October 2021 - Page 2 of 2

How to Become a Successful Commercial Real Estate Investor

by Prince Licaylicay | Oct 8, 2021 | All Articles, Buying, Investing

Investing in commercial real estate (CRE) may seem daunting at first. However, it can be incredibly rewarding once you dive into the process. If you’re hesitant because you’ve never invested in CRE or aren’t familiar with the process, this article will guide you toward becoming a successful CRE investor.

Investments always come with risk. No matter the type, investments require using your resources, time, and effort. This can be intimidating, but to reach your business goals and financial freedom, taking risks is essential. Therefore, investing in commercial real estate is a wise decision, especially if you keep these key factors in mind.

Know Your Market

First and foremost, understanding the market is crucial for CRE investors. You need to assess the value of real estate by considering demand, supply, and buyer willingness. Demand is defined by the number of properties sought in the market at a given time and price. Additionally, you must consider the property’s rarity and utility. Is it something tenants need and can rarely find? Is the property truly suitable for its intended use?

Moreover, make sure the property is transferable. Ensure there are no legal obstacles or encumbrances in the deed that could hinder its sale or transfer.

Tip: Use feasibility studies and Site Investigation Reports (SIRs) to gather comprehensive data, including business structure, zoning laws, land surveys, and traffic issues around your prospective investment.

Follow a Blueprint

Jumping into a CRE investment without a plan is risky. Just like a non-swimmer wouldn’t dive into deep water without a life jacket, a CRE investor shouldn’t venture into the market without a strategy. A solid plan is essential. When you thoroughly understand your market, you can create a blueprint to guide your investment decisions. Consequently, this plan helps you navigate the complexities of commercial real estate and minimizes the chances of failure.

Find the Right Approach

In CRE, using a multi-pronged approach often leads to the best results. A diversified strategy helps you find properties while also securing great deals. Furthermore, you should know the difference between direct and indirect CRE investments. Direct investment involves owning the property, while indirect investment includes owning market securities like Real Estate Investment Trusts (REITs). REITs allow you to invest in portfolios like hotels, offices, and retail spaces, providing steady income without the responsibilities of property management.

Embrace Technology

The real estate industry is rapidly evolving, but many investors still struggle to keep up with technological advancements. Don’t resist change. In fact, leveraging technology improves connectivity, helping you manage your investments more effectively. Social media and websites create valuable linkages, giving you more control and insight into your properties. As a result, you can make better-informed decisions.

Adapt with Agility

Successful CRE investors stand out by being agile. The real estate market is tech-driven, requiring investors to adapt and realign priorities. Agile decision-making and an updated portfolio are essential to staying competitive. Additionally, continuous learning and up-skilling will help you maintain and grow your investments. Agile investors build strong customer relationships, leading to more significant investment income. Therefore, staying flexible in your approach is key.

Conclusion: Taking the Leap into CRE

Becoming a CRE investor may feel overwhelming at first, but the rewards far outweigh the risks. Success in commercial real estate doesn’t happen overnight. It takes time, learning, and experience. However, by knowing your market, following a plan, embracing technology, and remaining agile, you can thrive in the world of CRE. If the risks feel intimidating, remember the potential rewards waiting at the finish line.

Even after outlining all the information above, writing a letter of intent (LOI) can still seem daunting. That’s why the Leveraged CRE Team at Commercial Properties, Inc. is here to help locate commercial space for lease and assist in using a letter of intent to land such space. Contact us at (480) 330-8897 or send us an email at request@leveragedcre.com.

Need assistance with your 1031 Exchange or DST? We’ve got you covered!

We’ve prepared a comprehensive, free e-book designed to guide you in achieving your long-term business goals or acquiring that dream property you’ve been eyeing.

Meet The LeveragedCRE Investment Team

Phill Tomlinson and Eric Butler are seasoned commercial real estate brokers with over 44 years of combined experience. They lead the LeveragedCRE Investment Team at Commercial Properties, Inc. (CPI) in Scottsdale, Arizona, specializing in investment sales and tenant/landlord representation across the Phoenix and Scottsdale submarkets.

The team leverages their extensive knowledge and expertise to help investors and property owners maximize their returns and navigate complex real estate transactions with confidence.

Stay informed with the latest in Commercial Real Estate strategies designed to enhance your income property investment results by bookmarking www.leveragedcre.com. Let us help you stay ahead in the market!

Winning Lease: Why Landlords Beat Tenants in Lease Negotiations

by Prince Licaylicay | Oct 1, 2021 | All Articles, Leasing

When negotiating a lease, the best deal often seems to favor just one side, whether it’s the landlord or the tenant. While you might think that the outcome is obvious, what if I told you that, with the right approach, either side can come out on top? By learning the secrets of successful negotiation, you can gain the upper hand in any lease discussion.

Secret #1: Familiarity with the Property

As the saying goes, “knowledge is power,” and this is especially true in real estate. Landlords typically hold an advantage because they know their property better than anyone else. They are aware of the tenant mix and often feel they control the negotiations. However, tenants can level the playing field by understanding the property in detail. If you know what’s important to the landlord and which property features to highlight, you can strengthen your position. In short, familiarity gives you leverage.

Secret #2: Understanding the Market

It’s no secret that landlords with more experience tend to have an edge in negotiations. Their knowledge of the market allows them to navigate the process with confidence. As a tenant, you can’t afford to go into negotiations without understanding the market yourself. Therefore, you need to know when to stand firm and when to compromise. Hiring a commercial real estate (CRE) broker to assist with negotiations can save you time and money. Having a professional on your side ensures you are well-prepared.

Secret #3: Recognizing the Power Dynamics

In most cases, landlords hold the upper hand in lease negotiations because tenants need the property more than landlords need to lease it. This is a classic supply and demand situation. The landlord controls the supply, and this often dictates the terms of the agreement. Nevertheless, tenants can still take advantage of specific strategies to shift the balance of power in their favor, even when landlords appear to have the upper hand.

Tips for Tenants to Gain the Upper Hand

Hire a Real Estate Agent
First and foremost, one of the smartest moves an inexperienced tenant can make is hiring a real estate agent. These professionals are experts in lease negotiations and can help you secure better terms. Many tenants mistakenly view hiring an agent as an unnecessary expense, but in reality, the long-term savings far outweigh the upfront cost. Therefore, having an agent on your team is an essential step toward success.

Consider Multiple Locations
Another powerful strategy is to negotiate for more than one property at the same time. This gives you options, and options equal leverage. If landlords know you are considering multiple properties, they are more likely to compromise. As a result, you can choose the property that best fits your budget and needs.

Negotiate for a Better Base Rent
When it comes to rent, negotiating for lower terms can be challenging but essential. One way to approach this is by offering to sign a longer lease in exchange for better base rent. For example, you could negotiate a 2-year lease with an option to renew at a minimal rent increase, rather than committing to a 3-year lease upfront. This approach allows you to lock in favorable terms while maintaining flexibility. Additionally, focus on securing favorable termination and subleasing clauses for added peace of mind.

Even after outlining all the information above, deciding whether to go for a 1031 Exchange or a Cash Refinancing can still seem daunting. That’s why the LeveragedCRE Investment Team at Commercial Properties, Inc. is here to help you achieve your business and investment goals. Contact us at (480) 330-8897 or send us an email at request@leveragedcre.com.