In an earlier post I mentioned several types of businesses that make good sale/lease-back transactions.  Since then I've been asked why a business would want to take part in this type of transaction.  In a sale/lease-back a owner occupant of a building sells the property and then signs a lease with the new owner to stay in the space.  Often a business will do this as a way to unlock the equity that they have in their property.  For example, there are several small businesses in Reading, PA that own their own property.  These businesses range from retail store owners to small businesses that own the office buildings where they are located. From time to time many small businesses run into cash flow problems.  It is common to have a profitable business that for one reason or another does n... 02/12/2011

It's been a little while since I added to my series on evaluating commercial real estate investments.  If you recall, we were analyzing a small retail property in downtown Reading, PA.  We looked at several aspects of the property's performance, from NOI through IRR, but one thing that we did not look at was the quality of the tenant.  There are several things to consider when looking at a potential tenant, but today I am just going to cover two important ratios that you should look at when evaluating the balance sheet of a potential tenant. The first ratio I always like to look at is the Current Ratio.  This is a measure of how well a company is positioned to handle its short term cash needs.  The Current Ratio is calculated by dividing the company's current assets by its current liabi... 02/07/2011

Like most commercial real estate, value is created in retail properties through effective leasing.  One important aspect to consider when leasing your retail real estate is your tenant mix.  In other words, you need to consider how your tenants businesses relate to one another.  Here are five questions to ask your self when evaluating a new tenant for your retail property in Reading, PA: Does the new tenant compete with your existing tenants?  For most types of retail properties, it is not a good idea to lease vacant spaces to tenants that directly compete with your existing tenants.  This is pretty obvious, but it is not always the rule.  There are some businesses that benefit by locating close to their competitors.  These are usually companies that sell big ticket items that people wa... 02/04/2011

If you are a serious commercial real estate investor sooner of later you are going to find yourself owning a property that is difficult to lease. Tenant's preferences change and what may have been attractive space a few years ago can quickly become obsolete. This problem is multiplied when the property is particularly large. Leasing to Micro-Tenants is one strategy that I've seen used to fill large hard to lease spaces. This strategy has been used in retail, office, industrial, and even multifamily and hotel properties. Retail: Often when big box retailers move out of a space it can be extremely difficult to rent. These properties can be rented to Micro-Tenants in a few different ways. One way is to turn them into indoor flea markets and rent tables or booths. Sometimes this is even don... 02/01/2011

I had an interesting meeting this weekend with a commercial real estate investor in Reading, PA.  This investor has several projects in different stages of development throughout the city.  He asked me to sit down and discuss his overall portfolio and help him figure out if and how I can help him.  Although this was only the second time I've met with this individual, he was very open about his situation and was willing to discuss several different options for each of his properties.  After our meeting I walked away thinking that we had covered a lot of ground, and I wondered what it was that made it such a productive meeting.  It took me a little while, but I realized that the answer was trust.  This investor was willing to trust me, a relative stranger, with a lot of information about ... 01/31/2011

I recently wrote a post where I mentioned investing in real estate using a self directed IRA, and since then I have received a ton of questions about how this works.  While I am very capable of helping you find, purchase, and manage commercial real estate investments for your IRA, I'm not an IRA custodian and I cannot set up a self directed IRA for you.  I would like to share some resources that I have used to learn more about investing in commercial real estate with an IRA. Websites: http://www.trustetc.com/new/real-estate-ira/ http://www.theentrustgroup.com/investment_options/real_estate/ http://www.penscotrust.com/investing/realEstate.aspx Books: IRA Wealth: Revolutionary IRA Strategies for Real Estate Investment How to Invest in Real Estate With Your IRA and 401K & Pay Little or No ... 01/27/2011

No really, real estate is actually worthless.  I'm sure that this might sound strange coming from someone who sells commercial real estate for a living.  Does this mean that I've been tricking investors for years now? Nope.  It just means that today I'm going to use that minor in philosophy that I earned in college.  This is going to sound a lot like the old "if a tree falls in the woods and no one is around to hear it..." paradox.  For example, what would you pay for a 1,000,000 SF class A office tower on Mars?  My guess is not much, at least not unless there were a ready supply of Martians to rent it from you.  So real estate does not have any intrinsic value.  This is probably true of almost everything.  If there is no demand for something, that thing has no value. Okay, what's the p... 01/27/2011