In this issue

• Increasing Market Value Of The Investment

​Since the value of a rental property is based directly on the cash return, adding value means increasing cash flow. When small investors set out to increase real estate values, the steps are in upgrading houses, duplexes, triplexes, etc., enhancing the cash flow and therefore increasing equity when the property is sold. When working with larger commercial and apartment properties be aware of the things that have the potential of adding value. Do the required homework on the property. A feasibility study can measure the capacity to add value. There may be many other measures that must be taken, such as market analyses, applications for new zoning, design and construction planning and a plan for marketing......(more)

• Building On Leased Land

Building on leased land results in a separate ownership of that building and the land. The two owners, one of the land, and one the improvement, come together in one investment parcel. In this situation, the landowner wants someone to develop the land, but still wants to continue in ownership. The developer prefers to lease rather than buy the property. One owner wants the security of owning the land with a good lease to the owner of the improvement. The owner of the building puts up less money since the ownership of land is not part of the expenses in the development.....(more)

• The Fair Cancellation Clause In A Commercial Lease

Whether a rental market is weak or strong, lease negotiations can be difficult when the landlord wants concessions that are different from the norm. One situation that happens is when the owner of an office building or other commercial property intends to sell when market conditions improve, whether that occurs next year or five years from now. Another is the holder of vacant or underimproved property who plans to develop it whenever market conditions justify. In the meantime, these properties must be leased to generate sufficient cash flow to pay operating costs and debt service. Such an owner will be amenable to giving significant concessions, including a low rental, provided the landlord can cancel the lease during the term....(more)

• How Property Management Makes Asset More Valuable

Management of a building is not just handling problems as they arise and renting units, it is making the asset more valuable to the owner by concentrating on every aspect of the property. Some owners of very large income properties still do not take professional property management seriously and fall behind in values. The professional property manager is keenly aware of all of the recurring costs of a property and how they can affect the bottom line. The owner may applaud and give attention to a one-time saving on a “high-cost” item such as insurance on the property while overlooking the multipliers in the number of units......(more) Click Here For This Months Newsletter

In this issue

• Negotiating The Termination Of A Lease

One or both of the parties to a lease of commercial or office space may want to sever the relationship prior to the end of the lease term. A tenant may want to terminate the tenancy, for example, because his business has grown since he first moved in and he requires larger quarters. A landlord may want to terminate the tenancy because there is a better prospective tenant available. ...(more)

• Your Real Estate Investment Check-Up

When you make an investment in real estate, it is implied that you want to make money. The cash can come from direct income from the property or from capital gains from a sale after an increase in value. Either way, the investment must be managed, considered, and watched at all times. If the owner and manager are taking care of business, there may be ways to increase the income, and the value. There is always the possibility to make a sale for the right price and terms. Keeping aware of the market might bring an opportunity to make a tax-deferred exchange into a property with more benefits for the owner.......(more)

• Alternative Rental Plans

When there are vacancies in commercial buildings, tenants may feel that they are in a good position to seek concessions from landlords on new leases or in exchange for extending or renewing existing leases. Landlords are apt to make deals for two reasons: (1.) The landlord may be facing high vacancy rates, and (2.) The landlord also recognizes that tenants may also be suffering from declining business and are less able to pay the high rentals of a few years ago....(more)

• Office Building Comparisons/li>

Newer office buildings may fill up at the expense of older office buildings. Since new buildings cost more to build than the older ones, rents may be higher. The actual dollars-per-square-foot costs must be compared, along with other benefits that the tenant may receive, before a final decision is made by the tenant on staying or moving. In many areas, there are a number of vacancies reported in office buildings. Most of this available space is in the newer properties. One of the most important jobs of a leasing agent for a building with this available space is to analyze other buildings to see if any tenant could be induced to move. Here are some of the items for comparison:...(more)

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• Build To Suit and Flex Buildings

There has been a move on the part of industry to relocate from the cities to the suburbs during the past few decades. The result of this has been the establishment of industrial and office parks in those suburbs. Many of these have been planned and developed by private investors; others have been planned or sponsored by public agencies. Preparation for construction of an office or industrial park is expensive. It includes plotting, grading, and installing streets, utilities, rail connections and other facilities. With the increasing difficulties in securing clearances and permits, speculative development in building these facilities is down......(more)

• The Role Of An Asset Manager

​​​​​​​​​​The institutional investor has found that income property must be placed under the supervision of professional, experienced and innovative managers. With more property moving into the ownership of institutions and real estate investment trusts, the need for asset managers increases......(more)

• ​​​​Office Building For Attorney Only

Property managers must show some imagination to keep a property fully rented. One way to keep an office building occupied is to consider specializing–renting to members of one professional field.......(more)

• The Professional Approach To Lease Renewals

No matter what the current vacancy factors are in any area, tenants feel they can negotiate with the landlord, whether in an apartment building, an office building, or commercial center. With other space available in the local rental market, the tenant will certainly be aware of all the possible terms for a lease renewal. If the owner or manager of the property is inflexible and unreasonable, tenants know they will have no trouble finding available replacement space in a building nearby. A professional manager is aware that a prolonged lease negotiation can quickly result in a vacancy. In an eagerness not to lose prime tenants, landlords may try to sweeten the pot by offering new amenities or higher levels of service than tenants actually would ask for. These promises may not even be necessary......(more)

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• Condominiums For Business Owners

Like apartment dwellers who are finding that it is less expensive to buy than to rent, business and professional firms are moving toward buying offices rather than leasing. While buying or constructing an entire building is an option for major corporations or for smaller firms outside metropolitan areas, owning commercial space generally means being part of a condominium structure.....(more)

• Consider Who Might Be The Buyer When You Want To Sell

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........(more)

• The Appropriate Management Plan

Real estate investments can be set up to generate one or more types of returns: Cash flow to owners (yield or return on investment). Appreciation of owner’s capital (capital appreciation). Shelter of cash flow and/or other income from taxation (tax benefits). Preservation of capital (safety). Once the owner specifies the type(s) of return desired, the mix of returns, and expected timing, the property manager can develop an appropriate management plan......(more)

• Space Sharing Executive Suites

With the revolution in communications, building owners must keep up with the changing needs of the corporate tenant. Often the larger, well-organized businesses do not need the space that was necessary just a few years ago. Electronic communications to and from employees have substituted for leased office space. Managers are more willing to grant favorable lease terms to operators of shared space. The operator sometimes receives a monthly management fee for operating the shared space plus a portion of rent revenues over a certain amount.....(more)

• Quick Profits When A New Hospital Is Built

What happens to nearby property values when a new hospital is built? Usually the surrounding area feels a ripple effect. Land values increase. Developers are quick to provide new space for offices and stores. The biggest profits are realized by the investors who get involved early (during the planning stages) before or while the hospital is built. In one location in the Southeast, as a new hospital went up, the area around it began to pop its economic seams. Among the new activities that created an abnormal demand on land located near the hospital were: ......(more)

• Are These Items In Your Leases

The following is a useful list of items that should be clarified between the parties in the lease of a commercial building......(more)

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• A New Style of Corporate Lease Negotiations

A few years ago, senior corporate managers were able to make major real estate decisions by themselves. Now, a negotiating team will negotiate leases. This team may consist of legal counsel, finance department representatives, outside specialists such as real estate brokers or tenant representatives, design and engineering consultants, and others.....(more)

• The Master Lease–A Seller Guarantee

Although office space is in supply in some locations, development has continued. Business leaders are optimistic about the long-term future. Unemployment shows a marked improvement and earnings reports by large corporations are improving.....(more)

• Apartment Complexes Converted To Condos?

The owners of many apartment buildings have found that rental prices have not changed much, and may be thinking about selling. The owner of an apartment complex, rather than sell, realizes the condominium conversion may be a good way to cash out the property....(more)

• Land Development Agreements

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....(more)

• Proper Management of Residential Condos

Whether the condos are converted from apartments or built from the ground up, the builder-developer, the project lender and even the unit purchaser in a condominium project should all be concerned with the proper management of the project. Without good management, a project can quickly lose its value and begin a downturn....(more)

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