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Part Time Real Estate Bad Business

I know many people who were successful in other industries who parked much of their wealth into real estate assets and built tremendous net worth. Usually, though, this is the exception, not the norm. Most people who come into the real estate business do not have the right expectations of what it takes to be successful. [...]

Understanding Building Classes

Typically, commercial real estate investors apply a simple, straightforward grading system to rate the quality, location, and other key characteristics of a building. The typical classes are A, B, and C. Building classes apply to all commercial product types, multifamily, retail, industrial, and office.What the "grade" tells us is how competitive an asset is compared to all the other [...]

Different Real Estate Investment Vehicles

REITs, Tenants In Common, Discretionary Funds, and Direct Deals For passive investors, finding the right way to expose yourself to the real estate asset class can be confusing. You might hear many different terms or buzz words - REITs, TICs, LLCs, Funds, Private Equity, Notes, Debt Funds. It really can be overbearing, so I'd like to [...]

Giving a Break for Term

One of the most crucial valuation components to a piece of commercial real estate is the term left on the current tenancy's leases. It's a simple equation: Longer Terms = Higher Valuation While keeping a properties net operating income (NOI) as high as possible is also a major contributor to the valuation of a property, sometimes [...]

Properties Starved for Capital

One of the most straightforward, effective value-add deals to look for, acquire, and then reposition, is the asset that is starved for capital. Many times you can find well located real estate that is simply not performing because it requires an additional capital infusion. Think about a retail center with a large parking lot that is in [...]

Betting on the Come

If you have played craps before you understand how the come bet works. I won’t try to explain it in detail if you aren’t familiar with the game, but when you hear the phrase it basically means that you don’t have what you need right now, but you are willing to bet on getting what you’ll need to [...]

My Case for Service Oriented Retail Real Estate

I think the single biggest opportunity for commercial real estate investors across the United States over the next decade will be in investing in service oriented retail shopping centers. When I say service oriented, I am referring to what investors in the industry call neighborhood or community centers. These are centers many times anchored by drug stores [...]

The Single Most Important Phrase in CRE

The single most important phrase in the real estate business is "You Make Your Money on the Buy." What that means is that the profitability of a deal is actually determined before you close on the property, not when you start managing it. The purchase price of an asset is the single most important factor in [...]

Different Types of Commercial Real Estate Leases

I often get questions from current and prospective partners about leases. I wanted to write you this short email to tell you about the different kinds of leases we sign with our tenants. 1. Gross Leases In a gross lease, the tenant pays the property owner a fixed amount. This amount is all inclusive for a [...]

Understanding Management Intensity

The underlying principals of commercial real estate investment are pretty simple, you own a building, and tenants pay you rent to lease space from you. But what goes into being successful from a management standpoint, can vary drastically from asset to asset. On one side of the spectrum, you have an absolute triple net retail building [...]