Monthly Archives: June 2016
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!
As a real estate investor, the availability to attract private money is vital for the success of your real estate investing business. By providing a website explicitly designed to attract and persuade private money lenders and potential investors that your business is the best to invest their money in is therefore mandatory.
But you must have the suitable private money investor website in order to meet this need a website that is clean, professionally designed and laid out, and most importantly, one that leaves no doubt in potential private money investors minds that their money is best invested in your business.
Finding the appropriate web site is therefore critical. Firstly, why must you have private money sources?
1) Do you like the deal? You are funded!
Can you employ regular funding for a deal with creative financing (such as taking over payments)? Even if such a deal can make you $100,000? Very fanciful!
No financial institution will lend you money unless it is a straight traditional purchase; not in my knowledge.
With a ready source of private money you can turn to in at a moments notice, you may transact all the real estate deals you can get; if you like it, you got it.
2) Close more transactions
With private money, you call the shots. As such, you can do deals that other real estate investors would not deal with simply because you have money in the bank from your private money lenders.
With private money you can close on real estate deals any time, even with time limitations. Regular banks generally take at least 30 days to finance a deal, and come with tons of under-writing conditions.
Hard money lenders lend only on real estate transactions under certain conditions (like 70% minus repairs) . With private money real estate loan conditions, such stipulations do not exist.
3) Private money is less costly
Interest charges of hard money loans are at least 16% plus points. Ordinary loan sources will not even consider any transaction unless these deals are straightforward.
4) It is not necessary to spend your own money
Hard money sources demand the first month interest as well as additional points before. Hard money lenders will not advance rehab funds, so you need a good bank balance even for a small real estate deal.
Conservative lenders will ask for counterpart funds from you, most times about 10%-20% . Private money does not have those preconditions.
Real estate investing websites for attracting private money
With a professional real estate investing private money lender website presenting you as a successful real estate investor, private money investors can trust you with their money. As a result, you can tap private money resources to finance your real estate deals others can only wish for.
You should have a private money web site specially crafted for drawing private money sources interest to back your business. Naturally, you will not wish to appear haphazard to potential private money investors and financiers.
So the website should portray you as a successful businessman and real estate investor who is knowledgeable and top notch in his field. The website portrayal should make you as a knowledgeable, professional real estate investor who is successful and a leader in his field that private money investors can count on.
The content of the private money investor website should be professionally written to persuade private money lenders that you are the best real estate investor for their cash. It should also be fully optimized for search engines.
Selecting the correct private money lender website in pursuit of this aim is hence a vital requirement for your business success.