Commercial real estate has turned out to be a great source of income for many people. If you have the right skills and talents, you can earn more six figures in a single transaction. There are many ways of making an income from commercial real estate, and below is one of them: the Two-Step Purchase Offer Process.
This process is, as the name suggest, comprised of two major steps which are writing the letter of intent and the purchase and sale agreement.
Letter of Intent
The letter of intent is the first of the two steps in the process. In this letter, you are going to convey your intention of buying the commercial property in question. Thus, you need to mention exactly which property you are interested in, how much you are offering, and the earnest money deposit you are willing to give. It should also include the conditions for the offer including financing, defaults and other conditions which you deem necessary.
However, the letter of intent is not considered as a binding, and instead only seeks to inform the receiver of your intentions. It is very helpful though in getting the attention of the receiver and sparking their interest in making a deal with you.
Purchase and Sale Agreement
The purchase and sale agreement is the legal and binding document in this process after it has been duly executed. In its simplest sense, a purchase and sale agreement is a legal contract between the two parties involved, you being the buyer and the other party being the seller. Once this contract has been executed, you are obligated to buy the property and the seller is obligated to sell the property. The execution of the purchase and sale agreement finalizes the deal between the two of you.
Once you have acquired the property you are now eligible to conduct repairs if necessary or simply sell it for a higher price than you purchased it. Being the new owner, it is now up to you to price your new property according to the profit margin that you want.
If you’re planning to put your commercial structure or property up in the market, you need to have a commercial real estate broker to represent you. There are many debates and discussions about how to choose the right commercial real estate broker for you needs, but there seems to still be no clear cut and fool proof way of finding the right commercial real estate broker. Hopefully, the tips and considerations mentioned below will help you in your search for the one.
If the company you chose works primarily in residential real estate, then you may start seeing some problems soon. Residential real estate is far different from commercial real estate. In the case of the latter, the clients who will be buying your property or leasing it are not concerned about kitchens for the wife and garages for the husband. Instead they are more concerned about the population and possible market, the location and its accessibility to customers and so on. Thus, be sure that you work only with brokerage firms that focus on commercial real estate.
You should also ask about how successfully they’ve worked on projects like yours in the past. It would be helpful if they could show you some testimonials from previous clients. Aside from the length of time they have been in service, you can also ask them about what special accommodations they can do for your specific requirements, which would be a big plus on the scorecard.
When possible, ask your commercial real estate broker what kinds of marketing materials they usually use for projects such as this. Go over their brochures and portfolio, and try to attend presentations if possible to see the processes behind their marketing strategy and see for yourself if this is effective.
The engagement period basically locks you in with the commercial real estate broker. The engagement period, which can be anywhere from six months or more, is the time for the commercial real estate broker to find the right buyer or lessee for your property. The engagement period should be long enough for the broker to find clients, but short enough so you can start looking for a better broker.
Deciding whether you should hire a professional to manage your rental property doesn’t have to be an agonizing decision. It really just depends on your own needs and expectations. Some folks manage their own properties without any stress, while others find it to be quite a headache. One thing is for sure: to successfully manage properties efficiently, time and energy are essential. Do you have what it takes, or should you hire a pro?
Despite record low numbers in 2011, Americans are finally on the move, suggests the Geographical Mobility 2012 report by the United States Census Bureau. Despite a definitive trend toward relocating, most Americans aren’t going far. In fact, 40% are staying within 50 miles of their last residence. We take a look at what
got them packing up and moving on out to a neighborhood nearby.
Should You Invest in a Multifamily Building?
A sound investment strategy is the key to building residual income in the property management industry. The promise of collecting a lifetime supply of rent payment can be quite short lived, however, if you end up getting in over your head. The process is akin to new homeowners. The joy of living independently often overcomes the facts and responsibilities that come with ownership.
If something breaks, you have to pay for it, as you are the property owner. When you want to move, you cannot simply terminate or wait for your lease to expire; unless you can find a buyer for the property, the lending institution will have full ownership. As the owner, not only are you faced with regular maintenance and upkeep expenses, you also are letting strangers live in the property.
The right tenant can make for an easy rental. The wrong ones not so much. Individuals new to the business of property management are better off starting with small single or multi-family dwellings. Besides, commercial offices and upscale apartment complexes are probably out of your league as far as budget goes at this point. Making smart decisions and staying the course is a surefire way to make these lofty property aspirations a reality.
A basic cost evaluation on a given property can be performed within 5-10 minutes, granted you have the needed data. Calculate the total potential rent payments (know how many units and what sizes are available), then subtract the mortgage and repair expenses from the figure.
Error on the side of caution. Assume 30% rental vacancy and factor in major maintenance costs (e.g. plumbing, HVAC, and electrical). Location is crucial for securing the maximum number of tenants. Area competition is something to keep in mind. If after all of this you are still in profit, then make the go ahead to shortlist the property.
Another factor to take into account is security. Is the building located in a neighborhood where crime rates, specifically burglaries, are high? If so, be ready to pay higher than average property insurance premiums. To keep these down and protect your investment and tenants from loss, installing a new security system and/or hiring guards should not be out of the question.
Unexpected costs are the norm with most multi-family buildings, but the value of your property management is not one of them. Expert Property Management is here to make your next investment worthwhile.
The real estate market in Jackson County continues its recovery with the median price of a home growing by 4.2% for the first quarter 2014 to $187,500. The number of homes sold in the first quarter of 2014 has actually decreased to 345 compared to 389 sold in the first quarter 2013.
Jacksonville, which extends all the way to Ruch, has fared much better with the median price of a home increasing in the first quarter 2014 by 16.5% to $282,500.
The number of homes selling has been hampered by the low amount of homes on the market and by many families inability to qualify for a mortgage. Currently there are less than 1,100 homes for sale in Jackson County which is down from a high of over 2500 homes.
There is help on the way. This spring/summer should bring an increase in the number of homes on the market giving buyers more choices. Combine more choices for buyers with an increasing amount of families being able to qualify for a home mortgage through a new federal program and the numbers of homes sold should increase.
The new federal program is called the “Back to Work” program which allows many families with damaged credit, foreclosures and even bankruptcy to apply for a loan as soon as 1 year after the damaging event. See the chart below for details, but waiting periods have been shortened and can be shortened drastically with extenuating circumstances such as families who experienced job loss or high medical bills.
So expect another “Hot Summer” ….for home sales!