Marketing Methods for Commercial Real Estate Leasing

When it comes to promoting a commercial or industrial property for lease, the marketing systems and tools that you adopt today should be optimized and well planned for every promotion. When you really plan the marketing for each and every property then you will reach your target tenants more effectively. Great marketing brings you better…

When it comes to promoting a commercial or industrial property for lease, the marketing systems and tools that you adopt today should be optimized and well planned for every promotion. When you really plan the marketing for each and every property then you will reach your target tenants more effectively. Great marketing brings you better inquiry. The success of every leasing agent is built around inquiry and the people that you know.

Today the best marketing methods used to lease a property are the technology based on. The use of smart phones and the tablet computers are taking over the property industry and the way we market property. Think about the technology you are using or you have available now, and you will have a good number of marketing tools to use. Try these for some ideas:

  1. It is simple and cost effective to have an app developed for your agency property marketing. The app can be downloadable for smart phones and tablet devices. You can promote the app from your website and the online app stores.
  2. Get some web domain names that reflect your location and property specialty, then have your web designer point those domain names to your website. It will help lift your identity in the search engines as the local leasing agent.
  3. SMS contact to business leaders with leasing inquiry or new listings is quite effective. You simply need the mobile phone numbers and the approval to send the messages.
  4. Email despatch of listings to your business database should be occurring at least twice a month. Add to the email some commentary on the local property market and any new developments that may be of interest to the business leaders.
  5. Video streaming from your website of good listings is easy to do and cost effective. Simple photographs from the property can be merged into a video that includes feature text labels and music as the photos flip through.
  6. Opt-in forms on your website to capture inquiry can now be streamlined to segment and specialize the inquiry back to your database. All of this can be done automatically; you just need a good web based auto-responder service and they are cheaper than ever before.
  7. Do not overlook the telephone as a business tool. Everyone has one and the use of mobile phones will extend personal contact opportunity. You now have much more reason today to make more telephone calls; there are simply more phones and mobiles around. Everyone has a mobile phone so make sure you track the contact numbers of all key business leaders and proprietors.
  8. Websites are a part of property and leasing marketing. They have been for some time, but now we have the opportunity to build websites cost effectively for special project leasing. Any building of character or identity that has multiple vacancies over a period of time (like project leasing) should have a website created to support extended marketing information such as pictures, plans, information, downloadable brochures, and inquiry forms.

Everyone knows about these tools that we have at our fingertips in the property industry. Many people do not use them to any great extent. Consider your prospects in your leasing market and start to load them into a series of technology based contact tools. Technology can be your friend to market property for lease, if you use it well.

Westmont Office Space

Overview Westmont is a village which appeals to both tenants and business owners for many reasons but due due to its central location. Located approximately 18 miles from Chicago, those who live and work in the area can enjoy the city when they desire to do so but have a suburban locale to call home…

Overview

Westmont is a village which appeals to both tenants and business owners for many reasons but due due to its central location. Located approximately 18 miles from Chicago, those who live and work in the area can enjoy the city when they desire to do so but have a suburban locale to call home and / or work within. Business owners like the fact that this village has many office space leases available and they can take advantage of the area clientele in a lease situation.

About the Residents

The village residents enjoy a good way of life. The average home value in the village is $ 200,814 and the median income per household is $ 51,422. A little under 1/3 of the households in the village contain children and there are a few different school districts which the area children may attend, depending on their residential locations.

Business Atmosphere

This area is perfect for businesses large and small. Due to the favorable population of more than 25,000 residents, those who open up their business shop doors within the village have the customer base to sell their goods and services to. This village is also readily accessible for those outside of the area. Main transportation routes such as I-88, I-294 and I-355 surround the town and allow clients to get to and from local businesses. The Westmont Metra station enables those who wish to do so to take public transportation to Chicago and surrounding areas.

Other Businesses

Commercial businesses are abound in the village. From the large amount of auto dealerships through the village to the smaller boutique shops in the downtown Westmont area, you will be in good company when it comes to your commercial neighbors when you lease office space here. Some business owners purchase the properties while others secure leases due to the flexible options offered to the business owners which do so.

Things to Do

Families and single individuals alike find plenty to do in the village. Historical landmarks are prevalent throughout the village which is perfect for all the history buffs who live and work in here. Outdoor enthusiasts will enjoy the encompassing park system while those who enjoy indoor activities can take advantage of the many shopping, entertainment and dining options.

Dining and Shopping Options

From the casual Harvest Pancake House and Grill to the delicious Vincitori restaurant, area dining options will put a smile on the faces of those who live and work in town. Shopping options include some of the popular spots like 30 North Antiques, Phillip's Flowers & Gifts and more.

How Much Down Payment Do I Need To Buy Commercial Real Estate?

In this article, I would like to talk about how much money you need to put down when you buy an apartment building or piece of commercial real estate. First, I would like to warn both beginning and experienced investors: Gone are the days of easy fast financing packages from lenders. The market has drastically…

In this article, I would like to talk about how much money you need to put down when you buy an apartment building or piece of commercial real estate.

First, I would like to warn both beginning and experienced investors: Gone are the days of easy fast financing packages from lenders.

The market has drastically changed since the “mortgage meltdown”. The impact on the residential market has certainly affected commercial real estate of all types. Today's reality is that financing is typically going to take:

1) More Time.
2) More Effort.
3) More Information For Lenders.

That is not to say that this will be the case for every financing project – that is for sure. But we are speaking in generalities for any type of investment property; whether that be an apartment building, a strip mall, a single-tenant store, or anything that would have considered commercial real estate.

Most lenders are typically going to require 20 to 25 percent down payment to finance any type of commercial real estate. This is not a hard and fast rule, but is generally going to be the case when you are buying an investment property.

What I have seen recently is that even if the appraised value is very high vs. purchase price, the lender will still require 20 to 25 percent of the purchase price.

Even with the 20% down payment, a lender will be closely looking at the financials of the property. They may be using a higher vacancy factor, higher expense factors, and higher reserves than in recent years. Keep this in mind as you are shopping for a loan.

Again, we are specifically talking about going the traditional route of financing for a commercial loan package.

Let's face it.

Banks, credit unions, and other lenders are lending towards being very conservative in the current market.

This is good news for buyers, and can be used as a leverage point in negotiations with the seller.

You will also find that more sellers will be willing to do seller financing in the current marketplace because of the current lending requirements. Again this is great news for buyers because if you can get a property with seller financing, you are eliminating a number of up-front costs for getting a traditional loan.

Keep in mind that a tougher lending environment can be to your benefit as a buyer. Remember that everything in business runs in cycles, so use the current lending market to your advantage.

Retail Property – Tenant Mix Analysis and Tactics

When you manage or lease Retail Property, the tenant mix strategy you adopt will make or break the success of the property. In many ways, the tenant mix analysis should become part of your property business plan each and every year. In that way you can make planned changes respect lease occupancy, tenant locations, and…

When you manage or lease Retail Property, the tenant mix strategy you adopt will make or break the success of the property. In many ways, the tenant mix analysis should become part of your property business plan each and every year. In that way you can make planned changes respect lease occupancy, tenant locations, and lease durations.

When it comes to leasing Retail Property, the lease and its position within the tenant mix should be well considered before negotiations start with the incoming tenant. Preparation is the key.

The success of a Retail Property and its tenant mix is ​​not a product of luck. It takes into account some key considerations such as the following issues:

  • The choice of anchor tenant to suit the local area, the property, and the community.
  • The lease terms for the anchor tenant to give the property a real identity for a sustained period of time
  • The diversity and location of specialty tenders to suit the customer base for the property
  • The size of a property and the way it is used by both tenants and landlord
  • The configuration and availability of the car park to the shopping area so it provides shopping comfort and convenience
  • The lease terms and conditions that protect the landlord cash flow and allow the tenants to successfully operate as a business
  • The lease terms and conditions that reflect stable occupancy and do not create excessive patches of vacancy or lease expire within the property at the same time
  • The design and the location of common areas within the property to extend the convenience factor for the shoppers and their duration of shopping.
  • The services and amenities that assist the customers and the tenants to enjoy the property and access its features.
  • The clustering of similar tenants within small groups inside the property. This provides procurement shopping and allows like related tenants to share individual shoppers.

So the tenant mix for a property is a key decision in the overall lease strategy. The property manager or the leasing manager should make tenancy mix and analysis a key part of the property business plan before each financial year, and an extended part of that planning process for a period of five years. That is the way it is handled within larger shopping centers. The selection of tenant and their placement within the tenancy mix is ​​not a random event.

When the tenant mix is ​​correctly optimized, it underpins the rental paid for individual tenancies and strengthens the performance of the property for the long term. Both the landlord and the tenant reap the benefits of tenant optimized property performance.

Budget Planning Designed for Commercial Coating Tasks

Maybe your budget for building maintenance has been reduced, and you can not figure out how you will be able to afford getting your building painted. Altering the contracting process and utilizing purpose driven spending are two project budgeting alternatives. Spending Driven By Purpose: Usually, people think of commercial painting as a regular, ongoing maintenance…

Maybe your budget for building maintenance has been reduced, and you can not figure out how you will be able to afford getting your building painted. Altering the contracting process and utilizing purpose driven spending are two project budgeting alternatives.

Spending Driven By Purpose:

Usually, people think of commercial painting as a regular, ongoing maintenance expense. It's easy to see that a good coating and painting treatment is a wise measure in preventive maintenance. A good paint job is easy to apply and will protect the surface (and there before the structure) of a building against damage. Some budgets separate operating costs from preventive maintenance. In this case, the painting project could be presented as an operating cost, and money could be available from the management team.

On the other hand, coating and painting application can add up to more than just a maintenance benefit. When thinking about the retail environment, it is clear that the way a building looks will have an effect on the amount of business it will attract. There are two possibilities for funding a painting project: the maintenance budget and the marketing budget.

Making Changes to The Contracting Process:

It may seem like overkill to resolve painting budget issues by changing the contracting process. If your facility utilizes outsourcing to a great extent, the practice of administering contracts utilizing this new method can save you money.

Job order contracting (JOC) systems are used by a number of large corporations to handle the process of contracting. Defined as an indefinite demand / quantity system, JOC utilizes pre-set base prices to determine cost of service. The price is settled on by a process of multiplying the base cost by a co-efficient that is pre-selected.

The contracting process can be streamlined by using a JOC system. This is common among many organizations, including government agencies and schools. Here is where you will see real savings: Faster RFP finished product time, lowered administrative needs, a reduction in advertising expenses. Centennial Contractors Enterprise, Inc. published a hard-copy report that indicated that using JOC system could save as much as 21% in ordinary costs.

After a JOC system has been put in place, it can be applied to other outsourced services. It is not limited to painting contracts. Nonetheless, you should think about hiring a JOC expert to help you implement this process if you are not already using it.

In The Final Analysis:

Because it is illegally that the budgets allowed for facility maintenance will increase in the near future, it is important to think outside the box when considering maintenance, construction, and painting projects. At the end of the day, your company may choose to change the contracting process or go with purpose driven spending. Either way, it is important to establish a uniform decision across all company settings and get management approval. This will insure that your company will be able to handle its commercial painting budget effectively.

Buying Commercial Real Estate – The Advantage of The “Re-Negotiation”

Most multifamily investors and commercial real estate investors have heard the old saying that, “You make your money when you buy a property.” What this really means is that when you buy the property correctly, at the right price, you will maximize your investment returns. Property management side, if you pay too much for a…

Most multifamily investors and commercial real estate investors have heard the old saying that, “You make your money when you buy a property.”

What this really means is that when you buy the property correctly, at the right price, you will maximize your investment returns. Property management side, if you pay too much for a property you may end up with a break-even deal or even worse …

Suffice to say, you should negotiate to the best of your abilities up-front to help maximize your returns.

One of the things I like to do is 're-negotiate' a deal before I actually close on it …

In fact. I do this all of the time.

Again, if you are reading this, you know how important it is to negotiate the best price possible on a property. But just because the contract has been signed does not mean the negotiation is over.

First of all NEVER be afraid to come back to the table with something based on either new information or a new development that has transpired while you
were heading to a closing.

There are a lot of examples of things that may come up during the due diligence period that may bring you back to the negotiating table.

1. Inspection Issues.
This is a pretty easy example for everyone to get. Most Purchase and Sale Agreements include an inspection clause. This is the time for you to review the property in detail with an inspector or other trade professionals, such as HVAC Technicians, Pool Technicians, Plumbers, Electricians, etc.

If at the time of inspection you find issues, this is an opportunity to re-negotiate your agreed-upon purchase price. In other words, you go through the building and find 8 units uninhabitable you will go back and strike a better deal.

This is not to say that you use every minute, small detail to knock the price down, but be reasonable with it. If there are really issues that need addressed, this may require an investment on your part to fix the problems, so is a good time to work with the seller to either a) fix the issue, or b) credit the purchase price.

2. Appraisal Issues.
Appraisal issues can range from a minor issue to a REALLY big problem that could, in fact, turn out to be a deal breaker.

This is something that comes up more often now than it has in the past, as appraisers tighten up on valuations after all of the problems in the residential markets. The important thing to note is that if there is an evaluation problem, again, it is a time to go back to the seller and renegotiate.

Again, never be afraid to go back to the table and ask. The worst thing that can happen is the seller says “NO” but as a sub-strategy keep in mind that time is on your side …

3 Habits of Successful Commercial Real Estate Investors

Having worked with thousands of apartment and commercial real estate investors from across the country, I have found that the most successful investors share some of the same habits. They “do” the same things, almost without exception. It is truly uncanny. The top investors I have worked with come from very different backgrounds. They have…

Having worked with thousands of apartment and commercial real estate investors from across the country, I have found that the most successful investors share some of the same habits. They “do” the same things, almost without exception.

It is truly uncanny.

The top investors I have worked with come from very different backgrounds. They have different “regular” businesses or employment. They live in different markets. They even invest in different types of real estate.

But what they all share in common is creating massive wealth for themselves and their families through real estate.

What I am about to share with you may not seem that exceptional on the surface, but take some time to think about each of these habits and whether these are truly the habits that you are following.

The Top 3 Habits of Successful Commercial Real Estate Investors

Habit # 1: They read voraciously.
It has been said that you can gauge a person's wealth by looking at the size of their personal library. I have found this to be very true among the top investors I work with.

Not only do they own a large volume of books, but they read voraciously. They spend very little time watching TV, checking Facebook, or simply “surfing the net”. When they do perform these activities, it is very focused and for a short period of time.

The most successful investors I work with read several books each and every month. They read more than one book at a time, and they read about a wide variety of subjects. It is interesting the breadth of business and personal knowledge that can be found in a $ 20 book, and most Americans simply will not spend the money. You can find the nuggets of 20+ year investors simply by reading their books, so why would not you do this? The top investors do, and so should you.

Habit # 2: They relentlessly focus on their goals.
One of the things I have learned to do is carry a planner with me at all times. It is a simple thing to do, but something many people do not do.

The top investors I know focus * relentlessly * on achieving not only their investment goals, but goals in other areas of their life.

Carrying and keeping a planner on a daily basis can help with this, while maintaining focus on your “Top 3” goals. It's great to have 100 things going on, but very difficult to make all of those a reality at the same time. Keep them on your list, but focus in on what I would call your “Top 3” and you will be much better off. But do this relentlessly!

Habit # 3: They take action … on a consistent basis.
Do you want to know the key difference between the top 5% and, say, the top 20% of investors I work with?

Simply put, they take massive action.

But the difference is that they take action on a consistent basis. That is the key.

Most investors that have some degree of success take action, but they work in what I would call “spurts”.

Week 1: They are excited, make calls to brokers and property managers, looking for potential purchases. They look over the financials on several properties.
Week 2: Follows much of the same activity level.
Week 3: Unfortunately things start to “sputter out”. Their cousin is getting married so they have to get things ready for the wedding, then the wedding is out of town … so nothing much gets done. When they return they are busy “catching up” on work so not much activity takes place, and so on.

Honestly, it is easy to see how many people can lose momentum. We are all human and have 1,000 other things going on in our lives. In fact, I would argue that many of the top investors I work with have MORE going on than most others. We all battle with what I would call “distractions” to one degree or another, so keeping these to a minimum is paramount.

Start with your plan, and stay focused on your goals. Take consistent action and keep going. These are really the keys, and reading a number of books every month helps to maintain that focus.

I have not shared anything earth-shattering with you today, but these seemingly small differences can produce large results in your wealth. It's all about the habits and maintaining consistency towards your investment goals.

Skokie Office Space

Overview Skokie is a popular town in the Chicago suburbs. In 2000, it had a population of 63,348 and this number has since increased, making it quite a large village, to say the least. Business owners like that it is close to the Chicago city lines as it offers easy accessibility to Chicago residents who…

Overview

Skokie is a popular town in the Chicago suburbs. In 2000, it had a population of 63,348 and this number has since increased, making it quite a large village, to say the least. Business owners like that it is close to the Chicago city lines as it offers easy accessibility to Chicago residents who want to do business in here. This village offers all this and more to business owners who rent and own property within the village.

About the Residents

Skokie is filled with a wide range of ages when it comes to the residents. 1/3 of the households within the village have children within them and the median household income is $ 57,375. Many of the residents either work within the town or make the short commute to the city of Chicago to make a living.

Business Atmosphere

As previously mentioned, one of the reasons why this town is the perfect place for businesses to open up shop has to do with its proximity to Chicago. Surrounded by busy interstates including I-94 and I-90, the village is easy to reach by car. Public transportation options are plentiful as well. The Metra and Pace lines service the area frequently and those who wish to travel to and from Skokie can do so with ease. Out of state travelers can fly into one of the two international airports near Chicago and reach the village businesses in a quick fashion.

Other Businesses

Many businesses either buy or lease property in the area. Some of the top names of businesses include Pfizer, Rand McNally, Woodward-MPC Airframe Systems, Skokie Hospital, Anixter, Evanston Northwestern Health Care and more. There are also smaller, privately owned businesses which operate within the village and will be your commercial neighbors.

Things to Do

History buffs will truly appreciate the Illinois Holocaust Museum and Education Center while those who are more into outdoor activities will be sure to enjoy golf courses or the ice rink. The Skokie Park District presents many avenues for outdoor enthusiasts to enjoy the fresh air and outdoor activities while those who like to dine and shop will certainly not be disappointed either.

Dining and Shopping Options

As this village lies so close to Chicago, it is no wonder that restaurant owners go above and beyond to compete with city restaurants. Therefore, you will not be surprised to find that the town has a wide array of cuisines within its village borders. Greek, Mediterranean, Italian foods and more are all well represented here. The shopping options are also plentiful. From small shops to large shopping centers, Skokie has it all.

Commercial Real Estate Agency – Scripts and Dialogue Processes For Real Estate Agents

Having been active in the commercial property industry for many years, I have seen one key fact of team performance that stands head and shoulders above everything else in the function of a successful real estate team. It is the practice of specific scripts and dialogues that apply to the many situations that arise in…

Having been active in the commercial property industry for many years, I have seen one key fact of team performance that stands head and shoulders above everything else in the function of a successful real estate team. It is the practice of specific scripts and dialogues that apply to the many situations that arise in day to day agency work. That is in:

· Prospecting for new listings
· First appointment with prospects or clients
· Presentations or pitches for new business
· Inspections of properties with buyers or tenants as the case may be
· Negotiations with complex sales or leasing events and properties
· Price and rent offers and counter proposals
· Closes of different types.

By practice I mean regular practice times each week or each few days for the individual members of the sales and leasing team so they can improve the relative dialogues and refine them. The teams that do the practice will always be better in the presentations and closes that they implement in lists and inspections. They will simply be more confident and it will be just so obvious to the prospect or client they are dealing with.

Each and every property market has its own challenges, and the current one is no exception. On that basis there will be special problems that you will strike each day quite regularly. So in tough markets like this, these are some of the most common problems you will strike:

  1. The price of the property is too high
  2. The price or rent offered by the buyer or tenant is off the mark
  3. The client or property owner does not want to put in any marketing money to the sale or lease campaign
  4. The client wants to open list when exclusive listing would be much more effective
  5. The method of sale or lease that the client wants to adopt is not a good match to the type of inquiry that is coming in current.
  6. The types of adverts to be used in the marketing campaign are different to what the client wants to use.
  7. The client does not want to publicly promote the property or advertise it in the weekly commercial newspapers.

These are all special situations in real estate agency that can be well handled with some practice. Regrettably most salespeople just 'wing-it' and struggle with the problem in a fairly basic way.

The best way to handle this and to fast track better results in your dealings with clients and prospects is to practice your scripts and dialogues on a daily or weekly basis. The more you practice, the better the results. Such a simple formula, and yet so few salespeople undertake the discipline and skill.

Commercial Property Marketing – Advertising Strategies That Work for Leasing Tenancies

When it comes to advertising a commercial or retail property for lease, it is the strategies you adopt today as a real estate agent that will make all the difference to the end result rent and the time on market for the client. The most successful completed leases today are generally the result of a…

When it comes to advertising a commercial or retail property for lease, it is the strategies you adopt today as a real estate agent that will make all the difference to the end result rent and the time on market for the client. The most successful completed leases today are generally the result of a dedicated exclusive listing agency, focused marketing campaign, and a hard working real estate agent.

Open Listings are a Waste of Time

Open lists are generally a waste of time for the agent and for the client. Open lists are a simple 'list and hope' process; they are simply not marketed well or consistently. The client gets little feedback or special service during the listing time; given that the client is not serious, it is hard for the agent to be serious in the marketing of the property. Surprisingly and generally the client that chooses this 'open' process of listing is expecting for the very best service but then soon gets upset when little action or feedback occurs. Commercial property is not a small value investment; it demands the best strategies and initiatives when it comes to leasing.

Exclusive Listings are Best

So let's assume you can get the vacant property or tenancy on an exclusive listing basis. From that point onwards you can structure a dedicated marketing and advertising campaign that taps into the right tenant segment of the local business community. This is the best solution for every property owner and landlord when they have a vacancy factor or problem to address.

Advertising a Vacant Tenancy

Advertising commercial or retail concessions for lease is quite a special process. In most cases the tenant that you need and find will come from the existing local business community. On that basis all or most (75%) of your marketing efforts should be directed into the local business precinct. You should define the following:

  • The primary market – this is where you will get 75% of your inquiry from
  • The secondary market – this is where you will get the remaining 25% of your inquiry from

To tap into the local business precinct the best advertising campaign should include:

  1. Flyers to be delivered to all businesses locally
  2. Advertising in the local newspaper that is read by the business community
  3. Talk to tenants in other properties nearby
  4. Internet listing on a number of sites regionally
  5. A signboard on the property that can be clearly seen by passing foot and vehicle traffic
  6. Other tenants in the same building may know of other tenants wanting to come into the area
  7. Other tenants in the same building may want to relocate or expand concessions
  8. Direct mail to all local businesses that match the target criteria
  9. Direct telephone calls to all the local businesses that match the target criteria

These strategies of advertising vacant promises do not and should not come with an open listing. They are the specialized services of a dedicated real estate agent that is appointed exclusively to act for a landlord on leasing the vacant promises. I am sure you can see what power an exclusive listing brings the landlord in solving their property problem.

Writing a Letter of Intent (LOI) to Purchase Real Estate – Step By Step

In this article, I would like to give you an idea of ​​when to use a Letter of Intent (LOI) to purchase real estate. Next, we will look at how to write a LOI step-by-step. First my disclaimer. Laws vary from state to state and do change from time to time. This information should not…

In this article, I would like to give you an idea of ​​when to use a Letter of Intent (LOI) to purchase real estate. Next, we will look at how to write a LOI step-by-step.

First my disclaimer. Laws vary from state to state and do change from time to time. This information should not be construed as legal advice. When you engage in any type of real estate or legal transaction, you should seek competent legal and real estate advice from a professional.

There – we got that out of the way!

OK. Now let's look at when to use a Letter of Intent vs. a Purchase Offer. I am specifically going to address this when looking at buying an apartment building or commercial real estate.

The standard contract used when purchasing real estate is called a Purchase Offer, or a Purchase and Sale Agreement. You probably used this to buy your own house or condo.

Again, this is the standard agreement generally used in most real estate transactions. It is a formal proposal, usually drafted by your real estate agent or broker along with you. If the Seller agreements to all of the terms and conditions in the contract, they will simply sign the document. It then becomes a legally-binding contract between Buyer and Seller.

A Letter of Intent (LOI) on the other hand, is generally used as a “starting point” of discussion when purchasing real estate. It is a great tool to use to begin discussions, and usually is followed up with a formal Purchase and Sale Agreement.

Why use a Letter of Intent?

A Letter of Intent is a great tool to use in order to gauge the versatility of purchasing a property given the price and terms you are looking for.

A lot of times, I will use a LOI when I am trying to purchase an investment property for much less than the Seller is listing the property. I may also use a LOI if I am unfamiliar with the property and the area. I like to use a LOI in these cases to start the negotiating process while I do some due diligence work during the process.

Alright. Let's look at how to write a Letter of Intent step by step.

1. At the top of the letter, write today's date.

2. Include the Seller or Broker information at the top of the letter.

3. Explain that you are presenting this as a letter of Intent to purchase the property.

4. Explain who you are – whether you are buying through an LLC, investment group, etc.

5. Describe the property you are purchasing – the property name and address.

6. Include the price you would agree to purchase the property.

7. Define the due diligence period – it may be anywhere from 30 to 90 days, possibly even longer in a complex project.

8. Identify how you would like to finance the project – Seller financing, loan assumption, bank financing, etc.

9. Describe what you would like to review during the due diligence period – financial information, leases, rent roll, etc.

10. Include the earnest money you would have prepared to put down during due diligence.

11. Identify a Closing Date target – it may be within 30 or 45 days of conclusion of the Due Diligence Period. This will vary based on the project.

12. End the letter stating if these terms are acceptable, to let you know and you will follow up with a formal Purchase Agreement to move forward on the purchase.

13. Sign the letter.

There you have it – the essential elements to include in a LOI. Nothing too complicated – and if it is too complicated you will likely scare off a serious Seller!

The LOI is really just a simple business letter outlining the price, terms, and conditions that you would like to get when purchasing the property. Those are the basics, and everything will vary from project to project.

Again, a LOI is a great tool in your toolbox to begin discussions when purchasing real estate. Keep these steps in mind when you are looking to make your next purchase of an investment property.

Tips On How To Qualify Commercial Lease Tenants

Five Tips on Qualifying Tenants in a Commercial Lease Commercial real estate investors involved in buying a property will almost always to inspections, review the report of title, take a look at comps, have surveys done on the land and structures, and analyze the competitive properties in the trade area. Often times I'll see the…

Five Tips on Qualifying Tenants in a Commercial Lease

Commercial real estate investors involved in buying a property will almost always to inspections, review the report of title, take a look at comps, have surveys done on the land and structures, and analyze the competitive properties in the trade area.

Often times I'll see the same astute investors not put the same effort into looking at the strength of the tenants that they are buying as part of their commercial investment. While it's true you usually can not change the tenant itself, you can at lease see what you're getting into with the purchase and anticipate any potential issues and plan or budget for those.

During the boom market years many investors did not bother to qualify the tenants because they figured a new one could always be found, particularly at a higher rent. In some cases investors would actually plan on replacing the tenant and planned an improvement in the rent roll at the same time.

Today's Market Reality Check

In today's market, if a sales transaction is being done at all, often it is a bank owned property or short sale property and the seller expects the buyer to accept the commercial lease as-is, in exchange for what it was supposed to be deducted sales price.

Investors become excited about buying a property 'below replacement cost' and fail to consider the importance of the commercial lease and how the property cash flow will be affected if one or two tenants are lost and the length of time it may take to find replacements at the same, or more likely, a reduced rental rate.

A True Example with a Commercial Lease

Recently we began managing a multi-tenant commercial property for an owner who had purchased the retail shopping center as a short sale. It quickly became apparent that the buyer had been focused solely on the price per square foot and on buying a building at a 'below market rate' with only a quick glance at the commercial lease that each tenant had signed.

Within 30 days of closing escrow the investor faced these situations with current tenants:

  • An anchor tenant was on a month-to-month commercial lease and began negotiating for a lower rent
  • Trying to collect rent that was 60 days past due from three of the tenants

Amazingly the buyer was aware of the above tenant situations but believed that through new ownership and good property management the tenants would voluntarily catch-up on their back rent and also re-sign each commercial lease even though they had above market rates.

The reality is that if a tenant is not paying the old owner, they're not going to pay the new owner either.

How To Qualify Your Tenants

Here are 5 things you can do, before you invest in any real estate investment property, to qualify the existing tenants and to make sure that the terms of each commercial lease are at market:

  1. Be a Secret Shopper. Pretend to be a customer and visit the business – in person – and see what your first impression is.
  2. Drive the Market Area. Make a list of your prospective tenants and drive around to see how much competition they have. Consider how they compare to the dozens you're buying.
  3. Examine the Tenant File. During your due diligence period when buying the property you've likely been given copies of the leases to review. Make sure to ask the seller for copies of the tenant applications, credit reports, and business plans collected when the space was first leased. If the seller can not or will not provide these ask why, and give the property transaction extra scrutiny.
  4. Examine the Actual Rent Deposits. Again during your due diligence, the seller will likely give you profit & loss and aging reports showing rent payments received from each tenant. Make sure to look at the actual dates the rent checks are deposited. Seeing a report that shows a tenant paying every month is different from seeing that the tenant is paying late every month.
  5. Look at Competitive Properties. Talk to the tenants in neighboring properties and see what opinion they have of the building you're about to buy.

It's always good for the real estate investor to do as much of the above as possible.

Delegating is an easy thing to do. But, one of the most difficult tasks in property management is to teach the new owner about the realities of the market place.

And the best way to learn the market realities is to get out into the market and be a detective, not do research in the office over the internet – although this certainly has its time and place.

I hope you've found this article on how to qualify tenants on a commercial lease useful.

Observations About Commercial Real Estate Office Performance – Part 2

When you consider the operational factors in running your real estate office, the staff strategies you adopt are make or break to market share and business opportunities. Here are the main ones to consider: Sales Staff should be well selected. Proven performers are preferred but are sometimes hard to find, and the 'ego or cost…

When you consider the operational factors in running your real estate office, the staff strategies you adopt are make or break to market share and business opportunities. Here are the main ones to consider:

  1. Sales Staff should be well selected. Proven performers are preferred but are sometimes hard to find, and the 'ego or cost factor' may deter many managers from taking on the most successful of these. That means you will need to have some staff growth plan and skill strategy for improving your more junior sales staff and move them through the ranks. The success of sales staff stems from their business character and work ethic. If they are hardworking, knowledgeable, and good communicators, they are likely to have a future in sales, although training and results are part of the performance equation.
  2. Tracking each individual salesperson is fundamental to the office cash flow and commission process. A debt credit system of salary and commissions allows the salesperson to show their success and get paid for it. It is important to set cut off levels on the debt level to allow the underperformers to be moved on; there is no point for either party in prolonging the employment of underperformers. If a salesperson can not show market success and momentum in 3 to 4 months then termination of employment should be considered.
  3. Commission only salespeople may be an alternative to use in sales staff employment strategies but your local HR rules and industry employment standards should be adhered to. Check these rules based on your industry, country, and location.
  4. Administration personnel are the backbone of the office and the tool to help the momentum and success of the sales staff. Diligent and hardworking administration people will keep the sales team effective and accurate in listing, marketing, and follow-up. It is normal in a successful and well run commercial real estate office to have a ratio of 3 or 4 salespeople per full time administration support.
  5. The success of a real estate office stems from salespeople that are really good at self-promotion, office promotion, knowledge of the local area, specializing in a property type or location, presenting, listing, inspecting, negotiating, and closing. Some salespeople need help with parts of this list. Training and skill development will help the process.
  6. The database in the office is the most important tool to help the business and the sales team with their success. Every sales person should have a requirement in their job specification to utilize and grow the database. Any salesperson that does not commit to the office database integrity and growth should not be employed long term; they are of little value to the business overall.

The success of your business centers on its people and how they perform their required tasks. A great real estate office is a mixture of successful salespeople, property managers, and administration people. Leadership then has something to work with.

When it comes to making a real estate office thrive in tough times, the manager and the team should be controlled and focused on taking the right actions and chasing results. These two factors are intertwined and will move the office forward.

Observations About Commercial Real Estate Office Performance – Part 1

When it comes to the performance of a commercial real estate office, there are some common reasons in the industry for office success or failure. Understanding that appropriate financing of the business has to be available from the outside, the other components to be concerned with are: Office location – your location in the local…

When it comes to the performance of a commercial real estate office, there are some common reasons in the industry for office success or failure. Understanding that appropriate financing of the business has to be available from the outside, the other components to be concerned with are:

  • Office location – your location in the local area has to be specific for the clients that you serve
  • Internet strategy – like it or not your internet strategy today has to be exceptional. Most agents have websites today, so your site has to be the best to be of any relevance in the local property market.
  • Property specialty – when you specialize in a property type you have more value to the clients that you serve. Importantly your specialty has to be a viable market for you.
  • Market coverage – this is always important. Your office should comprehensively cover the local area where you are positioned. As part of that you should rank yourself against your competitors and track that ratio over time.
  • Marketing tools and promotional material – marketing tools are today very sophisticated. The sales staff should have a good variety of tools and brochures to use in any promotional situation.
  • Branding of the office – this is the colors and the message that you want the market to know your for. It has to be clear and precise; you should saturate the area with your signboards as part of this process.
  • Competitors in the market – identify these groups and track their market penetration. This can be done through signboard counts, internet lists, and newspaper advertisements.
  • Time on market – within your property type or specialty make sure that you know just what is going on with the time that listings stay on the market.
  • Pricing and rental trends – monitor the market results here. Know what sells or returns and why. Know what remains on the market and why.
  • Pricing and commission strategies – your strategies here should be appropriate and relevant to the local property owners and tenants.
  • Prevailing local and regional economy and demographics – watch what happens with the local region with regard to population and business activity.
  • Zoning and infrastructure changes – when transport, highways, roads or zoning of property change, it creates shifts in property activity. Watch the signs of change and monitor the local planning office or council accordingly.
  • Territory management – define your territory and work hard to build your profile within it. Ultimate targets should be to dominate your territory with your target market.

Whether the property market is good or bad, some simple staff rules should be followed at all times to keep the agency successful.

Commercial and Retail Real Estate – Things I Have Learnt About Great Marketing Proposals

When it comes to commercial or retail real estate sales and leasing, you are regularly preparing marketing proposals for clients to consider in the promotion of their property. The marketing proposition is perhaps the most important document to win the business; get it wrong and you lose the game. Creativity is required given the promising…

When it comes to commercial or retail real estate sales and leasing, you are regularly preparing marketing proposals for clients to consider in the promotion of their property. The marketing proposition is perhaps the most important document to win the business; get it wrong and you lose the game. Creativity is required given the promising market conditions. A great marketing proposal is essential.

Here is a potential structure to create a great marketing proposition that can apply in the promotion of most commercial and retail real estate.

  1. The executive summary should always appear at the front of the document. This is one or two pages of key issues that relate to the promotion of the property. They are the most important issues that will have impact in resolving the client's property targets.
  2. The property brief outlines the relative property and the challenge that the client requires to be solved. This simple description process lets the client see that you as the agent totally understand their property need.
  3. The property description completely describes the property and its current status. This removes any confusion that may potentially exist between the agent and the client.
  4. An overview of the current market should be provided. This allows the client to understand the challenges and the opportunities that exist at this current point in time. This should include recent sales, recent leases, and comparable properties which will have impact in the current marketing campaign.
  5. A description of the target market should be provided. This allows the client to see where most of the advertising focus will be directed, and give your reasons why. A clear and accurate target market allows the advertising campaign to be well structured.
  6. It is now time to provide a detailed and comprehensive recommended marketing campaign given all of the previous points and most particularly the target market. The marketing campaign should include all required promotional and advertising channels. They will be Internet, e-mail marketing, flyers, brochures, information memorandum, direct marketing telephone calls, direct mail, editorial, articles, newspaper advertising, radio and TV Advertising if appropriate, signboard, database strategies, and website promotional solutions.
  7. A clear description and recommendation should be provided to the client with two or three alternative choices within the recommended marketing campaign. Some clients like to have choices for the purposes of budget or strategy.
  8. You should provide a timeline for the client to see how the campaign will be commenced and staged. The best way to do this is through a simple Gantt chart.
  9. A list of the key staff involved in the marketing campaign should be provided together with a description of their involvement and communication back to the client. Relative experience with the subject property should also be explained.
  10. In the appendix at the rear of the document, you should have a selection of sample promotional material. You can also have prepared draft advertisements and property descriptions for the client to choose from and set their preferences.

A great marketing proposal will be achieved from the above components and structures. This allows the client to be fully informed before they make the final promotional decision in marketing their property.

Notice that this list is primarily about the property and the clients requirements; it is not overly the agent or salesperson. When your document focuses on the client and the property, you have a much better chance of gaining the clients agreement to proceed. They can see that you really understand their property issues and you have a real solution for handling them in today's economic climate. In simple terms they need you.