Charlotte NC Commercial

by Rob Cassam, CCIM

A​ Checklist For Closing A Commercial Lease

Written October 1, 2021 by
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This month’s newsletter has just been released! Check out the latest tips for tenants and users of commercial real estate space.

In this issue

    • A​ Checklist For Closing A Commercial Lease

    When all of the negotiations have been completed, the broker and tenant have agreed to the terms of the lease. Now all that is left is the lease closing. Often there are so many back-up papers that must be produced, examined and approved, the closing can be held up because of a forgotten document.
    Following is a checklist that provides basic information on typical documents that may be required at a closing. It is a starter list, and may be expanded so that it is complete for your particular property….(more)

    • How A Small Shopping Center Can Be A Good Investment

    When you are looking at shopping centers, bigger is not necessarily better. While a well-run regional or super-regional shopping center can produce a good financial return, so can a successful small-market shopping center. In many cases, the small town center can turn out a better return. One of the benefits is the control that the owners can have by being “the only game in town”. This can help generate high returns……(more)

    • ​​​​​Definition Of A Shopping Center

    ​​​​We have all kinds of shopping centers from the smallest strip center up to the super centers. In a case in a federal bankruptcy court, the court was required to distinguish between a “shopping center” and other types of retail properties. The federal bankruptcy code did not define the term. The Third Circuit provided the following 14 elements to be used in determining whether a property is a shopping center……..(more)

    • Investment Opportunities In Commercial Real Estate

    There are a wide range of opportunities out there in commercial properties. Commercial properties provide space for businesses, and the kinds of properties are as diverse as the businesses.
    Following are the major categories of commercial properties:……(more)

Five Critical Clauses That Must Be In Your Commercial Lease

Written September 1, 2021 by
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This month’s newsletter has just been released! Check out the latest tips for tenants and users of commercial real estate space.

In this issue

    • Allowing Subleasing for Commercial Tenants

    In some office building markets throughout the country, some existing tenants have sought to sublease some or all of their rented space as they shrink operations or eliminate locations. The problem for landlords is whether it is a better strategy to enforce lease restrictions against subleasing or to work with tenants on the theory that the sooner cheap sublease space is filled, the better for all. (In addition, another problem could be whether landlords should insist on sublease restrictions in new leases being negotiated now.)….(more)

    • Lease Clauses Needed For Protection Of Confidential Information

    ​Typically, a landlord has access to leased premises at all times for purposes of making repairs and inspections. But in today’s information age, many tenants have valuable trade secrets, confidential information, and unique documentation in tapes, CDs, DVDs, listings, and other intellectual property that should not be accessible to the landlord.
    A software company tenant, for example, should try to obtain the right in the lease to maintain locked documentation rooms where even the landlord’s janitorial and maintenance people have no access and the landlord is given no copies of keys, pass cards, or cipher lock combinations to the additional locks installed by the tenant on the documentation room door……(more)

  • ​​​​​How To Make Quick Profits When A New Hospital Comes To Town

​​​​What happens to nearby property values when a new hospital is built? Usually the surrounding area feels a ripple effect. Land values increase. Developers are quick to provide new space for offices and stores. The biggest profits are realized by the investors who get involved early (during the planning stages) before or while the hospital is built…….(more)

  • Critical Lease Clauses

The following is a useful list of items that should be clarified between the parties in the lease of a commercial building:……(more)

How To Prepare A Loan Request Package

Written July 31, 2021 by
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This month’s newsletter has just been released! Check out the latest tips for tenants and users of commercial real estate space.

In this issue

    • How To Prepare A Loan Request Package

    When preparing a loan request package for presentation to the lender, the real estate borrower must be as complete as possible the first time. Insufficient, imprecise, or incorrect data in a loan request package can mean a rejection for an otherwise attractive real estate loan. Following are suggestions on things to include with the loan request package:….(more)

    • What is A Land Assemblage Option

    ​The option is an extremely versatile investment tool that comes in a variety of forms and can be used for a variety of purposes. The best part of an option is that it gives the optionee (the party holding the option) control over property (in the sense of the right to acquire it) for a very small cash outlay. In effect, it achieves a very high degree of leverage and conserves cash, two goals sought by both real estate investors and real estate speculators……(more)

    • ​​​​​The Benefits Of Preventative Maintenance Inspections

    ​​​​Maintenance of any rental building, either residential or commercial, should be handled as much as possible as a routine rather than an emergency. Preventative maintenance must be performed on a regular basis to keep the level of service at the property high and to reduce equipment breakdowns and service interruptions. Toward this end, the maintenance staff and on-site manager should make regular inspections for the repair and replacement of items before problems occur. Preventative maintenance reduces the number of emergencies by anticipating wear and tear that the property, buildings and equipment will undergo……(more)

    • The ​Appropriate Management Plan

    Real estate investments can be set up to generate one or more types of returns: Cash flow to owners (yield or return on investment). Appreciation of owner’s capital (capital appreciation).
    Shelter of cash flow and/or other income from taxation (tax benefits). Preservation of capital (safety).
    Once the owner specifies the type(s) of return desired, the mix of returns, and expected timing, the property manager can develop an appropriate management plan. Planning, with its resulting control, is the foundation of effective property management……(more)

What Is Adequate Parking For Commercial Real Estate

Written July 1, 2021 by
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This month’s newsletter has just been released! Check out the latest tips for tenants and users of commercial real estate space.

In this issue

    • The Master Lease- A Sellers Guarantee

    When new development is occurring in a market and developers are anxious to sell when the construction is complete, use of a master lease may facilitate a sale before the lease-up period is ended. A master lease is a form of seller guarantee that has several specific goals….(more)

    • What is Adequate Parking For Commercial Real Estate?

    Parking is not just important at your commercial building or apartment property; it is absolutely crucial for any business. Without it, potential tenants and their customer will reject the building. Parking spaces may be located below, at, or above ground level but wherever located, there must be enough spaces to accommodate the realistic, projectable needs of the particular building…..(more)

    • ​​​​​The Ideal Team For Negotiating Commercial Leases

    In the corporate world of today, a negotiating team will negotiate commercial leases. This team may consist of legal counsel, finance department representatives, outside specialists such as real estate brokers or tenant representatives, design and engineering consultants, and others. In today’s market, corporate tenants with high credit ratings, who are willing to make long-term lease commitments negotiate from a strong position. Therefore, corporations that formerly treated real estate transactions in a matter-of-fact way have now developed detailed real estate negotiating strategies. The corporate tenant sees these negotiations as a way to cut costs within the company (whether upsizing or downsizing)……(more)

    • ​​​​​Land Development Agreements

    The acquisition and improvement of land is a large-scale operation and requires large amounts of capital. This has created methods of land acquisition that gives the developer access to and control over a large enough tract to make development economical without requiring an initial outlay of all of the capital necessary to acquire such a tract. From the point of view of the landowner, the disposal of a large tract at a good price may require a formula that will encourage the developer to commit improvement and development money for part of the tract that will build future value into the entire tract……(more)

Is Now The Time For Condo Conversion?

Written June 1, 2021 by
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This month’s newsletter has just been released! Check out the latest tips for tenants and users of commercial real estate space.

In this issue

    • Is Now The Time For A Condo Conversion

    In a recent issue of our newsletter we wrote about the different types of commercial investments that have been converted to condominium projects.
    The Condo Conversion- When an investor is seeking an investment in a new condominium project, the possibility of purchasing an existing rental property for conversion to condominiums should be considered. While building a new property can be profitable, there are many benefits to converting the existing property….(more)

    • How To Establish Value In A Shopping Center

    ​​​​​​​​​​​​​​​When a person is either a buyer or a seller of a shopping center, the question of value for a sale is paramount. How do you appraise such a property? In commercial properties, there are three types of methods commonly used to establish a value for appraisal. They are….(more)

    • ​​​​​Landscaping For Profits and Image

    ​Owners and property managers must watch the nickels and dimes as well as the dollars that are spent on the property. Save one dollar in operating costs and (assuming a 10% cap rate) value of the property increases by $10. That is why owners are always looking for new ways to economize. In addition to saving money, we are always looking for a way to invest a little in the property for a good return. A well-planned landscape has a recovery value of 100% to 200% in increased rentals at the typical suburban office building. In addition, the owner gets back more than just dollars spent; the landscaping dramatically influences an owner’s positive image in the community…..(more)

Top Real Estate Investing Tax Benefits

Written May 8, 2021 by
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Depreciation
No tax on rental income
No tax on appreciation until sold
Capital gains is lower than ordinary income
Live-in flip- 2+ years of occupancy of the last 5 years and can still take the $250 (single) $500K (married) profit without paying tax.
1031 Exchange- Exchange equity into like-kind property and defer the tax
Installment Sale- defer gains tax on principle portion of the note income and prevents you from giving up to higher tax bracket due to a large gain on sale
Borrow tax free against it
Can use self directed IRA/401K to purchase
Die with real estate- your heirs get the property on a stepped up basis!
(see your accountant for details!!)

Negotiating The Termination Of A Lease

Written May 1, 2021 by
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This month’s newsletter has just been released! Check out the latest tips for tenants and users of commercial real estate space.

In this issue

    • Negotiating The Termination Of A Lease

    One or both of the parties to a lease of commercial or office space may want to sever the relationship prior to the end of the lease term. A tenant may want to terminate the tenancy, for example, because his business has grown since he first moved in and he requires larger quarters. A landlord may want to terminate the tenancy because there is a better prospective tenant available….(more)

    • Your Investment Portfolio Check-Up

    ​​​​​​​​​​​​​​​When you make your investment in real estate, it is implied that you want to make money. The cash can come from direct income from the property or from capital gains from a sale after an increase in value. Either way, the investment must be managed, considered, and watched at all times. If the owner and manager are taking care of business, there may be ways to increase the income, and the value. There is always the possibility to make a sale for the right price and terms. Keeping aware of the market might bring an opportunity to make a tax-deferred exchange into a property with more benefits for the owner. Real estate investors often own various kinds of properties. They may have a mix of commercial, residential income, land and groups of houses. These owners have an extensive portfolio of investment real estate. Owners of portfolios of stocks and bonds meet with or call their broker often. Like seeing a doctor or dentist at regular intervals, it makes sense for real estate investors also to meet with their real estate investment representative or counselor at least a couple of times a year. Exchanging ideas with the professional who has the daily pulse of the real estate market can be profitable. At each meeting, the investor can plan on finding out the current market conditions that will have an effect on equities that are now owned or that could be acquired….(more)

    • ​​​​​Alternative Rental Suggestions

    ​When there are vacancies in commercial buildings, tenants may feel that they are in a good position to seek concessions from landlords on new leases or in exchange for extending or renewing existing leases. Landlords are apt to make deals for two reasons: (1.) The landlord may be facing high vacancy rates, and (2.) The landlord also recognizes that tenants may also be suffering from declining business and are less able to pay the high rentals of a few years ago. The landlord will be looking for a formula or concession that will give the tenant an economic break, but at the same time allowing the owner to show a scheduled (on paper) rent roll that is sufficient to satisfy a banker who is providing financing for the property…..(more)

    • Office Building Comparisons

    Newer office buildings may fill up at the expense of older office buildings. Since new buildings cost more to build than the older ones, rents may be higher. The actual dollars-per-square-foot costs must be compared, along with other benefits that the tenant may receive, before a final decision is made by the tenant on staying or moving. In many areas, there are still a number of vacancies reported in office buildings. Most of this available space is in the newer properties. One of the most important jobs of a leasing agent for a building with this available space is to analyze other buildings to see if any tenant could be induced to move……(more)

Important Development Considerations For Raw Land

Written April 1, 2021 by
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This month’s newsletter has just been released! Check out the latest tips for tenants and users of commercial real estate space.

In this issue

    • The Self Storage Facility Investment

    One in ten U.S. households now rent a self-storage unit. The growing demand for self-storage in the U.S. is created by people moving (some 40 million people move each year according to U.S. Census data), and by various lifestyle transitions, such as marriage, divorce, retirement, a death in the family, etc. Self-storage companies indicate a positive trend in market demand and occupancy rate…..(more)

    • How To Find Land For Development

    ​​​​​​​​​​​​​​​In major cities, looking for vacant land is difficult. A builder can look for vacant land but also must look for buildings that are in a condition that looks like they are no longer productive. A neighborhood that is in decline might be rejuvenated by tearing down a building and replacing it with a new office building, high-rise shopping center or apartments. Starting with one property might transform several blocks of a blighted area over a period of months or years. If an opportunity like this presents itself, it can be time to get options to purchase adjoining properties. An owner of an old building may be just waiting for an offer of some kind….(more)

    • ​​​​​Important Development Considerations For Raw Land

    ​When an investor purchases land to build on, the next step is land development and financing. “Land development” cannot be precisely defined; generally, it refers to the physical, legal, and engineering processes needed to convert raw land to land (or lots) on which buildings can be placed…..(more)

    • Owner Requirements For Effective Management

    Once the owner specifies the type(s) of return desired, the mix of returns, and expected timing, the property manager can develop an appropriate management plan. Planning, with its resulting control, is the foundation of effective property management…….(more)

Should You Lease or Own Commercial Property

Written March 1, 2021 by
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This month’s newsletter has just been released! Check out the latest tips for tenants and users of commercial real estate space.

In this issue

    • Should You Lease or Own Commercial Property

    Whatever the kind of property used, the user has the option of purchasing or leasing. Should you buy the house you live in, or lease it from someone else? With few exceptions, there would be an overwhelming response to “own it”. The benefits weigh heavily toward ownership. With business property, the answer sometimes may be a lease instead. Real estate investors who enter into a long-term lease instead of buying property make a decision with implications that can have an effect on both financial and tax positions. The important difference of the long-term lease from a straight purchase (outright or with a loan) is borrowing (renting) the property itself for financial benefit…(more)

    • The Suburban Office Buildings And Good Planning

    Demand for commercial real estate continues to rise. Suburban office buildings remain many investors primary acquisition target. These investors reason that a suburban office building will almost always be a good buy. Careful choices must be made, as there must be a demand for office space in the area and a gradual increase can be made in rents. The long-term demand for office space looks good….(more)

    • ​​​​Acquiring Land For Development

    Acquiring land for development is necessary no matter what kind of market we are in. Professional real estate assemblers are always looking at and acquiring under-utilized sites within cities or in suburbs. Here are some ideas on how those professionals do it. A Thorough Knowledge. Only purchase or option property in well known localities to reduce the risk of unexpected surprises. If the locality is not familiar, seek out local professionals for their opinions……(more)

    • Commercial Real Estate Representation

    There are a number of ways to buy, sell or exchange investment or commercial real estate. Having the knowledge of what you can do in some tax situations can be the difference between an annual profit or loss in a property that you intend to acquire or one that you already have in inventory. The professional commercial real estate broker is in the position to represent clients in real estate transactions by setting up sales, exchanges, leases, purchase and sales of options, and management of real estate. A professional real estate practitioner must stay aware of current tax laws and court decisions in order to structure transactions, but does not give legal or tax advice (unless he/she is also an attorney or a certified public accountant). In any complex transaction that might result in changes in any owner’s legal or tax situation, the other members of the “consulting team” should be the owner’s attorney and CPA. We always recommend meeting with these other professionals during the planning and closing of major real estate transactions…….(more)

How Adding Value Means Increased Cash Flow

Written February 1, 2021 by
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This month’s newsletter has just been released! Check out the latest tips for tenants and users of commercial real estate space.

In this issue

    • How Adding Value Means Increased Cash Flow

    ​​​Since the value of a rental property is based directly on the cash return, adding value means increasing cash flow. When small investors set out to increase real estate values, the steps are in upgrading houses, duplexes, triplexes, etc., enhancing the cash flow and therefore increasing equity when the property is sold…..(more)

    • Factors To Consider For An Apartment Investment

    When any particular apartment building is under consideration for purchase, there are a number of factors that should be considered. Here are some of the more important points:…..(more)

    • ​​​​The Cancellation Clause In A Commercial Lease

    Whether a rental market is weak or strong, lease negotiations can be difficult when the landlord wants concessions that are different from the norm. One situation that happens is when the owner of an office building or other commercial property intends to sell when market conditions improve, whether that occurs next year or five years from now. Another is the holder of vacant or underimproved property who plans to develop it whenever market conditions justify. In the meantime, these properties must be leased to generate sufficient cash flow to pay operating costs and debt service. Such an owner will be amenable to giving significant concessions, including a low rental, provided the landlord can cancel the lease during the term……(more)

    • How Property Management Increases Value

    Management of a building is not just handling problems as they arise and renting units, it is making the asset more valuable to the owner by concentrating on every aspect of the property. Some owners of very large income properties still do not take professional property management seriously and fall behind in values…….(more)