Victoria Real Estate

Investors Club

Newsletter

Jumping to Commercial

February 2011

Hi Folks!

That meeting on January 25 ROCKED! Big lesson for me - many investors are aware of the HOT market in the Phoenix area, are curious, sense the potential and few are willing or ready to take action. Congratulations to those who are ready and made the time to contact the Gerchick Team the next day before they returned to Phoenix. Way to go to those who contacted us later with more questions and conversations. Big reminder from me - those who take action get the rewards. If you're not ready to check out Phoenix then where are you taking action?

Did you miss that record-breaking meeting on Jan 25? You can view the video of the talk at canadarei.com. Become a member (more free education) and look under videos and search for Investing in Phoenix. I must say, it's humbling to watch and listen to one's self speaking to an audience. It's worth the initial embarassment IMO.

At the breakfast meeting on Feb 12 at the Princess Mary Cafe one of our members, John D'Arcy, gave a quick talk on running the numbers for commercial properties. He's a former developer from California. His method for assessing properties relies on knowing the basic numbers for the property as compared to the numbers for area (cap rate, etc) and taking a conservative slant on what's possible, ie: let's talk about what is, not what might be. He's offered to share more of his knowledge and experience and so I need you to let me know if you're interested in some small informal sessions on learning how to evaluate commercial properties. Send me an email or let me know at the meeting.

We're right in the middle of selling one of our properties in Victoria (partner wants out). Our realtor asked for the last six months of utility bills and all the tenancy agreements. REMINDER: get in the habit of scanning documents and bills. Twice now I've received an email from her saying "That was fast!". All I had to do was attach the .pdfs I'd created to an email and press send. You can often get service providers to send a statement/invoice/bill in digital form. BUT that may mean no paper copy. Does your accountant/bookkeeper need a paper copy for tax time? Check with them before turning off paper copies.

We're right in the middle of buying a property in Phoenix and guess what? The lender wants copies of our bank statements, our tenancy agreements, etc. Turns out our US bank has .pdf copies of our statements available on line AND sends paper copies. So, except for a few last minute scans of our Canadian bank statements, I had almost everything available in digital form to send to them.

In the old days, it was photocopy and faxing. Now-a-days you better think digital copies of everything when buying or selling property. Have your personal assistant build a system so this is done automagically every month. You don't have a personal assistant? Put that on your dream board and give the universe a clear message that you want one. Or hire your children.

The meeting on Feb 22 (next week!) will feature the topic JUMPING INTO COMMERCIAL INVESTING. Tamara MacLaren will travel from the mainland to give us the benefit of her experience as a commercial investor and realtor. See details in the article below.

On that same theme, the two articles at the bottom Myths About Buying Commercial Investments

and Which Is Better - Commercial or Residential? are worth a read. More education!

See You on Tuesday!

Gord Knox

Tuesday Feb 22 Meeting

Jumping Into Commercial Investing

Why should anyone concentrate on investing in commercial properties? There ARE advantages! Find out what they are and if it's a fit for your investing style. Maybe it's the way for you to start investing.

Our speaker, Tamara MacLaren, hails from Ottawa.

She bought her first property in 1984, renovated it, and sold it for a profit. She has continued to do this, property after property, ever since, gaining experience in a multitude of different residential and commercial properties and land, solving an array of property challenges.

In the early years, Tamara worked as a Sr. Software Developer and Team Lead for companies such as Corel, Chrysalis-ITS, and Nortel, but left the corporate world in 2002 to focus on investing full-time.

Demand grew for Tamara as a business/real estate coach and mentor. She has helped thousands of clients through speaking, clubs such as OREIO (Ottawa Real Estate Investment Organization, http://www.oreio.org/) of which Tamara is one of the 6 founding members, and served as the Vice-President for 3 consecutive years, and through one-on-one coaching with Peak Potentials Training as well as private coaching.

7 - 9 pm
Tuesday February 22, 2011
Comfort Hotel
3020 Blanshard St

$15 at the door (no charge for annual or REAG members)

There's always an after-meeting meeting at Redd's down the hall for networking, socializing, eating, etc.

Mike Patterson

When you need a trustable, reliable, and reasonable

Plumber

who can do the job right the first time.

250-880-0104

Myths About Buying Commercial Investments

By Chelsey Walter

Buying commercial investments is something that people always warn potential investors about. They'll say "Well, unless you have a lot of money, it's better to invest in residential real estate." But this is one common misconception about commercial real estate. You don't have to have a lot of money to invest; you just need to be smart about it and to invest in the right sector.

So, what are the other myths about commercial real estate?

The number one myth is that buying commercial investments and being successful in them cannot be done by ordinary people. Why not? First, they say that it takes a lot of money. Second, they say that it takes a business genius to pull it off. And third, well, they just say you're simply not qualified to do it.

But, why not? I say all it takes is someone who's determined and lots and lots of research and you'll do fine. I was just an average employee when I stumbled upon self storage investment, which is one of the more stable sectors of commercial real estate, and I can say that I did good. Of course, I was very determined and I also did a lot of research before I ventured into it. And guess, what, banks love self storage and so I bought my first facility with very little cash. This is a prime example of how commercial real estate is definitely for ordinary people.

The second myth about commercial real estate is that when it comes to real estate investment, it's better to invest in residential real estate-especially when you're a newbie. First, they'll say that the capital is a lot lower. Then, they'll say, well, the economy is bad now so now's the time to invest in residential real estate as houses are selling at a loss. And third, they'll say that well, even if the value goes down, at least you have a house.

Why is this thinking wrong and definitely a misconception? First off, banks are very cautious when handing out loans and they hate residential short sales. So, first, you'll have trouble getting capital. Second, the market is currently saturated with residential brokers and it'll take much effort for you to land a sale that's worth your money. And third, this is what the owners of houses that are selling at a loss were thinking when they bought their house-but when they need it the most, they cannot even get a return of their investment, losing hundreds of thousands of dollars in the process.

The third myth is that the best sector in commercial real estate is apartment complexes or multi-family homes. Believe me, this is definitely a myth because I've been there. It's affected by a lot of factors that you really don't have any control over. For instance, I was already a millionaire with more than 20 apartment complexes when 9/11 hit and I almost went bankrupt. It's a very volatile market with a whopping 58% bank loan failure rate. This is why you'll have a lot of trouble asking banks for loans when you state that you're buying an apartment complex.

So, what's the best sector then. Based on experience and lots of research, self storage investment is the best and safest bet during this time of economic recession. Banks love it because it has the lowest bank loan failure rate at only 8%! What's more is that it's unaffected by the recession because whether the economy is good or bad, people need a place to store their stuff! This is because us Americans are pack rats by nature.

So, after dispelling some of the most common myths about [http://www.selfstoragegenius.com/]commercial real estate, I suggest that you intensively study which sector you want to invest in first before you start taking out your savings. It's fairly easy to learn [http://www.selfstoragegenius.com/]how to buy investment properties -and commercial real estate is an option you can definitely take!

Commercial Property Investing in Self Storage is a cash flow machine with hidden benefits.

Article Source: Myths About Buying Commercial Investments

What is Better - Commercial Real Estate Investing Or Residential Real Estate Investing?

By Dave Peniuk

My wife, Julie, and I often wonder if commercial real estate investing is the way to go. We've always focused on residential real estate - and it's been very lucrative. But, my parents previously developed, owned, and managed a mobile home park along with owning a variety of residential properties. Julie's parents have owned (and still own) a variety of commercial properties. And, we've watched them all make money, sometimes lots of money, from those investments.

We are often pulled towards the commercial side of things, not only because of what our parents have been involved with, but also due to our fascination with all things real estate. So, what's better - commercial or residential investing? Below I have noted a far from exhaustive list of pros and cons for both types of real estate investment. One type of investment may be better suited towards your own objectives and goals.

For the sake of simplicity, we'll consider commercial as office/retail/light industrial vs. residential which are smaller properties with less than 10 units used for the purposes of living only (not conducting business).

Residential Real Estate Investing - Pros

Simpler, easier to understand (we all have to live somewhere). If it's a quality property (especially single family home) that's moderately priced, it will have a larger market of willing buyers when you do decide to sell it. Generally, don't require a large down payment to own. Finding tenants is a simpler process than finding a commercial tenant. Lots of tax write-offs.

Residential Real Estate Investing - Cons

Legislation in most places heavily favours the tenants not the landlords. It takes months to evict problem or non-paying tenants. Generally speaking, positive cash flow is limited when it comes to single family residential properties. Cannot charge landlord expenses back to tenants including management, taxes, insurance, etc. 1 year leases are the norm - but tenants can easily break them with little consequence.

Commercial Real Estate Investing - Pros

Can have Triple Net Rent - tenants pay rent plus landlord expenses (tax, insurance, management, etc.). Long-term leases (3-5+ years) are common. No rent increase restrictions. Non-paying tenant, in many cases, can be locked out swiftly. Less emphasis is placed on person to qualify for financing. More weight is placed on the building quality, tenants, and leases (revenue from the leases).

Commercial Real Estate Investing - Cons

Generally require a larger % towards down payment (25-35% of the purchase price down is fairly standard). If financing a commercial property, there are many hoops to jump through, and with that, many associated costs. Not dissimilar to residential properties, if a unit becomes available, you may need to spend considerable dollars renovating it to suit your new tenant - to a larger scale than with residential (in some cases). Often takes much longer to fill a commercial unit than a residential (may take months vs. only weeks). Vacancy rates are traditionally higher for commercial properties.

Unfortunately, the above lists have probably just left you with more questions and not enough answers. I know that's what it does to me when I consider them!

Every investment vehicle has it's good points and bad points. This goes for stocks, bonds, businesses and real estate. The thing to do is figure out what vehicles suit your objectives, and then do your research.

Free tips and information on []investing in real estate at http://www.revnyou.com

* Three easy ways to make money in real estate (so easy you'll be making money while you sleep!),

* How to buy properties in Canada with limited cash,

* Your property type

* The easiest way to get financing,

* How to select a location and begin the search for your next (or first) property purchase.

Article Source:

What is Better - Commercial Real Estate Investing Or Residential Real Estate Investing?

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