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    Buy and Optimize: A Guide to Acquiring and Owning Commercial Property
    Buy and Optimize: A Guide to Acquiring and Owning Commercial Property
    Buy and Optimize: A Guide to Acquiring and Owning Commercial Property
    Ebook139 pages1 hour

    Buy and Optimize: A Guide to Acquiring and Owning Commercial Property

    By Marc Glaser

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    About this ebook

    Marc Glaser has been a commercial real estate broker in Metro Atlanta for over 20 years and founded the commercial property management company Tenant Science in 2014. His passion for helping commercial property owners in all aspects of their investment flows through in the expert advice he provides. Mr. Glaser is also a real estate investor and has a successful track record of buying, managing and selling his own properties.
    LanguageEnglish
    PublisherBookBaby
    Release dateFeb 1, 2018
    ISBN9781543919929
    Buy and Optimize: A Guide to Acquiring and Owning Commercial Property

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      Buy and Optimize - Marc Glaser

      heirs.

      Preface

      I grew up in Miami Beach, in the late 70’s. I was in Junior High when a friend of mine introduced me to his dad. At the time, his dad was well into his 50’s, a widower with 4 teenage sons and only one means of providing for his family. He was a landlord who owned one building; a 5 story walk-up with no elevator and no air-conditioning. He lived in a fancy home and his sons were provided every privilege, including the best clothes and the best schools.

      On any given day, one was likely to find this man in a sweaty tank top fixing something in his building. He never hired a contractor. He made all his repairs himself. Whether it was a clogged toilet or a leaking sink, he was simply the ultimate fixer. His building usually never had a vacancy. The tenants were so loyal to him that they would never think of cheating him, not giving him due notice or avoiding paying rent.

      One day he found out that one of his tenants was moving out, and he asked his son and I to accompany him to the airport. While this was a chore to my friend, I was simply clueless as to why we were at the airport at all. When we got there, we went right to the incoming flights directory and then to a concourse where a flight from Israel was arriving. We hurried to the gate and got there just as passengers were getting off. Immediately, the landlord went to work, talking with strangers who just got off the flight. After several minutes of making friends with two different couples, we were soon squeezing one of them into the back seat of our car and another followed behind. We took both couples back to the building and one of them leased the 3rd story apartment before the existing tenant moved out.

      In our discussions much later, the landlord told me that when he emigrated from Israel with his family, they did not know where they would stay upon arrival in the United States. Someone approached his parents at the airport, and offered them a home that was clean, and more importantly, located within a community of people that were immigrants like them, who would help them adjust into the new city, as well as protect them.

      Some may call this discrimination or steering, but it taught me a valuable lesson right from Junior high; the secret recipe to great property management. One aspect of it was controlling costs but making timely repairs, and the other aspect; keeping a close relationship with the tenants. These two components created a community that appealed to tenants.

      One of the greatest benefits of investing in commercial real estate is that you can have some control on the returns on your investment by making improvements and leasing vacant spaces. Perhaps even more important, is enabling the tenants to make enough money at their businesses to afford the rent.

      With a career in Commercial Real Estate spanning more than 20 years, I have represented numerous business persons either in investing in multi-tenant buildings, as well as those who preferred to simply be users of a portion of multi-tenant buildings while leasing the remaining space. In 2014, I founded Tenant Science, a strictly commercial property management company covering metro Atlanta. Tenant Science continues to be a rich resource for the Atlanta commercial property owner.

      Introduction

      Commercial Real Estate describes properties that are purchased and developed for the sole purpose of business operations and are leased out as workspaces, which are typically not residential in nature. Commercial real estate encompasses buildings that house retail businesses of all kinds, hotels, malls, restaurants, offices, gas stations, factories and so forth. Most people are more accustomed to residential properties and know very little about the commercial property terrain.

      Commercial real estate differs from residential real estate in a few interesting ways. To begin with, they are valued differently. The value of a commercial property is usually directly inferred from its usable square footage; a concept that does not always apply in residential buildings. Commercial real estate leases are also often much longer than residential leases, and this helps to sustain cash flow. Commercial properties are structured in such a way that risks are diversified, as the building houses various tenants, and the loss of one does not impact income as significantly as if it were the sole tenant of a residential property leaving. More importantly, the banks tend to view and value commercial properties differently, usually requiring a higher down payment than for residential buildings. A significant similarity between both types of real estate is that they can both go into foreclosure.

      Commercial properties provide a fairly stable fallback when in tight financial times. It is usually best to attempt to invest only if you have a sustainable business and experienced partners or lenders whose contributions can fund the purchase. Most people are cautious about venturing into the commercial real estate market because of the huge amounts of money involved as well as the potential risks. Memories of the economic meltdown in 2008-2009 which saw many commercial building developers pulling the plugs on projects are still fresh in the minds of many. However, an investor stands to make handsome profits, when a deal is structured right. Rentals are usually higher on these properties and with the right property specifications, good tenants and the most suitable lease type, an investor can realize a tidy sum annually. It is important to note that if what you are looking for is a quick cash in a short time, commercial real estate is probably not the best option for you.

      The commercial property investor’s cycle is an interesting one; one moment, you are the buyer, negotiating prices and structuring payment plans in order to acquire a building, and the next, you are an owner or a type of seller, offering units of the building to potential tenants with the aim of filling your vacancies. These different phases require that an investor is willing to learn and be flexible along the way. If there are reasons to put that property on the market again in a few years, the same investor must then be a seller again, calculating the property’s value and hoping to make the best sale.

      The purpose of this text is to furnish you with the right strategies to enable you to identify a good commercial real estate deal, successfully acquire the property and to establish an outstanding property management structure that preserves and subsequently improves the value of the property.

      Chapter 1

      Identify Your Commercial Property Investment Personality

      Crafting the commercial property investment strategy that will be right for you, requires that you first identify the type of commercial property that suits your personality, interests, and experience. And then you have to determine what you would like to achieve from owning and managing that commercial property. Once these

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