Peter Harris
As my mentors made so clear to me, location is critical in commercial real estate investing. You can fix a property, but you can’t fix a location. (Location 81)
That’s how I got the opportunity to author Commercial Real Estate Investing for Dummies, (Location 115)
He raised the entire $1.3MM in about 60 days. He structured the deal with a master lease agreement since it works for buyers with no experience, with lack of a down payment, and where no banks are involved. The master lease was structured for 4 years. After 4 years, he’ll have to refinance the current loan into his own company name. (Location 124)
Program found at CommercialPropertyAdvisors.com. (Location 134)
Throughout the years, this is what we’ve learned to increase our property values, our client’s property values, and the neighborhood values: a business center with computers (bolted down, of course!), fax machine, copier; a conference room to hold meetings; a fitness center with trainers available for hire, free wireless internet especially near universities, a cutely accented coffee bar (we copied the Starbucks theme); and concierge services. (Location 245)
As for a direct cash-generating amenity, consider putting a coin-operated laundry facility onto the property. (Location 252)
The 7 Habits of Highly Successful Commercial Investors (Location 255)
Habit #1 – They Only Invest in One Asset-type at a Time...The Power of Focus! (Location 259)
Habit #2 – They Don’t Over-Leverage DEBT… (Location 264)
Habit #3 – Their Properties Are Managed Effectively and Professionally (Location 274)
In a nutshell, a top management company’s ultimate goal is to maximize potential rental income, reduce operating costs, strengthen tenant retention and relations, enhance visual appeal of the property, and increase property value. If they can do this, you have a winner. (Location 277)
Good property management has well-oiled systems of accountability for the 4Ms: money, marketing, maintenance, and managing the staff. (Location 281)
Habit #4 – They Patiently Acquire and Have Tolerance for Mistakes (Location 282)
The average real estate cycle is ten years in length, so give yourself at (Location 286)
least that to build your Rome. (Location 286)
Habit #5 – They Effectively Partner (Location 292)
Don’t be average over a lot and master of none. Do what you do best and hire out the rest to the best. (Location 296)
To learn how you can effectively partner with the author of this book, go to www.commercialpropertyadvisors.com (Location 299)
Habit #6 – All Their Business Systems Are Accountable (Location 301)
Habit #7 – They Are Well-Insured and Their Entities Are Set Up for Maximum Protection, Privacy, and Tax Strategy (Location 309)
Self-storage facilities (Location 398)
How to Become a Commercial Real Estate Investor INSIDER (Location 599)
The first is a city’s future land use master plan or map that shows the future zoning and use for all the land (Location 604)
within a city’s limits. (Location 605)
The possibilities of what a future land use map holds is gold in the eyes of an investor, and extremely important to all those working in (Location 610)
commercial real estate. Refer to this map, and actually visit the locations of where there is change to identify opportunities. As every area is different, you will be amazed as to what opportunities will unveil themselves when you bring to it a little vision, creativity, and insider information regarding the zoning and use of a property. (Location 611)
Another tool to see into the future is the economic forecast for your area. By looking at both the past and future per capita income, population growth rates, housing costs and other such data that can be found through the census and local Chamber of Commerce, you can see the overall economic environment of your city and how it is performing. (Location 614)
The final tool I urge you to utilize when predicting your commercial real estate future is already approved infrastructural changes within your city. This will require you to attend city meetings regarding zoning, planning, development, etc. There could be discussion of a new development a year or more before it actually occurs, and once you hear about it, you can start putting your own ideas into place. (Location 619)
Let’s say that you hear two years in advance about a strip mall that will begin development after it is approved. You are then going to get a jump on all competition, look at the site, the land surrounding it, and the opportunities it may offer. Can you purchase the now extremely cheap land adjacent to this site, or perhaps the poor performing apartment complex in anticipation of this new development so that you may benefit from the price increase this major infrastructural change is going to cause? (Location 626)
Absolutely! (Location 629)
To start, you should understand that a large part of commercial real estate is dealing with the officials and decision makers of the city or county because they are the ones who decide zoning and use for every piece of property within the city's or county's boundaries. They plan for future growth, and attempt to create a balance among both residential and commercial properties so that the community does not grow too quickly or become unbalanced. Due to the fact that the city officials are so important to your ability to develop, renovate, and otherwise do what you want to a property, it is crucial that you get to know these people and create a rapport. You (Location 650)
also need to know what is occurring in your community regarding real estate at all times. Zoning often changes, there may be new regulations or codes regarding the zoning, or the intended use could be limited to only a few uses that will hinder your intended project. All these things can greatly affect your dealings with a specific property and how you pick and choose your opportunities. A good way to meet these important officials, as well as learn about the real estate market in your community, is to attend zoning and planning meetings at your local Chamber of Commerce or courthouse. (Location 654)
Beyond meeting the people who make the big decisions regarding the use of property in your community, you must know the laws and regulations regarding the various types of zoning. (Location 668)
Your goal is to know your market (Location 672)
inside and out so you can make decisions based on the changes in the market before anyone else even knows they are coming. You do this by recognizing certain points, such as an increase in vacancies of commercial property, or an increase in the median home price, or how the new mall planned to be developed in one year is going to greatly affect the land values around it. (Location 672)
When I was new to investing, I noticed that when I used words such as operating expenses, expenses per unit, cap rate, and debt service, they paid more attention to me. It seemed that using those words “bought” me inside their world. (Location 718)
1st GUIDING PRINCIPLE: POSITIVE CASH FLOW (Location 769)
2nd GUIDING PRINCIPLE: DOUBLE DIGIT Cash-On-Cash Return%, 10% OR GREATER (Location 778)
A high cap rate usually typifies a higher risk investment and a low sales price. High cap rate investments are typically found in poor, low income regions. A low cap rate usually typifies a lower risk investment and a high sales price. Low cap rates are typically found in middle class to upper income regions. Therefore, neighborhoods within cities have “stamped” on them their assigned cap rates. (Location 782)
3rd GUIDING PRINCIPLE: CAP RATE OF 8% OR HIGHER (Location 787)
4th GUIDING PRINCIPLE: GROSS RENT MULTIPLIER OF 9 OR LOWER (Location 795)
(Important Note: When you are looking at income properties and analyzing them, it is absolutely necessary to have your four Guiding Principles of Investment.) (Location 797)
Your established guiding principles of investment are your standards. If an income property does not match up to your guiding principles, then the property must be passed on. Go on to the next property in search of one that matches. The one exception you’ll make occurs when you are analyzing a value-add opportunity. (Location 800)
Pay attention to the price per unit (sales price/no. of units) (Location 827)
figure. It’s an important indicator that all apartment experts use to gauge how much they are paying for in terms of value. (Location 827)
Beware of properties that are “master-metered” for electricity and heat. That means that there is one utility meter for the entire building and the owner pays the whole bill. Not good. (Location 831)
The comment above, “right in the path of progress” concerns me. Does this mean that the neighborhood could get worse if revitalization does not continue? (Location 847)
He has since purchased over 1000 residential units, large apartment complexes, and various commercial property totaling over $20 million. These acquisitions have spanned the United States, from California to Arizona, New York, Ohio, Texas and Oklahoma. (Location 998)