Charlotte NC Commercial - Blog #Buying Commercial Real Estate

Which is Better, Commercial Condo Or A Separate Building

Wed, 01 Apr 2026 13:08:00 -0500

Which is Better, Commercial Condo Or A Separate Building

Which is the better investment — a separate (single) commercial building or a commercial condominium within a larger complex? Each has its own unique set of attributes, and so the answer really depends on the needs, goals and characteristics of the investor.

Comparison

Below is a comparison of each building type based on certain property characteristics, which hopefully will shed some light on the right property profile for your situation.

A freestanding building is owned by a single entity (be it a person, couple, corporation, etc.) and it sits on an individual parcel with separate legal access. The most common freestanding buildings are single-family residential homes, or commercial office buildings.

A commercial condominium is an individually owned unit that is part of a larger multi-unit building with various owners. Each condo owner receives fee simple title to their unit along with a recordable deed. A condo owner also receives an undivided interest in the common areas of the project, including the hallways, parking areas, landscaped grounds, entrance or lobby. Each condo is assigned its own assessor parcel number, allowing property taxes for the entire complex to be assessed individually to each unit based on that unit's particular value. Condos can be bought and sold in a manner similar to that of freestanding buildings.

Management

A freestanding building is generally managed either by the owner or by a professional property manager whom the owner must hire and compensate. A condo complex is typically managed by a condominium association comprised of a small proportion of the condo owners chosen to represent the entire project. This "owner's association" (OA) may also choose to contract with a professional manager. Investors or owner/occupants who want nothing to do with managing or keeping up their property may want to seriously consider condo ownership, as these tasks can be completely handled by others.

Property Operating Expenses

Many investors balk at purchasing a condo when they hear that, in addition to their mortgage payment, they will have to pay monthly Owner Association dues. However, association dues are simply a compilation of certain property operating expenses, such as landscaping, interior and exterior maintenance, fire insurance, utility expenses, parking areas that would be equally present in the ownership of a freestanding building. Although Owners Association dues of, say, $300/month for a 1,500-square-foot office condo may seem expensive, this amount could very easily be less than the cost for the same expenses in a comparable freestanding office building. Before discounting a condo based on OA dues, a comparison of operating expenses should be completed.

Decision Making

Due to the cooperative nature of condo projects, decisions regarding maintenance, capital improvements and other financial actions are necessarily relinquished to a representative Owners Association body. Independent investors who prefer to handle their own management may not be well suited for condo ownership. On the other hand, a well-run OA will budget for necessary expenses and reserves and will keep the property well maintained and running smoothly, thereby maximizing each individual unit's value. A walk around the condo project and a few conversations with existing owners are highly recommended prior to purchasing a commercial condominium, as this will give you a very good sense of whether the OA is functioning properly.

Cost and Appreciation

Because of lower per-unit construction costs and shared common areas, condos are generally less expensive than freestanding buildings. By example, a 3,000-square-foot industrial condo would generally cost less than a 3,000-square-foot freestanding industrial building in comparable condition. Therefore, if funds are tight, condos may provide an easier path to ownership. Will they appreciate as much as freestanding buildings? This is a very difficult question as the answer depends on numerous factors, including how the project is run and maintained. In observing commercial condo prices over the last 15 years, they generally tend to mirror the movements of their freestanding counterparts and will typically appreciate (and depreciate) in a similar fashion.

Get Started Now

How To Deal With Security On Your Commercial Property

Mon, 02 Mar 2026 09:21:19 -0500

How To Deal With Security On Your Commercial Property

Commercial security involves systems and strategies designed to protect businesses and properties from threats like theft, vandalism and unauthorized access. It not only safeguards physical assets but enhances tenant satisfaction and business continuity. Effective security measures include advanced surveillance cameras, access control systems and alarm systems to insure the safety of assets, employees, and visitors.

The problem of security is a major concern of owners and managers of office buildings or other commercial properties. There are many things to check both inside and outside of a property. Particular attention must be given to the perimeter of the property, as this is where an intruder will make the first contact.

For example, an office building should be inspected thoroughly all around the exterior to search for danger spots. No area should be overlooked because entry is possible from almost any point. The age, design, and location of a building will affect perimeter security.

Older buildings can have more security problems because of the style in which they were built. Often there are street-level windows, exterior fire escapes, and operable windows. Each can increase the number of entry points that must be protected.

Every building will be different, of course. Each will have to be checked, starting at a point and going around the property to return to that point.

Here are some things that will always need to be checked carefully:

Fencing. If there is a fence around the building, is it just ornamental or will it actually protect the property? Are there any vulnerable spots? If there is no fence, is it feasible to install one?
Loading dock. How is the dock controlled during regular operating hours? After hours? What personnel are involved? Are there procedures to control deliveries and removal of materials? Is the dock left untended at any time.
Windows, fire escapes, & roofs. Do any of these areas pose potential access problems? If any do, should new grates or locking devices be installed? Check on your local codes.
Entrances and exits. (Pedestrian and vehicular). How many entrances and exits are there? Where are they located? What kinds of locks are used? Are the locks effective and who has the keys? What are the hours of operation of each entrance and exit? Is there any kind of alarm system to signal when a door is open? Who responds to these alarms? Would closed-circuit television (CCTV) cameras be of value in any of these locations? If CCTV is used, are the monitors always watched? If there is a parking lot or garage, are the access routes safe?
Guardservice. If there is a guard service, what are the guards’ assignments in regard to controlling daytime and after-hours traffic and patrolling the building’s perimeter?
Exterior lighting. Is there adequate lighting that can serve as a deterrent to crime? Do time clocks or light sensors control the lights?
Landscaping. Are there possible hiding places along routes to and from the building?

Get Started Now

How To Deal With High Risk Troubled Property

Mon, 16 Feb 2026 13:41:31 -0500

How To Deal With High Risk Troubled Property

In any market, good or bad, there are always problem properties. Most are only troubled or problem properties because of the current ownership. Some may be neglected only because the present owner has failed to do fairly simple things that can solve the problems. Buying property and solving problems is a profit-making business.

Have you seen:

An empty office building.
An apartment house or hotel that has an excessively high level of vacancy.
A large tract of undeveloped land that no developer has become serious about wanting to develop.

These are examples of troubled properties.

Properties that are a definite financial burden to continue to hold but which also are unattractive properties to some prospective buyers.

The timing may be right for investors to obtain troubled property at bargain prices. The pressure on owners and lenders with troubled property to get out from under the on going burden is also high. The result is that syndicates have been formed to seek out and buy up troubled properties.

The High Risk

Knowledgeable property developers and managers (especially those familiar with empty or near-empty office, hotel, and apartment buildings) caution that buying a troubled property requires taking a very high risk. The financial returns are uncertain and may be a long time in coming. This type of investment is not for everyone; it’s for those who can afford high risk situations.

The profits can come from any one or a combination of circumstances.

A market turnaround caused by a boom in the local and/or national economy.
An improved system for promoting and operating the property. Some syndicates are being formed solely to manage the troubled property with an option to buy when and if it hits a specified profit level.
Purchase of the property at a bargain price, often combined with imaginative and untraditional financing techniques.

Some lenders are asked to share the financial risks by accepting a low initial interest rate in return for a big share of the profits later on. Sometimes the seller of the troubled property is asked to retain a financial stake in the property and to help turn it around. The seller’s experience and involvement in the project from the start can be valuable.

Including the troubled property in a larger development plan. An office building that sits empty might become part of a new industrial park with hotels, conference facilities, and residential apartments, all of which are successful.

Take another look at troubled properties in your area. With fresh new ideas and a re-structuring of the mortgages, the troubles may go away, leaving a profitable investment for you.

Get Started Now

Industrial Flex Building Investments

Mon, 01 Dec 2025 13:59:00 -0500

Industrial Flex Building Investments

A high percentage of speculative low-rise industrial buildings today are flex buildings, making them a good investment. One of the most appealing aspects of flex space lies within its ability to customize. For example, if a tenant wants to increase their office space or warehouse space, they are easily able to do that with flex space due to the reduced improvement costs. A flex building also allows for the tenant to have more choices in the type of space their company needs now and in the future at a more affordable price. Developers are favorable toward the flex building, as it will meet the needs of many modern sophisticated industrial building users.

The flex building is a speculative, low-rise (usually one-story), single or multi-tenant building that will accommodate different amounts of backroom and office needs, depending on particular tenants’ needs.

Another benefit is the vast diversification of its tenant mix. Unlike multi-tenant office buildings that are catered only to businesses such as law firms, insurance companies, financial institutions, etc., flex assets have tenants that range from construction companies all the way to retail-style restaurants. The customizable build-outs allow for a strong mix throughout each flex industrial park that normal multi-tenant office buildings would not be able to accommodate. As a result, landlords are mitigating risk by having a wide range of diversified national and local tenants throughout their business parks.

The developer finishes the exterior of the building, the interior remains only partially completed until the tenant signs the lease. The interior is then customized to provide space which might be for light manufacturing, research and development, warehouse and distribution, sales and accounting, or inventory control office space.

In existing flex buildings, 50% or more of the interior space may be used for offices. As a 100% office, the building is a low-cost all-office alternative to the low-rise office building.

Flex buildings usually have standard attributes that will help control construction costs. These are:

A ceiling of 16 to 22 feet. This will handle practically any manufacturing, distribution, or office operation.
A modern HVAC system that will provide zoned temperature control capability, advanced security measures, and “clean” atmospheres throughout.
Enough parking space. Loading docks that can adapt to any tenant’s needs. Driveways arranged for easy access for trucks of all sizes.
Because the flex building is attractive to a wide variety of tenants, the speculative builder can expect to find:
Favorable financing costs, since lenders look more favorably on flex buildings than the standard industrial building.
Since there is a larger pool of potential tenants for the building, there should be a faster lease-up.
Lower construction costs. The staged construction will eliminate costly and time-consuming rip-outs of already installed interior spaces that will not meet the needs of a new tenant. Later expansions of tenant spaces are easily handled (at lower cost) because of the flex design features. With this many attributes, the flex building has the making of a very good real estate investment.

Get Started Now

Land Development Agreement

Mon, 01 Dec 2025 13:59:00 -0500

Land Development Agreement

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.

This may be accomplished by the following:

The developer sets up a master plan that sets forth the general scheme of development and submits it for the approval of the owner.
The developer and owner enter into an agreement setting forth the acreage prices for the entire property.
Owner and developer agree on the number of years over which the full development is to be completed.
To protect the owner against freezing of his property, the developer firmly commits to buy a predetermined number of acres each year.
If the developer fails to meet this schedule, the owner is released from his commitment.

Development Agreement

Another way of handling the problem is for the developer to share the net profits from the land development with the landowner. This can be done by a “land development agreement” in which the developer agrees to perform the platting, the laying out, the installation of lot improvements, and the promotion of the subdivision. The landowner agrees to accept a percentage of the sales price of each lot, with a fixed minimum guaranteed. For example, the developer agrees to pay net to the landowner 25% of the sales price of each lot sold, with a minimum of $50,000 per lot.

With this kind of arrangement, it is important to protect the landowner from finding his land cluttered up with liens left by a subdivider who became insolvent. The landowner should consider confining the developer or subdivider to a small tract of land at a time and give him “rolling options” to acquire additional parcels at intervals over a period of time. Failure to keep up with this purchase program results in loss of future options. The land that has been optioned but not purchased is not subject to liens against the developer.

Liability for Not Proceeding

In one case, a jury found that a village breached its contract with a real estate developer calling for the village to acquire property and convey it to the developer for construction of apartment houses and a shopping center, all conditioned on obtaining financing from HUD. The village repudiated its explicit undertakings, to acquire and convey property to the developers. HUD had granted the main application and was in the process of considering the other grants involved, so the village could not back out of its promise.

[Heritage Commons Partners v. Village of Summit, 730 FSupp 821, (ND Ill. 1990)]

Get Started Now

Are Warehouses–Profitable Real Estate Investments?

Sat, 01 Nov 2025 06:30:00 -0500

Are Warehouses–Profitable Real Estate Investments?

When Syndicates, partnerships, investment companies and their individual participants look at investments in commercial properties, many tend to look at properties that have that bewitching charm of glamour in brochures. A beautiful office building or an enclosed shopping center seem to have a more acceptable “status” as an investment property. These buildings can be nice to drive by and point out as “our” investment.

Originally, any property designated as a “warehouse” would always be located in areas zoned for industrial use. There is not nearly as much allure in a squat bulky warehouse building. The physical attractiveness is not there in color flyers and photographs. However, as money makers, these bulky buildings can be a very profitable real estate investment.

A recent check in one area showed a vacancy rate in distribution warehouses of 4% to 6%, while office buildings had a 10.7% vacancy level. The vacancy rate for warehouses remains low in good times and bad. If there is a slump in demand for real estate, commercial real estate should not be affected. The demand for space in warehouses should remain the same.

When choosing a site for a new facility installation, think first of the renters who will be your customers. Does the warehouse have easy access from a major highway or Interstate? Will the driveways and parking areas accommodate large trucks? Is the facility very close to any houses or residential areas that will complain about the noisy trucks?

Expenses and Income

The normal costs of operating any rental property are the utilities, insurance, property taxes, management and maintenance.

Access and parking are important. There should be direct access to each unit by a vehicle with multiple trailers. There should be room for these vehicles to turn around or be passed by another car or truck. Loading docks are provided at most commercial-oriented warehouses.

Security: The latest state-of-the-art equipment makes the convenience of round-the-clock access available with no loss of security. There can be computer-controlled entry gates and individual alarms in each unit with security cameras installed in various places around the facility. If the building is a conversion of an existing property, windows should be sealed. All entrances and exit doors should be barred and locked. Building a new facility is easier, with fences, electronic gates and alarms built-in originally.

Get Started Now

What Is A Purchase Option Contract?

Sat, 01 Nov 2025 06:30:00 -0500

What Is A Purchase Option Contract?

Some investors look for the short-term investment with less of an emphasis on “doing business” and more pre-investment research on controlling property for the maximum gain in the short term. These investors often use the option or purchase-option.

Traditionally, most real estate investors have been attracted to commercial real estate opportunities. Typically these investors have been well rewarded for their investment. Properties that are designed for “doing business” proliferate and succeed as businesses grow and diversify and become more and more profitable. For investors to be successful it is normally important to understand the operation of the particular commercial enterprise involved in the real estate investment.

The Purchase-Option Contract

A purchase-option contract lets the buyer-optionee purchase a property at a specific price within a certain period of time. If the option is exercised, a closing is held and the property is purchased at the price previously agreed upon. There is no legal obligation to buy the property. But, if the optionee does not exercise the option, the deposit paid to the seller-optionor is forfeited.

The biggest differences between the purchase-option and direct ownership may be two advantages from the viewpoint of the investor: First, the short term (6 to 24 month) purchase option contracts can be an outstanding way to control property without assuming the responsibilities of ownership. Second, the contract enables the optionee to receive all of the benefits from appreciation in market value of the property.

Responsibilities Eliminated- There are five basic responsibilities of property ownership that are eliminated by using the purchase-option contract:

Long-term Commitment. With many investments, there will be no cash profit from property ownership until the property is sold. With the purchase-option, the responsibility for a long-term commitment of ownership is eliminated. The optionee’s commitment is short-term only, with the ability either to sell the option, buy and immediately sell the property, or never buy the property.
Mortgage Payments. There are no mortgage payments made by the optionee. He has eliminated the responsibility to “pay for” the property during the period when the purchase-option is open and unexercised.
Property Management. There will be no responsibility with respect to managing and maintaining the property unless the optionee exercises the option and takes possession of the property. In a straight purchase, the buyer must begin maintaining and managing the property right after closing–a time consuming and costly responsibility.
Cash Payments Required. As we all know, property ownership involves payment in full or cash down payment (10% to 25% or more). When the property is controlled with the purchase-option, the down payment is replaced by an option deposit (the consideration in the contract) that can be in a much smaller amount, perhaps in the 1% to 5% range.
Financial Liability. Optionees have no financial risk in the property other than the amount paid in the option contract. The property owner must pay the property taxes, mortgage payments, insurance payments, maintenance and repairs and any other obligations of ownership.

The optionee has the specified period of time that is in the term of the option in which to buy the property or decide to pass. During that time, the optionee can evaluate the potential and make those decisions. It is certainly the best way to hold a property for an increase in value over a very short term.

Get Started Now

Costly Mistakes In Commercial Real Estate

Sat, 01 Nov 2025 06:28:00 -0500

Costly Mistakes In Commercial Real Estate

Investors sometime make investments in real estate that turn out badly. They may then blame the loss on the “real estate cycle” when there were mistakes that could have been avoided by better planning and analysis. Based on data obtained through interviews with more than 200 real estate practitioners, several costly mistakes were identified and discussed. Here are three of them:

Misjudging demand. Developers have faced costly setbacks by assuming that customers existed without undertaking adequate market analysis. For example, a retail development designed to attract shoppers from executive ranks in the adjoining commercial center failed to realize that high-income executives have demanding work schedules and tend to shop during their leisure hours near their suburban homes. Clerical workers, who might shop during lunch or break periods, cannot afford up-scale store prices.

Faulty property analysis. Investors invite catastrophe by failing to thoroughly examine all physical aspects of property improvements, including size, structural stability, and mechanical systems. Some investors have suffered losses by relying on ballpark estimates of rehabilitation costs or by purchasing multi-unit buildings after seeing only representative sample units carefully selected by sellers.

The investment fallacy. Too many people have equated real estate investment with a more passive “buy low, sell high” investment in assets such as stocks, gold, and stamps. They have failed to recognize that time, talent, and work must go into maintaining and enhancing a property’s value. They have failed to understand that income properties and “investment” properties are largely the fruits of imaginative and capable management.

Get Started Now

The Type Of Buyer For Commercial Property

Wed, 01 Oct 2025 12:04:00 -0400

The Type Of Buyer For Commercial Property

When we represent a seller of a commercial property, we try to determine, as soon as possible in the marketing process, what type of buyer is most likely to be interested in this particular property. We then focus the main appeal on those elements that are most important to that type of buyer.

Normally there are three types of buyers for commercial property:

Investors, who seek an income-producing investment in which to place their surplus funds.
Speculators, who buy so they can sell when the market goes up.
Users, who seek sites for their businesses.

The seller’s agent will appeal to the special interests of each of the three types of buyers. Advertising and marketing materials should develop each appeal and furnish supporting facts, realistic projections, and professional information.

For the primarily income-seeking buyers, we focus on the financial data, concentrating on rentals from the property, terms of the leases, maintenance charges, mortgage information, and net income. We will also demonstrate the probability of income growth from the property.

For the speculator-buyer, the stress is on the potential for a resale profit. We might show that the property is in the line of future development (new public transportation is planned or being built, or there are other newly built or renovated commercial properties as neighbors). Demonstrate that the property is in a growing, vital locale.

Since income is of only a secondary interest to the speculator-buyer, we’ll go no further than the current income status. The focus will be on the potential for profitable resale.

The location will be of greatest interest to the user-buyer. Is it right for the user’s business? Is the building in good physical condition, or must it first be remodeled, improved, or up-dated? We must demonstrate the wealth and habits of the surrounding population.

With each type of potential buyer, the marketing effort will focus where it is most likely to produce a prompt, successful sale.

We are experts in values and knowledge of the entire market in this area. We may have the type of person that is looking for just your type of property. We probably have full information on potential buyers already.

We can be part of your professional team. Please give us a call and see how we can help in the identifying that buyer.

Get Started Now

A Complete Commercial Loan Request Package

Fri, 01 Aug 2025 13:31:00 -0400

In this issue

A Complete 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)

The Future Buyer For A Commercial Property

If you are new to investing in income property, you may have made a choice in advance of the type of investment property that you wish to own. There are many good types of investment properties: apartments, office buildings, shopping centers, high rise parking garages in downtown areas, warehouses, resort rentals and many others. Each of these takes a different type of management. Any and all should be under professional management during your ownership. Good management will ensure a profit for you when the investment is sold.......(more)

Maintenance–Routine Rather than Emergency

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)

A Few Energy Saving Tips

Conserving energy is important to everyone. Not only does energy conservation save consumers and businesses money, it saves precious resources for future use.

Saving energy is much easier than many people think. Insulating homes and commercial buildings, changing to double pane windows, lowering or raising the setting on the thermostat by just a few degrees has a significant impact on energy usage......(more)

Click Here For This Months Newsletter