Commercial Real Estate - Commercial real estate is distinctly different from residential real estate.

Commercial Loan - Broker Or Bank?

commercial mortgage uk, uk commercial mortgage broker, commercial mortgage rate uk, commercial loan mortgage uk, commercial mortgage loan

There is an estimated 5.2 million commercial properties within the UK. The commercial property market expanded by over 32 per cent during 1990-2000 (according to the new products started) compared with the previous decade, in itself a decade of exceptional growth. Bank lending for commercial property deals rose by a record £7.7 billion in the first quarter of 2005, according to data provided by the Bank of England, and property experts believe the bulk of the new lending was for investment purchases.

There has also been a substantial rise in the number of investors looking to buy commercial properties to put into Self Invested Personal Pension Schemes. Property investment funds received a boost as of late last year after the Government announced plans to allow them to be included in an ISA (Individual Savings Account) wrapper.

Savers will now be able to add investments, such as property funds and funds of funds, that have previously been restricted from being included in ISA's because the asset class did not feature on a European standard of eligible investments and commercial property funds are seemingly the greatest beneficiary of the rule change.

With this diversified interest in commercial property by investor, speculator and businesses alike the role of the broker has become a more integral part of the process. Increasing numbers of mortgage brokers have branched out into non regulated markets such as the commercial loan sector since Mortgage Day in late 2004 and subsequent involvement by the Financial Services Authority, interestingly 58 per cent of mortgage brokers claim profits are down since Mortgage Day.

Commercial lending is now not the preserve of the high street banks who, in the past, have not only seemed to cherry pick but have also had a tendency to only lend to their existing business customers. The result was that there are now over 1,200 commercial lenders currently operating within the UK.

The competitive market for commercial lending has also been confirmed by the rates available. There are also many other flexible options such as rolled up interest (No interest payments) for the first year to help with cash flow, start up finance, business expansion finance or even for finance on low yield investment properties.

Lenders will typically lend up to 80 per cent loan to value but 100% is achievable with additional security. Three years audited accounts are also now not the normal requirement as self certification of income has also found its way into commercial lending. Adverse credit clients are now considered and in the majority of cases loans approved. However self certification and bad credit applicants can expect a loading on the rate of typically between 1 to 4 per cent.

A cross section of business funding is available to retail businesses such as convenience stores, fast food outlets, specialist shops and supermarkets. Investment properties, professional practices such as accountants, doctors, vets and solicitors. Property development including speculative or pre-let for both commercial and residential. Offices and factories along with the health care sector including nursing homes, residential care and special needs homes. The leisure market has also been seen as the main stay for commercial lending over many years embracing hotels, guest houses, cafes, restaurants, wine bars and pubs.

Although latterly pubs have often sought brewery loans as a traditional way of borrowing money in the trade often referred to as Advance of Discount (AOD) or "Write Off" loans, the interest rates seem favourable at significant discounts over the banks but barrelage discount is affected and the repayment terms are often shorter over 10 years.

Lending on leasehold is also available up to 65 per cent on the security property (often the applicants main residence). With many businesses failing in the first year and business failure rates up 13 per cent in the first quarter of 2006 applicants must carefully consider whether they should be securing their main residence against the lease.

To calculate monthly charges use one of our many custom built calculators. Commercial loan applications, for both single and joint applicants, are processed on our own dedicated secure server.

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24 Mar 2009

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Commercial Real Estate - A Primer

real estate

Commercial Real Estate – A Primer

When speaking with a group of real estate investors recently in Philadelphia, the question arose as to how many of them have completed a commercial real estate deal in the last year, and surprisingly, the answer was none. It seems that many of them were either happy with the currently market conditions or they didn’t really have the aptitude to go about buying a commercial property.

Market specialization? No. It seems that the majority of real estate transactions go something like this:

1.   Residential real estate is the sweet spot of the small real estate investor.

2.   Commercial real estate is typically left for the small business owner, who has decided to stop renting.

3.   Both of these sectors of the real estate industry do have some crossover, but the previous two statements are typically the norm.

So how exactly are commercial properties being bought, sold, being rented? What’s the best way to acquire commercial real estate, and who you need to help you in doing an acquisition?

Here are five key points to consider:

1.   By far the most popular business entity for owning commercial real estate is now the limited liability company (LLC).

2.   Commercial real estate is a much less popular subject, in part, because it isn't as personal and doesn't tug at our own financial purse strings.

3.   Commercial real estate is a term to describe a property with 5 or more units. Commercial Real Estate is a critical component of any well-run business.

4.   Investing in commercial real estate is riskier and more costly than investing in residential property - but ultimately it can be far more profitable.

5.   Commercial real estate is a business investment driven by economic factors, not so much the property itself.

Investing in commercial real estate can be a good way to invest but you should make sure you are well represented by an attorney and accountant before moving forward since buying commercial real estate can have significant tax consequences and if you're buying or developing commercial real estate, it's important to protect your financial interests with legal support. It may sound redundant, but the axiom location, location, location, is an important factor in buying commercial real estate too. Here is the key to buying commercial real estate: the one with the most information wins.

The winners are the people that recognize that the world of commercial real estate is constantly changing and understanding the nature of commercial real estate is a precondition to the timing question. They also understand the data and realize that information is the most critical aspect of any transaction. In other words, the most valuable commodity you can have in the commercial real estate market is information.

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24 Mar 2009

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Commercial Real Estate – Hard, Hard, Hard Money Loans

commercial real estate, hard money loans, loan to value, real estate, interest rates, fees

Financing for commercial real estate is a completely different game when compared to residential mortgage loans. It moves much faster and is much more flexible.

Commercial Real Estate – Hard, Hard, Hard Money Loans

When purchasing commercial real estate, financing is the most significant factor in determining whether the project is worth pursuing. Although there are a variety of commercial real estate loans on the market, we are going to look at hard money loans in this article.

Hard money loans for commercial real estate are often a matter of last resort. They aren’t good deals, but they can save a financing situation that has gone critical. Most hard money loans come with significant upfront costs and astronomical interest rates. When you are facing the prospect of losing a commercial property, however, they can be a godsend because they also are granted very quickly.

Hard money loans are considered very risky and are issued by private financing groups, not banks or lenders. The loans tend to be only available as the primary loan on the property, which isn’t that rare a situation in commercial property.

Unlike home loans, hard money loans are all about the potential sales price of a piece of commercial real estate. The party considering lending you money is not going to look at the appraised value of the property. They are going to look at the probably sales price if the commercial real estate has to be sold a few months after making the loan. Depending on the condition of the property, this figure will typically be between 50 and 75 percent of the appraised valued of the commercial property.

Put another way, a hard money loan is a short-term loan designed to get you past an immediate problem. It is undeniably a loan of last resort and is not an ultimate solution to a financing problem with a commercial property. It does nothing other than buy you time, and at a fairly hefty cost. If you are in a tight spot and can resolve the problem with a few extra months time, a hard money loan may be the answer.

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24 Mar 2009

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Commercial Real Estate Definitions - From A to N

commercial real estate, real estate definitions, mechanics lien

Commercial real estate is distinctly different from residential real estate. The terminology is very different and here is a list of new terms from A to M.

Commercial Terms

According to Value: The value of the property when computing property taxes.

Build to Suit: A customized design and build approach for a single tenant space usually resulting in a single occupant building which is then leased or sold to the tenant.

Certificate of Occupancy: Issued by a city building department and is a necessary requirement prior to moving into the space.

Common Area Maintenance: Typically an annual charge assessed to tenants based on their percentage of occupancy to pay for maintenance of parking lots, bathrooms and open areas.

Demising Wall: A wall between two separate suites in a building with multiple tenants. In many states, the demising wall must meet specific fire safety standards.

Flex Space: A building providing mixed-use space such as an area combining an office and warehouse.

Gross Square Feet: Usually refers to gross footage of a building. GSF is typically arrived at by calculating the footage from the outside of exterior walls multiplied by the vertical footage.

HVAC: Refers to the climate control systems for a building including heating and air conditioning.

Mechanic's Lien: A legal claim typically filed by a subcontractor to obtain payment for services rendered. The claim arises under state law and is dependent on each states particular law.

Unlike residential real estate, commercial real estate is primarily considered a business transaction. Learn the terms and you're well on your way to moving smoothly through the process.

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24 Mar 2009

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Commercial Real Estate Definitions - From O to Z

commercial real estate, real estate definitions, operating expenses

Commercial real estate is distinctly different from residential real estate. The terminology is very different and here is a list of new terms from O to Z.

Commercial Terms

Operating Expenses: Just as it sounds, operating expenses are those costs associated with operating a commercial property. Contract and state law typically govern the exact nature of the operating expenses.

Partition Wall: A wall built in the internal area of a suite to divide the general space. For instance, offices built during a tenant improvement project with have partition walls separating them.

Punch List: A punch list runs part and parcel with a walk through of completed construction work. The construction company and client will walk through the area and complete a punch list of items that need to be fixed or modified. .

Shell Space: The interior of a commercial building that has been completed, but does not yet have any tenant build outs. The shell space generally refers to this gross square footage regardless of whether tenant improvements have occurred or not.

Substantial Completion: Notice given by a contractor to the client indicating the property has been completed to the point where a walk through and punch list review are appropriate.

Usable Square Feet: The square feet in a building, suite, warehouse and so on that can actually be used by tenants. Due to building regulations and design issues, certain amounts of a space in a tenant suite may not be usable and such footage is excluded from this calculation

Unlike residential real estate, commercial real estate is primarily considered a business transaction. Learn the terms and you're well on your way to moving smoothly through the process.

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24 Mar 2009

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Commercial Real Estate Guide- Earn more with Commercial Real Estate

Commercial Real Estate

Commercial Real Estate refers to the property that has potential to generate extra income for the owner of real estate. Commercial real estate generally includes office buildings, retail properties, apartment units, condos and raw land. Every property that can produce revenue for the owner is known as commercial real estate. It doesn’t include habitable real estate like houses or apartment buildings.

In 21st century, large number of people is generating income with commercial real estate. Commercial real estate business is based on certain principles. These principles are generally same for property owner, developer as well as for commercial real estate agent. Commercial real estate agent helps you to identify the best features of commercial real estate agent. Real estate agent enables you to make a finest deal of commercial real estate. Commercial estate agent is helpful to both buyers as well as tenants.

You should choose best commercial real estate as per your requirements. Choose your property at best location that has great future. Commercial real estate at good location will offer more benefits in the coming days. You’ve to choose finest piece of land that you can use efficiently. You may select commercial real estate nearby high traffic areas that can be easily used for full-service restaurants, hotels, stores or other shopping malls.

Investment in commercial real estate business is the best way to get more revenues. Always keep in mind that a right time investment is the best opportunity to earn more profits. You should consult financial advisors that will provide help to find the best commercial real estate. Investment in commercial real estate is good for large as well as small-scale businessmen.

Buyers should check the reputation of commercial real estate provider. Before any type of agreement or purchase, they should check rate, terms & conditions, and other essential aspects of commercial real estate for the best deal.

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24 Mar 2009

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Commercial Real Estate Misconceptions: You Mean Location, Location, Location Was a Lie?

commercial real estate, real estate, investment, return

Commercial real estate is a wonderful, exciting business that can offer a wealth of opportunity for those who look for it! Many people are often hesitant to enter such a market as commercial real estate for many different reasons. In fact, there are some major misconceptions about commercial real estate which I am going to address here.

Many people who hear about commercial real estate, but aren't necessarily in the business, often use the expression “Location, location, location!” Many people associate this expression as the truth, that the three most important attributes about a property are “Location, location, location!”

I am here to tell you- this is absolutely not the case! Now, I am not going to say location is not important, but what if you have a beautiful location for a mountain resort, complete with snowy hills, a perfect location for a lodge, and beautiful mountain views? What you want to do to the property is improve it for a weekend getaway for romantic couples with a beautiful lodge, resort, luxury type housing, and perhaps some individual cottages overlooking the green forest. Sounds great, right?

The perfect location- you can't beat it! But, you learn that the zoning for this property is residential, R1, to be exact. The use is only one single family residence per acre, and no commercial property allowed. What happened to your “Location, location, location?” It flew out the window!

The most important aspect of a property is the use. What is it intended for by designation of the city or county? It does not matter where the property is, if you cannot get the zoning that is in the realm of your intended use.

It is possible to get properties rezoned, especially as cities change and grow. Be sure to consult with the city or county to determine if these changes are even possible, because you do not want to buy a property that you cannot rezone, and be left with an unprofitable property on your hands.

Most people believe that commercial real estate is complicated and you need a special education or know how to succeed in the business. Many think that commercial real estate is filled with international finance, heavy and complicated math, complicated tax rules, and forms and applications that are just too complicated to understand correctly.

I am happy to tell you this misconception is the worst, because it puts a road block in front of many people's aspirations to become a commercial real estate insider. Let me put this misconception to rest. There is math involved, and most of it is not at all complicated: simple ratios, adding, subtracting and multiplying. What is even better is you don't have to do the math. There are others who can do that for you. The same is true with property management, inspecting the property, and doing the year-end tax report. In fact, commercial real estate is less complicated than residential real estate because you can focus your energies on a single deal that will be worth perhaps 10, 20, even 50 residential deals and more!

Let me put it into perspective for you. If you owned a business (many of you may), would you create strategies, keep the books, manage the many locations, sell on the front floor, and take out the trash after the day was over? I think not! Commercial real estate is made up of many people whom are there to help you with whatever you need. You must position yourself as a real estate insider, which is a leader in the business.

Another misconception is commercial real estate is management intensive, that you must manage every property you own. Let me tell you when you end up owning 10 or more properties, this is almost impossible to do! You do not have to actually manage your properties yourself, so you can concentrate on creating more deals. Hire a company or set a team in place to take care of this “day-to-day” business.

As you can see, what is passed around in dialogue about commercial real estate is not always true. Before you take everything to heart, be sure to get your facts straight. In fact, many people in this profession speak about commercial real estate as a business in which only the savvy and sophisticated can succeed. They often act this way because they want to keep people out of the market by differentiating themselves. If you were in this position, you would too!

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24 Mar 2009

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Commercial Real Estate Savings

Real Estate, Offices, Commercial Real Estate, Property

For small companies, an office is an overhead that many feel they can do without, at least when starting up, but as a business grows and takes on staff, an office becomes an essential.

Even before that, there are many arguments in favour of a physical presence; an office can add credibility, and suggests permanence, that the company is going to be around in the future, perhaps particularly important for new companies.

But how much space should you rent or buy? Obviously this will depend on the employees that you expect to be working there, but you will need to factor in growth plans, whether you require an open plan working environment (allow 75-100 sq ft for each person) or individual offices (about 175 sq.ft) and meeting areas (215 sq.ft will accommodate a table and chairs for about six to eight people).

An alternative, particularly if your growth is uncertain is a serviced office, where you rent space by the number of workstations you require and by the month. This may not only help with cash flow, but also allows a company to grow or contract in a fairly flexible manner. There are no capital outlay costs for furniture or telephone equipment, all of which are provided and if you need meeting space, you pay for it by the hour.

Additional services, such as secretarial assistance are also available as required and the telephone is answered by a dedicated receptionist and in your company’s name.

On a price per sq.ft basis, serviced offices are more expensive, but this additional cost is often outweighed by the fact you are paying for just the space your business needs.

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24 Mar 2009

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Georgia Real Estate – Southern Hospitality

Georgia, Georgia real estate, Atlanta, Atlanta homes, Athens, savannah, southern hospitality

Known as the Peach State, Georgia is the state of southern hospitality. If you prefer the traditional southern culture, Georgia real estate is certainly worth a look.

Georgia

The largest state east of the Mississippi, Georgia has a long and glorious history. Civil war monuments are rife throughout the state as are small towns with turn of the century homes. Notwithstanding this culture, Georgia is also a very modern state with growing cities such as Atlanta.

Atlanta

The most populous city in Georgia, Atlanta is a growing metropolis. From a sports perspective, the city has Michael Vick and the Atlanta Falcons, the Braves, basketball, hockey and has even hosted the Olympics. Raised in 1865 by General Sherman, the city has a newish feel and has grown to a population of over 3.5 million people. The city can be classified more as a modern city than a traditional southern one.

Savannah

If you’re looking for a true southern city in Georgia, Savannah is the place. Located on the border with South Carolina, Savannah is a step back into the past. With tree-lined streets, the city hosts a variety of architecture from the 18th and 19th century including Victorian homes and old manor. Streets are dwarfed by huge, ancient Oak Trees. To see Savannah, rent of buy “Midnight in the Garden of Good and Evil,” which was filmed in the city.

Athens

Roughly an hour north of Atlanta, Athens is a mix of southern culture and college town. Home to the University of Georgia, the town has a population of 30,000 plus students. This influx of students gives the city a liberal feel, which is unique for the south.

Georgia Real Estate

Georgia real estate prices vary by location with the metropolis of Atlanta dwarfing smaller town real estate. A single family home in Atlanta will set you back $300,000 on average, while $250,000 will do the trick in Savannah and $230,000 in Athens. The appreciation rate for Oregon real estate depends entirely on the location, but averages a moderate six percent for 2005.

If southern hospitality is your ideal, Georgia may be your destination. With reasonable real estate prices, you can pick up a good deal.

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24 Mar 2009

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Lake Tahoe Real Estate Investments

Lake Tahoe, Lake Tahoe Real Estate Investments, homeintahoe, Rental Properties, Vacation Rentals

A Good Mix of Fun & Financial Benefits
By Theresa Souers, president South Tahoe Association of Realtors

Lake Tahoe: A Unique Location
Lake Tahoe is perfectly situated just a few hours drive from the sophistication of San Francisco and just over the mountains from the sparkle of Reno, Nevada. Nestled in amongst spectacular mountains with breathtaking panoramic views and crystal clear fresh water lakes, the Lake Tahoe area is rich in both natural beauty and solid investment opportunities.

Over two million visitors a year come to Lake Tahoe to enjoy snow and sun alike. During the ski season people from all over the world, flock to the slopes for some of the best skiing in the United States. First class resorts such as Heavenly, Squaw, and Kirkwood are a popular draw for the recreation minded. And, the hot tourist market doesn’t cool down when the snow melts. Summer brings a whole different crowd—one looking for warm, sunny days full of boating, biking, hiking, camping, and of course, golf. There are nineteen golf courses in and around the Lake Tahoe area including the two world-renowned courses at Incline Village framed by a stunning mountain backdrop.

Gambling Attractions Add Attractiveness
As if these attractions weren’t enough, for those who prefer their entertainment indoors, Lake Tahoe’s casinos add to its reputation as an all-season, world-class vacation destination. Popular events such as the Summer Outdoor Concert Series, the Shakespeare Festival and the Renaissance Fair do their share to draw in visitors. After all, half of Lake Tahoe is in Nevada, and South Lake Tahoe is centered about Stateline (the California-Nevada state border) where the area’s largest casinos are located.

The question is, what do all these visitors have in common? The answer: they all need somewhere to stay when they come to play.

Getting Investment Returns from Rental Properties
Throughout the decades, the value of Lake Tahoe rental properties have consistently grown at a rate higher than the state and national averages. Every indication is that Lake Tahoe real estate values will continue to climb in the coming years. One reason is what’s known in the real estate business as the “rolling boom”—one of the strongest indicators of a particular area's investment potential. This is when an area grows due to its affordability as compared with its more pricey neighbors. In the case of Lake Tahoe, it sits squarely centered among major real estate hot spots predicted to have solid growth. Consider these statistics:
• The population of Nevada is growing four times faster than that of the United States and is predicted to double by the year 2023.
• Reno, Nevada is currently rated toward the top of the Metro Growth list.
• The San Francisco Bay Area has developed affordability challenges where the average price of a home exceeds the average homebuyers' budget.
Other economic factors indicate that rental properties may make a solid investment. The following have a direct affect on the real estate market: the U.S. gross domestic product, unemployment, consumer price indexes and interest rates. According to the National Association of Realtors, the U.S. gross domestic product should increase from 3.7% in 2005 to 4.1 % in 2006. The Consumer Price Index is projected to rise 2.9% and inflation-adjusted disposable personal income is forecast to increase 4.5% in 2006. And finally, despite recent modest increases, interest rates remain at record lows.

With the recent “pause” in rapid price increases, this may well be the best time to enter the revenue producing rental home market. In fact, the second/vacation home market is the fastest growing segment of real estate investments today. Lake Tahoe—as an international recreation destination with a bright demographic future—is one of the top recommended investment areas. When considering Lake Tahoe vacation properties for income purposes, an investor has two options, both of which can produce great results: a vacation or a full time rental.

Vacation Rentals vs Full Time Rental Properties
The advantage of a full time rental lies in the consistent income the owner collects, while the tenant pays most of the utility bills. Currently, there is a shortage of full time rentals in the South Lake Tahoe area resulting in a vacancy factor of almost zero, with the average rental bringing in close to $400 - $500 per bedroom.

While the income from a vacation rental may not be as consistent, the potential for income can be much greater and has the added benefit of allowing personal use for the investor. In fact, there are very few opportunities today that offer rental properties that “Pay for Play.” With Lake Tahoe real estate, baby boomers can spend their vacations at their own rental property and have the confidence and security that they have also made a wise investment. For example, if a home with a purchase price of $500,000 were to increase an average of 7% in value annually—not the 20 - 30% seen in the past two years—an investor could still see the following:
• $35,000 in equity appreciation per year
• A potential of $25,000 in rental income per year
• Significant tax benefits
• A whole lot of fun in the snow, under the sun and/or at the casinos

There is no one right strategy.

Real Estate Investment Strategies
The important questions to consider in choosing a real estate investment strategy include:

• Can I afford to carry the mortgage, property taxes and other real estate expenses in the months when the property may not rent or rents lightly?
• What is the likelihood that my family will use the property enough to add significant value to this investment?
• Which is more important to me at this time, the certainty of a full time renter or the pleasure of a vacation home?

Nevada Real Estate vs. California Real Estate
Lastly, there is always the California or Nevada question to be decided when purchasing real estate in the Lake Tahoe area. Is it better to buy on the California or the Nevada side of the state line? Both offer distinct advantages. Bottom line, full time residents of Nevada enjoy the benefit of living in a state with no personal income taxes. On the other hand, real estate located on the California side is as much as 50% less expensive between the South Lake Tahoe shore in California and the North Shore of Nevada.

Whichever way an investor chooses to go, California or Nevada, full time or vacation rental, Lake Tahoe offers many kinds of attractions as well as investment attractiveness. From my own personal experience, Lake Tahoe real estate is a great investment opportunity whether your investment goals are income, equity growth, tax leverage, or just plain old vacation fun.

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24 Mar 2009

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Last Posts

Commercial Loan - Broker Or Bank?
Commercial Real Estate - A Primer
Commercial Real Estate – Hard, Hard, Hard Money Loans
Commercial Real Estate Definitions - From A to N
Commercial Real Estate Definitions - From O to Z