Buying or Selling Commercial Property
I am interested in investing in commercial real estate, is there anything I should know up front?
Commercial real estate is much different from residential real estate in that commercial real estate has a stronger emphasis on the financials of the property and the income that it brings in. Residential properties are defined as 1-4 units and are mainly valued on a comparable approach. Commercial property includes multi-unit properties, which consist of 5 units or more, or are classified as industrial, retail, office, mixed use, or land. These commercial property classes demand a certain value of rental rates for a specific area and depending on how well the property is managed, will determine a value for the property.
What are CAP rates and how are they determined?
Commercial properties are usually valued based on a capitalization rate (“CAP Rate”) for the specific area the property is located in. The CAP Rate formula is as follow:
Price = Net Income/CAP Rate
How do you analyze a commercial property?
We spend thousands of dollars every month on a variety of different subscriptions services and proprietary software, which we use to break down a transaction when buying or selling. Additionally, we have built out several financial models that allow us to quickly analyze a property and its market to ensure we our getting our clients the best deals.
What geographic area does your company reach?
We have successfully completed transactions throughout Los Angeles County, San Gabriel Valley, San Fernando Valley, Riverside County, and Orange County. Our team is experienced in analyzing markets and structuring deals based on your current position.
How will you market my property?
We will work with you and discuss a variety of questions regarding your real estate goals. It is both of our interests to make sure we are on the same page and that we are strategizing correctly. After reviewing your situation, together we will determine the best course of action to take and whether to sell or lease your property. We have a similar process, which applies when you are looking to purchase a property as well. We carefully examine your goals. Do you need to quickly turn a profit or hold the property for long-term appreciation? We ask the questions that help us to jointly make the best decision for your future.
When purchasing a property, how can I determine if the tenants are good tenants?
During the inspection period, we will work with you through a series of inspection items. We have several methods of determining the quality of tenants including reviewing leases, reviewing applications, and analyzing rental history.
Is the location of the property just as important as the property type or condition?
Buying commercial property is a lot more complex than a standard real estate purchase or lease. There are many more reports and items to analyze in order to make sure the investment is a good one. Depending on the class of real estate you are purchasing, the location could have a major impact on the value of the property and the future value. We have a multi-step process to ensure our clients are getting the best location and value for their purchase price.
Are there off market commercial properties?
There absolutely are! There are always going to be properties sold that have not been listed to the open market. We work with a lot of real estate professionals who know owners who are potentially looking to sell. We also have a large list of clients would consider selling if the price makes sense. Please contact us today to find out what off market deals we currently have available.
What do I do after I purchase my commercial property and how do I manage it?
We recommend hiring a professional property management company to ensure your property is performing and being maintained. Our company has a professional property management division that can help you with this. Please visit www.McIntireManagement.com
After purchasing a commercial property, can you help with leasing it?
Absolutely, our team has years of experience leasing all types of properties from apartment buildings, to industrial buildings, to retail properties.We can work together with you through each step of the way to make sure we have a plan in place and we are getting results. We also can run credit reports, process applications, assist with move-ins and move-outs, and handle all necessary lease forms and documentation.
What does it mean when you refer to your company as a full service company?
Our business model allows for our teams to work with you through a single transaction or a variety of actions, which occur with your real estate portfolio. We work with a lot of investors and business owners who often require more than one service at any given time. There is a need in the market to provide a turn key solution while maintaining transparency with buying, managing, leasing, and selling a property. Our company allows you customize one or all services based on your future real estate goals.
Performing a 1031 Exchange
Can you assist me in my 1031 Exchange process?
Absolutely, each year we buy and sell millions of dollars with clients who are performing a 1031 exchange. Whether you need help with listing a property and selling it, locating a property to buy, or both, we can strategize a plan to make sure you get top dollar while meeting all your deadlines and requirements.
After selling my property, what is my timeline for the 1031 Exchange?
The important dates to remember are the following:
- You have 45 days from the close of escrow to identify your properties for your exchange, and
- You have 180 days to purchase your new property(s) and close out your 1031 account.
Do you have a specific 1031 Exchange company you work with?
We have worked with many different 1031 Exchange companies throughout California. In the event you need a referral, please contact our office and we will be happy to help put you in touch with a good 1031 Exchange company.