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Commercial Real Estate Pro Network

Commercial Real Estate Professionals who work with Investors, Buyers and Sellers of Commercial Real Estate. We discuss todays opportunities, problems & solutions in Commercial Real Estate.
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Now displaying: July, 2017
Jul 27, 2017

CREPN #102 - Should You Lease or Own a Commercial Building with Allen Buchanan

 

How do you know if you should Lease or Own a Commercial Building for your business needs?

 

The economy is growing, rents are rising, and commercial real estate space is more difficult to find.  

 

So what questions should you answer to know if you should lease or own a commercial building for your business needs ?

 

Allen Buchanan is a principal with Lee & Associates in Orange County, CA and a true commercial real estate pro.  He has specialized in industrial space sales and leasing since 1984 and provides the following tips for business owners considering purchasing a commercial building.  

 

Questions to ask before buying commercial real estate

 

Market

Where is the market in the cycle? Commercial real estate is very cyclical.  It is important to consider what is the current state of the market.  Is space plentiful or limited?  Are capital markets willing to lend with favorable terms?  Is there an expected growing demand for space like you need?



Who are You?

What type of company is yours?  What are the space needs for your business?  Do you expect to outgrow your space in the next three years?  Are you making money?  A lender will look for a favorable track record including, have you been in business for at least five years?  

 

If you are stable, have a proven track record, and anticipate the continuation of your business and have the time to benefit from long term appreciation, buying might fit be for you.

 

What are the Steps to Buying Commercial Real Estate?

If you have been in business for a while, you likely have received numerous calls from commercial real estate brokers.  If you are thinking about buying, interview a couple of theses brokers and find out if they can potentially be a resource for the time it takes to find a property.

 

Find out if you are eligible for financing.  The commercial real estate broker can point you to a potential lender.  Typically SBA loans and brokers provide some

 

How long will it take?  To be successful, you should plan on one to two years before you are moving into a new property.  The lengthy process includes:

  • Search
  • Potential misfire
  • Loan underwriting
  • Physical inspection
  • Appraisal
  • Build out
  • Permitted usage question and answer with city

 

What are the Benefits to Ownership?

Long term, for the right situation, you can benefit significantly through:

  • Appreciation: rent increases and demand will push the value of the building up over time.  Provided you have the time, this is a huge opportunity.
  • Depreciation: for the owner of the building, the purchase price or the structure can be expensed over 39.5 years.
  • Cost stability: when you own a building, you can more easily control the cost of space for your business needs.



For more goto:

www.allencbuchanan.com

https://www.youtube.com/user/abuchanan100

Jul 20, 2017

How do you transition from investing in Single Family Rentals to Commercial Real Estate?

 

Most people recognize single family properties because they live in one.  It’s recognizable and comfortable.  The barrier to entry is low.  Banks are willing to lend on the borrower’s credit score, job history and the property appraisal.

 

Many investors start in single family residential, and never consider commercial real estate.  While single family rentals is an investment strategy, the most significant increase in wealth consistently comes from investing in commercial real estate.

 

For investors who are stuck in single family or just getting started, and possibly afraid of larger properties, here are the steps needed to get into commercial real estate.



The Steps to Transition

 

Get the Knowledge

You need to make some connections with a few key professionals.  

  1. A Commercial Lender who is willing to meet with you and help you determine the lending parameters they can lend on.  It will be useful if you know the following terms:
    1. Net Operating Income; NOI
    2. Capitalization Rate; Cap Rate
    3. Cover Ratio
  2. Meet a Commercial Real Estate Broker who will help narrow your search to a property type, size and location that can meet your needs.  The broker will help you understand the ins & outs of commercial real estate and figure out why you want to pursue an opportunity in commercial real estate.

 

You need to have a clear understanding of who you are and what you are looking for.  Explain your “why” to the broker and ask for input from the broker to gain confirmation you are on the right path, or learn what might be a better option for you.




Ask to See Some Opportunities

Now that you have an understanding of what is required, and a level of investment you feel comfortable pursuing.  It’s time to analyze some opportunities.  Ask a broker to show you some deals.

 

Look at potential deals and even deals that have already closed and run the numbers.  The more you do this the more comfortable you will become, and you will be able to recognize a good opportunity when it presents itself.

 

Analyze as many deals as you can.  



Pull the Trigger

You will never know everything about real estate investing.  Each investment will teach you something new.  Your  team will help you make a good decision.  In fact, the larger the deal, the more help you will get.  Why?  Because the bank will not let you make an investment into a property if the numbers do not work.  



For more go to:

Robert Creamer

Email: creamer@cmocre.com

Phone: 214.564.8909

Jul 13, 2017

Three Steps to Financial Freedom.  Can it be so easy?  

 

Financial freedom is the goal for every working adult around the world.  So why do so many people struggle to get there?

 

Tim Rhode has come full circle.  He was a poor student, part time grocery clerk and found his passion and created financial freedom through real estate.  

 

Before you can invest, you have to be aware of your ABC’s of your personal finances.

 

  • How much is coming in?
  • How much is going out?  What am I spending my money on each month?
  • What’s left to invest?

 

 

Once you have money to invest, you can pursue Financial Freedom.

 

The three steps to Financial Freedom:

 

Step 1: Awareness

It all starts with awareness.  This includes getting educated about your surroundings and the people in it and where the path of progress going.

 

With some basic awareness, you have to jump in because you can’t win the game if you aren’t in the game.

 

Now you have to be willing to grind and focus.  

 

Step 2: Become a Master

The grinding starts to pay off after you have some experience.  You will start to recognize the next level of the game and how you can play it.  

 

Step 3:

Exchange into bigger opportunities.  In real estate, the 1031 Exchange is a vehicle for deferring the taxes from a real estate sale.  Because you still have the would be taxes to invest, you are able to leverage up into properties that are more easy to operate.  

 

It takes time

Quit looking for the shortcut to getting rich.  Everyone has heard a story about the overnight success.  But the reality is that true success takes time.  If you are willing to invest in yourself and your time, doing what works, over time, you will have success.

 

Remember, education is a lifelong pursuit.  You have to commit to continuously educating yourself.  

 

For more goto:

Email: tim@timrhode.com

Website: 1lifefullylived.org

 

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Scramento, CA

 

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Jul 6, 2017

Buy and Hold Investing is the standard for most Canadian real estate investors.  

 

Jesse Fragale bought his first rental when he was at college.  Recognizing a good thing, he grew his student housing portfolio with multiple single family and condo rentals.

 

You might think student housing equals keg parties and irresponsible tenants.  While this may be true, it was a guaranteed way to push market rents in a rent controlled market.

 

Jesse is a Commercial Real Estate broker in Toronto, where the rent control policy caps rent growth to a maximum of 1.8%.  The only time a landlord can increase rent by more is after a tenant moves out, which is frequent in student housing.

 

Rent Control

Interestingly, the policies meant to help tenants gain affordable housing, has prevented investors from entering the market to build more units.  It is estimated that over ninety percent of all apartment housing in Canada was built prior to 1970.  

 

Instead of building new apartments, investors have purchased condominium units and placed into rental.  Until now, condos have evaded rent control.  Ontario has proposed changes to rental housing policy to close the loophole and bring condos under rent control.  Ontario’s 16 new housing measures

 

Jesse and a partner recently purchased an eleven unit property.  Two vacancies allowed for market rate rent increases.  Also, there is a possibility of creating an additional unit from a large laundry room.  These measures will dramatically increase the value of the property.

 

Buy and Hold for the long run

The 1031 Exchange available in the USA, allows the investor an option to defer paying capital gains tax when a seller buys a larger property.  No such option exists in Canada.  Due to the lack of a 1031 exchange, most Canadian investors buy and hold focusing on the long .  

 

Jesse would like to grow the portfolio substantially in the next five years.  However, given the challenges in Canada, he is considering his options in the US.  

 

For more, contact Jesse Fragale at:

jessefragale@gmail.com

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