OVER THE PAST twenty-five years, commercial real estate has been transformed from a highly opaque investment vehicle accessible only to the wealthy into a transparent mainstream investment alternative available to sophisticated retail and individual investors. As the economy stabilizes and the long road to recovery begins, more investors will come to realize that commercial real estate is a viable class of alternative investing. Wealth Opportunities in Commercial Real Estate: Management, Financing, and Marketing of Investment Properties is designed to meet this renewed interest and the…mehr
OVER THE PAST twenty-five years, commercial real estate has been transformed from a highly opaque investment vehicle accessible only to the wealthy into a transparent mainstream investment alternative available to sophisticated retail and individual investors. As the economy stabilizes and the long road to recovery begins, more investors will come to realize that commercial real estate is a viable class of alternative investing. Wealth Opportunities in Commercial Real Estate: Management, Financing, and Marketing of Investment Properties is designed to meet this renewed interest and the accompanying increased demand for knowledge of the real estate industry. Author Gary Grabel understands that to succeed in this market, you need to take the time to learn the basics and build the skills necessary for properly evaluating investment opportunities and creating value. Covering all of the important terminology and key topics essential to developing a firm grasp of the fundamentals of commercial real estate, the book addresses leasing, financing, marketing, management, structuring a partnership, real estate tax consequences, buying and selling, and more. Grabel carefully sets forth a practical step-by-step process detailing exactly how to go about acquiring real estate through a real estate vehicle as a means of building significant wealth over time. By addressing a broad range of topics, this timely guide ensures its position as a resource that you can return to again and again throughout the buying and ownership process, from initial transaction to daily property management. A practical guide to the day-to-day management of commercial real estate properties for both beginning and more experienced individual investors and real estate professionals, Wealth Opportunities in Commercial Real Estate presents the must-have knowledge you need to master in order to find lasting financial success in this real estate market.
GARY GRABEL is the Managing Director of Ethan Christopher, LLC, the holding company for his real estate activities. The company specializes in value-added real estate with a focus on retail centers and medical office buildings. Ethan Christopher currently owns and manages over one million square feet of real estate in California, Arizona, and Texas. Mr. Grabel brings to this text his extensive practical experience as an owner/operator of commercial real estate. For over thirty years, he has been involved in all aspects of commercial real estate including financing, leasing, acquisitions, and the day-to-day running of a real estate portfolio. Mr. Grabel is a real estate broker, a member of the California bar association, and a frequent lecturer on real estate?related topics.
Inhaltsangabe
List of Abbreviations xiii Introduction xv Chapter 1 An Overview of the Problem, a Solution, and a Game Plan 1 The Problem 1 The Solution 2 Four Key Elements in the Solution 3 Concerns about the Solution 8 Acquiring the Skill Set to End the Cycle 9 A Game Plan to Achieve the Solution 9 This Book is about Center B Properties 18 Chapter 2 The Basics 21 Gross Income: The Starting Point 21 Vacancy and Collection Loss: Gross Income Reducers 21 Operating Expenses and Net Operating Income 23 Fair Market Value and Capitalization Rate: What's It Worth? 24 Gross Rent Multiplier 25 Value per Square Foot versus Reproduction Cost per Square Foot 26 Inverse Relationship between Cap Rate and FMV 29 Initial Determination of Value 29 Leveraged Return and Return on Equity 30 Cash Flow before Taxes (CFBT) 32 Reserves/Impound Accounts 32 Taxes and Insurance Impounds 32 Cap X, TIs, and Leasing Commissions 33 Devil in the Details: Over Simplified Analysis 38 Chapter 3 Detailed Financial Analysis 41 Gross Income 41 Vacancy and Collection Loss 43 Operating Expenses 43 Four Basic Types of Leases 46 Nonrecoverable Expenses 55 Time-Frame Assumptions 56 Static versus Active Analysis 57 Compounding 58 Rent Roll 59 Argus Ten-Year Discounted Cash Flow Model 60 Analysis Reflecting 100 Percent Occupancy 65 Reversion 66 Disposition Costs 66 The Time Value of Money: Present Value and Discounted Cash Flow 67 Net Present Value (NPV) 68 Internal Rate of Return (IRR) 68 Conclusions from Argus Analysis and the Hypothetical Facts 69 Analysis Reflecting a Large Vacancy after Purchase 70 Analysis Reflecting a Large Vacancy with a Tenant in Tow 72 Chapter 4 Lease Analysis 75 The Importance of Basic Lease Provisions 75 Twelve Key Economic Ingredients in a Lease 77 Frequently Negotiated Lease Provisions 96 Chapter 5 Real Estate Financing 119 Sixty to Eighty Percent of the Game 119 Types of Financing 120 What is the Right Answer to Debt Structuring? 122 Seven Key Factors to Consider in a Real Estate Loan 124 Loan Underwriting 131 Cash-on-Cash Return 137 The Mortgage Loan Application 138 The Pitfalls of Mortgage Lending 138 Negotiable Points of a Loan 153 Chapter 6 Real Estate Taxation 157 Income Taxation 157 Real Property Taxation 163 Taxation in the Event of a Refinance 164 Taxation in the Event of a Sale 165 Installment Sale 166 Section 1031 Exchange 168 Chapter 7 Acquisitions and Dispositions 179 Focus on Specific Property Types in Specific Geographic Locations 179 Establish Buying Criteria 181 Acquisition Philosophy 181 Governmental Impact 182 Initial Screening 183 The Purchase and Sale Agreement 187 Building a Team 199 Due Diligence 199 Dispositions 206 Chapter 8 Case Studies 219 Problem Number 1 219 Problem Number 2 230 Problem Number 3 242 Problem Number 4 244 Problem Number 5 248 Problem Number 6 255 Problem Number 7 258 Chapter 9 Development or Rehabilitation (Build to a 12 Percent Yield) 269 The 10 Phases of a Construction or Rehab Project 269 Assessing a Construction Project 270 Developer as Conductor 272 Does the Project Hit Your Minimum Yield? 274 Argus Developer 279 Feasibility or Market Study 283 The Composition of a Feasibility Study 284 Residual Land Value 285 Preleasing 286 Equity and Financing 287 Mechanics' Liens 287 Liability under the Construction Loan 288 Design and Construction Drawings 289 Governmental Approvals 290 Covenants, Conditions, and Restrictions (CC&Rs) 291 Ground Lease Restrictions 292 Construction of Improvements in a Ground-Up Development 292 Inspections 295 Insurance 296 Decisions, Decisions, Decisions 296 Communication, Communication, Communication 298 Graphic Time Line 299 Project Operating Costs 302 Lender's Disbursement Form 303 Change Orders 303 Rehabilitation Project 303 Construction of Improvements in a Rehab Project: Decisions, Decisions, Decisions 311 Rehab Project: Communication, Communication, Communication 311 Summary 311 Chapter 10 Marketing, Leasing, and Management 313 Definition of Marketing, Leasing, and Management 313 Marketing 314 Leasing 319 Strategy 319 Management 345 Management as a Business 353 Conclusion 354 Chapter 11 Partnership Structuring and Deal Restructuring 355 Partnership Structuring 355 Securities Issues 357 Fifteen Key Structuring Issues 361 Debt Restructuring 371 Borrower's Proposed Terms 383 Lender's Counterproposal 384 Chapter 12 Keeping the Money 389 Planning 389 Fractional Interests 396 Estate Planning Checklist 400 Acknowledgments 403 About the Website 405 About the Author 407 Index 409
List of Abbreviations xiii Introduction xv Chapter 1 An Overview of the Problem, a Solution, and a Game Plan 1 The Problem 1 The Solution 2 Four Key Elements in the Solution 3 Concerns about the Solution 8 Acquiring the Skill Set to End the Cycle 9 A Game Plan to Achieve the Solution 9 This Book is about Center B Properties 18 Chapter 2 The Basics 21 Gross Income: The Starting Point 21 Vacancy and Collection Loss: Gross Income Reducers 21 Operating Expenses and Net Operating Income 23 Fair Market Value and Capitalization Rate: What's It Worth? 24 Gross Rent Multiplier 25 Value per Square Foot versus Reproduction Cost per Square Foot 26 Inverse Relationship between Cap Rate and FMV 29 Initial Determination of Value 29 Leveraged Return and Return on Equity 30 Cash Flow before Taxes (CFBT) 32 Reserves/Impound Accounts 32 Taxes and Insurance Impounds 32 Cap X, TIs, and Leasing Commissions 33 Devil in the Details: Over Simplified Analysis 38 Chapter 3 Detailed Financial Analysis 41 Gross Income 41 Vacancy and Collection Loss 43 Operating Expenses 43 Four Basic Types of Leases 46 Nonrecoverable Expenses 55 Time-Frame Assumptions 56 Static versus Active Analysis 57 Compounding 58 Rent Roll 59 Argus Ten-Year Discounted Cash Flow Model 60 Analysis Reflecting 100 Percent Occupancy 65 Reversion 66 Disposition Costs 66 The Time Value of Money: Present Value and Discounted Cash Flow 67 Net Present Value (NPV) 68 Internal Rate of Return (IRR) 68 Conclusions from Argus Analysis and the Hypothetical Facts 69 Analysis Reflecting a Large Vacancy after Purchase 70 Analysis Reflecting a Large Vacancy with a Tenant in Tow 72 Chapter 4 Lease Analysis 75 The Importance of Basic Lease Provisions 75 Twelve Key Economic Ingredients in a Lease 77 Frequently Negotiated Lease Provisions 96 Chapter 5 Real Estate Financing 119 Sixty to Eighty Percent of the Game 119 Types of Financing 120 What is the Right Answer to Debt Structuring? 122 Seven Key Factors to Consider in a Real Estate Loan 124 Loan Underwriting 131 Cash-on-Cash Return 137 The Mortgage Loan Application 138 The Pitfalls of Mortgage Lending 138 Negotiable Points of a Loan 153 Chapter 6 Real Estate Taxation 157 Income Taxation 157 Real Property Taxation 163 Taxation in the Event of a Refinance 164 Taxation in the Event of a Sale 165 Installment Sale 166 Section 1031 Exchange 168 Chapter 7 Acquisitions and Dispositions 179 Focus on Specific Property Types in Specific Geographic Locations 179 Establish Buying Criteria 181 Acquisition Philosophy 181 Governmental Impact 182 Initial Screening 183 The Purchase and Sale Agreement 187 Building a Team 199 Due Diligence 199 Dispositions 206 Chapter 8 Case Studies 219 Problem Number 1 219 Problem Number 2 230 Problem Number 3 242 Problem Number 4 244 Problem Number 5 248 Problem Number 6 255 Problem Number 7 258 Chapter 9 Development or Rehabilitation (Build to a 12 Percent Yield) 269 The 10 Phases of a Construction or Rehab Project 269 Assessing a Construction Project 270 Developer as Conductor 272 Does the Project Hit Your Minimum Yield? 274 Argus Developer 279 Feasibility or Market Study 283 The Composition of a Feasibility Study 284 Residual Land Value 285 Preleasing 286 Equity and Financing 287 Mechanics' Liens 287 Liability under the Construction Loan 288 Design and Construction Drawings 289 Governmental Approvals 290 Covenants, Conditions, and Restrictions (CC&Rs) 291 Ground Lease Restrictions 292 Construction of Improvements in a Ground-Up Development 292 Inspections 295 Insurance 296 Decisions, Decisions, Decisions 296 Communication, Communication, Communication 298 Graphic Time Line 299 Project Operating Costs 302 Lender's Disbursement Form 303 Change Orders 303 Rehabilitation Project 303 Construction of Improvements in a Rehab Project: Decisions, Decisions, Decisions 311 Rehab Project: Communication, Communication, Communication 311 Summary 311 Chapter 10 Marketing, Leasing, and Management 313 Definition of Marketing, Leasing, and Management 313 Marketing 314 Leasing 319 Strategy 319 Management 345 Management as a Business 353 Conclusion 354 Chapter 11 Partnership Structuring and Deal Restructuring 355 Partnership Structuring 355 Securities Issues 357 Fifteen Key Structuring Issues 361 Debt Restructuring 371 Borrower's Proposed Terms 383 Lender's Counterproposal 384 Chapter 12 Keeping the Money 389 Planning 389 Fractional Interests 396 Estate Planning Checklist 400 Acknowledgments 403 About the Website 405 About the Author 407 Index 409
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