In my book, nothing beats commercial real estate investing.
Why?
Well, let me ask you: Where else can you make one… five… twenty-five million dollars a crack using NONE of your own money?
In other words, one of the most appealing aspects of commercial real estate is abundance… abundance of properties, of creativity, of choice- and, especially, money.
It's all readily available.
Commercial real estate is a very dynamic industry and investment. Commercial markets are always shifting; land uses are being re-assigned by city planners, and new, big name stores and developments establish themselves in communities causing land values to rise all around them.
In commercial real estate there are many market segments that can hold the interest of many different people.
Let's look at some of the actions you can take in commercial real estate:

Are you interested in buying commercial real estate? First of all you have to choose in which area that you want to buy in.
If you are willing to search around there are plenty of places to buy top notch commercial real estate. The key to doing this with success is to keep an open mind, and never shut anything down until you consider every last detail.There is not set area that has the best commercial real estate. Downtown commercial real estate is better than anything else, but for some people this may not be the case. For instance, you may not want to buy an office building downtown for one reason or the next. The best commercial real estate for you is not always the best for another buyer. So take the time to search the property that suits your need.

You have two options while buying commercial real estate.You have to choose between purchasing the property inside the city or out of it. The thing to remember is that most city commercial real estate cost you more than the properties that are a bit further out. This is not always the case, but most of the time it holds true.When it comes to the actual city or state, again, this is something that you need to decide on your own. If you are buying commercial real estate for your business you have to stay in the same area, and need to search around home. But if you are buying an investment property, your options are a bit more varied.

As you can see, there are many places where you can buy commercial real estate. If you are going to spend a lot of money to make a purchase, take you own time to ensure that you get a property in the right area. This is the only way to ensure that you are not disappointed with your choice in the end.

Have you gone to a shopping complex? There, you will see different novelty shops, grocery stores, and other small businesses. If you will decide on whether you want to enter such business, it is important that you will understand the basics of commercial real estate investment and how you can gain profit from real estated investing.

Understanding Commercial Real Estate.

Real Estate is defined as a certain property that can possibly generate revenue for its owner. It generally includes office buildings, shopping malls, service stations, restaurants, apartment units, and raw land.

You must understand that only properties, which have a potential to produce income for its owner, is categorized as commercial real estate.

Therefore, it will not include real estate of habitable characteristics such as houses and apartment buildings.

So how is it leased to the potential clients? Usually, the owner of the property leases it through a licensed broker. Then the broker will make the necessary arrangements with regards in advertising that property.

In addition, the broker can make some agreement with the owner or seller of the property about its improvements such as renovating or clearing the perimeter of the ground where it is erected.

How to Get Started in Commercial Real Estate Business

If you want to start with this type of investment and yet, you do not have a concrete property to sell, maybe the first thing to do is to have some guidelines that you can start with. Here are the things that you should consider in building your commercial property:

* Determine what are the hot business are around. Decide if you will cater to the needs of individual or partnership that wants to rent spaces for their food or novelty shops.

* Choose the best location of your property. Go for the finest piece of land that you can utilize efficiently. You can consider erecting commercial property nearby high traffic areas can be easily accessed for full-service restaurants, hotels, and other shopping centers.

* In aid of choosing your property's location, you consult the planners of the local government where it will be built. They have a zoning system, which separates industrial, residential, and commercial properties. It will help you to obtain the necessary clearance and permits from them.

* You can opt to hire some financial advisors. They can help you to plan for the revenue aspects of your investment. Always keep in mind that the right investment is the best chance to earn more profits.

* In case that the property is funded under a mortgage, it will be wise on your part to repay it religiously. Do not let it be your liability; remember that your goal is to earn money, not to lose money.

* If the property is now ready for leased, always have the necessary arrangements with your real estate agents with regards in advertising your property.

* Check the rates, terms and conditions, and other related aspects concerning the lease of your commercial property. You must also serve the interest of your potential clients that will avail it.

Earning money through commercial real estate property requires enough planning. This is an investment; either you lose or gain money.

The growing number of people who visit Orlando to get entertainment is driving the high real estate prices. For instance, CenterPointe on the Park is offering a unique commercial real estate opportunity, as it is centrally situated in metropolitan Orlando. It is being developed on 55 acres of land and is going to have an 'A' class facility featuring one of the most advanced office spaces in the area, a hotel, conference facilities, restaurants, retail space and other attractions. It is also to have Lakeside Park, and is positioned as one of the most advanced commercial area in the city. The land developers are also preparing plans to develop other areas into commercial real estate, as several people are showing a keen interest in business opportunities. The increase in the number of tourists is forcing entrepreneurs looking for good investments to renew focus on Orlando. Though the existing hotels are improving d

One of the signs of the times that indicates how any nation's economy is doing can often be determined by how well businesses are expanding in real estate. Right now, there is a continued expansion of commercial real estate and loans for these new projects. The current commercial real estate lending trends indicate that now is a good time to expand your business with a building program or new land purchase.

While the housing market has certainly taken a real dip, and has hurt the sub prime lenders in particular, commercial lending goes on. Many new projects, especially in the income producing properties realm, is seeing solid expansion. This includes the construction of office parks and buildings, multi-family dwellings, hotels, and other general land development programs.

One particular market that has held up its own is office rentals. The demand for office space - even at increased rent values - has grown. This is especially true in New York City (Manhattan), and some other large cities, too. This means that the available office rental space has actually decreased as office space is being filled - much to the owner's delight. In New York City, office space is being grabbed up - even though the rent has risen to nearly $70 per square foot.

A few other cities, however, still show a slow office rent market. In fact, much office space remains unoccupied. In those cities, though, where office space is in demand, the number of office buildings and office parks are certainly on the rise, as developers rush to fill in the gap. Commercial lenders are also seeing the need and providing the necessary bridge loans and commercial loans for these massive projects.

When compared to last year, there is an increase in the overall amount of activity in commercial real estate lending. This shows a growth of about 0.8 percent that is expected in the third quarter of 2007, according to the National Association of Realtors.

Over the last few years, commercial real estate lending has shown a strong increase. The Federal Reserve (Philadelphia) indicates that large mortgage lenders have gone from about 150%25 of loans (compared to non-commercial) back in the 1990's, to over 300%25 last year.

The number of commercial real estate loans is increasing and lenders are continuing to offer excellent interest rates. The market has begun to show a slight decrease in recent days, but for right now, the rates needed to expand business could not be much better. The qualifications needed to get such a loan also could not be much softer than they are right now, too.

Seeing this kind of commercial real estate trend, and the market's favor for this kind of loan, you also may be able to benefit greatly by investing now in a new building project or land development program. Check on availability of office space (in particular) in the area, find out how fast it is being secured by new businesses, and if it is in demand, be ready to move on the opportunity. Scope out possible land available, or existing structures that can easily be renovated into office space, get your paperwork in order, and talk to a commercial lender about your goals before someone beats you to it. Now is the best time for action on this kind of opportunity, while commercial loans are still available at great terms.

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!

I n Lesson 7, we are going to talk about the Critical Property Variables with regard to evaluating a property. You will need your calculator for this lesson .

We will be reviewing the Property Analysis excel worksheet, so you will want to pull up that worksheet at this point so it is available as we progress through this lesson.

This worksheet is the same one My team and I use with every deal that we analyze.

As you will see, this particular worksheet is designed for the multifamily and mixed-use properties.

As I have mentioned in previous lessons, we are focusing on Multifamily Apartment and Mixed-Use properties as these two categories illustrate the most logical path for new and less experienced real estate investors to use to break into the commercial real estate market.

N ow, let's look at the Property Analysis worksheet and follow along as we add specific information we look for and input as we go along.

A t the top left portion of the sheet, you will see the property address , the city in which the property is in, and typically the number of units in this apartment building.

J ust to the right of that, we have what is called an “ Asking Price ” or “ Value ” that relates to a purchase or a refinance, respectively. Just to clarify, the “Asking Price” is related to Purchase transaction, and a “Value” is relates to a Refinance transaction.

Investing in commercial properties is fast becoming popular among real estate investors. These properties offer lucrative deals and this of course makes the investors evermore interested in buying these properties. As in any other type of investment, it's obviously advisable to do your research well so that the property you invest in generates you a good residual income.

What is a commercial property? Properties such as hotels, malls, retail stores, business complexes, medical centers and industrial properties are commercial properties. Any property, which is used to earn an income and make a profit, is a commercial property.

When a real estate investor invests in commercial properties, he does so with the intention of selling it to other businessmen or even renting them out. Commercial real estate is really booming because of the demand. Every other day we see a new mall being built, or maybe even a brand new industrial coming up in the heart of the city. Nowadays it seems even hotels come up overnight! One wonders where all the space is coming from! But the point is, if such properties are being developed, the demand is obviously there! It's because of this demand that investors are showing a keen interest in investing in these properties.

Apart from the demand of course, there are other advantages to investing in commercial properties. The rentals yielded from a commercial property are much better than those you would yield from a regular residential property. Real estate is where the money is, and of course the first thing you look out for when you're investing is whether it's going to be to be a profitable deal. When you invest in commercial properties, you're bound to make good money by renting out your property.

The profits made from a commercial property are obviously incomparable to any other type of property. The very word "commercial" should explain this. When you invest in residential properties, you will either sell it off once and far all and reap a good profit, or earn from your monthly rentals. However, when you invest in commercial properties, whether you sell off a piece of property or rent it out, you're bound to earn much more, because these properties are being used for businesses of some kind, and hence the worth of these properties is much more!

If you've invested in stocks and bonds, then let us tell you that investing in commercial properties is just as lucrative. While stocks and bonds are a fluctuating market, and many are wary of investing because of this flux, real estate is a more stable market. As already stated earlier, commercial properties are highly in demand and this demand is only growing. Hence, investments in this sector are also growing and if you do a proper market survey and keep the basic rules of real estate investment in mind, you're sure to get yourself a great deal!

Make sure the condition of the property you want to buy will survive market conditions before seeking a commercial real estate mortgage. When you go to purchase a new residence, a good lender does a thorough financial background check on the individual seeking to borrow money. On the other hand, when you go to apply for a commercial real estate mortgage, the lender's greatest concern is the property. Some of the most important issues include your credit score. But that's not enough. The lender wants to make sure the property is in pristine condition and will survive tumultuous market conditions.

Research the commercial market

Before deciding to seek a commercial real estate mortgage, scout the city or town and get a sense of the market conditions. Are there many "for rent" or "for sale" signs for multi-family units such as offices or apartments? Is the commercial property in a part of town that receives enough traffic flow or is it difficult to locate? Talk to professionals in the area to find out where you can find the best deals before obtaining a commercial real estate mortgage.

Prepare to put money down

Just as you would put money down on the purchase your dream house, you will need to come up with money for a commercial mortgage. Most lenders want between 15 and 20 percent down. Next, you are ready to see if you can pre-qualify for a property. A loan officer will put together a loan package before giving you a letter of interest. Then, the lender will review the file and create a loan document.

Gathering documents for mortgage

You can begin getting together the documents you need in order to move along the commercial mortgage process. Put together your employment history for the past two years as well as with salary, employment dates, pay stubs and the contact information of your employers. You should also figure out your net worth and list all other assets.
Make sure you have all of your tax records organized. Bring along your social security card, the last three statements from savings and checking accounts, stocks and certificate of deposits. You should make a copy of your 401K or IRA plans, the title of your automobiles or loan information. Finally, write down the names, addresses and account numbers for all credit cards, loans and mortgages so those facts and figures will be handy for your loan officer.

Commercial real estate is a highly profitable industry where many people dedicate their lives. Like the many divisions of a Fortune 500 company, the commercial real estate industry has many opportunities for those with professional educations and interests. Some professional interests may include legal counsel, accounting, finance, development, building and investing. When it comes to the commercial real estate industry, these professionals are highly specialized in their knowledge and perform amazingly well within their boundaries.

These highly specialized professionals are often grouped together in teams by commercial real estate investors. A savvy investor surrounds him or herself with competent professionals to make sure that every deal that is made yields the highest most profitable results, with little to no problematic factors.

If you look at the residential investor, however, he or she usually does not have a huge team surrounding him or her and can usually invest in a few homes at a time with ease.

Why is it that the residential investor does not need a full time team to look watch over and consult every deal prior to purchase? Beyond the obvious reason that residential real estate does not involve nearly the millions, tens of millions, hundreds of millions and even billions of dollar price tags and profits that commercial real estate is known for, there is another very important attribute of commercial real estate that separates it from residential real estate.

This attribute is characterized by a term known as "buyer beware."

We all know that with most residential real estate, the buyer must be disclosed of every aspect of the property- good or bad. For example, if the roof was leaking in a home, but it was summer so the purchaser may not necessarily find out until rainy season, then the owner or agent must disclose this fact to the purchaser. It is illegal for the owner or agent to withhold any information from the purchaser. This law greatly decreases the risk on the purchaser's behalf and if a problem arises that was not fully disclosed at the time of purchase, then the purchaser could receive his or her deposit back and the owner and agent could suffer penalties.

In residential real estate, the buyer does not need to beware (in this sense) because every detail must be disclosed so he or she has the absolute facts on a property before deciding to part with a down payment or take out a mortgage to purchase the property.

The opposite is true in the commercial real estate industry. The owner or agent does not need to disclose any information about the property to the purchaser. In fact, if the new owner discovers that the land he or she purchased is toxic, and the previous owner or agent said nothing, it is the new owner's responsibility to have the land cleaned. The new owner must pay all legal and cleaning bills that come along with toxic property.

This may seem rather unfair. Why should the residential real estate industry have full disclosures while the commercial real estate industry does not? In commercial real estate, you have a certain amount of time prior to purchase to perform due diligence, or a complete analysis of the property. This may include building inspections, soil tests, infrastructure analysis, financial analysis etc. The buyer is completely responsible for retrieving the facts on a property.

It is considered an open and free market so, "buyer beware." There is a lack of need to protect the buyer or seller by the law. Therefore, it is increasingly important to have commercial real estate professionals looking out for the commercial real estate investor at every turn.

Because the law does not protect the buyer, the buyer must protect his or herself. Legal counsel should be brought in to oversee every single deal. This includes conditional statements on a contract and performing the most in-depth due diligence one can possibly do. Commercial real estate is not something you can look at for a few weeks and then decide you want to purchase like a home. It can take 45, 60, 90 days and more to perform due diligence, depending on the purpose of the property and how complicated the property is.

Let's look at an example. Purchaser A wants to purchase a property from Seller B. The property is raw land and is currently zoned R-1, or residential lots one lot per acre. According to the agent, there is a good possibility that the city needs additional commercial land to balance out the additional homes and apartments that were recently built near the subject property. For this reason, the city may be interested in rezoning the land from R-1 to commercial.

Purchaser A can see the profit potential of this rezone and wants to purchase the property. Purchaser A lets the owner know that he wants to purchase the currently zoned R-1 property. Purchaser A is acting in good faith that the property will be rezoned to commercial. But just in case, Purchaser A includes a conditional clause that states that if the property cannot be rezoned to commercial, then the contract is null and void. Purchaser A will no longer have a liability toward the property and owner.

This was an intelligent move Purchaser A made because in this case, the property could not be rezoned to commercial. Instead of sitting there with a much less valuable R-1 zoned property, Purchaser A was left with no property at all, but no financial or legal problems either. And that is far better than a worthless property and a legal battle to contend with.

Every commercial real estate deal is extremely different. Buyer and seller personalities, the quality of due diligence, the integrity of the buyer and purchaser, the financial needs, and skills of professionals such as the escrow company and commercial real estate owners all play a huge role in how each deal results. The best and most sound advice I can give you is never take what you hear for face value. Verify every fact and have your commercial real estate professionals available at every turn. The information they can conjure can save you a lot of money and legal headaches by simply getting the facts verified and inserting conditional clauses in the contract.

If you are new to the commercial real estate industry, realize the rules are a little different and a lot more is at risk than in the residential real estate industry. Keep the "buyer beware" mentality alive at all times and allow professionals to do their jobs. That is what they are there for. Surround yourself with the best and you will quickly become the best.

Now that you have had a chance to look at "buyer beware" and how it plays a specific role in both the commercial and residential real estate industries, you can greatly appreciate the additional risk in doing commercial real estate deals as well as the importance of solid commercial real estate professionals working in your best interest. Without them, there would be far more problematic deals- and that is exactly what you want to avoid.