San Diego Industrial Warehouse Market News

rics.org – 23 Sep 2013

Charles Smith FRICS, Founder of Boston Fieldgate Commercial Property Advisors, tells you what to consider.

Location, location, location. “Not that old mantra!” I hear you cry, but location is one of the main ingredients in the recipe for successfully choosing your new commercial premises. However, it is not the only one and as a business owner you need to consider a number of factors.

Selecting the right property so it increases your profitability and reduces stress requires early and detailed assessment and planning. In my experience there are some key themes you need to factor in to your thinking so you can make an informed decision.

Choosing the right location
Location is a many-faceted issue that impacts upon not only your staff but suppliers and customers.

For staff it isn’t just how easily they can get from the bus or where they can park. It is also about the immediate environment of the building and its access to facilities that your employees like to use as well as how easily can you get to your customers or vice versa.

Location also has a significant impact upon your ability to retain and recruit the best staff which directly impacts your bottom line as the cost of recruiting is considerable. Besides, happy people are more efficient and productive and a stable business in terms of employees is always going to be better.

Getting this right adds value direct to your bottom line and it costs you little.

What are your space requirements?
Built space is expensive and it is not just the rent but business rates, service charges, costs in use that all start to impact. Even in off-prime, city centre style locations.

In Birmingham the cost per sqm would be around £320/sqm – a waste paper bin could cost you £30 a year!

To get an idea of what you need, look at the number of staff you have, their roles, and any future expansion planned. An initial calculation might be up to 10sqm for each member of the team. To that you add boardrooms, storage areas, kitchen and staff areas – the numbers add up very quickly.

As property is generally inflexible you need to factor in any growth or downsizing that is reasonably predictable.

Technology advancement and changing working practices (hot desking, working from home) continue to allow an element of ‘flex’ in any event and this may be sufficient for 10-15% variation in staff numbers.

Taking too much space could prove terminal for the business and provide it with unsustainable overheads. This is where the advice from a chartered surveyor is invaluable.

What can you afford?
Set a budget and stick to it. As a very rough rule of thumb property rental and associated rates should be less that 15% of your turnover.

If you’re outside of that then you should consider what the impact is on your bottom line and business sustainability. Every business is different so this is not a definitive line in the sand more a guide. Projected growth in turnover will then help inform your budget going forward. We would all love really plush offices with all the whistles and bells but it is about a balance.

Does it match your brand image?
Expensive finishes are great but not if your clients feel they are paying for them!

You want it to signify success not failure but more broadly, what do you want stakeholders to see – their first impression from the outside and then from the inside. From the reception area through to the space you will occupy?

There is plenty to think about but be realistic. You can be quirky, provided it is interesting and well done, it can be a real wow factor and differentiator.

A client of mine recently created a sound proof box, within their space, for video presentations and screenings. They pasted an enlarged photograph of No 10 on the entrance so you actually feel like you are going somewhere important – to see the PM, perhaps. I’ve not seen that before so it resonates positively.

Property can be an asset or a liability. Keep you profits up, your stress down and talk to the professionals – RICS members can guide you through the process as we have seen it all before and our knowledge can save you lots of wasted time and effort. We also know what is available through our own experience and our network of contacts.

Download the RICS Small Business Property Guide for comprehensive advice on common property decisions and actions you may need to take – from acquiring a lease to challenging a dilapidations claim – along with vital property-related issues such as valuations, planning permission and the business rates system.

Boston Fieldgate Commercial Property Advisors offer hands-on, pro-active commercial property advice tailored to client needs. They specialise in property strategy to delivery, acquisitions, disposals lease advisory, rent reviews, renewals and restructuring, business rates reviews and development consultancy.

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As the global recession drags on, new concerns are rising about commercial real estate. So far, this sector — which in the past has led the economy into trouble — has been overshadowed by the crisis in the credit markets that has lead to sharply depressed stock prices, a collapse in consumer confidence and rising unemployment.

Now, with loans written during the boom years coming due, property owners face higher vacancies and lower rental rates as a result of the recession, and a less-than-receptive environment for refinancing their obligations. Wharton faculty, industry analysts and politicians suggest that commercial real estate is about to become the next high-profile casualty in the ongoing economic meltdown.

“The shoe has already dropped,” says Wharton real estate professor Susan Wachter. “Values are down severely. Vacancy rates are at 20-year highs.” The Federal Reserve reports that delinquency rates on commercial real estate loans have doubled in the past year to 7%, as companies pull back on commercial space and retailers go out of business.

Typically, commercial real estate developers help lead the nation from boom into bust by constructing too much space and defaulting on loans, jeopardizing the stability of lending institutions. This time, problems in the financial sector are branching out into commercial property.

“This is entirely a financial crisis, first and foremost. The problem is the seizing up of financial markets, not overbuilding as in the past,” Wachter says. “The overall economy is weak and weakening, which is driving down rents. Past real estate crises were centered in real estate without an economy-wide crisis at the same time.”

With financing tight, it is difficult or impossible for property owners to rollover short-term financing when it comes due. For example, General Growth Properties, the second-largest shopping mall company, filed for bankruptcy court protection after its lenders refused to refinance $27 billion in debt. The Real Estate Roundtable in Washington, D.C., estimates $400 billion in commercial real estate loans will come due this year. By 2012, the figure will be more than $1.8 trillion.

“The commercial real estate time bomb is ticking,” said Rep. Carolyn Maloney, D-N.Y., during recent hearings on the commercial real estate industry before the U.S. Congress Joint Economic Committee.

Wharton real estate professor Joseph Gyourko notes that residential real estate has already surfaced as a major factor in the recession. Many homeowners bought properties at inflated prices fueled by easy credit and now hold mortgages that are worth more than the value of the underlying property. “I think there was mispricing in commercial real estate, too, but it is not as bad as in housing because that would be impossible,” Gyourko says. “There was a lot of optimism about commercial real estate values and a lot of cheap debt [was taken on]. I think there will be stress that will make this worse than what happens [during a] normal downturn.”

In a paper titled, “Understanding Commercial Real Estate: Just How Different from Housing Is It?,” Gyourko presents evidence that today’s weakly capitalized commercial real estate sector will send property values down, as has occurred in housing. The paper concludes that commercial real estate, which is “further subject to the negative economic shock of a severe recession, looks likely to pose another problem for the health of the banking sector and the financial system more generally.”

Wachter sees a bifurcation in the commercial real estate sector. Large, publicly traded real estate investment trusts (REITs), with equity in projects and access to public markets, are best positioned to ride out the downturn, she says. Other real estate firms, particularly those controlled by private equity funds that face short-term debt obligations to financial institutions that are in trouble themselves, will have less flexibility.

An Opportunity?

“This is an opportunity — or may be an opportunity soon — for REITs that are positioning themselves to take advantage of other companies and bottom fish to purchase significant properties at bargain basement prices,” says Wachter. She cites plans by Vornado Realty Trust to raise $1 billion to create a fund to invest in distressed properties. “It’s back to ‘cash is everything.’”

Indeed, publicly held REITs reported strong second-quarter results. The Dow Jones Equity All REIT Total Return Index, composed of 114 REIT stocks, rose 28.9% — the largest increase since the index was created in 1989.

Brian Case, vice president of research for the National Association of Real Estate Investment Trusts, says many REITs have shored up their positions with cash raised in secondary offerings. In the future, he expects to see a new wave of initial public offerings (IPOs) by private real estate investors who are proven managers with strong portfolios, but who are also under pressure from debt that is coming due. In a better credit environment, that debt might have easily rolled over, but in the current climate an IPO may be the only source of new money. They have two choices: sell into a very soft market through 2012 or, if they are strong enough, do an IPO and use that equity to meet debt obligations,” according to Case.

Wharton real estate professor Peter D. Linneman agrees that private equity real estate funds face the greatest peril. Because the firms have committed so much capital, they have little in reserve to weather uncertainty, he notes. “I think it’s fair to say that economic and capital market uncertainty leaves a lot of those funds hamstrung.”

Meanwhile, the U.S. government is attempting to ease the crisis by extending its Term-Asset-Backed Securities Loan Facility (TALF) to troubled commercial real estate firms. The program opened for new real estate loans earlier this summer but received little interest. The TALF program was then extended to existing commercial mortgage securities. On July 16, the Federal Reserve Bank of New York said investors sought $668.9 million worth of loans to buy securities backed by commercial real estate loans that were made months or years ago. Two days earlier, Standard & Poor’s cut ratings on commercial real estate bonds issued by Goldman Sachs, JPMorgan Chase and other financial institutions, effectively disqualifying billions in bad loans from the government program.

“The government has successfully stopped runs on banks and has stabilized the banking economy, but that doesn’t mean it can coerce banks to make loans to entities where the value of their collateral is down as much as in real estate,” says Wachter.

Total losses in securities backed by commercial property loans could climb as high as $90 billion in the next few years, according to Deutsche Bank analyst Richard Parkus, who also testified during the recent Joint Economic Committee hearings. In addition, he estimated up to $140 billion in losses from construction loans made by regional and local banks is also in jeopardy. “We believe the bottom is several years away,” Parkus told the committee.

Wachter says the use of commercial mortgage-backed securities (CMBS) was not as flawed as mortgage-backed securitization in residential markets, but she predicts the CMBS market will face reforms before it becomes a force in commercial real estate finance again. Ultimately, however, securitization will continue to be an important element in structuring commercial real estate finance. “How it comes back is still in question, but it will come back. There are some clear issues with CMBS.”

In the meantime, property owners are scrambling to renegotiate with tenants and reposition properties to make them more likely to receive continued financing. Wharton marketing professor Stephen J. Hoch says retailers are approaching landlords and threatening to close their doors if they don’t receive concessions. “The REITs have adapted and tried to be proactive,” says Hoch. “It’s taken a catastrophe to wake up and smell the coffee.”

The Inflation Factor

Linneman cautions that a combination of record increases in the level of consumer savings as well as government fiscal and monetary policy designed to halt the economic collapse will inevitably lead to higher inflation. He notes that real estate companies have been able to predict an inflation rate of more or less 2% to 3% a year for the last 25 years, and focus more on location or operations. Now, he says, inflation has the potential to become a major factor in future real estate development and management decisions. “You have to actually say, ‘What is my view of inflation?’ and 2% to 3% is not an acceptable answer. You really have to think about it because the money supply could create a spurt of inflation that will swamp anything you do at the micro level with your property.”

Linneman says that while Fed Chairman Ben Bernanke has promised to pull back on the money supply the minute inflation ticks up, it will be politically difficult to pull back — by raising interest rates — while the country is still wrestling with lagging unemployment and weak credit markets.

Further, he argues, the government’s involvement in the economy will be another important factor shaping the future of commercial real estate markets. Actions taken by the Bush administration at the end of 2008, and later by the Obama administration, have thrown long-term market assumptions “out the window,” he says, noting that the government is taking on more socialist characteristics and creating more uncertainty in markets as policymakers change the rules of business. The government’s involvement in the economy will slow the rate of economic growth to rates not seen since the 1970s, he predicts.

Linneman says he voted for President Obama, but adds: “I didn’t vote for France” — where government plays a strong role in supporting particular companies and industries.

He is also critical of the current administration for not taking strong action to force banks to recognize losses, which he believes would have paved the way for renewed lending and growth. According to Linneman, it’s ironic that Larry Summers, who served as Treasury Secretary in the Clinton Administration and is now director of the National Economic Council, was constantly urging Japan’s banks to write-off bad assets during that nation’s prolonged economic slump. Now, he says, Summers is reluctant to take the same action against major U.S. lenders.

The administration seems prepared to let small banks go under, Linneman notes, although the policy would have little impact on commercial real estate because of their small portion of the real estate lending market. The largest 20 institutions control the bulk of the assets and the administration has not been forceful in encouraging them to clear out bad assets. Government ownership of shares in leading banks is a powerful reason. “It will look like we’re giving away the nation’s assets now that we are owners of these things,” says Linneman. Instead, “I think we will get prolonged stress.”

As technology takes on an increasingly important role in business productivity, replacing workers and their space requirements, real estate developers have steadily reduced the ratio of commercial square-footage to real GDP. Linneman notes that construction activity has dropped by half since peaking in 2006 and 2007. “The good news is that when the economy does turn around, we will be going into it with relatively little supply.” If the recovery is similar to those of the past, the upturn in absorption of vacant space and rental rates will be more robust than expected.

The future of commercial real estate, he stresses, is linked strongly to the overall economy. “Everything about real estate today is basically about the economy,” he says. “As the economy rebounds, confidence in general will grow. As that occurs we will see more confidence in capital markets and hopefully more stability in the political environment.”

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enterprisedojo.com

A productive workspace is the key to a successful company. If you want to get the best out of your employees, it is crucial to consider productivity in every aspect of your office design. Happy employees are productive employees so whether you are trying to improve your existing office space or you are looking for a more productive office design from somewhere like Skyline Offices, here are three ways to boost productivity in your workspace.

Asses the Temperature

Designing a comfortable space isn’t just about high quality office chairs. The temperature of an office can affect the happiness of your employees and therefore affect productivity levels. Getting the temperature right can be quite a challenge as some people prefer to work in a cooler environment than others. Studies show that a cold working environment can have a negative effect on productivity and that’s not all. The study in question found that employees made more mistakes when temperatures dropped below 20 degrees Celsius. In order to reach a happy medium, give your employees a survey to fill in and this will help you decide on the best heating solution to put in place. It is also wise to provide employees with heaters to allow them more control over their working environment.

Lighting

Lighting is another important aspect to consider if you want to boost the productivity of your workforce. According to recent research, having access to natural lighting rather than artificial lighting can make you feel more alert. The quality of your office lighting can directly affect the mood of your employees and therefore this aspect should be carefully considered. Try to ensure that every employee has access to natural lighting where possible or try to position employees away from direct light and install lensed-indirect lighting instead.

Comfort

An uncomfortable working environment can see productivity plummet so as a business owner, it is your responsibility to make sure they are happy. Bad posture and back ailments are common in the office environment so providing employees with the right chairs and equipment to prevent these conditions will go a long way. Comfortable chairs, foot rests and back rests can improve office conditions significantly for many individuals and this will have a positive effect on your business. Provide your employees with a guide to office ergonomics so they can learn how to sit comfortably and improve their posture.

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FORTUNE — Hilton Worldwide recently announced plans to return to the public market, after The Blackstone Group (BX) took the hotel giant private in 2007.

The private equity firm is eager to recoup some of the $26 billion it paid for the chain just before the credit crunch. Whether Blackstone will be successful remains to be seen, but the initial public offering comes as the hotel industry, and more broadly, the commercial real estate market, turns around.

Less than four years ago, lawmakers and executives warned that the market for hotels, malls, apartments and office buildings would be the next to collapse, after countless homeowners lost their homes to foreclosures. While prices across the commercial real estate declined almost 40%, it never quite crashed like the housing market. Yes there were foreclosures and defaults, but not to the scale of housing.

There are a few reasons why the crash never came, which also help explain how commercial real estate has recovered much faster than the market for homes. Unlike residential, the commercial market didn’t bubble up nearly as much as housing; it was not nearly as overbuilt, either.

MORE:The barbarians are still at the gate

This had a lot to do with timing, says Casey Mulligan, economics professor at the University of Chicago. The boom in home construction took workers, materials and land away from the commercial sector. It was only after 2005, when the housing market bubble burst, that more of these resources freed up and construction projects started picking up — but that was short-lived since the financial crisis shortly followed.

While there were defaults, the commercial market didn’t see nearly as many foreclosures as the housing market. Joblessness and plummeting home prices led many to miss mortgage payments, which led to the wave of defaults. Commercial properties saw similar price declines, but unlike residential properties, owners enjoyed continuous flow of income by way of rents from tenants. This gave owners struggling with the credit crunch considerable relief.

“There were defaults in the commercial space, but it didn’t hit the heights seen in the single-family market,” says Susan Wachter, real estate and finance professor at the University of Pennsylvania’s Wharton School of Business. Rather than a wave of defaults, the real estate crash triggered a wave of workouts whereby banks renegotiated the terms of loans, sold to new owners or took the properties over. Private equity firms also swooped in and bought up distressed properties.

“Any solution did not trigger excess supply in the market,” Wachter adds. “It was almost a nonevent in the commercial space.”

MORE:More Americans pay mortgage first again, then credit cards

On average, prices regained all the ground that was lost during the downturn, according to the monthly index by Green Street Advisors that tracks commercial real estate prices. While office industrial buildings have a ways to go, prices for apartments, high-end malls and strip centers are well above their prior peak.

Hotels, in particular, have recovered in big ways as stocks soar and the economy improves. And Hilton’s move to go public is the latest example. With hotel stocks close to a five-year high and revenue and profits growing industry-wide, investors are taking advantage of the stock rally to sell assets.

Hyatt Hotels (H), the chain controlled by Chicago’s Pritzker family, raised $1.09 billion in an IPO in 2009; it rose 12% on its first day of trading. Since the IPO, shares have gained 77%.

Caesars Entertainment (CZR), the casino chain that also operates hotels, sold shares to the public last year, after private-equity owners Apollo Global Management LLC and TPG Capital took the company private about four years ago. Since the IPO, shares have risen 81%.

The crash in commercial real estate may or may not have happened, but if it did, it probably wasn’t as bad as many thought.

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Los Angeles Times

By Martin Eichner
September 20, 2013, 8:16 p.m.

Question: My partner and I went to check out a vacant apartment in a very attractive local rental community. We met with the management’s leasing staff in the community’s leasing office. We were happy with the rent amount and the other basic terms they described verbally, including a one-year lease. However, when they asked us to sign the lease we saw that it had a lot of pages with many terms and conditions. We asked if we could take a copy home to review before we signed it, but the leasing agent said no, because the lease was a proprietary document. Basically we were told to sign immediately if we wanted the apartment. We were told a copy would be sent to us after we signed.

We decided to go ahead and sign because we believed there was a law that allowed us to rescind the lease within three days, so we would be safe if it turned out we didn’t like the lease details. As three days were passing, we asked for our copy but did not receive it. Then when we tried to notify management that we were rescinding the lease under the three-day rule, they told us there was no such law. We have moved into the community because we didn’t want to lose our deposit, but we still don’t have a copy of the lease even though a month has passed. Were our rights violated?

Answer: Unfortunately for you and your partner, you were relying on a very common misconception when you assumed you had three days to cancel the lease you signed. Certain contracts such as consumer contracts are by law subject to a right to rescind within three days after execution, but there is no such right under the laws governing residential rental agreements. You were bound by the lease as soon as you signed it.

Also, there is no law that obligated the leasing staff to allow you to have a copy of the lease before you signed it. However, their failure to allow you sufficient time to review the document prior to signature should have been a red flag for you.

Civil Code Section 1962 does require your new landlord to provide a copy of the signed lease to you within 15 days after you signed it. Since it has now been more than 30 days since you signed your lease, your new landlord has violated this statute. Section 1962 does not, on its face, render the lease void for failure to comply with the duty to provide a copy.

However, you should document the landlord’s failure to comply with an email or letter demanding a copy. The landlord’s failure to comply, combined with the failure to allow you a sufficient opportunity to review the document, will give you a strong argument that the many detailed provisions in the lease form are not enforceable against you.

Eichner is director of Housing Counseling Programs for Project Sentinel, a Bay Area nonprofit. Send questions to info@housing.org.

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Inspiring communication can elevate people and communities. It changes the way we feel and take action toward a better future.

The secret to inspiring others is connecting an idea or a vision with a sense of urgency to make a difference. Great leaders leverage their message and story in one way or another to make a connection and compel change.

Leadership is the understanding that everything communicates.

Everything we do or say has an important message to convey, whether you like it or not.

We can either make choices in advance about what and how you’re going to communicate or react to what others do. It is

As a leader you need to discover your true message and be crystal clear on your platform for change, vision, and call to action before you start trying to inspire others. It will evolve as you learn, but you can’t lead unless you have a starting point to help focus those important communication values.

Inspiring Leaders persuade better
Few people care about the “how” until they understand the “why” they are doing what they are being asked to do. People want to understand the benefits and the costs of joining you as leader. What’s in it for them? Or is it all about you? People get inspired when they know why you want to talk about your initiatives and ideas that will improve their lives.

Inspiring Leaders tell powerful stories
Inspiring leaders are great connectors. They communicate through story telling. Facts and figures are not enough to navigate people into a better journey. You must share and relate stories to the heart.

When leaders communicate, the most important thing people want to know is, “Where is your voice?” Why should I listen to you?

Inspiring Leaders welcome feedback
Great leaders take the time to listen deeply. They dig below the surface to help their relationships take a meaningful journey of understanding and trust. The only way you are going to cultivate that is by being open to feedback and let people have a point of view.

Does that mean that there won’t be disagreements? Probably not. However, Inspiring leaders inspire others to share and even sometimes encourage a different point of view

Some of the most important decisions in our history were made not by one person but opposing views on a particulate topic.

Inspiring Leaders encourage the best in people
When you focus on people’s talents and strengths, you are paving the way for leadership. You are coming from a place that cares and continuously looking out for the best interests of others. Inspiring leaders understand that people have something to offer. They drive and engage in people’s contributions.

When other people flourish and shine, so is the leader. Their success is your success.

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Part of being a responsible adult is planning for the future. Most of my family’s plans for the future have been based on getting out of debt now and setting up our retirement savings. If you’ve been following my blog, you know that we have been making changes to our 401K and investments since 2008. Just click on the category links for “Retirement” and “Wise Investing Made Simple” to read my older posts, such as “Choosing the Best Investment Strategies” that I wrote about a year ago.

Once we’ve started on the basics of planning for retirement, we are ready for the next step, checking out the different investment opportunities. Today’s financial marketplace has many different ways to earn a good return on investments, including:

life insurance,
mutual funds,
bonds,
trusts, and
real estate.

We have been particularly interested in commercial real estate, which can be anything from buying or building a small strip shopping center, an office building or multi-family properties.

The U.S. economy is slowly recovering and this has signaled changes in the banking and mortgage industries. Record low interest rates on loans for real estate are starting to rise, and demand for rental housing continues to grow. Even the Federal Government’s web site for FreddieMac mortgages endorses buying apartment buildings in most metropolitan areas as a good investment. Established in 1970, Freddie Mac makes mortgages possible for one in four home buyers and is one of the largest sources of financing for multifamily housing. Their website shares a wealth of information on investing in apartments, including information about qualifying for their loans, market insights and checklists.

Digging into more information on investing in apartment buildings, I’ve found advice from many sources and have learned a lot already. Successful investing in commercial real estate, and especially multi-family properties, depends upon three things:

Finding The Right Property
The Right Location
The Right Financials

Finding the right property is the most time consuming and challenging part, but some people consider it the most fun. You get to meet many different professionals, from commercial real estate brokers to property management companies, appraisers, insurance agents, attorneys and mortgage brokers.

We will start our search for the right property by conducting an overview of the existing market and property owners. Companies that are proven successful in owning and managing apartment buildings, such as Post Brothers in the Philadelphia area, can be good role models but might also be good candidates for considering a purchase offer. I found their story intriguing, starting with the fact that their company really was founded by and is run by two brothers.

Post Brothers Apartments is a good example of a company which manages properties and their web site describes how each one was selected and is maintained on certain criteria, such as:

strength of community
tenant focus
local resources/neighborhood
green initiatives and eco-friendly
accessibility to transportation options

As an investor, I would mirror the Post Brothers business model and task my commercial real estate broker with finding properties like theirs to tour as a good investment prospect. I especially like the many steps they have taken to be green, such as all Energy Star appliances in each unit, and meters so tenants can see for themselves have much energy they use.

Then it all comes down to the financials. If you like the property and believe it can make money for you without requiring a lot of additional capital investment, the next step is to prepare and submit a Letter of Intent (LOI) to gain access to the property’s financial and records. If everything checks out, making an offer to purchase puts you on the path to a multi-family property owner!

Find commercial properties for sale in Los Angeles at http://www.enconcommercial.com

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In case one of you are considering investing directly in to commercial real estate arena, this article is for you, based on what I learned from my friend and doing some feasibility study over net and talking to other people. If you would like to buy commercial real estate, you can do it here.

20 Tips for Commercial Real Estate Investment –

1) From the start, make it clear to yourself that you are an investor and certainly not a ludicrous accumulator of commercial properties. Remember that the concept of establishing commercial real estate investments is to generate abundant profit. So, if you do not produce any profit when you resale, then that only means to say that you only possessed a property and did not invest.

2) Find out if you and the commercial properties are completely and personally protected prior to purchasing. This is to protect you from any lawsuit.

3) Accept that commercial real estate deals do not really provide you handsome profits overnight. These properties are commonly a bit difficult to sell but once they have great attraction, they can bring greater rewards. So, be patient and do not rush in making unfavorable decisions.

4) Carefully study all property types and pick your own corner based upon your comfort zone and whatever shall aid you obtain your profit objectives without much hassle.

5) Always remember that there is a learning curve whenever you experience spending more of your time in concluding a particular deal. Things will for sure fall into place once you perform exceptionally well.

6) Make sure to keep more contacts in your network who understand what you are searching for to buy or sell.

7) It is important for you to consider reserving more seed money since the initial down payments are generally of a greater percentage as compared to family house loans.

8) Devote more time in determining deal partners or private lenders to back you up. These may provide the credit or money necessary to buy high value commercial property and you may allot with an agreed percentage of the earnings from the sale.

9) Only work with expert real estate agents, an well-experienced professional who can answer questions which may arise while assessing commercial properties or purchasing them, shall help you immensely. Make sure that you also understand all the regulations and laws in force in your state and city.

10) In this type of business venture, it is best to think long-term; that is, you must be ready to hold properties with a minimum of ten years.

11) Be practical and ask yourself important questions like what’s your time worth? Prior to putting your money down, carefully ponder about how much work you’re prepared to do and how much you’ll contract out work.

12) Of course, you have to learn and understand by heart the tax codes.

13) Aim attention at one investment type at a time. This is primarily valuable when you’re first starting out; you must concentrate on one type of investment such as land, apartments, retail, offices etc.

14) Think about environmental issues such harmful waste problems. Take note that property owners have the main responsibility for repairing such problems, although the present property owner didn’t actually cause them.

15) Consider getting a mentor so you can acquire ideas from his/her mistakes and for you to understand the whole thing that revolves around in commercial real estate venture.

16) If you’re in a partnership deal, see to it to fund your deal with a non-recourse loan. Non-recourse discloses that you are not personally guaranteeing the loan; that is, it enables you to be withdrawn from the loan in case the partnership went sour and, in case the property did not succeed, it won’t be obligated to you personally.

17) Understand that each property comes with a lifetime. In short, every building needs repair and restoration, so see to it that you secure a long-term plan to manage such repairs.

18) You must know how to recognize an excellent deal. The most exceptional deals are the ones you can easily walk away from.

19) Your top priority should be to set parameters so you must master how to map out a plan of effective action.

20) The most practical strategy to assess and determine a commercial property is to review the neighborhood it’s in, by searching for vacancies, making conversations with neighborhood owners and going to open houses.

Some additional tips on commercial real estate deals are here also you might not want to miss out on this gigantic post about 100 ways to make money by real estate investing.

For me, I want to first start with investing in rental property which is meant for personal usage. If I can handle that then I may consider venturing out in to commercial real estate investment.

Readers, if you’re a commercial real estate investor, do share your experience with us.

SB is a husband and working as a software professional for a Fortune 100 corporation in Florida. Thanks for visiting the blog.

Posted from WordPress for Windows Phone http://www.enconcommercial.com – Find warehouse and office space in Los Angeles for lease or purchase.

September 11, 2013 Real Estate Money Bulldog
We are all on the lookout for ways to make our money work harder for us these days. If you are fed up with the low interest rates given by banks and the risks associated with the stock market then maybe you are tempted by the idea of buying commercial real estate? If you are then here are some of the points you might like to consider.

The Purpose of the Investment

There are a few different reasons why you might want to buy a commercial property. For a start, if you plan to run a business out of it then buying a property outright is going to be a lot more profitable for you than leasing one for a long time. Paying the rental amount every single month is something which is going to eat into your business profits. Of course, leasing also means that at the end of years of paying for a premises you will have nothing to show for it.

Even if you aren’t going to work from it, though, it can still make sense to buy a slice of commercial real estate and let it out to someone else. This is similar to buying a residential property to let out, in that your original investment grows over time as the property rises in value. Meanwhile, you can be cashing in with the rental money every month for it as well, making it something which starts to earn you money right away.

The Length of the Investment

Another issue which you need to think about before making any sort of investment is how long you want to hold onto it for. Property investments of all types tend to perform better when they are viewed as something which you are going to hold onto for a relatively long period of time. However, it has to be said that commercial real estate values can rise sharply enough at times to make a short period of investment something worth doing. As with every property you buy, it all comes down to buying and selling at the right time. Ideally, you will have enough financial freedom to not have to worry about having to sell it other than when the time is perfect for you. Selling any sort of property under pressure usually means not achieving the best possible price for it, and that is something you will definitely want to avoid if you want to make as much from your investment as you can.

Conclusion

There is no doubt that buying commercial real estate is a great idea in a lot of situations. If you are going to need commercial premises to work from then buying one is definitely the smart approach, which is going to save you a lot of money. If you are just looking to make a good investment with your money then it could be right for you as long as you find the right deal. At the moment in the UK, commercial property prices are starting to rise again, with July 2013 marking a third consecutive (modest) increase. There is a feeling among some analysts that prices are still very much on the low side and that further growth is due. Like any other type of property investment, markets can rise and they can fall. This means that investing in property is something which is best done when you are looking for a long term way of growing your cash, rather than a quick profit. Having said that, if you can lease it out in the meantime then this is going to make sure that your profit isn’t entirely dependent upon the price you sell for.

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Your landlord may ask for a security deposit to assure that cash will be available if you fail to pay the rent or don’t make other payments required under the lease. Unlike residential landlords, who in many states may not ask for more than two or three months’ rent as a deposit, commercial landlords may set whatever deposit amount they want. You may be able to negotiate the dollar amount and more favorable terms if you are a desirable tenant with impeccable credit and business history (especially if you are renting space that has been vacant a long time).

Unless the lease provides otherwise, the landlord may not increase the deposit during the term of the lease, and you may not use the deposit to cover the last month’s rent. Your landlord will typically return the deposit at the end of the lease, minus any deductions, such as for damage repair.

Where the Landlord Will Keep the Deposit

No law requires the landlord to put it into the bank or pay you any interest the deposit earns. Ideally, the landlord will put the deposit in a separate account (not commingled with the landlord’s other funds) in a federally-insured bank and give you the interest, but that’s up to the landlord (and your bargaining power).

How the Landlord Will Use the Deposit

Landlords often deduct from the deposit at the end of the tenancy—to cover damage that you haven’t fixed or outstanding rent. However, landlords may also use this money during the tenancy. A typical deposit clause will state that the landlord may use the deposit if you fail to pay money you owe under the lease. When the landlord dips into the deposit to cover unpaid rent or another default, you will typically have a set amount of time to replenish the deposit (try to get as much time as possible to do this).

Breaking an important term or condition of your lease—a default—also constitutes grounds for termination of the lease. Can the landlord use the deposit and terminate? Unless the deposit clause clearly states that the landlord can’t do both, that’s what might happen. In fact, you’ll want to go further and require the landlord to first look to the deposit to make up for any monetary default on your part—in other words, you don’t want the landlord to have a choice of curing the default or terminating the lease. If the deposit can cover the money you owe, you’ll want a provision in the lease that there will be no termination. A landlord who agrees to this provision will probably insist that this cure right will be extinguished if your defaults are large and/or frequent.

When the Landlord May Use the Deposit

You won’t want the landlord to be able to dip into the deposit, perhaps without even telling you, every time you owe a payment or are late with rent. At the very least, bargain for a notice and cure right—a promise that the landlord will alert you before using the deposit and give you a few days to come up with the money. For example, if you’re going to be slightly late with the rent because a large account will be late paying you, you’d want the landlord to notify you before taking the rent out of the deposit—so that you can redouble your efforts to collect on that overdue account.

Landlords sometimes take money from a security deposit not only when the debt is clear and undisputed, but even when the very existence of the debt is in question. For example, suppose the two of you are engaged in a dispute regarding the proper calculation of common area maintenance (CAM) costs. If the rent clause doesn’t require that these disputes be mediated or arbitrated, the landlord might simply satisfy the claimed debt from the deposit. To guard against this end run, negotiate for a clause that allows the landlord to use the deposit only when you’ve failed to pay an undisputed debt (one you don’t contest) or an adjudicated debt (one that was the subject of court proceedings and was reduced to a judgment against you).

This article was excerpted from Negotiate the Best Lease for Your Business by Janet Portman

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