4 Key Reasons to Buy Commercial Real Estate for Rental Purposes

Posted on: Monday, September 25th, 2017, under Commercial Real Estate, Real Estate Investing.

Bob Samii

Investing in commercial real estate has a plethora of attractive qualities. And, purchasing multi-unit properties that allow you to recruit tenants offer some of the best returns on investment around.

Of course, attracting the right tenant and negotiating leases can be challenging, but once that’s in the books, the doors are open to enjoying all the perks of your investment. The good news is most commercial tenants enter into long-term leases because they are looking for a reliable space in which to operate their business. This low tenant turnover rate, along with the steady stream of rental income, makes commercial properties a lucrative investment that you wouldn’t want to miss out on.

So, here are four reasons you should seriously consider buying commercial real estate for rental purposes:

Leases Are Long Term

We can’t stress this enough. Unlike residential leases, commercial contracts tend to be long term. Typically, businesses can enter into five year terms (some even double that).  Having a steady, long-term location is good for their business as well as yours. You have guaranteed rental income and time to build a trusting relationship with your tenant. Not to mention, banks look favorably on long-term leases if you ever plan to refinance or sell your property.

You Set the Standards

As an owner, you are able to negotiate any types of rent, deposits, or other collateral that you want with your tenants. Some leases may require a couple of months’ rent as a security deposit. You can also ask tenants to personally guarantee the space, which means that they will be held personally liable for any damage or unpaid rent caused by the business. Leases can also include what happens if the tenant terminates the agreement. So, you can be sure to protect yourself and get set-up a little bit better on the on-set of a new tenant.

Rent Provides Consistent Income

Having consistent tenants will ensure that you’ll receive a certain amount of income each month. This can help you achieve a significant return on the investment for the property. During lease negotiations, you can work out many different rental agreements with tenants.

Unlike residential properties, there are rarely any rental control regulations on commercial properties. However, landlords sometimes give new business a reduced rate in the beginning so that they can establish their business and get things ready to grow on their end. There is always an expectation is that the rent will increase over time. More established businesses are likely to pay more rent to ensure that they maintain their space – especially if they’ve created a brand awareness in the space you’ve provided. Added bonus? Tenants also often pay a portion of utilities and some maintenance costs.

Exclusivity Offers

As a landlord, you can offer exclusivity to your tenants. While this limits who you can rent to—for example, your exclusivity agreement may limit your building to one accounting firm—it also limits where the tenant can move to if they vacate your building. Essentially, it limits a tenant’s competition, which makes it an attractive feature for recruiting tenants. You want your tenants to have successful businesses, so it benefits everyone.

If you’re ready to take the plunge into commercial real estate – it’s definitely worth your while to dig in and consider purchasing a tenant-driven property. The benefits are endless, and it is a great opportunity to really get a high ROI.

Check Out Avison Young’s Tech Spaces Q3 Newsletter!

Posted on: Thursday, September 21st, 2017, under Announcements, Thought Leadership.

Bob Samii

Get an update on the Austin tech sector’s workplace trends. Get insight on everything from who’s on the move to M&A and market news.

Download the report here and connect with the Avison Young team.

The Tech Spaces team at Avison Young specializes in office leasing advisory. Its members share a strong focus on the technology sector, representing a large number of technology companies throughout Austin as well as nationally.

Building a CRE Agency: Being a good fit determines your success

Posted on: Wednesday, September 20th, 2017, under Thought Leadership.

Bob Samii

Networking, a strong work ethic, and being knowledgeable about your local commercial real estate market can help you break into the industry. It’s also vital that you’re a good fit for commercial real estate.

Being successful in commercial real estate and building your own CRE agency hinges on where you specialize and the reputation and culture that you create. These elements are essential as you build your CRE agency.

Your Market

Commercial real estate brokerage and development is big business just about everywhere, but markets in big cities are often a little more active. Breaking into large markets sometimes takes more persistence, but your hard work will pay off. In smaller markets, it may be easier to make waves, but the deals are usually smaller, as are the fees and CRE .

Your Specialization

Finding a specialization keeps you focused so that you can build your agency and not get distracted with smaller deals or ones with elements you aren’t familiar with.

The specialization determines the types of properties you’ll handle, as well as the types of people that you’ll interact with, the knowledge that you need, and the environments you’ll work in. Depending on your personality type and interests, you’ll likely gravitate to a certain industry segment.

Your Agency’s Culture

Successful CRE agencies foster the idea that when everyone works together, everyone makes more money, gets and retains clients, and dominates the market. Make collaboration a part of your company culture. Fierce competition and distrust do more harm than good. Let this drive how you pay your staff, split commissions, and assess fees, as well as how you set up your .

Your Personality

Self-improvement can go a long way, but certain personalities are more successful in CRE. As a broker, you will simultaneously be a contractor, architect, salesman, attorney, financial analyst, and design consultant—depending on who your client is and what property you’re working with. Successful CRE professionals are personable, good with money, and driven.

Your income is not always steady. Can you manage your lifestyle on a commission, or not getting paid for several months? And, if you were to get a large six-figure check, you would likely need to make the money last for a while.

Success in commercial real estate depends on being a good fit. You have to fit in well with the industry, the lifestyle, and your specialization. And, as you build your agency, you have to create a company that fosters collaboration and fits within the.



Technology is Making Investing in Commercial Real Estate Easier

Posted on: Monday, September 11th, 2017, under Commercial Real Estate, Real Estate Investing, Technology.

Bob Samii

Commercial real estate investment has always been built on relationships. Traditionally, those relationships were built upon face-to-face interactions and lots of paperwork. Technology is changing that, making investing in commercial real estate all that much easier.

Technology increases organization, boosts efficiency, and helps people connect. Because technology is making investing more streamlined, new investors are empowered to enter the market. They can search for properties online, use online tools to research investment strategies, and even complete transactions online.

Investors can easily form relationships online, and the information that previously took weeks to collect and consider can now be created and examined within a few hours. These trends are helping to attract new commercial real estate investors:

More Data Is Available

The vast amount of data available can save time for commercial real estate brokers and allow them to provide property and market data to potential investors much more quickly. In the past, this data had only been available to professionals and insiders.

In addition, tech-driven investment platforms can help investors more easily find investments because data, insights, and trends are easily accessible and located in one spot. Investors can learn about properties and the market, and make smart decisions.

Details Are Easy to Access

Owners can create detailed online listings that provide potential investors with everything they need to know about properties, including history, location, tenants, and the local market. Technology better enables owners to tell their property’s story and discuss investment opportunities and philosophies.

Technology allows for a clear expression of value propositions and other essential details so that no surprises come up. Technology also enables investors to access information about their properties in real time and on demand.

New investors and a younger generation of investors are more drawn to CRE investing as information becomes more easily accessed online. With information and investment opportunities readily available, investors can build knowledge, and the flow of information and completion of transactions is easier than ever before.