Unfortunately, commercial real estate is not for everyone. Before taking the plunge into this vastly competitive field, you may want to ask yourself the following questions, all of which relates to how you work and your personality.

-Do I Have an Entrepreneurial Mindset?

Successful professionals in commercial real estate tend to have an entrepreneurial spirit. The have a motivated drive or desire to succeed. Having an entrepreneurial mindset could mean that you possess the following qualities:

-hardworking
-innovative
-goal oriented
-passionate
-organized
-creative
-a leader
-a risk taker

Some people describe having an entrepreneurial mindset as having a "fire in the belly." In short, you have burning desire for success in commercial real estate and you have the creative and innovative spirit to translate that fire into concrete action.

-Do I Have a Passion to Help Others Succeed?

If you want to be successful in commercial real estate, particularly as a commercial real estate mortgage broker, property broker, agent or lender, you must have a passion to help other people succeed. In the end, your success in any one of these specialties within the realm of commercial real estate depends on your own ability to assist other people achieve their own goals. Do you thrive on seeing others succeed and knowing that you were able to contribute to that endeavor?

-Do I Have an Internal Personal Belief System That Supports My Success?

Finally, when it comes to achieving success in commercial real estate, it is absolutely fundamental that you develop and maintain a personal belief system that permits you to fully understand that you are capable of achieving any goal. Although some people may conclude that it is a trite saying - you have to BELIEVE in yourself. If you do not believe in yourself, how can you expect your clients to trust and believe the advice that you give them? By believing in yourself, you will have the ability to develop an appropriate plan of action that will ensure that your important dreams become realities. By setting goals and by believing that through your own best efforts you can achieve those goals, you will enjoy significant and lasting success in the commercial real estate profession.

If your answer was "yes" to each of the questions above, you are well on your way to finding a great career in commercial real estate. The industry is not made for everyone, but for those who can appreciate what it takes to succeed, they are in for one exciting ride! Best of luck to you!

So you're a small business owner and you need a business loan to further the objectives of your company. Where do you turn?

When it comes to a business loan or commercial real estate loan, there are many good reasons NOT to turn to a traditional bank. Here are some of the most important reasons. Many small business owners, will find most of these points directly applicable to them.

"THE BANK TURNED ME DOWN"

Of course the biggest reason most small businesses go looking for alternative sources of commercial real estate loans is because they have been declined by the banks. Small businesses are often forced to look for other sources of funding because the banks will not provide it. This is not even listed below, since there are many positive reasons to prefer non-bank funding, EVEN IF YOU CAN get an approval from a bank.

REASON 1 - The minimum loan amount available from banks is too high

In many cases banks will not offer a commercial real estate loan for less than $250,000. So if you only need $100,000 you will be pushed to borrow more than you actually need. Or if your property will not support a $250,000 loan you are out of luck with the banks.

The solution is to look for an alternative funding source that can provide a lower minimum amount. Some commercial financing services will go as low as $100,000, and will often give you better terms and much better service than the traditional banks.

REASON 2 - Many traditional banks will charge you an up-front "commitment fee" just to examine and process your application

Banks usually think they are doing you a favor by processing your application, so they will often make YOU pay for their attempts to win your business.

The solution is to find other established and credible lenders who are eager to offer you better service without charging you a fee for processing your application.

REASON 3 - Most traditional banks will severely limit the amount of cash you can get from a commercial real estate loan.

Banks usually have very narrow rules about where you can use the cash derived from a commercial real estate loan. If you need a cash injection for your business, or want to use the proceeds from a commercial mortgage as a down payment for another property, most banks will not be interested in that type of loan.

Look for a lender who does not restrict your use of the cash derived from commercial real estate loans. Some services, (see links below) can provide commercial loans that give you up to $1 million in cash to use however you want.

REASON 4 - Most traditional banks require detailed business plans before approving a commercial real estate loan.

Many small businesses have business plans, but they are usually not sufficiently detailed to satisfy the banks. As a result, applying for a commercial real estate loan from a bank can turn into a very time consuming and expensive process. Creating the type of business plan that is adequate for the banks will usually cost thousands of dollars.

Find a lender who does not require business plans as part of their underwriting process for a commercial loan.

REASON 5 - Many traditional banks require tax returns for a commercial real estate loan.

If you are either unable or unwilling to provide tax returns for your business, many banks will not give you a commercial real estate loan. Even some of those banks that do not request tax returns will ask borrowers to sign IRS Form 4506, which authorizes the lender to obtain tax returns directly from the IRS.

When looking for alternative sources of funding make sure they do not require either of these conditions (tax returns or access to your IRS records).

REASON 6 - Most banks will require cross collateralization of personal property.

Even though there is sufficient collateral in your business property to secure a commercial real estate loan, many banks will require you to provide additional security by putting up personal assets. Business people have become so used to banks doing this that they just assume it is a necessity.

But the truth is, over-collateralization like this can restrict your personal freedom to dispose of your personal assets as you see fit. And fortunately, there are non-traditional lenders who do not require cross collateralization at all.

REASON 7 - Most banks require income verification.

Many small business people and self-employed borrowers have incomes that are erratic and difficult to document. There are many legitimate reasons for this, but traditional banks generally do not care. Very few of them will provide commercial real estate loans without complete income verification.

An alternative used by some non-traditional lending sources is to use the "Stated Income" approach. Look for a lender who uses the Stated Income approach and does not require income verification.

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.

Coaching You to the Next Level

I want to take a bit of a side-trip from my usual hard-hitting commercial mortgage loan and investment property advice. I had the opportunity to spend a few days at the Pacific Life Open tennis tournament in Indian Wells, California last week while on vacation and noticed a minor, but significant change in the rules. The change was minor in that the players were allowed to ask for a time out to spend time with their coaches between sets. It was significant because the opportunity to speak with their coaches helped several players turn their games around.

For those of you not familiar with the rules of the Association of Tennis Professionals (ATP) coaching during a match was, until recently, against the rules. In fact, a player could be penalized points during a match if the umpire felt that he or she was getting verbal or non-verbal coaching tips during a match.

I point out this concept of "coaching" because it has implications in commercial real estate investing.

Have you ever stopped to consider why the best sports figures and Fortune 500 CEOs hire coaches? On the surface it doesn't make sense. These people are the best in the world at what they do, so who is realistically going to be able to help them get even better? Well, as I'm sure you already know, the reason that they are the best is because they have coaches. Coaches provide several things for those at the top of their profession and those seeking to improve their performance:

1. An external, unemotional perspective to help the one coached see things that they can't perceive about their performance.

2. Information on new aspects of the profession or related professions to help increase performance.

3. Networks of other professionals who can help in areas where the performer is weak.

4. Experience from their past challenges, helping the one coached move ahead faster.

So what does this have to do with commercial real estate?

Whether you're just starting out or are a seasoned development professional, I can guarantee that you'll get better if you enlist a commercial coach or coaches to help you grow. So where can you find a commercial real estate investment coach?

Let me note that we will soon release coaching programs for investors and loan agents who want to break into and excel in the commercial side of the business (email us here for more information: Coaching@InvestmentPropertyInsider.com). However, until those coaching programs are up and running, here are some suggestions on finding and using a coach to help you get better at investing faster:

1. Consider a retired commercial developer, investor, or real estate agent. You could check with a local commercial real estate office to ask if anyone is retiring soon or has recently left the business. Approach them with the concept of becoming an apprentice and giving them a piece of your profits. They might just enjoy passing on their wealth of experience.

2. Check with a local S.C.O.R.E. office to see if there is anyone who has experience in the commercial real estate investing or development businesses. S.C.O.R.E. is a non-profit business resource group and can be found at www.SCORE.org.

3. Do you know anyone in the business that is already successful? Approach them with the idea of becoming an apprentice, but be very mindful of their time when you do. Again, consider offering them some of your profits as compensation.

4. Consider a personal or business coach for hire. There are a lot of people in this business and some of them are very good. I'd caution you to be very careful whom you hire, however. You're looking for a specialized type of coaching here, more than the generalized life coaching that a lot of these people offer.

I would suggest a few other points in selecting a commercial real estate coach:

1. Make sure that they have actual experience in commercial real estate investment, sales, or lending.

2. Hopefully they will provide you with access to experts in related fields to help you understand all aspects of the business.

3. They should allow you to access other investors so that you can network, share resources, and benefit from each other's experience.

4. They should provide an archive of useful information, resources, and tools for your benefit, accessible at any time you need.

As I mentioned, having a coach handy helped several players turn their matches around to advance to the next level at the Pacific Life Open. You should strongly consider your own coach to help you get to the next level in your commercial real estate game, too.

If you have been skirting around the idea of investing in commercial real estate, you may be wondering how you can know when it's the right time to invest in these properties. The right time for you will be synchronistic; your borrowing and repayment capacity will meet market opportunities to buy low in an area that offers high potential growth. There is certainly some luck involved in this, however, for the most part good preparation meets opportunity to result in long term profitability.

Investing in commercial real estate can be very profitable if you carefully evaluate the market and are cognizant of both the risks and the benefits. Commercial real estate can offer the canny investor the benefits of cash flow, depreciation, appreciation and capital growth. It can provide tax benefits, help you diversify your portfolio and increase your personal wealth.

Profiting from commercial real estate is basically a matter of buying low and selling high. Properties that are under-priced or under-performing in areas with a solid and sustained rate of growth are considered to offer the best profit potential. All these factors are essential aspects to successful commercial real estate investing. However, taking the time to gain needed expertise and experience cannot be underestimated.

Before committing to purchase a commercial real estate property, it is important to understand what you want to achieve from the investment. For example, are you planning to hold onto the property for a long term to benefit from capital gain and are therefore less concerned with annual rental returns, or do you need the cash flow generated by higher returns? In fact, to be successful at investing in commercial real estate you need to acquire the right mindset before you even begin to look at properties. You can rarely make money quickly in commercial real estate, rather the most successful investors are willing to hold onto their properties for the long term. The very nature of commercial real estate investment requires you to take an unemotional approach involving thoughtful analysis, research and extensive due diligence. You need to become a long range thinker, planner and implementer.

It is always a good idea to get expert advice, but remember real estate agents and property management companies are selling their services and will not necessarily tell you the whole truth. Caveat Emptor (Buyer Beware) holds very true for commercial real estate investing. You need to do your research in order to avoid serious pitfalls.

Before purchasing a commercial property, check into the demographic information relating to the area within an easy distance (for example, a five mile radius). Knowing the average age, average household composition, average household income, and ethnicities can be very revealing. If the commercial property you are considering is retail, you will also need to consider the quantity of passing traffic and ease of parking.

An obvious consideration when evaluating commercial real estate as an investment is the vacancy rate as well as the absorption rate over the previous few years. You also need to consider the length of current leases still to run. This is important for two reasons. First, the current rents may be lower than the market value. Alternatively, they may be providing a good return and the longer the lease the better the value of the property because you will not have to fill vacancies.

The aim when purchasing commercial real estate is to get the best return on investment at the lowest possible risk. For example, there is far less risk in purchasing an office building with ten well paying tenants in it who still have a substantial period of their lease to run than it would be to buy one with leases about to expire or only one or two tenants.

Commercial properties are commonly much more expensive than other forms of real estate and significantly more complicated in terms of market considerations. You will need to sort through a lot of information designed to put the property in the best possible light so you will need to have excellent analytical skills to sort through relevant data from the false impressions. Commercial investment needs to be taken slowly. Take whatever time you need to evaluate the suitability of a property for your investment purposes.

Course Objectives

            1) Education & Knowledge provided to participants

            2) Create community or master mind group of like-minded individuals beyond this course

            3) Participants get on the court and do a deal before the end of the course

 How Course Differs from Others

1. Focuses on understanding what individuals are looking for
2. Questions what Risks Participants can manage
3. Questions what Resources Participants have to leverage
4. Participants look at real deals early on in the game
5. Participants actively & collectively source and analyze deals
6. Participants get involved in the process of real deals
7. Participants form alliances (if so desired) which transcend the course
8. Participants have potential to re-coup the course costs
9. Participants have direct access to the other Participants and Tutor

Course Features

1. One Hour Live Calls with Group
2. Recorded calls for future reference
3. Email access to Instructor and other group members
4. Group dynamic accelerates the learning process
5. Group dynamic opens up the possibilities of groups network 
6. Real Deal Analysis and Examples
7. Access to financing sources within the group and from outside resources
8. Library of Forms provided over the length of the course
9. Glossary of Terms
10. Access to the CRE Tutor Blog (When fully functional)

Lesson One Discussion Points

1. Intro to the course Format, Features and Benefits, and what to expect, in general
2. Intro to Participants and Instructor
3. Cursory Intro to the concept of Assignment(s) with much more to come
4. Intro into the 6 Property Types we will discuss in this course (See below)
5. Review of the Forms that we cover in Session One & beyond (See below)
6. Need for a Financial Calculator – Hewlet Packard “10-B-II” recommended (www.hp.com/calculators)
7. When to expect to start looking at real deals, and where to find them
8. Notes,  Attachments, and Homework (See below)

Course Property Types

Forms to Complete by Participants (Suggested to download all forms and save in a file)

1) Risk Analysis Form to get you better acquainted with YOUR risk tolerance. This form is a general form and most commonly used for “Orthodox” investing evaluation.
Keep in mind that Assignments are “Un-orthodox” for several reasons:

- Most investors don’t understand the dynamics of assignments
  (which you will learn and practice during this course)

- Assignments are inherently less risky than the orthodox or traditional
“acquisition” of real estate in that we never take possession or have a
 stake in the real estate per se

- Assignments have a defined time horizon or risk (Typically 30 – 120 days) 

2) Personal Financial Statement to get you better acquainted to YOUR current financial situation. This will be required to be current if and when applying for financing. It is a good practical exercise that I recommend for all to keep updated quarterly. Again remember, if you plan on being active, your financials will reflect this, and consequently should be actively (as opposed to “re-actively) reviewed periodically. This is part of being a professional investor, if this is what you desire to be.

3) Resource Analysis Form to get you better acquainted with YOUR resources. Again, be aware that most people under-estimate their resources, neglecting to acknowledge all that are available to them. You must consider and understand the importance and value of all your resources, including:

- Financial Resources (Cash, Credit, Equity, Liquid Assets, Securities, etc)

- Intellectual Resources (Information, Knowledge, & Experiences)

- Social Resources (Who you know, and Who they know)

- Professional Resources (Bankers, Brokers, Lawyers, Accountants, etc.)

- Government Resources (Grants, Loans, Tax Incentive Credits, Etc.)

- Physical Resources (Your physical ability to do things)

NOTE:  These Resources can all be leveraged into deals….More on this later.

DIVERSE BEGINNINGS

Carl and Karen Moose are two very busy and successful commercial real estate professionals with an active young family — "three under three," as they say — and an impressive list of colleagues, clients, and investors who have nothing but praise for the deals they put together for their business, Investment Realty Services, Inc., which expertly manages investor's real estate assets by providing brokerage, investment services and property management services for equity partners.

Karen is president of Investment Realty Services, and Carl works as Managing Director, officially speaking. As they explain, this means that Carl focuses his efforts on finding great commercial properties, analyzing them, and putting deals together for his company and investors, while Karen trains her energy on managing the properties they own, raising capital, and forging and maintaining strong relationships with colleagues, clients, and investors.

More on Carl And Karen Moose: Successful Real Estate Visionaries

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.