Tips for Finding a Commercial Real Estate Mentor

As we’ve previously stated commercial real estate is a growing market that has shown a lot of profitability.  With that being said, it is not a market that one can jump into blindsightedly.  A lot of people entering the world of commercial real estate need a mentor.  Here are a few tips to take into consideration when looking for a mentor.  

One of the main things to think about is the geographic location you are searching for.  It’s important to note that properties in Florida are going to offer a higher ROI than properties in Iowa.  Keep these thoughts in your mind when you are considering an investment. 

Another important thing to know is that you need to know the market.  If you are looking for a mentor, their job is not to teach you from ground up.  It’s imperative that you have some pre-existing knowledge in order for the mentor to elaborate and expand what you already know. 

When you think that you have found a worthwhile mentor have a sit down face-to-face chat with them.  A lot can come from an in person conversation.  Although the internet is great for communicating, meetings are the best way to let your mentor know that you are serious about investing.  

If you have a meeting set up with your mentor be sure to have high value questions to ask.  Sitting down and asking them to ‘tell me everything’ isn’t going to get you very far.  Research goes a long way in this field, and it will ensure that you and your mentor have a quality conversation that is productive.  

Keep in mind that mentoring isn’t something everyone wants to do.  Some people have the mindset of ‘oh I figured it out myself, they can too.’  Try and avoid these types of people, and don’t get discouraged when you run into this personality.  Keep learning and researching your market, and eventually you will find someone who is willing to help. 

The Advantages of Commercial Real Estate

Investing in real estate is a great way to put your money to work in this economy.  With the many different types of investments that are available, it has been proven time and time again that commercial real estate has an enormous amount of benefits.

Often times, commercial real estate leasing contracts are longer than those of residential.  Residential real estate leases are usually short, whereas the commercial properties typically have lease agreements from 5-10 years in duration.  Assuming the tenant(s) do not vacate or go out of business, this long term provides for stability in the investor’s portfolio.  Advertising and marketing costs are much lower in commercial real estate properties as well due to the lower turnover rate.  People often switch apartments within 1-3 years, however, businesses do not move as frequently.

Another advantage of commercial real estate is there is typically less maintenance responsibilities for the property.  Triple net lease agreements provide for all maintenance of the property be the responsibility of the tenant.  In residential real estate, it is usually the investor’s responsibility to take care of the property and any associated maintenance and/or repair work.

Commercial real estate investing is a profitable endeavor if you have the time and patience to put into it.  On the other hand, it can also be a very risky business if you have not done the proper research or sought the advice and assistance of a commercial real estate professional.

Investing Decisions - Commercial vs. Residential?

Investing in residential and commercial properties has been proven to be quite prosperous for many people. 

But which types of real estate seem to be a wiser investment decision?

Let’s take a look at a few topics that are covered when thinking about investing.

One of the main strengths that commercial real estate properties have over residential is the quality of their leases.  Typically, residential tenants pay on a month to month basis.  This can be quite bothersome if someone is simply looking to invest and make some extra cash.  Alternatively, commercial real estate usually possesses leases that span over multiple years.  These are much lower maintenance, and typically more preferable to investors.

When it comes to repairs, it’s usually the lessee that has to pay for residential repairs.  A lessee can be expected to be woken up in the night to come fix a refrigerator, clogged toilet, air conditioner, etc.  Commercial real estate investors don’t have to deal with that headache.  Most times commercial real estate repairs fall under the leaser. 

Another strength that commercial contains is that they have the law enforcement on their side.  Well, more so than residential, that is.  When you own a residential property it is very difficult to evict tenants.  When it comes to commercial it is much easier for a landlord to evict an unruly tenant. 

Furthermore, commercial real estate will yield you less wear and tear.  If you are renting or leasing out your residential property chances are the person or family will be living there 24/7.  They will constantly be using the utilities and appliances.  With commercial, you typically don’t have that.  Most businesses utilize their property during normal working hours, and then lock it up and leave it alone for the night. 

On the grand spectrum of investing, commercial real estate investing always seems to take the cake.  They bring in more money, and require less upkeep.  Commercial real estate is a growing market. 

Tips And Tricks For Successful Commercial Real Estate Transactions

Investing in commercial real estate is no ‘get rich quick’ scheme.  Investing requires a lot of thought and planning.  To ensure you don’t waste your time and money in the commercial real estate world, take a look at a few of these tips.

Be open minded

Just because it has the word commercial doesn’t mean that it needs to be secluded to apartment blocks.  There are plenty of properties that fall under the commercial category.  Think about investing in offices or warehouses.  Both of which can bring you in a good chunk of cash if you invest wisely.

Shop savvy

Don’t just look for a good deal, look for the best deal.  With the economy how it currently is, there are plenty of deals out there that will satisfy your goals.  Be patient, and keep up a continued search.  Once you find a property negotiation is key.  Your prospects will rarely go as low as they are willing to go on the first offer.  Investigate to see how much wiggle room you have. 

Lose the rose tinted glasses

Be very critical of the property you are considering.  Don’t allow for the good in the property to over shine the bad.  Take the time to write down a pro/con sheet, and take it seriously!  I can’t tell you the amount of times investors overlook the negatives because they are awestruck with the property, price, location, or architecture.

Go big or go home

If you have the financing, make your purchase worth your time.  It’s the overall property that is pricey, so why waste your time and money on something that contains only a few units?  If you are already going through the trouble, try your best to find a property that is large and that has many units that can be rented.

Investing in commercial real estate is becoming more common.  With hard work, and the right amount of research, it’s probable that your ROI will make everything worthwhile. 

Commercial Real Estate Pricing Trends for 2012

There seems to be mixed results with the commercial real estate pricing trends this year.  It appears that the General Commercial sector is rising, while the Investment Grade is decreasing.  However, one fact is certain, and that is that we are continuing on with recovery in this field.  According to CoStar the steady increase of the General Commercial sector is the main clue that the recovery is continuing.

Here are a few important facts that were found in the April release by the CCRSI:

·   Due to a dip in Investment Grade pricing, the US Composite index showed a decline of 1.3% in February 2012.

·   The Investment Grade index showed a decline of 6.6% in February.

·   The three major commercial property types are office, retail, and industrial, and they have been positive in net absorption of both general commercial and investment grade.

Even though the Investment Grade index declined 6.6% in February 2012, that actually is a trend.  Typically the Investment Grade shows a decrease within the first 2 months of the year.  Although the trend may suggest otherwise, investment grade properties have increased 11.5% since 2009.  These investment grade properties seem to be doing better than the general commercial properties.  

Although it has remained relatively consistent, the General Commercial index has shown improvement over the Composite index.  CoStar states that a reason for this is partly because of the increase in demand for general commercial properties, and a diminishing higher end of the market to net absorption. The good news is that the increasing absorption of general commercial properties is not a sporadic event.  The results show this to be a steady increase that can be expected to hold.

Leave the ‘Right’ Kind of Lasting Impression

When it comes down to it, it’s the location and ambiance of a restaurant that determines if it succeeds.  You can have the best chef in the world but if the location of your restaurant is not up to par, your reviews and profits will definitely show.   

Here are two things to take into consideration when you are searching for a new restaurant site.

Lots of people = lots of profit

It’s very important to find a location that will be able to reach a wide variety of people.  You want to find a place where there are a good amount of people that will be able to visit your restaurant without a terribly long commute.  Along with the actual number of people around the vicinity, you also need to think about the demographics of that region.  

It wouldn’t be profitable to place a 5-star, expensive restaurant in a rural area.  The key is to play into your surroundings.  If your restaurant is located near many businesses, be sure to offer options for quick lunches for those people who are on their lunch break.  

What can’t be seen, doesn’t exist

Make sure that you are visible to people just ‘passing by’.  You don’t want the type of restaurant that is only known by regulars.  Most people go to new restaurants because they have passed by a place multiple times, and thought to themselves ‘I’d like to try that out’.  No amount of advertisement will be able to outweigh the importance of having a location that can be seen easily.  

Essentially, picking a great commercial real estate property is key in your restaurant’s success.  The location is the first thing that people will notice before entering your eatery, and it’s the last thing that people will notice as they are leaving.  

Venezuelan Investors Find Interest In Southern Florida

It’s no secret that there has been a significant rise in Florida real estate.  We partly have foreign investors to thank for this rise.  Latin Americans have been taking it upon themselves to invest in a variety of Florida properties.  According to the Miami Association of Realtors,  it is Venezuelans who are leading the international investors, closely running with those from Argentina and Brazil. 

So, why is Venezuela investing in our market?

Well, part if it has to do with the amazing deals that can be found in Florida.  Many of the investors are coming over and paying cash for their investment.  These wealthy investors find what they perceive to be a “great deal”, and don’t hesitate in placing their money into some American real estate.  

Cleto Puzzi called it the “Chavez effect”, implying the Venezuelan president Hugo Chavez is to blame.  Puzzi states that “you cannot invest in Venezuala these days”.  Evidently the investment opportunities in Venezuela are scarce, and the wealthy must go north in order to make their money grow.

This international investment growth has helped out the Florida market immensely.  It enabled many real estate developers to develop more properties.  Florida is named the top real estate opportunity for foreign investors- southern Florida being specifically in the lead. 

Although many of the investments are currently residential; there is no limit to what could be done commercially.  Historically, an increase in residential sales often leads to an increase in commercial sales.   The rapid rise of the residential international investments could be a direct link to the rapid rise in commercial real estate investments.

This trend of investment will hopefully expand.  Although the majority is lead by Latin America, some are expecting for European investors to make their way to southern Florida.  As long as the deals are present, so will the international investors.