European roots.]

In real estate legal terms, a client is someone with whom a brokerage has entered into an agency relationship wherein they agree to provide certain professional services and owe certain legal obligations to the client. In reality, the client relationship, at least a good one, goes far beyond a mere legal obligation. While a customer is treated fairly and honestly, they don't get the same level of advice or counsel that a client gets, nor do they realize the long-term benefit of a true client relationship; they're just there to buy something and move on.

In my opinion the key really is the relationships. As much as new technology has made the job of finding property and property details easier, and much as it has made the task of marketing and finding real estate quicker, it cannot replace the human connection that face to face relationships build. I don't care how much you Twitter or write in your blog or how much time you spend on Facebook! These are good tools to start the conversation, but the connections, the relationships are the ticket.

Given this, it's no surprise that #1 on the list of things most valued by potential clients is the relationship with the broker. If the client doesn't feel a connection and doesn't feel that they can trust you, nothing else you do will ever turn them into true clients for life.

Without further ado, the Top 7 Things Clients Look For When Selecting a Commercial Real Estate Broker:

1. Relationship with Broker
2. Prior experience/performance
3. Reputation of firm/brand identity
4. Understanding of their business/objectives
5. Personalized approach/solutions
6. Fee structure
7. Knowledge and advice

I'm always interested in varied opinions, so let me know what you think. Do you agree with this list? What would you change or add to it?

Watch for my next post on this topic: What frustrates brokerage clients most!

Source: CEL&Associates Inc.

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The Top 7 Qualities and Skills That Tenants Value Most in Their Commercial Real Estate Broker

As part of an ongoing look at what consumers want from their real estate broker, today I'm looking at what tenants value the most when choosing a broker to represent them.

Tenant representation is a very specialized field and one that doesn't get the respect it deserves, in my opinion. From a brokerage perspective, it just isn't very sexy. The deals aren't as visible, the commissions (generally) aren't as big as investment deals, and the broker is often seen as just another cost in the transaction rather than bringing the real value that they do add to the process.

So what do tenants look for in a commercial real estate broker? Here are the top 7:

1. Understanding of their business.
2. Open communications and accessibility.
3. A relationship built on trust and concern.
4. Financial/analytical skills and structuring advice.
5. Collaboration and a team approach to their needs.
6. Understanding of the market and opportunities.
7. Accompaniment on building tours.

Source: CEL&Associates Inc.

Did I miss anything? What do you look for?

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What Investors Value the Most in Their Commercial Real Estate Broker

I recently found an old paper in my files that I had to have had lying around for the last 3-5 years. It was a summary of survey results put out by a company called CEL&Associates Inc. on behalf of the Canadian Real Estate Association. I'm sure that the results might appear in a different order today, but the underlying themes seem, at least to me, to be timeless.

Over the next couple of weeks, I'll post a few times on this topic and look at what tenants, clients, and investors look for when selecting a commercial real estate broker. I'll also post about what frustrates these same people and report on the profile of a customer-centric brokerage company.

Without further ado, the top 7 skills and qualities investors look for in a broker:

1. Direct solicitation of potential buyers.
2. Quality communications and follow through.
3. Accuracy and quality of financial analysis.
4. Negotiation skills.
5. Quality of investment package.
6. Quality of research.
7. Team assigned to their transaction.

I'd love to hear what you think of this list, and where you agree or disagree.

Thanks for reading!

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