Smooth Real Estate Transactions: 4 Tips to Consider When Selling or Buying a Commercial Property

No one would invest in a piece of commercial real estate without investigating it’s resale value, income generating potential, building structure, etc. However, there are a couple of things that seem to get overlooked, even by the savviest investors. Following are the four most overlooked items that you should consider when you are selling or buying a commercial property:

Has the building been unoccupied for more than 180 days?

Collier County has an established Land Development Code (LDC) that governs things like a building’s architectural standards, setbacks, landscape and parking requirements. These requirements vary based on the district where the property is located. The LDC is reviewed and updated twice a year and new projects are required to comply with the codes. Existing buildings are usually “grandfathered” in, however, there are certain times that a building is subject to review for compliance with the current land development code.

One reason a building is subject to review is if it is unoccupied for a period of more than 180 consecutive days. To bring newer buildings into compliance with the LDC may be as simple as revamping the landscaping with extra trees or buffer shrubs. However, with older buildings it can be very costly. A local businessman purchased an older building with the intention of using it as a warehouse-showroom. When he tried to get a permit for a renovation, he was informed that he would have to change the front facade of the building to include among other things, a 75% glass storefront. To bring this building into compliance, it would have meant serious structural changes that increased the renovation costs by tens of thousands of dollars. The project proved infeasible and the building was subsequently resold and developed.

Will the occupational license require a change of use for the building?

Another reason that would make the building subject to review for compliance with the land development code would be if there was a “change of use.” Change of use doesn’t necessarily mean a zoning change. It can mean going from a jewelry store to an office supply store, or a retail store to a restaurant. The reason for this review is to make certain that the new use is in compliance with the permitted uses of the specific zoning area. This review also ensures that there is adequate infrastructure (ie parking) to support the new use.

Will the building need alterations to the fire alarm or sprinkler system?

Another overlooked item is the fire safety system, which includes the fire alarm and fire sprinklers. By adding sprinklers or changing out a fire panel, you open the whole fire safety system up for review and it will have to be brought up to current code. Depending on the age of the building, this can include relocating the fire alarms on the wall; adding fire sprinkler heads; or replacing an entire control panel, which can add thousands of dollars to a project. If you are in doubt, get a consultation with a qualified general contractor or architect during your due diligence period.

Have you allotted enough TIME for planning and permitting?

Permitting is frequently the place where owners don’t allot enough time. According to the City of Naples Building Division, it typically takes three-four weeks for a permit application to be reviewed and a permit issued. However, if your permit application is rejected it can take another two-four weeks after your plans have been revised by the architect. According to the Collier County Building Department, it typically takes six weeks for a permit application to be reviewed and permitted. Depending on the complexity of the project and allowing for a couple of rejections, it is more realistic to plan on three to twelve months for a permit to be issued. A renovation might be three months and a building under 10,000sft might take six-nine months. Unfortunately, there are NO short cuts in getting through the permitting process.

With proper planning, your commercial real estate transaction can go smoothly and provide you with a profitable investment. If you have any questions about the process, it would be wise to consult with a reputable commercial general contractor and an architect.

10 Tips For Choosing a Real Estate Agent

Whether you are buying or selling a property, choosing a real estate agent may be the most important decision you make. Good real estate agents can save you a substantial amount of time and money. They can also ensure that the buying or selling process is an enjoyable and memorable experience. Here are some tips for choosing a real estate agent:

1. Ask Friends/Family for Referrals

Ask family and friends for their advice on local agents. This way you will be sure to find an agent with a good reputation.

2. Consider More than One Agency

There is an array of agents that will kill for your business. That is why you should interview as many agents as you can. Compare agents with regard to their knowledge of the area, experience and qualifications. Also, ask for references from previous clients.

3. Choose an Agent that Knows the Importance of Customer Care

While interviewing different agents you will be able to establish their level of customer care or how far they will go to satisfy the customer. Look at things like their attitude towards returning phone calls and their willingness to meet with you.

4. Choose an Agent that Handles Homes in Your Price Range

When you opt for an agent that deals with homes in your price range, you will be sure to end up with an agent that will give his or her best effort. Some agents deal only with high-end properties and are used to high commissions. They are more likely to attend to these properties first.

5. Choose an Agent that Respects Your Time Schedule

If you will not be able to view properties during office hours, you need to find an agent that is willing to do business after hours or over weekends.

6. Look for an Agent that You Can Communicate With

Communication is vital when buying or selling real estate. Make sure that you choose an agent that understands your needs and that communicates them well. You will be best off if you choose and agent that registers a high level of comfort with you or with whom you are compatible with.

7. Choose an Agent that Provides Multiple Services

It will be a bonus if you can find an agent that can handle the buying/selling process as well as other additional services like arranging property inspections or who can refer you to a trustworthy real estate attorney.

8. Choose an Agent That Can Negotiate

Negotiating skills is an essential quality of a good real estate agent. Make sure you choose and agent with impeccable and proven negotiating skills.

9. Choose an Agent with Lots of Resources

Ask agents where your property will be advertised. Make sure that the agency uses print advertising (newspaper/magazines) as well as other promotional material such as brochures. Also check if the agency makes use of the Internet for advertising their listings.

10. Follow Your Instinct

Choose an agent that makes you feel comfortable and whom you trust. You level of comfort and satisfaction will let you know if you’ve met the right agent.

Tips for Writing the Best Real Estate for Sale by Owner Ad

The property ad is your chance to create a great first impression and to make the potential buyer contact you to find out more. When planning a private property sale, it is vitally important to spend some time thinking about the wording of your real estate ad.

Writing a real estate for sale by owner ad can be difficult, despite the fact that most publications have a strict word limit. There are several important things you need to say and a few tricks that will help you make the real estate ad text more exciting.

A Great, Catchy Title

Most people interested in real estate for sale take a look at the title of the listing and the photographs that accompany it. These are the two factors that will often determine whether a person will continue reading.

Work on a catchy and descriptive title. It should mention the location of the real estate for sale by owner, the size, the price and the most important features of the house. Squeezing that much information into a title may appear to be a great challenge. Do a bit of brainstorming and write down your ideas. You can refine the most promising titles after you put all of your possibilities on paper.

Make It Very Specific

The lack of specifics and details will instantly kill the interest of potential property buyers. Do your best to include enough descriptive information in your listing.

Refrain from saying that the house has a modern and beautifully designed bathroom. Say what makes the bathroom modern – is there a water massage system in the bathtub? Did you install faucets that decrease the consumption of water? Such details make all the difference in the world.

Avoid the Real Estate Ad Cliché

Go through several property ads. You will see a number of phrases repeated in the majority of ad listings. These real estate ad clichés are very dangerous. They make your listing boring and very similar to everything else that the market has to offer.

Clichés are safe and easy but they will never give your real estate for sale by owner the attention that it deserves.

Some of the most common ad clichés include hidden gem, conveniently located, original interior design, vibrant, spectacular, amazing view, modern, easy access, majestic, stunning, just renovated and special offer.

Write a Little Bit about the Neighborhood

As a house owner and a private property seller you have one great advantage over the realtor or the agent – you know the property and the neighborhood by heart. Use that knowledge to create the perfect real estate ad.

Adding a sentence or two about the neighborhood will help paint a complete picture. Get the reader interested. What makes the neighborhood special and worth relocating to? Mention these interesting details towards the end of the listing.

Encourage Potential Buyers to Ask More Questions

Finally, encourage the potential buyers to contact you and to get their questions answered.

Provide a few communication options. Instant messaging, emailing and calling are the most popular possibilities. Each potential buyer has a preferred method of communication, so you should have a few options available.

The perfect private property sale listing is difficult to create. See what the competition is doing but do your best to keep your text original and fresh. Provide specifics and be as descriptive, as possible. Spending some time on writing a house listing that stands out can help you sell your house faster. The results are worth the effort.

Commercial Real Estate Agency Blogs – 5 Tips For Success

It’s no secret by now that one of the cornerstones of a great marketing strategy, you need to have great content, well-written and helpful to your site visitors. Perhaps the easiest way to achieve this is through creating and actively maintaining a blog. You’re probably thinking, wait, I’m a commercial real estate agent, where do I even start with having a blog? Here are some tips to get you started on your way to becoming a CRE wordsmith.

1. Don’t cover too much at once

As an author, your space on the blogosphere is pretty much unlimited. However, this does not mean that you should try to cram all you know about one topic into one single blog post. If you think that the topic can be broken down into smaller sub units, you should also make blog posts covering only those sub units. It will be easier for your readers to process, it will be easier for you to write, and it will give you more content and more traffic.

2. One topic = one blog post

Related to our previous point, your blog posts should revolve around one single topic. The reason is simple – both you and your readers will be able to stay more focused. If you’re already brewing with ideas, write them down and expand them in future blog posts.

3. Answer the right questions

Writing helpful content is one of the best ways to get your visitors engaged and keep them returning to your site. However, you need to make sure that you’re answering those questions which they need help with. Put yourself in the prospects’ shoes and see what kind of concerns and problems they might have.

4. Cover common problems

In your average working day, you come across dozens of clients and they all have similar questions and doubts. Why not use this knowledge to your advantage? Your blog can be a platform where you address frequently asked questions, problems and concerns your clients might have.

5. Look at the bigger picture

You might think that having your own blog implies that you should use it to write about yourself, your agency and your work experience. However, your potential clients will not be looking for information specific to your agency. Instead, they will be looking for more general information pertaining to the commercial real estate industry. This is why your blog posts should rarely touch upon your own agency, unless it’s something really worth noting – such as an important deal you closed, company anniversary, charity event you hosted or similar.

Tips On Picking "Sleeper" Real Estate Property

Real estate investing is all about perception. Your perception of where the market is going, in conjunction with where it’s actually going. The aim, as always is to buy low and sell high.

You want to buy a cheap tract of dirt and sell it as a high priced piece of developed real estate, after it’s appreciated enough to turn a tidy profit. Selling the property is an art in and of itself.

Buying an initial tract of dirt lends itself to some solid, rational guidelines:

First, look at trend lines for housing prices in your area. While most housing markets are in decline (and the housing markets in Florida and California are adjusting from more than a decade of over-valuation), there are markets where the housing prices are going up. This is a decent leading indicator that there’s a market for expansion.

Second, look for job related news. Home purchases require a steady source of income. New employers moving into a city, or a government branch office opening up are a strong indicator that good, well paying jobs are likely to come up. Where well paying jobs roost, home purchases follow.

Related to this, talk to your local city planning office. Are there recent purchases of “right of ways” to lay down sewer lines? Is the local telephone cable making plans to run out fiber optic lines – a “must have” trend in new home construction. These things point to areas where home growth is immanent. Other big tip offs are school bond issues (found in your local news paper) and new parks being opened up.

Before you look at the land, check out the adjacent commercial real estate usage. Look for “family friendly” or “residential friendly” commercial properties: Houses that are close to grocery and clothes shopping tend to fetch a higher price than ones that are farther away. If there’s a movie theater nearby, or plans for an elementary or middle school, factor that into the size of the homes you build, and what their amenities will be; buyers looking for those features are looking for “mover upper” homes – with a bit more floor space, and two (or three) bedrooms for the kids. Other spots to look for are anchor stores, like Wal-Mart and Best Buy. These companies spend millions on surveys of purchasing patterns before buying a store location; if they’re buying a plot of land, you’ve got about a year to a year and a half window to look into nearby real estate for single family residential and rental residential properties.

You can even flip this on its side – if you can talk to a group of commercial real estate investors, building a shopping center as the nucleus for home development is also a viable combined strategy. This also applies to highly urban areas. Many downtown areas that have been abandoned by businesses can be converted to apartment buildings, and some of the older housing projects are being torn down for mixed-use spaces with combined commercial and residential areas. In particular, you can often get block grants to help with the financing on projects like this, and there are programs from HUD that can help out a great deal with “urban renovations”.

Another source to investigate is the demographics in your area. Look at the US Census figures (and local county figures) for median age, and median birth rate per capita. You want to invest in areas where the population is growing already. High skews in the ’40s and ’50s indicate that you’ve got a bunch of people who are going to retire soon, and retirees are highly prone to selling properties off. Places to watch carefully are most of the urban parts of California, and great swaths of the rural Midwest, where demographic trends have been changing entire towns since the 1950s as the country’s population has shifted to urban areas.

If there’s a local planning council, or urban development council, make it a point to get the minutes of all the meetings from the past year. The city council offices will have them on file as a matter of public record. Also try to get into the next range of meetings as an observer. Discuss with the city and county managers where they see housing and construction trends moving. What you’re looking for is real estate that will be desirable in two to three years; look at road planning atlases, and look for all the data you can find. Also look for real estate that will be scenic – lake front property is as close to a guaranteed bet as you can get in real estate investing, particularly if there’s a lake that’s at the “far end” of a development axis. Likewise, if there’s land that the city council is looking to acquire for parks, buying the adjacent lots now means you’ll be able to sell them later.

Lastly, talk to the professionals in your communities. Talk to architects who can tell you if they’re busy or not. Maintain professional contacts with engineers, bankers and attorneys. They will usually know about projects well before the general public. Also make a habit of reading the local newspaper’s business section. Often times, the first clue that a business may move in to your area is buried at the bottom of a column on page 8.

Using the guidelines suggested above will help you to find “sleeper” raw land properties. These “sleeper” properties are perfect for the buy low, sell high strategy used by successful commercial real estate investors.

Top Ten Tips when Buying Real Estate!

In today’s financial climate, real estate continues to be a strong investment in many areas. Educated buyers will always make the most out of the real estate market. These top ten tips to buying real estate will help you enter into your next real estate transaction with confidence.

TIP #1: Hire the right Agent!

Hiring the right Real Estate Agent is invaluable. If you are unfamiliar with the area, the realtor you choose is your link to important information regarding schools, zoning, city and county regulations, neighborhood trends, building and remodeling and rental restrictions, and property values. Every city has different laws governing what can and can’t be done with a property. Sanibel is one of the most beautiful cities in the United States due in part to its strict building codes and city planning. Having experienced many aspects of real estate transactions on a personal level, I understand situations and concerns of my buyers and sellers. I have been an island property owner for many years and have walked through several local real estate transactions myself. From buying and selling lots to building new homes with local builders, to investing in rental income producing properties and utilizing 1031 Tax free exchanges, I don’t just sell island real estate; I invest in it because I believe there is no place in the world like Sanibel and Captiva. Whether you work with me or someone else, finding the right realtor is invaluable.

TIP #2: Utilize 1031 Tax Exchanges and Save Money!

1031 Tax Exchanges are tax free exchanges of investment property. Section 1031 of the Internal Revenue Code is one of the last great tax shelters. If you purchase an investment property of “like kind” within 180 days of the sale of a similar type property, and you are willing to increase the amount of debt or value of the property, your capital gains taxes can be completely deferred. Having just completed a Reverse 1031 tax exchange myself, I believe in using this powerful tax shelter. Feel free to contact me if you are considering using a current Sanibel, Captiva, or Ft. Myers property in a 1031 Tax Exchange, or want to purchase an investment property that might qualify in the future for a 1031 Tax Exchange. A Reverse 1031 Tax Exchange is the same exchange concept as a 1031 Tax Exchange except you have purchased your replacement “like kind” investment property first, before selling the property to be exchanged. Learn more about 1031 Tax Exchanges, and how to use them to your financial advantage. Keep in mind that a neutral party must have act a Qualified Intermediary. Real Estate may also be bought and sold through your self directed retirement account. Whether you utilize a traditional IRA, Roth IRA, SEP, or company plans such as 401 (k) plans, Keogh, or profit sharing plans, investigate your options.

TIP #3: Pre-qualify for Financing!

Pre-qualifying for a loan may not seem that important until you find your perfect paradise property at the same time as another buyer. When a property is priced to sell, it will usually attract more than one buyer. Once a seller receives an offer, the two most important things they consider are …the price, and the contingencies. For some sellers, a contract contingent on the buyer obtaining financing makes them uncomfortable with the offer. Eliminate any doubt in the mind of a seller, by pre-qualifying for the amount you may spend on the purchase of any property. This is especially important if your dream property suddenly has a price reduction. When this occurs other buyers might come into the picture, that didn’t look at that property before it went “On Sale”! Often times a seller will take a financially solid contract over a higher offer. Be ready to put a deal together!

TIP #4: Location, Location, Location!

“Location, location, location”, while overused as a real estate phrase, is still and always should be a huge consideration to you as the buyer! If something about the location of a property bothers you, be aware that the same location drawback will bother any buyer you hope to attract when and if you need to resell the property! It’s important to ask a lot of questions, but often times it is difficult to know the right questions to ask if you are unfamiliar with the community. This is why it is so valuable to choose and hire the right real estate agent to represent your interests when buying a property.

TIP #5: Get a Home Inspection!

Obtaining an inspection report performed by a licensed professional building inspector of your choice, can protect you from many defects that are hidden from view. Why gamble with such a large financial investment? Let a professional building inspector point out areas to be fixed or replaced that aren’t obvious. A good inspector will give you a lengthy report covering all systems in the home from electrical, to plumbing, to roof conditions, and structural concerns. Once you receive a report you may begin negotiations again concerning repairs. Often a seller will agree to make necessary repairs up to a specified financial amount. When a seller lists their property “as is” they are letting you know that they are not willing to fix or replace any part of the property. If you are interested in an “as is” property and aren’t going to level the structure and build new, it is still in your best interest to obtain an inspection report. Don’t rely on the building inspector to look for termites and other harmful pest problems. Although an inspector will see pest damage, it is best to have a separate termite inspection conducted by a licensed company that understands pests and can eliminate them.

TIP #6: Obtain a Survey and Title Insurance!

Surveys will show easements, encroachments, and boundary lines of a property. By surveying a home in an established neighborhood you are assured that the property boundary lines have been maintained. As homeowners add on the their properties over time with fences, sheds, docks, garages, and other structures, boundary lines can be crossed placing part of their structure on your property, or vice versa. Surveying vacant land is also important for same reasons as a home, plus a survey will help determine the size home, or amount of coverage the lot will allow.

Title Insurance will protect your investment from another party claiming ownership interest in your property. Title searches will uncover liens placed on a property by vendors, or mistakes in past transfers of the title. The last thing you want to discover when you’re in the back stretch of a transaction is that there are encumbrances on the property such as tax liens, undisclosed owners, easements, or leases. Should a claim arise after the purchase of a property, the title insurance company is there to protect your ownership interest in that property.

TIP #7: Be Realistic!

“Wants” and “Needs” are very different when is comes to real estate features. If every home you see has the upgrades you “want” but exceeds the price range that you “need”…. be realistic. Who wouldn’t love a large, oceanfront, professionally decorated home or condominium, with all the bells and whistles? Looking at properties that exceed your price range is always fun, but it can be extremely frustrating and upsetting. Be realistic by looking at listings in the price range you “need”, keeping an eye out for that special property that has the potential to evolve into the dream home you “want”. Always look beyond the furnishings, wallpaper, and floor coverings to the architecture of the home; it is then that you will find properties with potential.

TIP #8: Use Contract Contingencies Wisely!

Contingencies in a contract for the purchase of a property are designed to protect you, the buyer! This may seem silly to mention but it’s important to remember that you need to work with the seller to come to an agreed upon contract. Valid contingencies to an offer are expected by the seller. Common contingencies include building inspections, termite and pest inspections, financing, and surveys. Many deals fall apart over small details, and easy to fix issues. Remember that sellers are emotional about their property. If you can see that major repairs or replacements need to be made due to neglect or age, make allowances for this in your offering price. The old adage “Everything is negotiable” still holds true, unless you upset the seller so much that they refuse to work with you. Try to avoid listing cosmetic changes you would like the seller to make as contingencies. Cosmetic changes are subjective, be objective when writing a contract.

TIP #9: Understand Regional Health and Safety Issues!

An informed realtor will help you understand other health and safety issues that should be considered when purchasing a property. Safety and Health topics can include EIFS (Synthetic Stucco), indoor air quality, mold, radon, and lead paint. Many of these require the seller to sign a disclosure statement, while others may not apply due to the age, type of construction, or location of the property being purchased.

TIP #10: Ask for Information!

Don’t be shy. When you have hired a realtor to work for you, ask them for information. Do you want to look at all the properties in your price range, with the features you need, or just the houses a realtor wants you to see? You deserve all the information you need to make an educated decision. Can you imagine buying the home that you felt was good for your family, only to find that you never received information on a similar property that is perfect for all your needs? I provide many services to insure my buyers always have information at their fingertips.