| How will the expiration of Bush tax cuts impact commercial real estate? |
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Posted by: Lynch, Kevin
Arlington Heights
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Prudent property owners will buy and sell real estate based on the properties merits, not based upon tax rates. It is more likely that a property owner selling will perform an IRS “1031 Like-Kind Trade” rather than paying a higher tax rate given the choice. The fact is nobody knows for sure but I believe that a property owner is better able to re-invest taxable money than a government that runs “in the red” every year.
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Posted by: Anderson, Jerry
Orlando
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It is all moot now that the extention has been granted. Now we watch for 2012 changes!
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| Is the market at the bottom yet? Or should I sit on the sidelines a bit longer? Really difficult to know. |
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Posted by: Kawulok, Steve
Fort Collins-Loveland
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Most of the tracking services are now showing a slight uptick since the "bottom" which hit in early 2009. Core properties are in high demand, as are value opportunity properties. Both categories have shown value strengthening trends over the last 18 months, though certainly not a steep surge yet.
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Posted by: Lynch, Kevin
Arlington Heights
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You will know if the commercial real estate market is "at the bottom" at some point in the future...after we are well off the bottom. It is better to look at real estate values based upon cash flow, tenant strength, lease length, location, functional obsolesce, price vs. replacement cost, sub-market demand, leasing velocity, market rent vs. existing lease rate, location… Different product types (office, industrial, retail, multi-family) like different locations (Southern California, Arizona, Midwest, coastal cities…) are recovering differently.
If your hold period is five years or greater, this could be a wonderful time to buy keeping in mind all of the above as well as the probability of additional distressed properties entering the market over the next 24 months.
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Posted by: Berk, Mark
Philadelphia
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Determining market bottoms in any investment vehicle is usually indeterminable. However there are market signals we are there or very close depending on which geographic market you select. Prudent investors are entering the marketplace now with the economy stabilizing.
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| I see so many terrific opportunities at the momemt. What do you think are the regions/cities to focus on and most importantly, which asset type. I do like multifamily, but so do many other investors it seems. I am not interested in following the herd. |
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Posted by: Lynch, Kevin
Arlington Heights
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Always, always invest in what you know, and where you know. Do not focus on what is “hot”. If you understand multi-family, get a broker that knows multi-family. Focuses on markets you understand and can manage and go for it.
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Posted by: Berk, Mark
Philadelphia
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I agree with Kevin and would add that diversification of your assets is a prudent move in future commercial investments. Stay with a specialist that knows the market, has depth of experience and will put your interest first!
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| What is the best way to buy REO properties from banks? I get stonewalled at the local level even though I've written offer after offer. |
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| Why are office and retail investments in such trouble compared to apartments? |
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Posted by: Kawulok, Steve
Fort Collins-Loveland
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Retail and office properties are closely tied to employment/jobs. With the severe loss of jobs over the last few years, demand for office space has diminished, and many employers are consolidating space. Consumers don't spend as much when their jobs are insecure, so retailers do not want to expand during these times, and some are forced to close due to lagging sales revenues. Apartments, on the other hand, have increased occupancies as former homeowners transition back to renters after having to sell their homes, or having lost them to foreclosure or financial stress. After all, apartments fall within the three basic needs of life : food , shelter (!), and clothing. People need shelter, and if they can't own, they will become a renter.
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Posted by: Lynch, Kevin
Arlington Heights
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Steve Kawulok of Colorado is right. Folks that lost their house or are fearful of losing their jobs have migrated to multi-family. Additionally, lenders have had a sweet spot for multi-family. Look for this trend to change in the next 24-36 months as we slowly work our way out of this housing mess.
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| Are there any sources of financing that will lend 70% LTV on an office building I plan to use for my business? |
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Posted by: Lynch, Kevin
Arlington Heights
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Check out SBA loans and consider making offers that include "seller financing". Deals are being made in today's market. Also, shop local lenders as they did not get as caught up in the commercial mess. Creativity is the rule of the day.
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| I am presently renting part of a commercial property. The property was a manufacturing building, zoned industrial, and is a possible remodel with store frontage. It was purchased at auction in 2009 for $36k. The property consist of 3 acres with the main (18,000 sq ft) building being block with center of building having a pitched roof. The side roof lines are flat with leakage. The second building (4,200 sq ft) is a pre-fabricated metal built in late 80's. Utilities are in tacked but vandalism has left its mark in main building and some in metal building.
My question(s) is, would it be the time to purchase the entire property (it is currently on the market) to improve my foot print in my business and later improve property for rent/lease newly created space? Note; have a couple of small businesses owners interested in store frontage for rent/lease.
I have brought a construction friend to assess the property with an investor who could provide financing or the present owner may be willing to financing with down payment. The asking price was $249k dropped to $200k with 3 known offers just over purchase price based on the property condition. We are thinking of a cash offer of $100k with an offering of allowing the owner to remain in half of the metal building for 18 months at $0, thereafter set rental cost. In closing please provide your input concerning this property. Thank You
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Posted by: Anderson, Jerry
Orlando
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Difficult question to answer without a bit more info. But if you have a use for the building it is always advantageous to control the scenario. You might contact one of the advisors on this site in the area closest to you for a bit more info and detail. The current market is a terrific time to buy at less than reproduction cost.
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| How do I locate a mentor for commercial real estate? |
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| Re: land contract on commercial property... is there a guide for current interest rates in Michigan? |
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| I own a commercial property in Atlanta GA. Its a auto mechanic shop that is located on a corner lot. The surrounding area has change and added restaurants and bars which seem to be doing
well. Its getting more difficult to keep a good tenant in the mechanic shop and the property should be a different type of business. But I lack the funds to make this transformation. I'm thinking of selling the property and given that it has more area for parking than the surrounding properties I hope it would still bring a good price. Three years ago I was offered $750000 Hope to get $500000.
What would be the best way to get this property out and sold. |
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| Southeast Massachusetts market. If I bought a building for $100,000 and leased the space to a tenant or tenants at an average market price per sq ft, in how many years could I expect to recoup the initial $100,000? |
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| Any suggestions on a PPA or financial intermediaryto help with what would be tantamount to a spin out or for lack of a better term, "a company captive" as it's called in the PE space? A first time Fund raise for an Emerging Manager is next to impossible, especially in this environment. Strong transactional background with long term holds, so no realized returns. I do have buildings to throw in as prespecified opportunities. Possibly some type of Draw Down Fund or programmatic /platform raise. Any input would be helpful. |
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