Home|CRE Basics

Commercial Real Estate Basics

These blog posts are designed for beginning commercial real estate investors or those seeking to learn more about investing in commercial real estate.

Different Types of Commercial Real Estate Leases

We often get questions from current and prospective partners about the type of leases we use in our commercial real estate endeavors. Here is a quick look at the different kinds of leases we use with our tenants at various commercial properties in our portfolio.  Gross Leases In a gross lease (also known as a full-service [...]

5 Things You Should Consider Before Investing Passively in Commercial Real Estate

Commercial Real Estate can be a fantastic investment because of the capability to have reliable, passive returns as well as the potential for upside in the commercial property purchased. This article considers that you are investing passively in a deal. If you are a real estate investor looking to be an active manager of commercial real [...]

Why Business Owners Should Invest in Passive Real Estate Investments

Everyone has heard that Real Estate can be a great investment tool for building wealth and a secure financial future for you and your family. As business owners, one of the core issues we can find is that we’re just too busy building our main business to now begin researching, purchasing and managing a real estate [...]

Commercial Real Estate Opportunity Zones: An Investment Primer

Cities are exciting, vibrant places.  They’re teeming with energy and, while it’s not noticeable on a day to day basis, constantly in a state of change.  In some cases, change can be a powerful force that improves the lives of many. In others, it has the potential to leave a city’s most vulnerable residents and communities [...]

Tax Implications of a Passive Real Estate Investment

The primary benefit of a passive real estate investment is that an individual investor can leverage the relationships, resources, and expertise of an experienced sponsor to gain access to a commercial-quality asset that they wouldn’t otherwise be able to invest in.  But, like any investment, there are tax implications – positive and negative – that should [...]

Signs You Should Avoid a Private CRE Deal

There is a common misconception that buying and managing commercial real estate is easy. It isn’t.  To be done correctly, a significant amount of resources need to be invested in the research and analysis of a property’s market and financial statements to ensure the transaction meets acceptable risk guidelines. For an individual considering an investment in [...]

The Ultimate Guide to CRE Underwriting

On the homepage of our website, we have a statement that reads “we look at 1,000 deals and choose ONE.”  To get from 1,000 deals to one, we devote a significant amount of resources to our underwriting program and have developed an efficient process designed to uncover the deals that have the best chance of being [...]

Private Equity Real Estate – 9 Risks to Consider Before Investing

Like all investments, there is a distinct risk/reward tradeoff with private equity real estate.  The higher the risk, the higher the potential reward (or loss).  The best investors have a knack for recognizing the risks in each transaction and take proactive steps to mitigate them as part of their project plan. As a private equity firm [...]

Understanding the Capital Stack

Depending on the size of the transaction, the finances of a real estate deal can be a complicated matter.  In the largest deals, funds can come from a variety of sources/investors, each of whom have their own specifications, rules, and requirements.   Collectively, these sources are known as the “Capital Stack” and each component plays an important [...]

Waterfalls, Clawbacks & Catch-Up Clauses – Three Private Equity Terms Explained

Whether allocating money to an investment fund or to an individual deal, the terms and conditions of a private equity real estate investment are governed by a document called the “Private Placement Memorandum” or “PPM” for short.  Among other things, the PPM lays out two important aspects of the transaction: (1) the fee paid to the [...]

The Top 7 Commercial Real Estate Commandments

I wanted to share with you what I like to call the "Seven Commercial Real Estate" Commandments: 1. Commercial real estate is a local business There is no substitute for local market knowledge. Local operators will outperform investors who do not intimately understand the market. 2. Commercial real estate is a full-time business There is no [...]

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. [...]

An Investors Guide to Commercial Real Estate Building Classes

When you are preparing to invest in a new venture, commercial real estate building classes can be helpful in providing information about the property. This grading system is both simple and straightforward, giving investors details about the location, quality, and other key characteristics of the building. Three Categories: Commercial Real Estate Building Classes The building classes [...]

Different Commercial Real Estate Investment Vehicles

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. The question many investors ask is "What's the difference between all of the available commercial real estate investment [...]

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 [...]

Understanding Pad Sites

Business owners looking for a new location sometimes find that the retail space in strip malls or shopping malls isn’t a good fit for the needs of the company. As a result, commercial real estate pad sites can be an effective solution to allow business owners the opportunity to choose a different size or style of [...]

Going Outside of Your Backyard

Anyone who has spoken with me or read any of my work knows I am a major proponent of Real Estate being a local business. So what if an opportunity or market presents itself outside of your backyard? Should you stay away from it? No. Absolutely not. Real Estate needs to be managed, leased, and handled [...]

Understanding Value Added CRE Deals

I’d like to share with you one of the great strategies that sophisticated commercial real estate investors utilize to generate significant risk-adjusted returns. It is the backbone of our investment strategy and the predominant strategy we utilize in our private equity real estate funds. It's called: "The Value Add" Value-added transactions are all about transforming a [...]

The Human Element of the Real Estate Business

As active Real Estate investors, we spend a tremendous amount of time searching for, and ultimately analyzing deals. We look at gross income, and the dozens of different expense line items. We analyze the amount of capital a building will need over the next ten or so years to account for new roofs, HVAC systems, and [...]