The 7 Commercial Real Estate Commandments

|The 7 Commercial Real Estate Commandments

The 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 such thing as effective, part-time real estate. Competent professionals must constantly monitor and oversee properties to ensure that the value of each asset is maximized.

3. Creating value is essential

The highest, most profitable segment of the commercial real estate deal process is to find assets below replacement cost and then create value through professional, active management.

4. You make your money on the buy

The single most important key to success in a particular deal is buying at the right purchase price.

5. Middle market assets generate superior returns

Middle market deals are too large for poorly capitalized local operators–and too small for large institution personnel–to manage effectively. Superior, risk-adjusted returns are found in the middle market.

6. Access to capital is imperative to success

Commercial real estate assets need constant funds for building expenditures and new leasing expenses. Institutions with personnel who have access to new debt and equity will outperform smaller operators who are without the same access to capital.

7. Self-management is vital to success

Ownership can be the greatest performance incentive. We believe the most effective manager of an asset is its owner. This applies to leasing, property management, and asset management.

2019-02-06T15:34:34-05:00

About the Author:

Mr. Grosso holds the role of Managing Principal at the firm. He is widely regarded as one of the leading authority figures and thinkers in the Commercial Real Estate Private equity business today. Under his leadership, FNRP has grown to become one of the preeminent Commercial Real Estate private equity sponsors in the United States. His responsibilities include leading investor capital-raising initiatives, strategic planning, portfolio management, business development, and overall investment strategy as an officer of the firm’s Investment Committee. Anthony is an active philanthropist with a history of supporting young entrepreneurs. He is the author of Value Added Real Estate, and is a noted public speaker.