During
2008 economic crisis, business of commercial real estate also suffered. Some
thought that this credit crisis gave their business of commercial real estate a
hard blow. Nevertheless, for the expert realtors like Dean Graziosi, this was
an opportunity to expand the business.
According
to Massachusetts Institute of Technology Center for Real Estate, value of commercial
properties reduced 10.6% during fourth quarter of 2008. This is biggest price
drop in real
estate properties since 1984. However, Dean and
other savvy property investors, increased commercial real estate allocations up
to 51%. On the other side, just 11% of the investors decided to reduce
allocations.
Deans
explains commercial real estate business as a business of opportunity. You have
to understand acquisitions, cause and effects of all deals. An investor must understand
how to get best out of best deals in commercial real estate, despite of harsh
circumstances.
Dean
Graziosi is an expert realtor. He started his real estate career at the age of
18. He does not have any educational background; therefore, his ideas are not
stereotypical. He believes in innovation and using new trends in the field. He
wants aspirants and his students to use new technologies and trends. He has
given some valuable tips to evaluate a good commercial real estate deal.
Feel Like a Professional:
Only
great real estate players can understand importance of a commercial real
estate deal.
It is also important to note that commercial property is valued differently
than a residential property. In order to make professional deals, you must
understand following differences between a commercial and residential property.
- Income and profit on a commercial property is calculated with the help of its usable square footage. Whereas, residential property has its own value.
- Commercial property offers a greater cash flow as compare to residential property.
- Commercial property leases are longer than that on one-storey residential properties.
Moreover,
when you come for a commercial real estate deal, you must bring some cash with
you. Most of commercial property lenders would ask you to show a 30%, more or
less, down payment before issuing complete loan.
To
behave more professionally while signing a deal, you must conduct research and
find out all of the following factors:
- Set proper parameters of your deal
- What are total charges and how much can you pay?
- How much profit do you expect?
- Who are the key players in the deal?
- How many tenants are already on the deal?
- What is the net rent each month?
- How much rental space is free?
How to Recognize a Good Commercial
Real Estate Deal:
There
are a few points that you must consider in order to make a good commercial real
estate. Professional realtors like Dean Graziosi, explore all pros and cons of
a real estate deal. Dean breaks secret of success of the deal.
An Exit Strategy: Always keep an exit strategy. The
best deals are signed when you know there is no pressure, when you know you can
walk away at any time.
A Keen Eye: Always have a keen eye on the
property. Search if the property requires repair and maintenance works. If yes,
how much you will have to pay on these works.
Your Financial Goals: Always keep a calculator handy. Make
calculations, plus and minus, how much you are going to spend and what is the
ratio of profit. Keep your financial
goals on top of the list.
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