Commercial Real Estate Investment

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I need some good advice on whether I should start my California-based real estate investment company as a sole proprietorship, a partnership of some sort, or some kind of a corporation. The general purpose of this company is to purchase and rent out residential and commercial real estate. Any help would be greatly appreciated.

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I'm in the same boat and looking to buy my first property as well. I set it up as an LLC. Sole Proprietor is generally a bad move in my opinion as it offers no protection of personal assets should something happen to that property. If you want to send me an email through the system here, I'm more than happy to chat about what I've done, who I've talked to, and what contacts I've made.

Can someone explains a little on what commercial real estate investment industry does?? Do they buy commercial properties and sell it to individuals? What does an commercial real estate analyst needs to know? Thanks so much!!

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www.craigslist.com

I'm interested in investing in an office building in the Seattle area. What are the best tools to anyalyze various properties? Are there any websites someone might recommend?

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The first step I would do is contact a GOOD commercial real estate appraiser. Speak to them about the properties in question so you will have an idea not only of what the value may be but also what the capitalization rate in the are is along with a good idea of what the market rents in the area are. Next determine whether or not you will be an owner user of any of the offices or units. Take a look at the current leases on the property to see if the rents will offset the mortgage payment. Most lenders want to see a debt service ratio of somewhere between 1.2-1.4% on a purchase. (Debt service ratio: Take the total rents/mortgage payment = X) DSR greater than 1 means the property is making money... less than 1 and not so good. Keep in mind when purchasing commercial property that your maximum loan to value is going to be low compared to the home loan market... no 80/20's here. Depending on the type of property you may have a maximum loan to value of only 65% meaning your coming in with 45% down. If you would like to discuss your situation in detail feel free to give me a call or drop me an e-mail. Kevin 866-562-6838 x 106 kruorock@firstratelending.com

I'm almost 90% sure that i want to start my real estate investment company as a corporation not a LLC. I was wondering is this a good idea. Also, can't i sell shares of my company to private investors to raise capital. Any advice on starting a commercial real estate investment comapany will help.

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I think you are right on starting as a corporation. HOWEVER...as legalities vary from state to state on private investors, I think you really need to find a good small business attorney in your area, pay him a fee, and find out the in's and out's from there. A lot to consider with investors. 1) Are they going to be silent partners? Or 2) Are they going to have an equal say in how the company is run? Would be worth the fee.to find a good business attorney to lay it all out for you. Or find a book on amazon about starting a business. Once you are using someone elses' money, the company is no longer yours exclusively, unless you have a proven track record and your investors are willing to leave you in full control.

Hello. I am considering investing in a retail property that is NNN leased to a very solid national tenant (7-11). This would be my first commercial real estate investment and wanted to obtain some advice. 1) The property is leased for 10 years with 3 5-year renewal options. Rent escalation are 10% every five years with current cap rate of 6.5%. Is this a reasonable price for a NNN property? 2) In looking at my returns, what should I assume as my interest rate and closing costs. I'm assuming a interest rate of 6.5% - is this reasonable? I have excellent credit and am willing to put 20-25% down. 3) What other initial costs might I incur? I'm thinking maybe attorney fees to review the current lease and the cost of setting up a corp or llc. Am I overlooking anything? 4) What other costs might I incur on an ongoing basis? I've just thought about attorney and accounting fees - am I missing anything? 5) Any other gotchas or things I should be aware of? Thanks for your help.

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Cap rate of 6.5% on a NNN lease is not bad, especially since 95% of your responsibility with the property is taking the check from your mailbox to the bank. I would consider putting less down if possible, increasing your CCR (cash on cash return). Having an attorney look over the documents is a good idea, especially if he/she doesnt charge you $800 for some light reading on the office sofa. Setting up and LLC is a good idea simply to limit your personal liability (you dont want to be sued personally for someone falling on the ice in the middle of the parking lot. Look at the area of town....does this store bring in good customers or is there possible damage to your building because of problematic people?....what about traffic flow...can people get to the store easily?..Is it on a hard or soft corner?...... Happy Investing