Why You Need To Start Investing In Commercial Real Estate TODAY... - Business

Partner sites

Submit articles
Articles Collection
Articles Folder
Articles Network
Network of Articles
Articles Publisher
Free Articles
Collection of articles
Site of articles
Business Articles
Read Articles
Some Articles
Rent Articles
Articles Cabinet
Articles Room
Cool Articles
Articles Achieve
Source Of Articles
Free Advertising Blog
Webmaster Feeds
Cell Phone Resources
Free Lyrics
Cell phone feeds
Online Business
Inspirational Quotes

> Business :: Why You Need To Start Investing In Commercial Real Estate TODAY...

Is The Pot At The End Of Your Rainbow Filled With Fool's Gold?
Why You Need To Start Investing In Commercial Real Estate TODAY...
BY: J. Scott Scheel

People often ask me how I got started in commercial real estate, and I tell them that it was a conscious decision for me.

Most people who begin investing in real estate start off with single family residential properties because that is what they are most comfortable with. They tell themselves, "All I need to do is a couple of deals a month. I'll make myself five or ten thousand dollars, then at the end of a very few months most of my problems will be taken care of." They do not really understand everything that is involved in getting these properties going.

They think they are going to be making big money, but before long, oftentimes they end up with a lot of problems and a lot of headaches. They might have traded in their job for a perceived higher paying job, but find that it is really taking a toll on their lives.

If you belong to a real estate investment group, take a look around you. Look at the people who have done twenty-five to fifty houses or more. Are they living the life of their dreams? More importantly, are they living the life of your dreams? They may be better off than you are now, but is this really what you want to work towards?

I know so many people who have a large portfolio of properties but really haven't achieved the type of freedom, success, and wealth that they truly desire.

How can you change this?
In my opinion, the answer is commercial real estate.
When I decided to start investing in real estate, I stopped and took a look around. I realized that the people who were making the big money in real estate were the people who owned buildings not houses. People who owned the large apartment buildings, the large office buildings, the large warehouse and industrial space - those are the ones who really seemed to be living a lifestyle that I wanted.

They didn't have to be there tending to their properties; they had property managers who took care of that for them. Yet, they were the ones spending the checks, catching planes to exotic locations and destinations, and living the lifestyle that I desired so much.

After looking at this for quite a while, I decided that there must be a way of getting this done. They couldn't have been much smarter, have learned much more, or have had access to more resources then I could. Even though I didn't know how immediately, I knew I could figure out a way to do it.

I sat down and took the time to learn how to invest in commercial real estate, which is what I would recommend that you do. I studied and figured out exactly what it would take, and as I learned, commercial real estate became less and less of a mystery to me.

How can you start? First of all, let's talk about why you would want to do it.

What are the benefits of commercial real estate? First of all, one of the biggest benefits is that commercial real estate is valued differently. By "valued differently", I mean the amount of income that a property produces is directly proportionate to its worth. So if a property produces more income, then it is worth more. It has very little to do with "market comps".

Second, along the way you are going to get a far greater cash flow. Imagine if you were to buy a $200,000 home. That $200,000 home may rent for somewhere in the neighborhood of $1,500 per month. The underlying mortgage on that home may be somewhere between $1,000 and $1,400 per month. So you end up struggling to gain between $100 and $500 per month in positive cash flow. That's not a very high number for the amount of work you have to put in, and it certainly is not going to get you on the jet set.

Now, let's take a look at a similar investment from a commercial standpoint. That same $200,000 investment may end up yielding you an 8-unit apartment complex, based on $25,000 per unit to acquire the property.

Let's say each of those units were two bedrooms, which could rent in most areas of the United States anywhere between $400 and $600 per month. For simplicity's sake, let's use an average of $500 per month. At $500 per month times eight units, you're bringing in $4,000 per month - more than double the rent that you could expect to get from that same $200,000 single family home. Your underlying mortgage payment would be very similar to what you would expect on a residential property; for this example, let's use $1,400 per month.

Your cash flow on this 8-unit apartment building will be $2,600 per month ($4,000 per month income, minus $1,400 mortgage payment). Now that will make a difference in just about anyone's life.

Third, and most essentially, you're now spreading out the risk over eight tenants, as opposed to one. If your single-family home goes vacant, you're on the hook for the entire mortgage. Every penny of that mortgage, all of the maintenance, and everything that goes along with it is now your responsibility. If the house is vacant for two months, you'd better be planning on spending a minimum of $2,800 to cover that mortgage plus miscellaneous expenses including maintenance, utilities, taxes, and insurance. Potentially, you're looking at a very heavy negative cash flow.

On the commercial property, however, if one of your eight units goes vacant at $500 per unit, you're still bringing in $3,500. So you get slightly less positive cash flow but you're certainly not experiencing negative cash flow. Say three units go vacant - you're still covering your mortgage and experiencing positive cash flow.

The fourth reason you should be investing in commercial real estate is because of a concept called "forced appreciation". Forced appreciation means doing things with your property that will increase your income and decrease your expenses. Remember that the more income your commercial property brings in, the more it is worth.

As an example, let's go back to our 8-unit apartment building. Let's say we plan on improving the quality of each apartment unit by replacing the flooring, upgrading to nicer doorknobs and bathroom fixtures and lighting fixtures, perhaps even adding some ceiling fans - all relatively inexpensive fix-ups. As a result, we can now raise the rents by $50 per month per unit. That's $600 more income per year times 8 units, or $4,800 more per year total (which will also recapture all the costs of the fix-ups).

Next, let's decrease our expenses by $100 per month by passing on a portion of the utilities to the tenants, or by doing some competitive shopping for our lawn-care service and finding a company that does the same great job for less money per month. Times 12 months, we've just saved ourselves $1,200 per year.

Total increase in annual income is $6,000 ($4,800 plus $1,200). By increasing our income by $6,000 per year, we've increased the value of the property by $60,000 or more. That's the power of forced appreciation.

There are a lot of strategies that you can use to force appreciation and these are just some of the simplest. But needless to say when you're dealing with 8 units in one building, for instance in our small example, you've got an opportunity to improve many things that will help you justify the increased rents. Also, you'll be seeing yourself dealing with a better tenant mix. Higher quality properties tend to bring more stable tenants.

All of this leads us to the fifth reason why you should be investing in commercial real estate and that is the passive income. Passive income is the key to commercial real estate. The way that commercial properties are managed and the way they allow for a concentration of efforts lets you to put someone in place to manage those properties.

In the beginning, on the smaller 8-unit buildings, you'll probably need to manage them yourself. But as you climb your way up the ladder, and you start dealing with 20-units or above, you can then offer free rent on one of the units to someone in return for managing the rest of the units for you. As we discussed earlier, even with 8 units you can still make a monthly profit if a couple of the units are vacant, so giving away one unit is certainly a small price to pay in return for the freedom it gives you.

Now you've got an on-site building manager who handles all of the tenant problems, tenant issues, tenant improvements, cleaning, and trash removal - all in return for free rent in your two bedroom, $550-per-month unit. Usually these people have other jobs, so you're not their sole source of income. If your buildings are large enough to keep them busy full-time, however, you will probably have to pay them an hourly wage in addition to the free rent, but that will only be a small portion of your total monthly profits.

Meanwhile, all the checks come directly to you. You deposit them, you pay the bills, you keep the difference - and believe me, that difference can be substantial. Even on the small 8-unit buildings that we've talked about, it's easy to generate $2,000 to $3,000 dollars per month in positive cash flow, over and above your expenses. On larger, 20+ unit buildings, it's not difficult to create positive cash flows in excess of $5,000 to $10,000 per month if these properties are acquired properly. And since someone else is managing the properties for you, all this money flows to you passively, while you are spending time with your family, or traveling, or looking for exciting, new opportunities.

Obviously there are many more great reasons to invest in commercial real estate than these five that I've given you - in fact, I could easily list another thirty: cost recovery, how it's financed, management opportunities, scales of economy, and so on.

So, how do you get started?
Just as you would get started investing in residential real estate by getting your education first (either "the easy way", through books and courses and investor group meetings, or "the hard way", through the school of hard knocks), the place to get started with commercial real estate is by getting your education and learning the terminology. It's not that different from residential real estate, and it's not that difficult to understand.

Next, look around - see what's going on in your market place. Find several small apartment buildings for sale, get the financial information on them, and learn how they work - what they rent for, how full they are, how the utilities are split up, what the expenses are, and so on. Start doing some "practice" deals - go through the motions of buying the property with as much diligence as you would if you were buying a single-family home. Once you understand what the income is and what the expenses are, you can start to figure out how you would acquire that property.

The sooner you get this process going, the sooner I guarantee that you will be an apartment owner. Don't wait to get started - now is the time! This is the best commercial market in the last 50 years. Properties are available extremely inexpensively, and there are many distressed properties just waiting to be picked up with millions of dollars in equity in all of them. The bank rates right now for commercial property are extremely low. These factors combine to offer you an incredible opportunity. Do not let this market place pass you by, or you may very well regret it.

Can you imagine buying five 8-unit apartment buildings in the next 12 to 24 months? At the end of that time, you'd have 40 units, managed by someone else, and generating six figures of annual passive income. The exciting part is that apartment buildings are just the tip of the iceberg, and in my opinion, not even my favorite investments. I personally prefer office and retail space which have a much higher profit potential. Apartment buildings are nice but office space and retail space generate the really big money.

I can promise you that if you start following these simple strategies, you'll generate more than enough gold to fill up the pots for yourself as well as your family and loved ones. The sooner you get started, the sooner you'll see your first $1 Million check!

Author Info:

Recent Submitted articles

Suggestions on Website Usability

Website Usability is more than just placing a navigation bar in the right spot and allowing users to search the site. It is an intricate art that not everybody can easily implement. This tip aims to identify some of the key factors that come into play when designing a usable and functional website[ Read Article]

Weaving new techniques for Business Growth

In todays day and age, it�s complete lunacy for businesses to ignore the importance of eMarketing and how it can ultimately benefit their bottom line. Already it�s now 2007 and eMarketing is in full swing, yet it seems there are a lot of organisations that still don�t want to know about it. This b[ Read Article]

Building your Brand Interactively

Welcome to the world of touch screens, mobile phones and online shopping. It seems interacting with businesses via technology is becoming increasingly popular each year and the horizon indicates that this isn�t going to change. Interactive marketing is undoubtedly the future of advertising and is [ Read Article]

E-Commerce in a Nutshell

What is the use of paying hundreds of dollars per week on rent just to sell a few products through a storefront when you can sell everything easily and efficiently online? That is the question a lot of potential small business owners are asking themselves whilst they piece together the intricate d[ Read Article]

Free Web Hosting

Free web hosting is something that appeals to many people. Though it is obviously not right for everyone, free web hosting is suitable for a lot of up and coming web entrepreneurs. Because it is free, there is very little risk when going in with a free web hosting company. The only thing you risk [ Read Article]

Cost Effective Web Hosting Options

For those folks that need some form of web hosting, but they aren�t looking to break the bank in order to get everything, there are some options. You don�t have to be a millionaire to start a website and web hosting doesn�t cost an arm and a leg. If you do some research and look over the various o[ Read Article]

Options in Web Hosting

There are many different options in web hosting that can appeal to the new website owner. Today�s internet offers quite a buyer�s market when it comes to web server hosting. Because of the heavy competition and the many different types of service available, great service is usually readily availabl[ Read Article]

Reseller Hosting

Reseller hosting is an interesting type of web hosting that allows people the ability to use his or her own hard drive space to host websites for other people. Reseller hosting services rarely stand on their own. Usually, they are simply added features from companies that offer other web based ser[ Read Article]

VPS

Virtual private servers, or VPS, are a great way to take one single server computer and let them run many multiple servers. Each of these VPS controlled machines has the ability to run its own operating system and can be full functional. What makes these even better is that each server can be reboo[ Read Article]

Dedicated Servers

Dedicated servers are the most efficient way to host a website on the internet. With dedicated server hosting, webmasters do not have to share their server space with anyone else. The best thing about using a dedicated server is that you have total control and freedom over the things that you do wi[ Read Article]

Post tsunami: Phi Phi revisited two years on

How has the famous Phi Phi island in Thailand recovered from the Tsunami? Thailand based travel writer Andy Burrows went back 18 months later and discovered an undeveloped paradise, much better than it was before. Although living in Thailand for some time, I finally only got to Phi Phi island t[ Read Article]

Hitting the road safely when backpacking across the United Kingdom

An excellent road and rail network and a highly eclectic selection of landscapes and scenery combine with good accommodation infrastructure to provide idyllic conditions for pursuing a nomadic lifestyle. The Youth Hostel Association (YHA) of England and Wales is the most established organisatio[ Read Article]

An easier and cheaper way to book Luton airport parking

When you book airport parking at Luton, you will have three options to consider. You can choose the self park, block park or the meet and greet option. All of the options are simple at Luton as there is only one terminal, ensuring you don�t end up booking a park space in an inappropriate location.[ Read Article]

Safety for outdoor sports and adventure holidays in the UK

Now UK residents and overseas visitors can take advantage of the geographical, topographical, climatic and social variations throughout England, Scotland, Wales and Northern Ireland with peace of mind. For adventurers, these differences mean a vast range of outdoor activities. With everything from[ Read Article]

Savings all the way from the departure gate

Holidaymakers these days almost instinctively head straight for the computer for a cut-price trip away, in the same way we would have automatically gone to the travel agent a decade ago. Flights and hotels are the main criteria to arrange for the perfect getaway, but it is also becoming increasingly[ Read Article]

Safety and comfort before you fly

Making it to the airport for a departure time in the middle of the afternoon is fairly easy, especially for those lucky enough to live in the vicinity of a major airport. But what if your flight is early in the morning? Getting to check-in 2 hours before takeoff usually means a very early start, w[ Read Article]

Great daytrips from Orlando - USA

Orlando�s most popular attraction has to be the Walt Disney World Resort, with famous attractions such as the Magic Kingdom, Typhoon Lagoon, Epcot, Animal Kingdom and Blizzard Beach. Universal Orlando Resort and SeaWorld Orlando are also some of the area�s biggest attractions. SeaWorld is a th[ Read Article]

Great daytrips from Paphos - Cyprus

Paphos, a UNESCO World Heritage site, is a wonderful destination; but there is more to the island of Cyprus to be discovered while based in the capital town. From historic sites to beautiful harbours with castles and mountains in between, taking a daytrip from Paphos is the best way to enjoy the s[ Read Article]

A 700 year story � the moated city of Chiang Mai

Chiang Mai, the capital city of the Province of Chiang Mai, is steeped in history. From its foundation the city has enjoyed both successful and turbulent times. The creation of this moated city can be traced back to the Lanna (million rice fields) Kingdom. A major tourist attraction, lying to [ Read Article]

Parking your car at Exeter Airport

Exeter International Airport (EXT) operates from one comprehensive terminal which provides ten check-in desks, four gates and two luggage claim belts. During the past decade I had to catch numerous of flights from Exeter airport. As a business man I use the facility frequently mainly for busine[ Read Article]

Parking at Glasgow Airport (GLA)

Glasgow airport is positioned eight miles from the city�s downtown area, and the facility handles more than seven million passengers annually. More than 80 worldwide destinations are served by 40 national and international carriers flying out of Glasgow. I can not recall how many times I used t[ Read Article]

Parking at Leeds-Bradford Airport

The Leeds-Bradford Airport (LBA) is positioned approximately 8 miles (13kms) northwest of Leeds and about 7 miles (11kms) north of Bradford. The facility operates direct services all over Great Britain and Europe as well as linking long-haul flights through Paris, Amsterdam and London Heathrow. Le[ Read Article]

Parking at Durham-Tees Valley Airport

By now, after three years of regular travelling out of the Durham airport, I can say I am an experienced (business) flier. Everybody will know that arriving by private car is the most relaxed way of travelling. An important factor is that you should know before you arrive where you want to park an[ Read Article]

Parking at East Midlands Airport

The East Midlands Airport (EMA) is located in central England, 13 miles (21kms) southwest of Nottingham, 11 miles (18kms) southeast of Derby and 19 miles (30.5kms) northwest of Leicester. I�ve been catching business-related flights out of East Midlands airport for years now. Since I first comm[ Read Article]

Tips for cheap parking at Edinburgh Airport

Edinburgh International Airport (EDI) is Scotland�s main air hub and is located just eight miles (13kms) west of the city. There is one comprehensive terminal in the airport with arrivals positioned on the ground floor and departures and the majority of the outlets and eateries situated on the fir[ Read Article]

Nanotechnology � Just What the Doctor Orders!

What if you were terminally ill and your doctor informed you that the venom from a snail could save your life? What if the technology was available to produce a non-addictive painkiller that was thousands of times more potent than any morphine based product available today? What if nanotechnolo[ Read Article]

Nanotechnology and the Emphatic Computer

by Tatiana Velitchkov � 2007 People show their emotions in many diverse and specialized ways, some of which a computer can be programmed to detect. By employing nanotechnology, a camera and image analysis software, some computers are able to observe a user's body language and, with proper progra[ Read Article]

Nanotechnology, Genetic Engineering & Robotics � Doomsday or Miracle?

by Tatiana Velitchkov � 2007 Advances in nanotechnology have proven that incredible progress is not only possible today and in the future, it is pretty well inevitable. Fantastic advances in nanotechnologic medical research have resulted in life saving techniques that were unheard of even a deca[ Read Article]

Accept Credit Cards Online Without a Merchant Account

There are two major ways to accept credit cards on your website. The first and most expensive is to have your own merchant account. Not only is this option expensive, it also requires extensive credit checks, lots of paperwork, and usually takes days or weeks before you get approved. Fortunately, [ Read Article]

Dont Get Ripped Off Getting A Merchant Account

Far too many people get ripped off when setting up a merchant account for their online business. The biggest reason is that they don't understand their options and are intimidated by the whole process. Now, armed with the proper knowledge, you don't need to become a victim of this process. You may[ Read Article]

Articles feed

Acne Basics | Your Acne Problem Solver

I am sure that every one of you is somehow familiar with acne. Sometimes it seems as though everyone got that skin disorder, right? Acne is described as an.

Acne And Diet - Are You Aware That These Foods Can Cause Acne

Acne, the word itself is enough to give nightmares to any person, specially the teenagers. What if we tell you that the food you consume is also responsible for you problem to a certain extent. Some food items when eaten can cause and ...

Racked: Acne, Filippa K, Nudie Jeans

Acne, Filippa K, Nudie Jeans. Wednesday, November 19, 2008, by Leslie Price. dealfeed_women.jpg dealfeed_men.jpg Labels: Acne, Filippa K, Nudie Jeans Deal: Up to 60% off dresses, coats, denim and more; cash only ...

TryBeautyTips - Skin Care - Use antioxidants to prevent acne

Skin Care - Use antioxidants to prevent acne - powered by flashedblogs.com.

Acne (Pimples) Causes, Treatment Information and Types on ...

Learn acne causes, treatment information and types: comedones, whiteheads, blackheads, zits, pustules and cystic acne. Folliculitis and rosacea may look like pimples, but they're different conditions.

Get Rid Of Acne Quick

I have surfed from acne for most of my life. I have always looked for ways to get rid of acne quick. I started to break out with acne in middle school, and it got really bad in high school. I know first hand how much acne can lower ...

Cystic Acne Cure - Acne Care Secrets

Information about Cystic Acne Cure at Acne Care Secrets.

CO2 Ablative Fractional Resurfacing for Deep Acne Scarring

For many acne patients, the resulting acne scars which last long after the pimples have disappeared can cause considerable psychosocial distress. Now, a new study recently published in Lasers in Surgery and Medicine (August 2008 issue), ...

Acne Care Product Skin Solutions - 3 Crucial Tips -- Isnare.com ...

Acne Care Product Skin Solutions - 3 Crucial Tips - Free Reprint Article Written By Ray A. Rubio.

Acne Control – Find Out 4 Reasons Why You Need to Be Proactive in ...

Acne Control – Find Out 4 Reasons Why You Need to Be Proactive in Treatment - Free Reprint Article Written By Ingrid Lihan.

Acne
Advertising
Advice
Aerobics-Cardio
Affiliate Programs
Alternative
Arts
Attraction
Auctions
Audio-Streaming
Autos
Awards
Babies-Toddler
Beauty
Blogging-RSS
Book-Marketing
Branding
Breast-Cervical-Ovarian-Cancer
Broadband-Internet
Build-Muscle
Business
Cancer
Careers-Employment
Casino-Gambling
CGI
Coaching
Coffee
College-University
Colon-Rectal-Cancer
Communications
Computers
Cooking-Tips
Copywriting
Crafts-Hobbies
Creativity
Credit
Cruising-Sailing
CSS
Currency-Trading
Customer-Service
Dating
Debt-Consolidation
Debt-Relief
DHTML
Diabetes
Direct Mail
Divorce
Domain Names
EBooks
ECommerce
Education
Elder-Care
Email-Marketing
Email Entertainment
Entrepreneurialism
Environment
Exercise
Ezine-Marketing
Ezine-Publishing
Family
Finance
Fishing
Fitness
Food
Free
Games
Gardening
General
Goal-Setting
Golf
Government
Grief-Loss
Hair-Loss
Happiness
Hardware
Health
Hobbies
Holidays
Home-Security
Homes
Home Business
Home Repair
HTML
Humanities
Humor
Innovation
Inspirational
Interior-Decorating
Internet-Marketing
Javascript
Kids And Teens
Landscaping-Gardening
Law
Leadership
Leases-Leasing
Legal
Leukemia
Link Popularity
Loans
Lung-Cancer
Lymphoma-Cancer
Management
Marketing
Marriage-Wedding
Martial-Arts
Medicine
Meditation
Men's-Issues
Metaphysical
MLM
Mobile-Cell-Phone
Mortgage-Refinance
Motivational
Multimedia
Music
Negotiation
Network-Marketing
Networking
News-and-Society
Newsletters
Nutrition
Off-Line Promotion
Online Business
Online Promotion
Organizing
Other
Outdoors
Page Rank
Parenting
Personal-Tech
Pets
Photography
Podcasting
Poetry
Politics
Positive-Attitude
PPC-Advertising
Presentation
Prostate-Cancer
Psychology
Public-Speaking
Publishing
Real-Estate
Recipes
Recreation
Reference
Relationships
Religion
Sales
Sales-Management
Sales-Teleselling
Sales-Training
Satellite-Radio
Satellite-TV
Scams
Science
Security
Self Help
Self Improvement
Sexuality
SE Optimization SE Positioning
SE Tactics
Shopping
Site-Promotion
Site Security
Skin-Cancer
Small-Business
Social Issues
Society
Software
Spam
Spirituality
Sports
Stocks-Mutual-Funds
Strategic-Planning
Stress-Management
Structured-Settlements
Success
Supplements
Taxes
Team-Building
Technology
Teleseminars
Time-Management
Traffic-Building
Traffic Analysis
Travel
Uterine-Cancer
Vacation-Rentals
Video-Conferencing
Video-Streaming
Viral Marketing
VOIP
Web-Development
Webmasters
Web Design
Web Hosting
Weight Loss
Wine-Spirits
Women
Writing
Yoga