Live Oak Medical Development Site
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Link?s Top 11 Reasons Why Owner Occupied Commercial Real Estate is Worth Further Investigation in 2011
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11.????????? My opinion is that lenders would rather provide commercial real estate loans to a group that intends to occupy the building than an investor that must lease it out.? Click here to read a great article from Lee Land Design relating to how landscaping affects property value.?
10.????????? Commercial lending terms are more favorable for owner occupied commercial real estate than investment real estate due to the bank?s reduction in perceived risk.? (Longer amortizations, longer fixed rates, lower rates, longer terms, with less down.)? Regarding risk, please consider clicking here to read from Eric Cervantes regarding how the ?soft insurance? market might present opportunities regarding your building?s insurance policy.?
9.??????????? Commercial Lending Approvals often happen faster on owner occupied commercial real estate transactions.? Many of the commercial real estate loans for owner occupied projects are completed with the company?s existing business banker.? If the bank already has a relationship with the company regarding deposits and other bank services, the time frame for loan approvals are often shortened.? Click here to read an article from Jason Tarbox at Holt Power Systems regarding options when you lose commercial power on a project. ?
8.??????????? If the owner is developing a single user site, there are typically fewer variables for the buyer and bank to analyze during the feasibility/inspection period.? Click here to read a great article from Doug Becker relating to feasibility/inspection variables. ?
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Build to Suit
7.??????????? The market has been slowed in the last few years regarding speculative investor development due to the banking industry?s reluctance to lend on these types of projects.? Land prices for already developed retail, medical, and general office pad sites (fewer headaches and variables to juggle than raw land) have gone down from this lack of investor financing.? It is a great time to investigate the idea of purchasing if you are a business owner and your lease is coming up for renewal.?
Click here to see our portfolio of commercial land and buildings for sale/lease.?
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6.??????????? Construction prices were at an all-time high several years ago at the height of speculative development market.? Contractors are sharpening their pencils today.? Many of our owner occupant commercial real estate clients have taken advantage of this great opportunity over the last few years.? Click here to read a great article from Pugh Constructors relating to construction planning. ?
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5.??????????? Most investor and speculative development requires the brokers, developers, bank managers, and analysts to create proformas to submit to bank underwriters.? A proforma is a financial projection of the asset?s future performance.? The proforma that I create for an owner occupied deal is based on variables that the owner/user/buyer and I can reasonably project because the building income is based on an expense versus a return.? The business owner has already been paying a monthly occupancy expense where they lease or own now.? On the contrary, when I put together a multi-tenant investor deal for our group or client, I have to analyze my projection of the building?s potential for return based on market, potential tenants we are in communication with, demographics, estimated leasing time frame, and ?gut feel?.? The bank may respect my opinion or I wouldn?t be in their office?but do you think they would rather provide a loan to the business owner that has been paying a fixed rent (or mortgage if they own today) in their current location for 15 years?or to me or my client on a ?gut feel??? Click here to read an article that I wrote recently regarding my love for single user development.?
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4.??????????? With the uncertainty and lack of confidence in the potential of bank financing for investment projects, developers have been less likely to spend the money needed to provide a bank with a full project plan for their loan.? With increased confidence in owner occupied commercial real estate financing, most of my clients have no problem throwing down the money to pay the for full building plans on a site that they are under contract to purchase prior to closing.? Much like 3rd grade, you have a better chance of getting an ?A? on your bank loan if you turn in all of your homework.? When thinking about homework for a new building purchase, please consider clicking here to read an article from Shelly Alvarez regarding estate planning.?
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3.??????????? There are many vacant buildings in the market place today.? Unless your business requires a specific location that has no available buildings or your concept requires its own unique construction (retail or specialty health care) then my suggestion is to heavily investigate redevelopment.? I don?t care how cheap you buy your land.? It is very difficult to develop a new building less expensively than you can redevelop on yesterday?s construction dollars.? There are also fewer variables to control on redevelopment.? Redevelopment can often happen faster so the owner has an opportunity to mitigate their risk from increases in the market on construction materials and labor (shorter cycle) mid project and increases in interest rates (lock them now!). Our main goals in owner occupied commercial real estate are to control our client?s expenses and acquire an asset that will hold long term value. ??Click here to read a great article from Alfred Brice on Sustainability and its impact on long term.?
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2.??????????? KISS?????? One of my college baseball coaches used this acronym often.? KISS stands for KEEP IT SIMPLE STUPID.? At the end of the day, owner occupied commercial real estate deals are much more simple projects because we are not trying to organize multiple companies for a project.? Click here to read a great article from Michael Perkins on Cost Segregation for Commercial Buildings.?
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Build to Suit
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1.??????????? Call 10 different commercial bankers in your city today (start with your personal business banker) and ask them if they would rather provide a loan for an owner occupied commercial real estate deal or an investor commercial real estate deal?and why?? Hopefully their responses will help you to further understand why owner occupied projects are worth further investigation after making these calls.? Banks have never had so much money to lend, however, at the same time they have never had so many eyes watching their loans.? The money is there.? Business owners need to know this so that they can take advantage, especially while interest rates remain historically aggressive.? Click here to read one of my favorite articles on owner occupied commercial real estate from The Granziado Business Review.
Cell: 210-789-5465
Licensed in Texas
Keller Williams Legacy
1102 E. Sonterra Blvd. #106
San Antonio, TX 78258
Office: 210-482-3200
Fax: 210-493-4669
Email: link@kwcommercialsa.com
Website: www.kwcommercialsa.com
Source: http://kwcommercialsa.com/blog/?p=1411
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