Florida Commercial Real Estate - The Potential Expenses of Owning a Commercial Property

If you have grown weary of putting money into the lease of your existing business space, or if you have thought about buying a Florida commercial real estate property as a long-term investment, you need to know a number of essential factors that can help you get the most of your financial opportunities. To begin with, you have to do some research about the different overheads involved.

Unlike residential realty, a Florida commercial real estate property entails additional fees and expenditure that are not instantaneously apparent. Therefore, you need to see to it that you're able to get the whole picture before making an actual purchase. More often than not, probable property expenses comprise, but are not restricted to, the following:

Property Taxes

When it comes to the costs of a Florida commercial real estate tax, financial backers usually make use of the actual tax numbers rather than its ballpark figure. The latter is only applicable for residential real estate properties and should therefore not be used to compute for commercial property taxes.

Management Costs

The expenses typically differ depending on your chosen arrangement. In case you decide to deal with things like building maintenance and landscaping contracts, you will most likely shell out a minimal flat fee for the management of tenant administration. On the other hand, if you choose to subcontract everything to the company -- for a building that houses several renters, the bill may be derived from a percentage of the RSF (rentable square feet) or USF (usable square feet) per tenant.

Insurance Overheads

In most cases, the insurance requisites of the financial backer are different from what the owner/buyer typically carries. As a rule, the owner/buyer is obliged to conform to the backer's insurance necessities regardless of the costs.

Replacement Funds

These are resources reserved for the operating cost of replacing things such as HVAC, pavement and other essential structures or systems that have an inevitably short lifespan. On numerous deals, replacement funds are instituted with the help of a qualified engineer that conducts the PCA (property condition assessment) on the Florida commercial real estate property. The sum of the funds required is normally ascertained based on the engineer's estimation of the major systems' remaining life.

Know that these operating costs do not include current expenses like managerial fees and upkeep expenditure. You need to factor in such overheads, as well as the expected money flow, when mulling over the total cost of the Florida commercial real estate property. After you've determined the amount of your estimated outlay, it's now time to review your financing options.

Seeing as these overheads may seem heavy on the pocket, you would probably want to be familiar with your funding options. Your financing alternatives typically include business partners, investors, your personal funds, bank loans, and financial assistance from other commercial real estate properties or investments.

With a good credit record and a minimum of 10-20% down payment, you should be capable of securing some type of financing. Your company's present bank is a good place to start given that you already have a relationship with them. If you wish to find better options and more cutthroat rates, consider going to commercial brokerage companies that specialize in matching up commercial lenders with prospective buyers of Florida commercial real estate properties.

http://commercial-realestate-florida.xon.us -- Florida Commercial Real Estate

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Residential Property in Punjab

India has many alternatives for healthy investing in a real estate property. Here the buyer can make a choice for both residential property and commercial property at an affordable cost. Cities like Delhi, Gurgaon, Noida, Ghaziabad and Faridabad are the well developed cities of India. Many big and popular residential projects are moving towards the other cities of India like Punjab. This is the one of the beautiful city which is full of greenery. The Punjab is consisting of many small towns. Let's take a look on some major cities of Punjab; there is rapid growth in real estate sector includes Amritsar, Jalandhar, Ludhiana and Patiala.

Residential Property in Ludhiana

Ludhiana is the industrial town of Punjab. It is popular for Hosiery Goods, Bicycle & Bicycle Components Industries, Sewing machine and parts & Machine Tools. This is the pollution free city with the green surroundings, which is hard to find in the metro cities. Many big companies like IT, BPOs and more are planning to hit this city. In commercial point of view it is highly developing city. Many shopping complexes and Malls are being rapidly constructed on different areas of Ludhiana.

There is also high demand of residential property in Ludhiana. As we all known that the Ludhiana is the hub of educational institutes. Many students are coming from different states of India. So to meet the demand of accommodation for students needs, more residential properties require to be developed. The rental values in Ludhiana starts between Rs 4,200 and Rs 7,800 depending up on the location of the city. The newly-constructed apartment costs in between Rs 1,400 and Rs 2,000 per square feet. For real estate buyers and developers Ludhiana is the best investment option for them. It is the fastest growing city in Punjab.

Residential Property in Amritsar

Real estate market in Amritsar is on growing while many big builders are rapidly investing in this city. Amritsar is also known as Sikh Holy City in Punjab. It is a well structured city and also tourist attraction destination because famous Golden Temple. The property market in Amritsar is developing rapidly weather it is residential property or commercial property. From the past few year the rates of residential properties are almost doubled it's around Rs. 10,000 sq ft to Rs. 18,000 per sq ft. Number of builders are willing to establish the commercial buildings in the city. For more details log on to various free online classified websites.

Author is giving address of free property classified from where you can search ads for Residential property in Punjab.

How to Design Great Marketing Adverts When Selling Commercial Property

Marketing commercial real estate for sale of lease is not just an exercise in spending money in the media. If you want to be successful in the industry you should devote time in designing each and every marketing campaign to match the target market that the property needs to reach.

Some key goals must be reached in each marketing campaign:

1. Advertising is to be timely to the market
2. Advertising is to use the most effective 'channels'
3. Advertising is to be cost effective
4. Advertising is to be to a budget (usually 1% of the sale price)
5. Advertising should be vendor paid (in advance)
6. Advertising should be monitored so that you know what works and what doesn't
7. Advertising should focus on the initial 4 to 6 weeks of the campaign, after which the property becomes 'stale' if unsold or unlet
8. Advertising results should be reported in writing to the vendor at least weekly
9. Advertising should be adjusted as the campaign proceeds and results are tracked

What types of buyers will be the most interested in your property? It is a prime question and needs review so that your campaign to sell the property is as effective as possible. In the first instance you need to know if the property is attractive to all or any of these:

o Investors
o Developers
o Businesses in the area
o Occupants of the building
o Neighbouring property owners

At least one of these will be your target market to get the best price for the property.

Highest and Best Use

As part of the advertising considerations you also need to know if the property has a highest and best use that stands out above everything else that the property could be used for. Whatever that best 'use' is, will likely be the core element of your target market and the advertising campaign. From that you should select the most relevant 'channels' of advertising that will reach your market.

The most common channels of advertising available to you include:

o Internet websites (this of high value to most campaigns)
o Newspapers
o Radio
o TV
o Brochures
o Direct mail
o Telemarketing (this of high value to most campaigns)
o Signboard (this of high value to most campaigns)
o Email marketing (this of high value to most campaigns)

The use of the property is always analysed prior to the advertising campaign being designed and implemented. To handle this matter, ask yourself this question;
'What 'needs' can the property best satisfy in its current or future condition?'

AIDA

So property advertising is designed to match the target market. In some agencies it is common for the advertising to be written by a specialist advertising consultant that is contracted to the business for that purpose. This practice all depends on the authorised budget that you are to work to.
Many adverts when designed by expert consultants are constructed to a principle of advertising called 'AIDA'. It stands for:
o Attention
o Interest
o Desire
o Action

The advert you are designing is simply built around the four main points above and in that order. Consider this in more detail:
o The top lines or headers of the advert are to create or attract the 'attention' of the reader
o The following area below the 'header' is to encourage interest through providing more and yet simple information
o The following area is to create desire from the reader so that they are really interested
o The base of the advert is to encourage people to take action and call you now

Property adverts today are less 'wordy' and utilise carefully selected 'dot points' that are simply read and attract interest. Lengthy sentences should be avoided where possible as people generally do not read them. The 'white space' principle of advertising is used extensively today so that more white space appearing on the advert both simplifies the layout and also allows the key focus points to be seen.

Channels & Search Engine Optimisation

So what is the most common 'channel' of property advertising? Internet based property promotions from websites and direct email marketing is by far the most effective methods of promoting properties today. That will get even stronger as time passes. The internet is also the most cost effective for reaching most markets.
To use this channel of advertising most effectively, you will need a well constructed and maintained website that is 'search engine optimised' on an ongoing basis. This is a specialised field of business communication that many agents are yet to fully appreciate and undertake. You can seek specialists in the field to advise you and help you should you wish to 'optimise' your website and attract higher levels of enquiry or market presence.

Advertising Processes

The decision you make in the selection of marketing alternatives should be the result of the following process of review with the seller of the property:
1. Define seller objectives
2. Define target market
3. Examine outside influences
4. Business environment
5. Interest rates
6. Supply and demand
7. Construction costs
8. Financial constraints
9. Change opportunities
10. Buyer sentiment
11. Seller budgetary constraints
12. Timing influences
13. Select best marketing tools for your target market
14. Establish a 'point of difference' or 'competitive edge' strategy that applies to your property
15. Design the Marketing Plan
16. Discuss Marketing Plan with Seller and seek written approval
17. Implement the Marketing Plan
18. Evaluate the plan progress weekly
19. Adjust plan strategy if and when necessary
20. Review and evaluate all results at campaign end

REMEMBER - A good marketing process always involves asking your buyers or prospects the source from which they found out about the sale or lease of the subject property. This allows you to appreciate real value from the campaign while also allowing you to make adjustment when necessary.

John Highman is a prominent commercial real estate speaker and trainer. His other articles for commercial real estate agents and brokers can be accessed at http://www.commercial-realestate-training.com

My Favorite Way to Purchase a Commercial Investment Property

"Happy are those who dream dreams and are willing to pay the price to make them come true." -- Anonymous

As I was on my way to my son's Flag Football practice today I drove by a property that I own. It is a nice apartment property; good location, tenants are nice and responsible, and the property cash flows very well.

As I was looking at the building I got to thinking about the fun I had when I purchased it. I actually ended up buying this property about 13 years ago with a Mentor of mine. This guy is now 82 years old and still spends some time around the property - giving him something to work on during his retirement...

That got me thinking..

What is the best way, or rather, my favorite way of purchasing commercial investment real estate property?

Well, first most people get the picture in their head of people on two sides of the table. They think of Donald Trump's Board Room with people arguing and negotiating on the property, beating each other up until one person says "uncle," and you can have it at your price.

The real world is much different. For the most part negotiating is fun, not really controversial, and you have like-minded people wanting to get an investment property transaction done.

Then it hit me. Some of my best deals have been fun to purchase, little in the way of problems, and pretty easy without the dog eat dog mentality. Some of my worst properties I have had over the years did have a lot of stress, arguing, one-upsmanship, etc.

My recommendation when purchasing a property is to truly seek a win-win scenario for both parties. Look for properties that make sense in the first place, and do not try to make the numbers make sense at the negotiation table. What I have found is that when one party pushes the other "over the edge" so to speak, they will need something from the other party sooner or later. It may be during the closing process, or it may even be a question they need answered after closing. How do you think the person who left the negotiation table feeling like they were run-over will react? Of course, the answer is that they will not be very accomodating when that time comes.

So be sure when you are at the negotiation table you follow these steps:
1. Work on properties that make sense in the first place.
2. Focus on a win-win deal.
3. Be professional.

As I reflect on this, those people that I have found to be the most successful definitely operate on the side of fun, as do I. Try to make it easy to do business with you, and take a laid-back approach. This is not to say I let the other side have everything they want and bend over backwards every time they want something. Remain tough, yet relaxed, and make it easy to do business with you. This is the best way for the long-run, and I have found the most successful too.

The bottom line is that if you are in deal with a lot of stress, problems, arguing, etc. it may not be a deal you want to be in. If there is a lot of controversy, you may want to at least think about why you have it, and act accordingly...

Do you want to learn more about investing in commercial properties? Click the link below for my FREE 7-Part Investment e-Course. I'll also send you my FREE special report and teleseminar access "How to Buy Apartments and Commercial Real Estate With No Or Low Money Down."

Download it free here: Commercial Real Estate.

Which Types of Commercial Property Should You Invest In?

When it comes to commercial real estate investment, investors often want to know which types of properties they should consider investing in. This article discusses about 5 groups of properties and reasons why you should or should not consider them.

1. Land: the people who invest in raw land often hope to buy agricultural land near commercially-zoned land at a few thousand dollars per acre. They dream their lot will be re-zoned to commercial in the near future which is worth hundreds of thousand dollars or more an acre. People who convince you to invest in raw land often try to sell you this dream. While this dream actually happens just like it's possible to hit the jackpot in Las Vegas, the reality is most investors lose money or get little return in land investment. It is a very risky investment as land generates either no or very little income. From an income tax viewpoint, land does not depreciate in value so you cannot claim depreciation. On top of that the interest rate to land loan is also very steep compared to other types of commercial properties. So each month, you would need to come up with money to pay for the mortgage while collecting none. You should consider invest in land if you

- Know how to develop so you could convert raw land into a shopping center.

- Know exact what you do and have deep pocket.

- Own the land of a shopping center (you don't own the buildings).

2. Apartments: this is a management intensive investment as the turn over rate is high. The leases are short-termed often at one year of month to month. As tenants move in and out, you would need to spend money to get the unit ready for occupancy. Apartment tenants tend to have higher late payments history than other tenants as they are more often have a tighter budget. If you don't like the headaches dealing with lots of tenants, you probably want to stay away from apartments. The key to successful apartment investment is to

- Control or minimize the expenses. This may sound like a trivial task until you see the expense list provided by the property manager. These expenses include: advertising, accounting, bank fees (for insufficient funds), capital improvement, coin laundry subsidy, cleaning, collection fees, garbage disposal, insurance, landscaping, legal (eviction) fees, maintenance, offsite property management, onsite property management, pest control, painting, repairs, sweeping, security, property taxes, utilities and water.

- Invest only in properties in a good location with no deferred maintenance.

- Stay away from areas with rent control, e.g. Berkeley, Los Angeles.

Otherwise you may end up getting little cash flow or even having negative cash flow. If one of your investment objectives is to get high cash flow, you may want to stay away from apartments. In California, if you own a 16 or more units apartment you must have an onsite manager. This increases the expenses further. In general, apartments are easy to buy and harder to sell. There are always lots of them on any markets. The upside about apartments is they tend to have high occupancy rate as everyone needs a roof over their heads. Due to this fact the interest rate for apartments is often ¼- to ½ percent lower than other commercial properties.

3. Special Purpose Properties: These are properties designed for a specific business, e.g. restaurants, gas stations, and hotels/motels.

- Restaurants: some investors like to invest in brand name fast food restaurant like Burger King, Pizza Hut, Jack In The Box, KFC. These are single tenant properties with long term absolute triple-net lease which often require no management responsibilities from the landlord. However, the rental income or cap rate for these restaurants is often lower in the 5-7% range. Emerging regional brand name restaurants like Johnny Carino's, Back Yard Burger, Zaxby's or Tia's TexMex tend to offer higher cap rate in the 7-8.5% range. However, when you look deeper in the financial statements they may not make a profit yet. The restaurant operators sell the real estate to investors higher cap rate and lease back the property for 20 years. They in turn use the sale proceeds to expand their business by building more restaurants. So if you are willing to take higher risks, you will be rewarded to high income with these emerging restaurants.

- Gas stations: when you buy a gas station, you buy both real estate and the gas station business. Most gas stations also have convenience stores and sometimes several car repair bays. The profit margin for gas is fixed at 10-20 cents per gallon [many customers wrongly blame the high gas prices on the innocent gas station operators] but is pretty high for convenience store. This is considered an owner-occupied property which qualifies you to a SBA loan with as little as 10% down payment is required. If you don't plan to get involved in running the gas station, auto repair and convenience store business, you may want to stay away from gas stations as gasoline is a chemical that could contaminate the soil. Once a leakage occurs and contaminates the environment, it takes years and lots money to clean up the soil. You may even be liable to damages from owners of adjacent properties as contamination may spread out to their properties. It's almost impossible to sell your property as no lenders want to loan the buyers the money to buy it.

- Hotels/Motels: once you buy a hotel/motel, you buy the real estate and a 24-hour-a-day 365-day-a-year business. This business requires hard work, and marketing skills to get the rooms filled. The rooms are worthless if they are vacant. The business tends to be seasonal and may be affected immediately by economic downturns and political events, e.g. 9-11. Many of these properties are owned by Indians with the last name Patel as they seem to work harder and know this business well.

4. Office Buildings: these properties are single or multi-story buildings. The older two-story office buildings without elevators tend to have trouble finding tenants on the upper floor as many service businesses may have physically-challenged customers who cannot walk up the stairs.

- Single-tenant buildings: the properties are used as corporate headquarters of big corporations like Cisco. These big buildings tend to be more sensitive to the economy. Once vacant, it's hard to find a replacement tenant.

- Multi-tenant buildings: these properties are leased by small businesses, e.g. real estate, tax accountants. Investors who purchase these properties want to spread out the investment risks. When one tenant vacates a unit, you lose just a small percentage of rental income.

- High Quality Tenants: most of them have good credits, lot of assets and promptly pay the rent when due.

- Leases: The leases for office building vary from full service [landlords pay property tax, insurance, maintenance and utilities] to NNN [tenants pay property tax, insurance, maintenance and utilities]. The NNN lease is a litmus test on whether the office building is in high demand by tenants or not.

- Medical buildings: these properties are leased primarily by doctors and dentists. A good medical building should be in front of or across the street from a hospital. This makes it convenient for doctors to go back and forth between hospital and their offices. Some investors prefer medical buildings as medical tenants are very recession proof.

5. Shopping/Retail Centers: These centers are mostly single-story and can accommodate wide varieties of tenants: retail and service businesses, restaurant, medical, school, and even church. As a result, this is the most popular type of commercial properties that investors look for. They are always in high demand as there are more buyers and few sellers.

- Multi-tenant strip: the advantage of this investment is when a tenant moves out, you only lose a portion of the total income while you are looking for a new tenant. So you spread out the risks in this property.

- Single-tenant building: The advantage is you just have to work with one tenant. Some of the tenants, e.g. Costco, Home Deport, Walmart, CVS Pharmacy sign 10-20 year lease and guarantee with their corporate assets which could be worth billions of dollars. This makes your investment very safe.

- High Quality Tenants: most of them have good credits, lot of assets and promptly pay the rent when due. They often sign long term 5-30 year leases so you don't have worry about finding new tenants every year. They keep your property in good condition and sometimes even spend their own money to make it look better in order to attract the customers to the stores.

- Triple Net (NNN) Leases: the leases for retail centers are often in favor of the landlord. The tenants pay a base rent and reimburse the landlord for property taxes, insurance, maintenance and sometimes even property management fees. This takes away a lot of risks from you as an investor. The NNN lease in a sense is a litmus test on whether the property is in high demand by tenants or not.

- Ground Lease: occasionally a retail center with ground lease is for sale. When you buy this center, you only own the improvement but not the land underneath. It could be a trophy property but you should think thrice about investing. Once the ground lease expires and the land owner refuses to extend the land lease, you own nothing! So it's easy to buy this center but very hard to sell.

David V. Tran is the President and Chief Investment Advisor at Transmercial (formerly eFunding, Inc.), a commercial real estate & loan brokerage company in San Jose, CA. His website is http://www.transmercial.com He may be contacted at (408) 288-5500. Transmercial does business in all 50 states. He is the #1 US commercial real estate expert author. David currently offers 3 FREE real estate investment seminars:

1. How to invest in commercial real estate for early retirement income.
2. How to maximize cash flow with 1031 tax-deferred exchange.
3. TIC: Fractional ownership in high-value commercial properties.

David's blog features a daily list of Best Commercial Properties in the US to invest for early retirement income.

You are welcome to share this report, unedited and in its entirety, with anyone you like. You may not remove this text. � 2007-2009 Transmercial.