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Commercial Real Estate

Transcript: Marzucco Real Estate Commercial Real Estate MLS 1 2 Where? Where do I find Commercial Listings? Signage 3 Off Market or Developer 4 Approved Usage/Land Development & Zoning Code Approved Usage Land Code Development Zoning Code Municipal Code Library (County Website) Types of Use Different Types Of Commercial RE - Restaurant/Retail - Office - Retail - Medical - Industrial - Shopping Centers/Strip Malls - Multi-Family/Residential Developments -Vacant Land Commercial Sales Commercial Sales 1. It’s Dynamic and Market-Driven Like all other industries, market factors also drive commercial real estate. Before making any important decisions, consider the supply and demand, the key return metrics, and overall industry performance to reduce your risk. 2. You Have Multiple Investment Options Whether a business owner or an investor, you have the option to choose from 3 different types of properties, depending on your affordability or portfolio preference. 3. Local Market Trends are Important While you need to look at the overall market trends for the commercial real estate industry before investing, you also need to consider the local trends in the area. The demand, supply, and preferences for each region are likely to be different and need to be considered to increase profitability. 4. You Can be an Active or Passive Investor As a commercial real estate investor, you can choose to be active or passive. As an active investor, you will be responsible for property maintenance, repairs, and tenants. As a passive investor, you can simply hire an expert who will manage the property for you and make the process easier for you. Investment vs. Owner/User There are essentially two categories all commercial real estate owners fall into: investors or users. Investors purchase the property and then lease it out to tenants to generate income, while owner/users utilize the building, or a space within the building, for their own business purposes. Owner_Occupied owner also known as owner-user commercial real estate – is key to understanding lending options to finance a new property for a business. The financial upsides of owning versus renting are many. An owner will build equity with every mortgage payment and asset appreciation increases value in the property over time. Capitalization Rate (Cap Rate) vs Return On Investment (ROI) Capitalization Rate (Cap Rate) vs Return On Investment (ROI) - Cap Rate = Net Operating Income / Property Value Example: $12,000 NOI / $150,000 Price = 0.08 or 8% Cap Rate - ROI = Annual Return / Total Investment Example: $15,000 Annual Return / $100,000= .15 or 15% ROI Commercial Leases Commercial Leases ● Lease Terms (can range anywhere from 1-30 years) ● Price Per SF/Year ● Gross vs Triple Net ● Common Area Maintenance (CAM) ● Annual Increases (%) in longer term lease Additional Info To Know ● Contract/Lease Agreement vs Letter Of Intent (LOI) ● Due Diligence Periods ● Financing Options

Commercial Real Estate

Transcript: How To Become A Commercial Real Estate Agent 1. First you must get into a college with a good finance program. The top 10 in the country are: CUNY Bernard M Baruch College University of Pennsylvania Texas A & M University University of Phoenix University of Illinois, Urbana, Champaign University of Central Florida Florida International University University of Florida Florida State University Pennsylvania State University, Main Campus You must take the Real Estate test for both your state and the U.S. There is a fee so if you fail you have to pay more to take it again. After you pass the Real Estate tests for your state and for the country you have to work for a broker for a time. During this time you will learn about the market you are planning on working in. You will also learn about the laws in that area. Create a list of clients so that you can contact as many people as possible so that you can sell you properties. Do this by advertising your services so that people know about you, calling people who may need space in the near future and getting to know them, and have a mailing list of high-up people in the business world that may need your services. After that you must either try to work your way through the company to become a big agent, you must find a new real estate firm and try to work your way through that firm, or you must create your own real estate company so that you will make all of the money. Is it a good career choice? Yes. If you become a big-time agent in your company you can make huge sums of money, but it takes a while of not so great money to get there. Ovarall it is very lucrative. Quiz: What should your major be in college if you want to become a Commercial Real Estate Agent? Does it cost extra money to take the real estate test multiple times? More sources:

Commercial Real Estate

Transcript: Commercial Real Estate 101 Uses include Warehouse Storage, Light and Heavy Manufacturing, Shipping and Distribution, Automotive, etc. Tenants place heavy emphasis on a location’s feasibility: Other occupying uses in the immediate and surrounding area, ease of access, proximity to highways and railways, etc. like office, Industrial properties may also be ranked by Class, however more importantly, they are classified by allowed use. Just because a property is zoned Industrial DOES NOT mean that any industrial use may occupy it. Emphasis must be placed on allowed uses. Basic Definitions and terms in commercial leasing The terms associated with Commercial Leases mostly refer to who's responsibility it is to pay certain expenses: The Landlord -OR- The Tenant. Triple Net (NNN): In addition to the Base Rent, Triple Net leases identify the Tenant as the responsible party for ALL Expenses including: Property Insurance, Property Taxes, C.A.M., Utilities, and Other Maintenance including the Roof. The tenant is also responsible for obtaining their own insurance. Double Net (NN): In addition to the Base Rent, Double Net leases identify the Tenant as the responsible party to the Property Taxes and Building Insurance. Tenant is still responsible for their utilities and personal insurance. Single Net (N): In addition to the Base Rent, Single Net leases identify the Tenant as the responsible party to the Property Taxes. Tenant is still responsible for their utilities and personal insurance. Modified Net: Can have a variety of meanings and interpretations- Always ask for clarification. Typically means that it is a "NNN" Lease where 1 or more of the expenses is paid by the landlord. Gross Lease: A lease where the Landlord is responsible for paying Property Taxes, Building Insurance, and C.A.M. Gross leases may or may not require the tenant to pay utilities. Modified Gross: Typically, the tenant pays only base rent on year 1 of the lease, the landlord pays all other Expenses as is with a Gross Lease; However, the Tenant is responsible for paying any increases for Taxes, Insurance, etc. over the base. C.A.M.: Common Area Maintenance. Charged to a Tenant for their pro-rata share of the Maintenance and utilities of the Common Areas. i.e. Hallways, Lobby, Outdoor Walkways, etc. Annual Increases: The Percentage which the Base Rent Increases (Typically Annually) May be a set percentage or an adjustable index such as CPI. C.P.I.: Consumer Price Index. The CPI measures the average change in the prices paid for a market basket of goods and services. These items are purchased for consumption by the two groups covered by the index: All Urban Consumers (CPI-U) and Urban Wage Earners and Clerical Workers, (CPI-W)* Pass-Thru Expenses: Any Expense incurred by a Landlord that is passed-thru to a tenant: i.e. Taxes, Insurance, Utilities, etc. Percentage Rent: A lease condition that grants the Landlord a percentage of "Profit Sharing". Typically reserved for Retail Tenants. Useable Square Footage: Usually Referred to as the "Carpetable Area" - The area a Tenant can actually use. VS. Rentable Square Footage: A measurement based on B.O.M.A. Standards that uses an add-on factor to compensate for losses within a given space: i.e. Interior Walls, Pillars, Intrusions through the Floor, etc. Qualifying Tenants & Landlords Qualifying Commercial Tenants and Landlords is just as important as it is in Residential. We will now discuss a few of the initial questions that should ALWAYS be asked: Tenants: What type of space are they looking to Lease? What are they looking to do with the Space? Have they ever run this type of business before? IF SO- Where are their existing/former locations? How long have you been in business? Do you have any partners? IF SO- Who is the decision maker? LET THEM KNOW THAT WE ONLY DEAL WITH ONE POINT OF CONTACT - THIS HELPS TO AVIOD CONFUSION. Have they ever leased/purchased Real Estate? Have they ever had a Real Estate professional represent them? What is their budget? Does their budget include expenses? Do they understand the various types of leasing and terms associated with Commercial Leasing. When are they looking to move-in? Landlords: What type of space do they have available for Lease? What type(s) of Tenant are they looking for? Are there any type(s) of Tenant they do NOT want? Do you have any partners? IF SO- Who is the decision maker? LET THEM KNOW THAT WE ONLY DEAL WITH ONE POINT OF CONTACT - THIS HELPS TO AVIOD CONFUSION. Have they ever been a Commercial Landlord? Have they ever had a Real Estate professional represent them? Do they have a price in mind they are looking to get for Rent? Does their price include expenses? Do they understand the various types of leasing and terms associated with Commercial Leasing. When will the space be ready for move-in? How will the space be delivered? NEVER DISTRIBUTE, SIGN, OR ENTER INTO ANY AGREEMENT OR CONTRACT WITHOUT FIRST SPEAKING WITH AND RECEIVING AUTHORIZATION FROM

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