There are numerous websites, podcasts and YouTube channels that talk about building wealth through real estate investing. Interestingly, the majority of those resources focus on residential rather than commercial real estate. Why is that? Perhaps it is because identifying, analyzing and purchasing commercial real estate isn’t for the faint of heart! The process of establishing market value, making an offer and even submitting a contract of sale are all very different in a commercial real estate (“CRE”) transaction. Traditionally, participating in the exciting world of commercial real estate required many years of knowledge, experience and carefully cultivated business relationships in order to minimize risk and increase the chance of a success.
In today’s world, there are two developments that have evened the playing field and challenged the status quo of CRE property acquisition: 1) The Internet – although most of the information about real estate investing is slanted toward the residential end of the spectrum, there is still a lot of great information about CRE investing if you know where to look for it, and 2) CRE agents who are willing to help clients with limited CRE experience understand the nuances of CRE property acquisition and find opportunities that meet their real estate objectives.
So if CRE is so complicated, why bother? For business owners, purchasing a building in which to operate their business can be a good way to generate an additional revenue stream or to offset operating expenses. For others, commercial real estate provides a means of generating passive cash flow, which can then be used to support their long-term financial objectives.
In either case, the services of a professional commercial real estate (CRE) agent can significantly reduce the complexity of purchasing these types of properties. For those who already own commercial real estate, knowing the value of your property with respect to current market conditions is essential in order to maximize return on investment. As your CRE agent, I will make sure that you have the latest industry data with respect to CAP rates, vacancy and lease rates, and other industry metrics that real estate professionals use to establish market value for your property.
Knowing what you want to buy is the first step on the road to completing a commercial real estate transaction. Are you interested in existing properties in the multifamily, commercial retail, or self-storage market segments? Or perhaps you are thinking of acquiring land on which to build an income producing property? Whatever your interest or project, I can help you identify and evaluate properties and guide you toward opportunities that align with your business objectives. Utilizing recognized industry resources, I can provide you with accurate and detailed market date and trend analysis compiled by some of the best analysts in the country. This data can be used to determine if an opportunity meets your financial criteria and, if so, what value to place on the subject property. Equally important are the terms to include in any proposed CRE transaction; in some cases, the terms can be even more important than the price. Starting with property identification and progressing through each stage of the acquisition process—Letter of Intent, Negotiation, Contract, Due Diligence and Closing—I will be your advocate to ensure that you are always in the best position to make a sound business decision.
Most investors have timelines for their real estate holdings. Typically, the investment timeline is based on targets for return on investment and/or a commitment to investors for return of capital. Whatever the reason, as you approach the target date for selling your commercial investment property, it is critically important to know the market value of your property. To determine the value of your commercial property, you will need access to current sales and leasing metrics for your property type. You may need to prepare a Pro Forma to highlight the upside potential of your property for potential buyers. You will need to gather financial data related to the income and operating expenses associated with your property. And finally, you will need to properly market your property to attract potential investors. As your CRE agent, I will present you with a detailed plan for selling your property that will include:
- Coordinating the gathering of the necessary documentation and financial data;
- Providing a broker price opinion (BPO);
- Creating the marketing material and Offering Memorandum (OM);
- Reviewing the marketing plan for your property.
As your advocate, I will provide regular market feedback, answer all of your questions and do my best to keep the stress of your real estate transaction to a minimum.
If you are interested in using the proceeds of your property sale to acquire a “like-kind” property via a 1031 Exchange, I can assist. If you are unfamiliar with the Section 1031 Rule of the Internal Revenue Code, I will provide information and resources that will allow you to determine if this is an option that you would like to explore. If you are an experienced investor who understands the 1031 Exchange requirements, I will facilitate the process per your specifications. In either case, I will make sure that you are aware of all critical dates and make sure that you have considered all of the requirements of the 1031 Exchange Rule in the acquisition of your like-kind property or properties.
Landlord Representation (Leasing)
If you purchased a Retail of Office property, you will invariably need to lease vacant space. Marketing a property, finding prospective tenants, showing available spaces, negotiating lease terms, and consummating a commercial lease are generally much easier with the assistance of a CRE agent. A CRE agent working in this capacity is often referred to as a Landlord Representative or “Landlord Rep”. As your Landlord Rep, I will leverage the resources of Coldwell Banker Commercial to properly position your property in the marketplace and proactively pursue suitable tenants. I will make sure that you understand the current market rate for lease terms, including base rent, rent concessions and tenant improvement (TI) allowance for your building type and class. I will provide regular updates on inquiries, showings and market feedback so that you can feel confident in the manner that your vacancy issues are being handled. Working as a team, we will maximize your effective gross income and minimize the negative impact of vacancy on your investment cash flow.
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