‘Commercial real estate investment’ refers to the class of real estate that is primarily meant for investing money for profits later on. Examples of such properties include:
• Restaurants (including franchises)
• Retail
• Office buildings
• Self-storage (Mini-storage) / industrial
• Strip malls
• Hotels (also called "hospitality")
• Multi-family / apartment buildings
Why invest in commercial property?
Unlike residential real estate, Commercial real estate investment is evaluated, bought, and sold based purely on numbers - on a set of factors that describe what kind of return on investment you can expect with the property. Most Commercial real estate investment is expected to make a return for you on an on-going (monthly) basis. With the retail boom and increasing return on investment in the commercial real estate market, the value of commercial real estate have grown by leaps and bounds, particularly, in the commercial areas, where the local retail shops and shopping complexes have been replaced by huge and swanky malls.
What to expect?
Remember though! Commercial real estate investment is a long term opportunity, do not expect to increase you net worth over night. No one is going to profit all the time. Real estate investors have to suffer through times of little to no cash flow - it is part of the game.
This may cause panic but if you can stick with it for the long term, cash flow will increase. Investing especially in real estate is not for the weak of mind or body. It can be frustrating, and stressful. But for successful investors the rewards are priceless.
Saturday, July 17, 2010
Saturday, July 10, 2010
10 Steps to a Successful Urban Redevelopment Project
You’ve got a project with exceptional architecture, you’ve completed months of review and modification, your design team is sure this project will get significant notoriety, yet after hours of going back and forth in City Council meetings, they ask you to cut the project in half, increase the setbacks, or just drop the project altogether.
Does this sound familiar?
Developing commercial and residential projects in urban areas require special care. While some urban areas are on the verge of new developments, misunderstanding and community opposition can block even the best designs.
You can reduce risks by taking a thoughtful approach to the process. Some residents and politicians demand programs be based on trust, openness, and consensus building. This should not mean you compromise your design. Executing these ten important steps can result in strong design and a smooth process.
Consensus doesn’t mean that everyone agrees, it’s more about showing respect for different opinions, developing relationships, and identifying shared goals to establish positive public opinion so the project will gain community and government acceptance. It’s important to nurture supporters and expose the extremists.
The following 10 points should be addressed:
1) Create the vision. It’s about design, not density. Establish a vision early by connecting it to local settings and looking for ways to build partnerships. Good design attracts people.
2) Know your market. Do the homework necessary to understand the competition and the market forces that influence a project.
3) Understand the issues. All communities have a set of unique characteristics and issues that guide their decisions. It’s essential to have a good understanding of the marketplace, environment, regional influences, and financial aspects. There is no single solution.
4) Get the public benefit. Make the benefit for the city & community clear.
5) Pay attention to everyone who has a stake in the project. Have small discussion groups to get their feedback.
6) Establish trust. Do this by sharing knowledge and listening carefully. Be honest, encourage participation from everyone, stay neutral and pursue win-win goals.
7) Inform decision makers. Meet one-on-one and provide solutions to educate decision makers.
8) Use the media. Take the high road and keep the message simple. Talk about helping the community.
9) Use the unique. Incorporate the area’s physical social and historical environment into the design.
10) Be patient . Listen carefully, provide guidance, establish credibility, and let the process grow.
By using these ten points, several revitalization plans have been completed in the face of strong initial community resistance. Guided by strong visions which have been established by working with city programs launched to solicit feedback and educate everyone have had a profound effect in the success of revitalization efforts.
Implementing major public and private improvements can convert old spaces into lively gathering places for community activity.
Does this sound familiar?
Developing commercial and residential projects in urban areas require special care. While some urban areas are on the verge of new developments, misunderstanding and community opposition can block even the best designs.
You can reduce risks by taking a thoughtful approach to the process. Some residents and politicians demand programs be based on trust, openness, and consensus building. This should not mean you compromise your design. Executing these ten important steps can result in strong design and a smooth process.
Consensus doesn’t mean that everyone agrees, it’s more about showing respect for different opinions, developing relationships, and identifying shared goals to establish positive public opinion so the project will gain community and government acceptance. It’s important to nurture supporters and expose the extremists.
The following 10 points should be addressed:
1) Create the vision. It’s about design, not density. Establish a vision early by connecting it to local settings and looking for ways to build partnerships. Good design attracts people.
2) Know your market. Do the homework necessary to understand the competition and the market forces that influence a project.
3) Understand the issues. All communities have a set of unique characteristics and issues that guide their decisions. It’s essential to have a good understanding of the marketplace, environment, regional influences, and financial aspects. There is no single solution.
4) Get the public benefit. Make the benefit for the city & community clear.
5) Pay attention to everyone who has a stake in the project. Have small discussion groups to get their feedback.
6) Establish trust. Do this by sharing knowledge and listening carefully. Be honest, encourage participation from everyone, stay neutral and pursue win-win goals.
7) Inform decision makers. Meet one-on-one and provide solutions to educate decision makers.
8) Use the media. Take the high road and keep the message simple. Talk about helping the community.
9) Use the unique. Incorporate the area’s physical social and historical environment into the design.
10) Be patient . Listen carefully, provide guidance, establish credibility, and let the process grow.
By using these ten points, several revitalization plans have been completed in the face of strong initial community resistance. Guided by strong visions which have been established by working with city programs launched to solicit feedback and educate everyone have had a profound effect in the success of revitalization efforts.
Implementing major public and private improvements can convert old spaces into lively gathering places for community activity.
Monday, July 5, 2010
A Real Estate Formula
It was a simple real estate formula. The ads ran in our small-town newspaper for years before I realized exactly what was going on. They were always the same: A house for sale with 5% down and payments of 1% of the purchase price. Maybe a three bedroom home for $90,000, for example, with $4,500 down and $900 per month payments.
When a friend started doing the same thing he explained the process to me. It was a way to get a great return on capital, and it was the opposite of buying with no money down. There is no down payment at all when you buy, because you buy for cash.
The Simple Real Estate Formula
You probably know that when you buy for cash, you can often get a much better price. With no financing contingencies in the offer, and the promise of a faster closing, sellers are willing to sell for less. You can offer $95,000, for example, on a house that might be worth $108,000. If you can't get it for less than, say, $99,000, you walk away - there are always other opportunities.
Once you buy the house, you put few thousand into high-return repairs and improvements. These might include paint, carpet, and maybe asphalt for a dirt driveway. For our example, we'll say you spend $5,000. Let's suppose the house is worth $116,000 now. You're ready for the next important step in this real estate formula.
You put it up for sale, targeting buyers who can't get financing easily. You provide the financing. Because you are making it easy for the buyer, you can get more than the $116,000 value for the home - and do it without paying a realtor's commission. Let's say you sell it for 123,000. The buyer needs a down payment of just 5%, or $6,150, and makes monthly payments of $1230 per month. You charge higher interest than the going rates at the banks, of course.
This is a win-win situation. Your buyer is able to buy a home instead of renting, and you get a capital gain of perhaps $16,000 after expenses, plus good interest. Your total rate of return will often be over 20%!
In our town, the first to do this consistently were a father and son team of lawyers. They saved money by doing their own foreclosures when necessary. Once they foreclosed, they raised the price and sold the home all over again.
They made millions. Did you know that if you can get an average return of 18% on your money, you'll turn $75,000 into more than one million dollars in about fifteen years? That's the power of a good real estate formula.
When a friend started doing the same thing he explained the process to me. It was a way to get a great return on capital, and it was the opposite of buying with no money down. There is no down payment at all when you buy, because you buy for cash.
The Simple Real Estate Formula
You probably know that when you buy for cash, you can often get a much better price. With no financing contingencies in the offer, and the promise of a faster closing, sellers are willing to sell for less. You can offer $95,000, for example, on a house that might be worth $108,000. If you can't get it for less than, say, $99,000, you walk away - there are always other opportunities.
Once you buy the house, you put few thousand into high-return repairs and improvements. These might include paint, carpet, and maybe asphalt for a dirt driveway. For our example, we'll say you spend $5,000. Let's suppose the house is worth $116,000 now. You're ready for the next important step in this real estate formula.
You put it up for sale, targeting buyers who can't get financing easily. You provide the financing. Because you are making it easy for the buyer, you can get more than the $116,000 value for the home - and do it without paying a realtor's commission. Let's say you sell it for 123,000. The buyer needs a down payment of just 5%, or $6,150, and makes monthly payments of $1230 per month. You charge higher interest than the going rates at the banks, of course.
This is a win-win situation. Your buyer is able to buy a home instead of renting, and you get a capital gain of perhaps $16,000 after expenses, plus good interest. Your total rate of return will often be over 20%!
In our town, the first to do this consistently were a father and son team of lawyers. They saved money by doing their own foreclosures when necessary. Once they foreclosed, they raised the price and sold the home all over again.
They made millions. Did you know that if you can get an average return of 18% on your money, you'll turn $75,000 into more than one million dollars in about fifteen years? That's the power of a good real estate formula.
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