Making Money in Commercial Real Estate

Have you ever thought about owning commercial income property? One of the most consistent and reliable ways that investors have been making money, for hundreds, maybe a thousand years, has been in the buying and renting and selling of property.

That said, plenty of money has been lost in the same. So what is the difference between the investors that make it, and the ones that don't?

First, savvy investors do not over extend themselves. The smart investor will make sure that they spend what they can afford--even if there is a market downturn, or a natural disaster, or a major expense. Too many people who buy property buy more than they can afford, and then run into problems. In fact that is the simple explanation for our current economic woes!

Next, savvy investors choose the right property or properties. "Location, location, location!" and don't forget it. A high end boutique will not thrive on the back of a country road next to the chicken farm. An ice-cream shop will not survive if it is the only shop on a busy highway. You have to decide what kind of investment property will best suit you and your area, and what area will best suit the kind of investment property you want. Do not skimp on the research here! Take your time, be observant and make smart choices.

Finally management of the property will make or break your investment. Choosing the right property manager who can successfully market your property, and who can screen tenants, handle upkeep, etc. is give you the best chance at a positive ROI. Property managers and property management companies have different areas of expertise and specialty, and you should look for one that has worked with similar types of businesses in your area and has a positive track record.

If you would like more information on property management or investment properties in the Carolinas, please check out our website at www.kuester.com.

Is Now A Good Time To Buy Residential Income Property?

Buying residential income property (from duplexes to apartment buildings and large complexes) has traditionally been a good idea for investment purposes. Many savvy investors have chosen this route to invest their money and it has paid off.

Despite the fact that the real estate industry as a whole is also feeling the strain of the mortgage crisis, now may be the right time for you to consider your entree into investment property, or even expanding your current portfolio. Just like home values, apartment buildings and complexes have also dropped in price, and that means there are some great deals to be had for the right investor.

With so many people falling victim to homes foreclosures, there has been--and will soon be more of an influx of people who need a place to rent, and still have a decent income. These people will need to be carefully screened, and their credit may be hurt, but they may make very good tenants still. Be sure to vet these people fairly, taking into account that they many have filed bankruptcy, (wiping out most of their unpaid debt), which would give them the ability to pay rent and start over rebuilding their credit. These people may be not your typical renters and a good tenant screening process will pay off here!

As you know - there are risks with any investment, and buying rental properties is no different. However, there are still good reasons to take that risk. With a well managed property purchased conservatively, rental income will help pay the monthly mortgage on the property, and temporary short-falls due to maintenance or occupancy, can be make up with good management. Property investment is not for the weak of heart, but it can, and has produced positive results time and time again.

A word of caution: It is important that you do not get caught in the same situation that caused the real estate crisis we are in. Too many people purchased properties that had over-inflated values. Be sure to carefully research any property you consider including the property value, the location, and the comps, and make a significant downpayment so that you can guard against a month or two of lower income from your unit(s) should this happen. Remember to insure against the risks.

So, now really is a great time to buy -- but you have to make sure you get the best property for you. Do not over-extend yourself, make a significant downpayment, and choose a property that will pay off, (does not need major repairs, is in a desirable location, etc.)

If you need assistance finding a great residential investment property in the Carolinas, or have any questions of property investment of property management, please go to our website at http://www.kuester.com.

Is Now a Good Time to Buy Commercial Property?

Did you know that RIGHT NOW is one of the best times to purchase Commercial Real Estate in decades!

"But the economy..." you say. Well, yes, EXACTLY! Because of the bad economic conditions and the very unfortunate real estate situation, it is a "buyers market" for both residential and commercial property. Now is the time to pick up a great deal if you are willing and able. But this means that you have to have really good credit and probably cash on hand.

There are a many things to consider if a commercial real estate purchase is in your future, including the best type of property, the location and how to finance it. The option for a" Financing Purchase Transaction" should be looked at especially. Financing purchase transactions for owner occupant (meaning for your business) type loan requests may be a possibility for you, and may be a better option than other types of commercial mortgages since they are hard to qualify for currently. You may want to consider this option over other commercial mortgage programs, such a conventional and investor.

Need more convincing? We are currently at historic lows with property values, having dropped 30 -40% in the last 3 years. Historically, after a down cycle, property values came back up rapidly after the banking industry stabilizes and we are almost at that point. Do not miss out on a great opportunity.

Many business owners will be remiss in a few years that they did not take advantage of one this moment in time -- one of the best to purchase commercial real estate since the Great Depression.

If you are interested in purchasing commercial investment property in the Carolinas, check out our website at www.kuester.com.

What kind of training does a property manager need?

If you are considering a career in property management, you should know that your career can go in a couple of different directions, depending on where and what kind of properties you manage. Property management is an exciting and challenging industry and you will do well if you can be organized, stay on top of current laws and regulations, and maintain a strong network in your community.

If you are interested in becoming a property manager, you should first look for training in property management that suits the specific field in which you are interested in working. For example, most apartment communities utilize a property manager to interview prospective tenants, collect rent and oversee maintenance needs. You should focus your education on business, negotiation skills, communication and finance.

Commercial property managers, while performing many of the same duties as apartment property managers, may also be involved in negotiating contracts and handling leasing arrangements. A strong understanding of contract laws and the specific regulations that govern your town and state will be required.

You can receive certification from The National Property Management Association, and take certificate training programs that can provide you with a professional designation, and credibility as you look for open positions in property management. A certificate shows employers that you've received training in asset management, tenant communication and contracts.

If you would like to take your education further, you can receive a bachelor's or master's degree in residential property management. The curriculum includes courses in interior design, marketing and leasing, management, accounting and real estate law. During the course of study, you will take the certified apartment manager certification exam.

It is important that you consider membership in associations in your community. In addition to networking opportunities that have the potential to advance your career, you can find a number of continuing training opportunities. Look for groups such as the American Apartment Owners Association and the Property Management Association.

Property management careers can be exciting and rewarding for people who like to work with a variety of people, solve problems and be a valuable resource. If you are interested in careers in property management in the Carolinas, please check out the Kuester Contact page.

What is a Property Manager?

We have talked a lot about the duties and responsibilities of a property managers, and what you can expect from a property manager as the property owner. Fact is, that what you can expect from a property manager varies on the manager and the company for whom they work. At Kuester we have high standards and hope that we meet and exceed the expectation of our customer. That said, there are a few things that should be universal, regardless of which property manager you have contracted.

A property manager is the legal representative of the landlord or property owner and is responsible for the day to day operations of a property, which varies depending on the type pf property. All different types of properties can benefit from a property manager, since they can manage the tenants residing there or the businesses doing business on the property.

Property managers are in charge of single unit rental homes, multi-unit and apartment units, and commercial office and retail developments, and is responsible for maintaining the property grounds and the building itself, including the repairs of the common areas and sometimes the tenant space as well.

In addition to the day-to-day upkeep and emergency situations or a particular property, the property manager can also handle the business and financial end of their rental business. Project managers find prospective tenants, collect rent, and take rental applications, and will manage vendors and contractors and through short and long-term projects.

The property manager is the liason between the ownership of the property and those using it - and will run the property and the investment thereof efficient and effectively.

Kuester Property Management manages a variety of properties including multi-unit residential and commercial properties in North and South Carolina. If you would like to learn more, go to www.kuester.com

How to Find A Good Investment Property

There are a lot of properties out there right now, and if you have the opportunity to purchase a great investment, now is a wonderful time to buy.

However, if you really want to get the best deal on investment properties, you have to increase your odds of finding the best one--one that will be a money maker! Do you really want that GREAT investment property? Then you are going to have to be vigilant—check your resources and keep your eyes and ears open! Looking through the MLS listings is not enough any more. Here are ten ways you can increase your chances of getting the best deals:

1. Tell people what you are looking for. Let the right people know what you are looking for and let them help you find the properties. There are a lot of owners out there who want to sell, but haven't yet listed their property -- and they may mention it to friends or families. You could catch one of these great deals ahead of time!

2. Go online. Go to a search engine and enter the type of real estate you are looking for, in the appropriate city. Sometimes you can get a good opportunity here -- and other times not, but this is a great place for a first step.

3. FSBO sometimes pays off. Drive around looking for "For Sale By Owner" signs. Owners often don't want to pay to keep the ad in the paper every week, so you won't see all properties there. A FSBO sign might mean a great price for you, and a seller who will be eager to sell.

4. Look for abandoned properties. An abandoned property means that the owner doesn't want to deal with the property, or can't for whatever reason, and may sell cheap.

5. Look at "For Rent" ads. Save newspapers or look at old craigslist ads that are a few weeks old. If the rental unit was not rented, the landlord might be ready to sell.

6. Bankers are great friends! Bankers are in the know and you might get a lead on a foreclosed-on investment property, and get it cheaper if you buy it before it's listed with a real estate agent.

7. Pay for leads. There are people that always seem to hear about the good deals - so offer them a finding fee!

8. Take advantage of eviction notices. Many local papers publish eviction notices,and sometime this information isinformation at the courthouse. A landlord who just went through evicting tenants may be ready to sell.

9. Advertise. Place your own "Looking for investment properties to buy," ad on Craigslist, or on a sign, or the newspaper.

10. Call Kuester! (888.600.5044). We will work with you to find the perfect property for you!

Investment Property Lingo

If you are considering an investment in property, you will need to know the know the lingo!

Familiarize yourself with the industry terms such as:

Gross Income - Total income before taking out taxes and expenses

Vacancy Rate - Percentage of rental units unoccupied

Effective Gross Income (EGI) - potential Gross Income less a vacancy and collection allowance, plus miscellaneous income.

Operating Expenses - Ongoing cost for running a business.

Net Operating Income (NOI) - Operating income after operating expenses are deducted, but before income taxesand interest are deducted.

Debt Service - The ratio of cash available for debt servicing to interest, principal and lease payments.

Cash Flow - The movement of cash into or out of your business.

Cash-on-Cash Return - The ratio of annual before-tax cash flow to the total amount of cash invested, expressed as a percentage.

Capitalization Rate (Cap Rate) - The ratio between the net operating income produced by an asset and its capital cost or Marketing Value.

With the understanding of investment vocabulary you will be able to make better decisions and turn your dream of investing in commercial property, a reality. Take the time to do the research and consult with the experts before making any major financial investment!