A Field Guide to Commercial Real Estate Investment

A Field Guide to Commercial Real Estate Investment offers practical, straightforward advice for individuals considering the potential of any income-producing property – be it a small duplex or a large office building. Written for novice investors just entering the field, brokers looking to improve their skills in commercial transactions, or experienced investors looking to expand their portfolio, this book moves step-by-step through every stage of the analysis, financing, and purchase of investment property.

In clear, jargon-free language, this book shows you how to

• Calculate and understand the importance of investment concepts such as cap rates, return on investment, net operating income, and leveraged appreciation.
• Evaluate and understand the unique issues associated with the most common types of investment properties – multi-family, office, retail, and industrial – including special concerns for inspection and analysis of each.
• Compare the operating expenses in relation to the income potential of different types and sizes of properties in order to make the wisest decision.
• Determine the fair market value for any property, in order to strengthen your negotiating position as both a buyer and a seller.
• Write a solid purchase offer, create a realistic time table for inspection, appraisal, and financing, and negotiate the offer through closing.
• Calculate the maximum loan amount available for any property and determine the cash needed for the initial investment.
• Find the type of financing that's best for you and the lenders most likely to finance the property under consideration.
• Safeguard yourself from the common mistakes made by investors and brokers alike.

A Field Guide to Commercial Real Estate Investment doesn't offer get-rich schemes – just solid advice and all of the tools necessary to make wise decisions that lead to steady income from the purchase and proper management of income-producing property.

Chapter 1 – Commercial Real Estate: An Overview
What is Commercial Real Estate • Understanding the Basics: Leverage and Return on Investment • Financial Analysis of Income Property

Chapter 2 – Investing in Multi-Family Property
Elements of Value in Multi-Family Property • Location • Age of Building • Tenant Turnover and Unit Configuration • Size • Overall Condition and Inspections • Operating Expenses and Their Impact on Value • Utilities and Maintenance • Payroll • Real Estate Taxes • Property Insurance

Chapter 3 – Investing in Office Properties
Key Elements of Office Properties • Core Areas and Common Areas • Layout and Space Efficiency • Gross and Rentable Square Footage •Parking • Office Building Features • Elevators • Electric • HVAC Systems • Safety Features • Tenant Improvements

Chapter 4 – Investing in Industrial Properties
Types of Industrial Buildings • Key Elements of Industrial Properties • Square Footage and Common Areas • Ceiling Height and Column Spacing • Floor Loading • Parking • Electric •
Key Points to Remember for Industrial Properties

Chapter 5 – Investing in Retail Properties
Types of Retail Properties • Regional Malls • Power Centers • Big Box and Freestanding Retail • Strip Shopping Centers • Community Commercial and Urban Retail • Office and Industrial Conversions • Other Retail Uses • Location, Location, Location • Traffic Volume and Patterns • Demographics • Tenant Mix • Shopping Centers • Community Commercial and Urban Retail • Retail Leases • Utilities • Tenant Improvements • ICSC • Key Questions for Shopping Centers

Chapter 6 – Valuing Investment Properties
Methods of Valuing Commercial Property • Income Approach to Property Valuation • Gross Rent Multiplier • Understanding Capitalization Rates • Comparable Market Approach to Property Valuation • Types of Comparable Market Data • Finding Market Data • Using Comparable Market Data • Elements of Comparable Market Data • Adjusting the Market Data • Putting it all Together • Some Final Advice • Key Points to Remember in Property Valuation

Chapter 7 – Understanding Financing
Understanding Loan to Value Ratio • Calculating the LTV • Other Acquisition Costs that Impact Financing • Understanding Return on Investment • SBA Loans • Depreciation • Key Points to Remember About Financing

Chapter 8 – Anatomy of a Sales Transaction
Owner-Occupied versus Leased Investments • Step 1 – Re-analyze the Property • Confirming Income and Expenses • Zoning • Property Red Flags • Step 2 – Develop a Realistic Time Frame • Financing • Commercial Appraisal • Inspections • Legal Review • Due Diligence • Step 3 – Write a Well Developed Offer • Consideration (or Deposits) • Contingencies • Step 4 – Negotiate the Contract • Step 5 – Create the Closing Calendar • Step 6 – Close the Deal

Chapter 9 – Tax Deferred Exchanges

Chapter 10 – Options and Rights of First Refusal
Purchase Options • Lease Options • Lease Options to Purchase • Right of First Refusal •
Legal Counsel for Options and Rights

Appendix A – Sample Worksheet Analysis of a Multi-Family Property

Index

This new book is a straightforward, highly useful, easy-to-read overview of the key attributes and characteristics of property transactions for every major type of commercial real estate. The author has written a simple, yet comprehensive book that will appeal to a wide audience and is a must-read and reference guide for every commercial real estate investor, owner, broker, and student alike. The book covers the full range of issues and concerns that commercial real estate professionals and students will find indispensable to achieving a fuller understanding of many key issues in commercial real estate transactions. It provides a unique perspective on commercial real estate from a highly successful practitioner of the trade.

Frank D. Stephens, CB Richard Ellis

Bob McComb's newest book, A Field Guide to Commercial Real Estate Investment, is a welcome addition to my bookshelf of real estate titles.

His streamlined introduction and review of the process of real estate investment provides enough detail to have substantial merit without overwhelming and distracting readers with a barrage of words and numbers. Especially helpful are his clear explanations of how to analyze the income potential of any investment property, large or small, and how to determine the fair market value of any property.

Experienced brokers, investors, newcomers who are considering a first investment, and business owners looking to move from leasing to ownership will all benefit from the author's wisdom.

John M Peckham, Executive Director, REcyber.com

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