Commercial Real Estate Investment Articles

People who have always put their money in blue-chip stocks, bonds, and money-market accounts commonly think of real estate as being an inherently risky investment. While real estate can be risky, you can certainly limit that risk by educating yourself.

The headlines keep on coming. The only thing for certain is as leading business consultant, Tom Peters, would say: “If you’re not confused, you’re not paying attention!”

Another month, another “home sales” decline, as the real estate markets in many parts of the country decelerate and transition into something less than the hyperactive state of the past few years.

“Do not try this at home . . .” There’s a reason those guys on television ask you to not do the things you see them attempt to do. They’re risky or downright dangerous, and for a novice to do whatever it is they’re doing on the screen is just an accident waiting to happen.

As I write this in the spring of 2007, the real estate market is in the throes of yet another of its recurrent downward cycles. Consequently, a frequent question we get these days is: “How is the latest meltdown in the subprime lending industry affecting the purchase of owner-financed paper?”

The real estate contract is the most often used, yet little understood tool in the real estate business. Whether you are a rank beginner or seasoned expert, there is no excuse for not knowing and understanding real estate contracts.

The so-called day after “hangover” from the fast and loose lending spree that helped fuel the real estate boom during the first half of this decade keeps getting worse, with a continued fall out among lenders who catered to high-risk (or “subprime”) borrowers. Several dozen lenders have closed their doors because the Wall Street firms who have provided their funding will no longer do so.

We’ve all done it. Anyone who invests in real estate is bound to make a clunker deal sooner or later. I’ve been in this business for over 25 years and have made plenty of mistakes, and I am always reminded that experience is what you get right after you needed it.

In Part One, Riding the “Paper” Tiger: The Subprime Disaster, I left off with a discussion of the current marketplace and the role subprime lending is playing. In Part Two, let’s explore how your knowledge of recent history–and what is going on right now can help you use time-tested techniques to profit in today’s marketplace.

Curb appeal is one of the most important aspects of any real estate transaction. For me, it is the curb appeal that defines everything about my deal. How much will I offer? How much will it take to rehab the property? How does it compare to the surrounding living conditions?

Ray, what factors indicate the climate, good or bad, for investing in mobile home parks?

How to invest in real estate? Don’t. You heard me right. I don’t invest in real estate and neither should you. Forget about being a real estate investor, and you’ll be well on your way, financially, to wherever it is you’re trying to get.

In my previous article, Top 5 Mistakes of Beginning Commercial Real Estate Investors, we discussed 5 of the 10 most common mistakes investors make in commercial real estate.

“Flipping” is the buzzword of the year in real estate: Flipping books, flipping articles in the newspaper, and even flipping shows on TV! What is flipping, how does it work, and how you can profit?

More Americans are falling behind on their mortgage payments at a record pace as stagnant home prices and a convergence of weakening economic factors have taken a toll on housing affordability, according to the quarterly survey just released by the Mortgage Bankers Association (MBA).

When I go to speak to real estate clubs, sometimes my reputation precedes me: “Mr. Landlord is the guy who talks about adding extras and upgrades to your properties for more cash flow.” After speaking for nearly 20 years and publishing the Mr. Landlord newsletter for 22 years, I’ve played a big part in revolutionizing the way thousands of rental owners market their rental homes.

For real estate agents, business brokers, and mobile home dealers and brokers, seller-carryback financing can make the difference between a “sold” or an “expired” listing. This is particularly so in certain economic cycles, like the one we are entering NOW! A majority of listings expire, UNSOLD, especially single family residential (SFR) properties.

The question of the day for commercial real estate investors is: What is the effect of a slowing economy and possible recession on valuations? The run-up in values for some sectors has raised alarms, and opinions range from “no more than a ripple” to “impending doom.” For investors, there is much to consider in plotting our course.

I often hear people say they can’t get started investing in mobile homes because either they don’t have any money, or they have very little money. Just this week, Eric, a young man in our local real estate club, said he only had $5,000 and wanted to know how he could get started with such a small amount. I told him that the amount doesn’t matter; what matters is that he get started. And NOW!

Is it too late for real estate? I’ve been investing in real estate for twenty-four years, and I’ve seen the ups and downs of the real estate market. I’ve made some bad investments, but most of them have turned out great–as long as I was prepared to stay through the bad times.

In How to Profit in a Slow Economy (Part One), we discussed economic conditions and the outlook for capital availability for real estate investment. Now let’s turn our attention to the effects of those conditions on various commercial property types, and specific strategies that can profit from the current trends.

I get a lot of questions from people asking, “Will real estate investing work in my market?” The truth is, real estate investing works in every market. But you need to learn your market and adapt the techniques that it requires.

There are two common questions that involve Realtors and investors: Should I become a Realtor? How can I work with Realtors?

Fact: Well, let’s see what a Supreme Court Justice had to say about that. Justice Learned Hand said, “There is nothing sinister in arranging one’s affairs so as to keep taxes as low as possible. Everybody does so, rich and poor, and all do right. Nobody owes any public duty to pay more than the law demands.”

A key to understanding the power of using “paper” in real estate transactions is to understand that despite what a promissory note might state on its face as the amount of debt owed, it could very well have different perceptions of value to different folks.