New York Real Estate

All property that has the potential to generate revenue now or in the future is commercial real estate. Some types of commercial real estate are:

o OFFICE PROPERTIES… Executive office space, office buildings, executive suites, flex space, rental office space, upscale office parks, corporate headquarters, class A office suites, freestanding offices, bank branches.

o RETAIL PROPERTIES… Shopping centers and shopping malls, shops, strip center sites, chain store site, showrooms, major franchise locations, showroom space, retail sites, pads, out parcels, free standing stores.

o DISTRIBUTION AND INDUSTRIAL PROPERTIES… Warehouses for lease, sublease, rent and for sale, industrial facilities, industrial parks, factories, factory sites, mills, industry manufacturing plants, cross dock trucking terminals, shipping container yards, supply chain management infrastructure, 3pl resource provider company facilities, bonded warehouses, rail freight warehousing, refrigerated climate controlled warehouse space, logistics bulk transport, air cargo airport rentals, deepwater port commerce, airports, rail yards, deep water ports, cold storage and dry storage facilities.

o HIGH TECH PROPERTIES… Research and development parks, medical laboratories, call centers, scientific building projects, office space, NAP, R&D Park.

o LAND BROKERAGE… Corporate Headquarters locations, land tracts, residential development tracts, Industrial Parks, zoned land parcels, speculative acres, waterfront property, reality sites, business parks, resort property, regional mall sites.

o INVESTMENT PROPERTY… Office buildings, industrial rental properties, realty, multifamily rentals, regional shopping malls, shopping centers, rental properties, net leased properties, business parks, land parcels, residential developments.

o HOTEL AND RESORT PROPERTIES… Hotels, motels, resort lodging and hospitality properties, luxury resorts, convention centers, motel and hotel brokers, golf courses, theme park sites, stadiums, attractions. Note that unused property held for future appreciation is also considered to be commercial real estate.

By: Ron Redlich

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The refinancing of commercial property often occurs for the same reason a person might refinance their home – to reduce high interest rates. The owner may also be looking into refinancing in order to obtain cash from the equity that has been built into the property over time. Regardless of the reason there are few points to remember if you are thinking of refinancing your commercial property.

1.Any capital obtained from the refinancing of the property should be reinvested in the property itself. Any other use of the cash and the interest paid on the new portion will not be tax deductible. This cash-out amount will be considered a consumer debt if its use was found to be outside of the property and is therefore no longer tax deductible.

2.Because loans for commercial properties are typically much larger than those for residential properties, it will pay to consider the type of loan you have in depth before committing to a large loan that will take many years to repay. Compare your options for both fixed rate and variable rate loans. Does the variable rate loan have a cap? How many times is it expected to change? These details can often be inferred from the investment index that is linked to the rate. Be wary of any lender unwilling to discuss these details with you.

3.If you decide to refinance, check to see if the new loan has a “due on sale” clause. This clause works to the benefit of the lender in that it prevents the property from being sold without the approval of the lender.

4.Make sure you know what kind of paperwork will be involved. Professionally prepared stated income reports may be all you need for many types of commercial property, depending on the circumstances. Corporate tax returns, profit and loss statements, and balance sheets may not be required. In rare situations, full appraisals or environmental reports may be needed. The more complex the situation surrounding the refinancing, the more complex the required documentation may be.

5.Hefty penalties that must be paid off for pre-payment of an existing fixed-rate loan may prohibit some borrowers from refinancing. Check the details of your original loan to see if there are any pre-payment penalties.

6.Interest rates on commercial real estate loans have reached as low as 5 percent for a 10-year term. Make sure you get the best rate you can if you decide to refinance. It may be best to lock in long-term debt now – interest rates may or may not get any lower.

7.Consider selling if it is an option for you. Prime commercial real estate is a hot investment in many areas today. Test the market and see what kind of offers come back.
8.If your business is doing the refinancing of the building it occupies, acquiring a term loan may be an option. Term loans usually mature between one and ten years and can give small businesses the operating cash they need.

By: J Suffie

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Forget about the competition and focus on creating a successful game plan for landing that perfect listing. Here’s how:

1. Determine what type and location

a. Retail, industrial, office
b. Size: big, small
c. Urban, suburban
d. Areas you’d like it to be located in

2. List all possibilities in this category

a. For example, if you pick smaller suburban retails properties to lease; list all of these properties within your area.
b. You can’t prospect that which you have no awareness of – do a thorough job on this step.

3. Gather contact information

a. Collect the contact information on each property you’ve identified including name, address, phone, fax, and email.
b. You want all of this information so that you can contact these property owners using a variety of mediums.

4. Identify the common problems these owners have and suggest a solution.

a. List all of the problems your prospects may be experiencing as a property owner.
b. Pick the top three and focus on a solution.
c. Let the prospect know you can solve their problems! *

*THIS ONE IS BIG!!!!! PEOPLE BUY SOLUTIONS!!!!!

5. Come up with a game plan for contacting each owner

a. Write a letter introducing yourself and let them know you can solve their biggest problem (see #4 above).
b. Call next, your name hopefully will be familiar to them as a result of the letter.
c. Email after you call. Either thank them for their time or write how you’ve “missed” talking.
d. Fax a letter.
e. And so on.
f. The point here – have a game plan.

6. Set up an appointment to meet the prospect and “snag” the business.

7. Show up prepared.

a. Have nearby comps
b. Know who’s in the marketplace already (don’t forget these businesses still can be candidates to lease if you are seeking a leasing assignment).
c. Provide a sampling of who could be viable buyers or lessee’s (don’t be afraid you’re giving away a few of the goodies).

8. Bring pages and pages of testimonials (written statements from those who have been happy with your service).

a. This is “social proof” that you are what you are portraying.

9. Provide an outline of your marketing program. Bring some samples.

a. Sign
b. Invitation to all brokers to bring a buyer/lessee
c. Direct Mail
d. Emails
e. Fax Blasts
f. Advertising
g. Online venues – Loopnet, CoStar, and others
h. Etc

10. Provide a prepared written document with all the frequently asked questions your prospect may come up with.

a. Even call them – FAQ’s.

11. Find out what methods of communication the prospect prefers

a. Written or verbal
b. BE SURE TO PROMISE COMMUNICATION WEEKLY – then do it. This could be the single most important thing you do once you get an assignment

i. Communicate the good news, bad news, or no news. Don’t be afraid of no news or bad news – communicate all news.

12. Provide a success story or two. It makes the story telling easier.

a. Use the PAR formula, state the:

i. P = PROBLEM
ii. A = ACTION TAKEN
iii. R = RESULTS

13. Let the prospect know what they can expect from you.

14. Lastly, ask for the business!

a. If you don’t let the owner you’d really like, appreciate and value their business, there’s a good chance you won’t get it.
b. Too many say, “They know I want the business why should I ask?” Don’t get trapped into this way of thinking.
c. Ask, Ask, Ask.

If the above feels like too much work – choose another career. It is a lot of work to continually land successful listings. That’s why it’s called ‘WORK”. Go get ‘em and good luck!

By: Cindy Saxman Spivack

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Commercial Property

Here in the United States, “fair market value” on any item is determined by what a buyer is willing to pay a seller for the item. Simply put, if I have a stick of gum, and I offer it to you for ten cents, and you want to purchase it for ten cents, then the fair market value of the stick of gum is ten cents.

While real estate also has a fair market value, it is a bit harder to determine because of all the factors which go into the valuation. A property, unlike the simple stick of gum in the above example, has multiple aspects for a seller and buyer to put different valuations on. Introduce a lender into the picture, and then you have a third option on valuation to deal with as well.

Determining commercial property market value is different than determining market value for a residential property. In a residential valuation you can simply look at other recent comparable sales in the area, of similar homes and lot sizes, and determine about what a property is worth at any given time. The issue you will find with commercial property is that they tend to be one-of-a-kind properties, and you may not be able to find many local comparable sales in recent times.

One major difference between residential and commercial properties is their location and their use. If you own a large lot inside of the city limits, with a huge warehouse store built on it, with a 10 year lease to a big box store, then you have a very valuable property. If you have the same lot size, with the same store on it, same lease, but it is located 30 miles from the only local town where most people in the area live, then you have a lesser valued property. Location, also known as market area, is more important in commercial real estate because businesses need to be near to their workers and to their customers as well.

Another consideration when looking at market value of a commercial property is the availability of similar properties on the market. By looking at as many properties as possible, you can start to get an idea of what different properties are selling for in your local area. This gives you some leverage to point out differences and better negotiate the price you are willing to pay. This will also give you some idea of how difficult it will be to find a tenant for your property.

If you are tying to determine the market value of a piece of commercial real estate, one of the factors you should always consider is how well other properties in the area are renting and what they are renting for. You will need the rental income to cover your investment funding as well as your day to day costs of owning the property. If you purchase a property at an agreed upon price, will the rents support the costs? What if your property sits vacant for a month or two? These are things you need to think about prior to purchase.

When trying to determine commercial property market value there are many factors which come into play. The biggest being the market area, local property costs, rental income potential, and the property condition itself. By determining what you are willing to pay for a property, and having a professional commercial real estate market analysis completed for you, you can avoid many of the mistakes new commercial property investors make.

By: Andrew Stratton

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As we speak Residential Property, financial institutions, stock markets and bank’s interest rates are offering very poor returns & even poorer security for investors. Currently Commercial Property is offering the best returns to investors and also offering the most security for investors.

This is a general guide to Commercial Property in New Zealand for would be investors.

Firstly if you are looking to invest in Commercial Property it is important to identify what your investment goals are. These may range from short term capital gains by buying and selling to long term cash cow investment and even negative investments that are deliberate tax deductible. Once you have established what your goals are you can then determine the type of commercial property you should pursue.

The age old adages of high risk = high return and low risk = low return are simplistic ways to differentiate between the types of commercial property investments available. That being if you are looking for a long term investment with capital growth you will most likely look at low risk investments such as properties with banks, petrol stations and other similar solid tenants. However if you are looking for short term capital gains most buyers will look to either purchase a property at a sharp price for resale, add – value to a property for resale or acquire a vacant property with the intent to tenant it for resale as well as other capital gains vehicles.

Once you have identified what type of investment you wish to pursue the next step is to identify what areas you wish to invest in. I recommend that investors should predominantly invest in areas they are familiar with (so that they can readily view the property and are also able to readily assess the local market), however if investors have valuable and reliable investment advice to call upon then this rule need not apply. However be wary of individuals touting themselves as commercial property experts, whilst many may claim they are the majority without doubt are not.

Next is how you plan / strategise to purchase the property. If you are looking to secure any property at a sharp price never underestimate the power of an unconditional offer. An unconditional offer can be compared to flashing a briefcase of money in front of the vendor and more often than not tempts an owner into accepting a previously unacceptable price.

Once you have purchased a property it is important that you have a clear plan and goals that you wish to achieve. As Commercial Property is generally a business investment it is important to treat it as such, ie if the numbers stack up then a vendor should seriously consider selling and reinvesting that capital in another project. Never underestimate the value of making a smaller gain right now and reinvesting the money into another project.

A clear exit strategy is a central element for business decisions in general and no more so than in Commercial Property. Too often Commercial Property vendors think with their emotions rather than with their heads in their decision making. Commercial Property is a business investment and I cannot stress the importance of seriously considering offers if they stack up.

In summary Commercial Property is at present one of, if not the best investment vehicle available in New Zealand. My best advice for would be investors is to align yourself with an individual experienced / knowledgeable in Commercial Property. The value of having one trusted agent / broker or adviser will be immeasurable over the long term. Repeat business will also ensure that you also get offered the best properties first.

By: Benjamin Jones

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As a successful property investor, you will want to make a commercial property analysis of any real estate deal before you consider making the purchase. There are many factors which you should take into account while making your property analysis. Some of these factors which you should look at are: the location of the property, the price, taxes, local government and zoning laws, potential rental income, as well as the options you have for obtaining the property using an investment property mortgage loan.

Commercial property has many guidelines and regulations which must be followed. The last thing that you want to do is purchase investment commercial property, and then find out once you own it that you cannot lease it to the business you want, or that zoning permits you from using the property how you would like to. Whenever you are reviewing a commercial property analysis, it is vitally important to find out about the local governmental rules and regulations which will govern what you can and cannot do with the property in question. Look at what you had planned for the property and make sure everything is in agreement.

Taxes can be a big consideration when you are making a commercial property analysis. Some local areas offer tax incentives for commercial property owners and to certain businesses. If your property can meet the guidelines then you could possibly see a nice tax reduction. Also, if the area taxes commercial real estate at a high rate, you could be in for a real surprise if you did not consider taxes in your commercial property analysis.

Just as there can be tax incentives to buying commercial property in a particular area, the same can be said for financing options. Many commercial lenders have programs which fit a variety of different business and community needs. If your property qualifies you can see a nice reduction in your mortgage interest rate.

Another consideration is the rental rate of other commercial properties in the area. If many properties are sitting vacant that is a sign that you may have serious trouble renting to a business and keeping them for the long-term. This is important for your commercial investment analysis because the rent money is your income on the property.

In addition to all of the above considerations, the usual considerations still apply. You need to look at the location of the property and determine if it is in a good enough location for what it will ultimately be used for. What is the area around the property like? Will people likely come to the location if a business starts there? Who are the residents of the local area and will they benefit from your property’s use?

You will need to look at the land and buildings and determine how much work and cost is likely involved in bringing things up to code and working order. Look at the offering price and consider if it is reasonable or if it needs to be adjusted because of the things you have found while looking at the other factors for your commercial property analysis.

While performing a commercial property analysis you should take all of the above into consideration. You also might want to consider hitting the pavement and talking to people in the area of your potential property purchase. See what the people who already live and work in the area think about the property.

By: Andrew Stratton

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If you plan to purchase an investment property, you should consider getting a commercial property analysis before any real estate deal. Incomplete research can sink the deal on any real estate. You must understand everything about it before making the purchase.

Many individuals consider several factors when they get a property analysis. The location of the land is very important. Is the land in area that is appreciating? Are there other business property buildings around this place? Also, the price of the asset is very important. Are the taxes expensive? Are there any local government and zoning laws? Finally you should see if the investment property is a source of potential rental income.

All investors must realize that commercial real estate has different guidelines and regulations which must be followed different from residential real estate. You do not want to purchase investment commercial land to find out that you are not permitted to lease it to a specific type of business. You may also be prohibited from making certain improvements on your property which go against the zoning laws. As an investor, it is important to go to City Hall and educate yourself on the local governmental rules and regulations which will govern what you can do with the land. Make sure you are able to do all that you plan on the property in question. Taxes are very important to consider when you are conducting a commercial property analysis. Many local municipalities offer tax breaks or incentives for business property owners who fall under a certain business-type or industry. You may also be eligible for a tax reduction, if you meet the applied deadlines. If the region charges taxes on commercial real estate at a high rate, investors could be unpleasantly surprised…especially if they do not consider taxes in their commercial analysis.

Many lending companies participate in programs which fulfill a variety of different business and community needs. There are many issues lenders take into consideration which influence whether a loan can be granted. Such issues include zoning requirements or economic make-up of the community. Commercial property analysis professionals can evaluate many factors that can help you decide whether or not to pursue a loan for that particular site.

Since your time is very expensive, you should be efficient when contacting your sellers, lenders or brokers concerning a site. Evaluating analysis information can be time consuming, but may cost you the deal if the investigation is not done thoroughly.

Securing the appropriate documents and information for your commercial venture can be hard for you to accomplish on your own. This is one of the reasons why you may want to hire a professional. This person can allow you to maximize your time. You should be able to focus on generating profits from your investments. You should have your commercial land analysis conducted by a professional; consider employing a broker or using investment property software to help you get that commercial real estate you have always wanted.

By: Andrew Stratton

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Whether you are starting a new business or seeking a new location for your existing business, it is important that you understand the lease process before you enter any negotiations with potential landlords. Location may be the most important factor, initially, to the success of your business; however, the terms of the lease you enter into could make or break you down the road. Never sign the landlord’s Standard Lease Agreement. Always negotiate for the most favourable terms that you can get.

Before you even begin looking at desirable locations for your business, you should already have analyzed your needs and determined your space requirements as well as the amenities and services you will need your landlord to provide for the successful operation of your enterprise. This will prepare you for the lease negotiation process. Once you start looking at potential properties, before you talk to the landlord, interview some of the other tenants to get an idea of tenant satisfaction, the history of the property, and landlord performance.

Once you have determined the square footage, the layout, and other needs that your commercial space must meet, you are ready to begin touring properties and comparing them. Having a list of several candidate properties strengthens your negotiating position and can result in significant cost savings. Use the results of your careful analysis and investigation to prepare and submit a Request for Proposal from each contender. This RFP and the resulting proposals will become the basis for your lease negotiations. Your leverage in the pending negotiations will be greatly reduced if liability limitations, options to extend or terminate, security deposit considerations, and other significant items are not included in your proposal.

At this point, you may wish to procure the services of an agent or attorney to aid you in the negotiation process. The experience that a professional negotiator can bring to the table could prove invaluable as you sit down with a potential landlord to talk terms. Be sure to discuss with him the terms that are not negotiable and ask him to review your RFP and propose changes.

Tailor your proposal to the unique needs of your particular business. You may want to include language that prohibits the landlord from leasing to objectionable tenants, for instance. Take a close look at how other tenants are using utilities. If utility meters are shared, adjustments may need to be made. Think carefully about the best month for your lease to terminate, what access you will have to the property, security that may be provided, adding additional space, rent increases, late charges, maintenance and repairs, insurance costs, property taxes, and so forth. Make your proposal simple and straightforward but spell out, in detail, each provision so that there are no misunderstandings in the terms of the final contract.

When the final lease contract is drafted, either by you or the landlord, be sure that everything that you asked for and reached agreement on is included and have your attorney review it before signing. An agreement reached through careful and amicable negotiation will benefit both parties and lead to a satisfactory relationship between you and your landlord for the life of your lease and beyond. It can and should truly be a win-win proposition.

By: Jonathon Tideman

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Commercial Property

Even though we are currently in a buyer’s market, many land owners are looking to sell it to potential buyers. Before an individual can sell it, they must know how much to value their own property in order to attract potential buyers. Most individuals appraise property before they sell it.

Valuing commercial property is very important for an investor. If an individual values it at a price that is too high, then it can prevent the sale from taking place. If a piece of a property is valued too low then the seller will lose out on a potential profit. The best way to evaluate commercial land is by an appraisal.

There are many ways of appraising and deciding commercial property market value for a piece of property. Many owners will usually pay for one or two appraisers and compare each individual’s evaluations. Most professionals appraise a piece of land by developing an opinion of the value of property. An appraisal of a land occurs because no two properties are identical and the value of all of them differs based on location. Because estimating a property’s value does not always utilize a market-based pricing mechanism, an expert appraisal of the real estate is needed.

Usually appraisals are performed by a licensed appraiser. Many times the appraiser bases his or her opinion on market assessment and “the Highest and Best use of real property.” An appraisal is most often reported on a standardized report form. If the appraisal is for a complex piece of property with many unusual characteristics, the appraiser will typically report their findings in a narrative report.

An appraiser will determine a cost approach, a sales comparison or salary-based approach when assessing your property. The cost approach suggests that the value of the property is equal to adding up the value of the land minus any needed improvements. This approach is usually used on newer structures and less on older structures. The sales comparison approach evaluates the price per unit area of land similar to other appraisal amounts of similar properties in the marketplace. This approach is the most objective of the three approaches and allows the appraiser very little wiggle room. The salary-based approach is used to value commercial and investment properties, because it evaluates an income stream.

Since these techniques vary greatly amongst each other, the technique used will depend on what type of asset you have. For example, appraisals of investment property such as skyscrapers may be subject to the income approach, whereas retail or office buildings may be subjected to the sales comparison approach. An apartment building may be more subjected to the sales comparison. Before you sell your property, make sure you appraise it with an expert.

By: Andrew Stratton

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Property taxes are a major concern for the commercial real estate landlord. No matter where you are, they are not going down. There is, however, a method for appealing commercial property taxes.

Every community has a different way in which they assess the commercial property tax. The first thing you need to do is to understand how the community in which you own commercial property assesses taxes against that property. Next, find out where it is you go to appeal that assessment. The Assessor’s Office generally does not handle appeals. In some areas you will need to appeal to the County Commission. If you have trouble determining who will hear your appeal, contact the Assessor’s Office and ask. They should be able to provide you with that information.

Appeals usually attach a time limit; so make certain you prepare your appeal in a timely fashion. In these tough economic times, you might find yourself waiting in line for a hearing to appeal commercial property taxes.

The typical appeal is a document asking you to quantify and qualify why you feel that your commercial property taxes are too high. You will probably be granted an opportunity for a hearing, at which time you must be prepared to back up your claims with solid documentation. Local governments are not likely to reduce property taxes unless you can make a very persuasive argument for them doing so.

There are a growing number of tax experts specializing in commercial property taxes. You might want to consider hiring such an expert to represent your appeal. They have experience in dealing with your local tax authority and should know exactly who to contact and how to proceed. When you consider hiring such an expert, ask for references so you can speak with other commercial property owners and find out how successful the expert was in helping them.

Be sure to talk to more than just one tax consultant before you decide whom to hire. Consider your judgment based upon cost, experience, and results. As with anything in life, cheapest is not always best. Try to find someone from your local community or, at the very least, someone whose office is within the county where your commercial property is located. Such an individual should have a good working knowledge of that local government and be able to use their contacts and experience to best represent your interests in the jurisdiction.

By: Chintamani Abhyankar

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