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Real Estate Investments Archives – Commercial Mortgage Corporation

Commercial Building Costs

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Operating a commercial building can have significant monthly expenses. It is a challenge for building managers to reduce these monthly commercial building costs, of which the energy bills comprise a greater proportion. Proper maintenance and energy saving measures can go a long way in bringing down a commercial building’s costs without compromising on the operational efficiency.

Generally, the ratios of operating cost categories to the total operating cost are stable in most parts of the country. Total utilities including electricity, water, steam and natural gas adds up to approximately 25% of the Total Operating Costs, according to the statistics by Institute of Real Estate Management (IREM).

Retro-Commissioning to Reduce Commercial Building Costs

Altering a building’s operational timing can significantly reduce energy consumption. For example, there is no need to run the air conditioner at night, especially when the building is not occupied.

Meanwhile, as the buildings get older, the overall efficiency also starts to decrease. Energy efficient designs cease to be as efficient as they were initially. This is when a retro-commissioning process can go a long way in restoring efficiency to the intended amounts.

Steam Trap Maintenance / Replacement

Steam systems that are poorly maintained are a common issue for old commercial buildings, especially those that rely on larger boiler systems. Such buildings usually have hundreds of steam traps that regulate the condensate inside the steam system. These can get stuck open, thereby returning steam back to the boiler. The ultimate result is an excessive usage of energy.

Professional maintenance crews can work to solve these issues with the steam system and restore efficiency to previously high levels.

Optimization of HVAC Systems

Chillers and boilers consume large amounts of energy in commercial buildings. This can account to as much as 20% of the total energy costs. If your building is located in a cold region, then you’ll have to ensure that boilers work at their peak efficiency. Same goes for buildings in warm climates – their chillers should be replaced with newer, more efficient models.

Controls of Energy Management

Incorrectly programmed controls can make a building owner assume that their building is running as efficiently as possible, whereas the building may be performing poorly. It is wise to replace, or upgrade such components and reprogram the energy management system of the building; thus allowing the building to run at a peak efficiency rating.

Lower Financing Rates

The expenses of a building aren’t only limited to its running costs. Commercial mortgage borrowing costs can also form a significant part of overall operating costs. Partnering with reputable, experienced commercial mortgage brokers can ensure you arrange low cost borrowing while including the added benefit of saving you time negotiating your mortgage terms. Lower financing rates can significantly reduce the overall operating costs for all businesses and help redirect capital to fulfill a company’s individual goals.

 

Commercial Properties for Sale

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Investments come in many shapes and sizes and people invest for all kinds of reasons. They invest in precious metals, foreign currency, financial stock and bonds, and in real estate. Some people invest short term and look for quick profits, while others invest in the long term in order to financially secure their future.
Regardless of the type of investment, or the reason behind it, the single purpose of an investment is to deliver profits, and very few investments provide returns like commercial properties. They provide a considerably higher income potential, lower competition, reduced risks, tax benefits, equity build-up, long term capital appreciation, and much more. Qualified commercial mortgage brokers can help you make the right decision and get you the proper financing required for such investments.
 
The Flip Factor: Investing in commercial properties and ‘flipping’ them for quick returns is a resurgent trend in the industry. The popularity of commercial real estate investments is due to the fact that they often provide positive returns. An investor can raise debt, either through banks or through private investors, purchase a property, renovate it, and resell it for considerable profits. A great way to access these sources of financing are through commercial mortgage brokers.

 
Talks of Finance: Compared to residential real estate, it is often more challenging to find financing for commercial properties. Options can include finding a private investor, or using a combination of financing from a bank or other lenders. The down payments required for commercial real estate are larger than those needed for residential properties, and therefore, you will usually need someone to finance your acquisition. You could also raise capital by placing new commercial mortgages on your existing properties, a great way to access the built up equity in your portfolio.
 
The Property: There are various types of commercial real estate, and you need to consider carefully which one to invest in. You could opt for office buildings, residential towers, industrial property, self storage units, and even retail stores. These properties can then be renovated and rented out to generate a regular stream of income, or sold to harvest quick and substantial returns.
 
The Land: There are tremendous benefits to investing in commercial properties for sale. Not only do they provide current income and spendable cash, but they are incredible securities for your future as well. If you happen to choose the location wisely, you can earn income indefinitely even if the property reduces in value. This is because the land it sits on will continue to provide intrinsic value and revenue generating opportunities.
 
Due Diligence: There are several factors that you need to consider, most particularly your ability to repay the loan. A detailed conversation with your commercial mortgage brokers will be necessary. You also need to ensure that you can recover the full amount of the loan from your investment, including the interest accrued. The due diligence process is also extremely vital when purchasing investment properties.
 
Once you have carefully evaluated all the relevant factors and have avoided the potential pitfalls, you can put pen to paper and begin to reap the plethora of rewards from investing in commercial properties for sale.
 

Investing in Commercial Real Estate

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In an increasingly complex and competitive business world, more and more people are searching for ways to supplement their income. The days of a single breadwinner in the house aren’t as common, and even multiple earners are working to manage the household finances. Of the many avenues available through which earnings can be improved, investing in commercial real estate remains one of the most secure and profitable.

 

The Reasons to Invest

The Economy: Commercial real estate makes perfect sense as an investment choice. It is a relatively secure financial venture, compared to most other options, and it adds a lot more zeroes to your bottom line as you can enjoy plenty of economies of scale. You can effectively manage a considerably larger number of offices, apartments, etc. compared to residential houses, and you can do it all at reasonably low costs.
 
The Value: There are considerable differences between the valuation of commercial and residential properties. The income derived from a commercial property is based on its usable square footage. Commercial real estate leases last longer than residential ones, and the yield per square foot is also higher, which lends commercial properties with greater cash flows.
 
The Finance: A major benefit of investing in commercial real estate is that you can start with virtually no money and still purchase multi-unit properties. This can be achieved through private money investors, or a combination of bank loans and owner financing. Commercial loans also tend to be considerably more lenient compared to residential ones. The biggest benefit however, is that you can take out commercial mortgages which allow you to acquire new properties through equity raised from your existing portfolio.

 

The Tips for Investing

Take Your Time and Give Your Time: It is essential when investing in commercial real estate, to take as much time as you need in order to avoid rushing this important decision. Remember that commercial properties are a long term investment and that you will have to devote significant time to them if you want any profits.
 
Think Big and Then Bigger: If you are going to use commercial financing one way or the other, then why settle for small properties? You can benefit from economies of scale by purchasing more units, and of course, earn more money at the end of the day.
 
Learn, Learn, and Learn: Although investments in commercial real estate have a high probability of being profitable, there is still a lot you need to learn about the business before you reap its rewards. Arm yourself with as much knowledge as you can, learn all the rules of the trade and make sure there are no surprises in the details.
 
Relationship Matters: It is critical that you maintain good, long term working relationships with your investors and lenders. This will help when looking for commercial mortgages. The very nature of commercial real estate investments often demands that you work closely with partners, and a strong established network can only help you find more and better deals.
 
The Finance Equation: In matters of finance, as in most other things, it is better to be well prepared. Commercial loans differ from residential ones and usually require larger down payments. Therefore, you need to find good, solid financing for commercial mortgages well in advance and you need to make certain that you find the best lenders in your area.
 

The global marketplace is an increasingly volatile place, with high risks and no guarantees. It is always wise, in such situations, to plan and prepare and investing in commercial real estate can be one of the most reliable ways of ensuring a secure financial future.
 

Managing Commercial Properties

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Property management requires years of experience. It involves an extensive job that entails the operation and control of real estate, as well as involving the accountability with regard to a particular property. The sheer size of commercial buildings, as well as the various stakeholders and people involved, makes managing such properties to be loaded with patience and perseverance. These are only a few of the reasons why success in managing commercial properties is correlated to past experience.
 
Commercial properties are those buildings or lands that are mainly for profit or revenue. Typically, these properties are categorized into six classifications: office, industrial, retail or restaurant properties, multi-family housing, land, and other non-residential properties, like hotels and medical centres. It also involves both cash inflow and outflow. Cash inflows are those that enter as revenues, such as rentals and fees. Cash outflows are those that exit through expenses and other payments.
 
Managing large commercial properties requires extra care and skill. This extends to the financing process to arrange commercial mortgages on these assets. Commercial real estate loans of this size can consist of several participants including banks and other financial institutions. Often debt can be arranged with both first and second mortgages that require more than one lender participant. Having a solid understanding of debt placement and management, is critical to properly manage these properties as the cost of borrowing can considerably impact profitability.
 

The Importance of Effective Property Management

When it comes to businesses and commercial real estate, the proper cash inflow and outflow is a very crucial component of managing the property. The right timing of cash inflow should be in harmony with the cash outflow, to maintain positive liquidated assets.
 
Management also requires the proper prediction of possible risks when it comes to properties. If a property is not leased out for long periods of time, this could seriously harm your cash flow and the value of the real estate. Good management foresees these kinds of risks to predict the future cash flow of properties.
Of course, there are always unexpected changes in the cash flow. However, with the right management of such, these contingencies would be covered by an effective property manager. It is a crucial role to maintain profits and revenue over time.
 

Ensuring Successful Commercial Property Management

In today’s evolving world, a property manager is not just somebody who collects rents and pays the bills. It is now composed of a team that works closely together to maintain an efficient way to realize profits and revenues, and at the same time, take care of the properties.
 
Managing such a significant number of tenants can be daunting task. However, there are automated and computerized ways of actually maintaining clean records for large properties. By using traditional and effective means to manage such, coupled with artificial intelligence, administration of these properties can be made easier.
 
Effective management also needs to be knowledgeable about commercial real estate. It allows managers to continually make properties attractive for the tenants, efficiently calculate the ups and downs of the real estate industry, and allow them to better understand the properties and its surroundings.