Over the years, my clients have understandably wanted me to pursue all opportunities to sell their property. To do this, I am often asked to list their property as an investment, and the inclusion in a particular category of commercial real estate. While this may seem like a good idea, in my opinion, unless you have a property that can be considered an investment property, not particularly useful.
Recently, a client asked for your office building listed as investment property. Characteristics of the office can be an investment, but in my opinion, this property does not qualify. It was about 50% and all vacant leases in place is cut long-term leases.
Similarly, I have had clients ask that the land shown as investment property. Certainly, there are people who will buy and own land for a potential windfall in the future, but unless the land has a lease or some kind of ongoing earnings potential, do not think it appropriate to consider an investment property.
For a real investor, none of these cases could reach the surface before.
* Ongoing revenue sources - Generally, this would be the rent. In the past, some people have taken an appreciation of the property at the time in your decision process. In my opinion and in light of the tremendous devaluation of real estate in recent years, it is a mistake. Making investment decisions, it is best to take into account the actual revenue streams itself in the valuation of assets.
* The long terms of revenue streams - Ideally remaining lease terms should be 10 to 20 years. When buying a rental property, a new owner does not want to pay for a property that may be vacant in 1 or 2 years.
* Users of a single tenant - This does not mean that people do not take into account the multi-tenant properties, however, with increasing the number of tenants, it also increases the number of potential headaches associated with ownership.
* Credit Tenants - If you have a single tenant or tenants multiple lease contracts related to property are as strong as the tenants.
* Triple Net Lease - Ideally, an investor simply want to collect the rent and deposit a check. For them the best rent that the tenant responsible for property taxes, insurance, utilities and building maintenance.
* Occupation complete or nearly complete - Some properties are advertised as rental properties that have significant vacancy. These properties often advertise a maximum rate of the property assuming vacant area will be leased to the lease rate and ask the sales price of the property. In my opinion, this is misleading. If a property is fully leased, citing a maximum rate thus makes no sense. An investor make an intelligent decision would be better served selecting a property that is fully occupied.
For investors to compare apples to apples, you need an alternative investment is basically as simple as any other investment option. With stocks, bonds, interest bearing accounts, simply invest the money and not have to make property maintenance, leasing and other tasks and expenses. Of course, these criteria will significantly reduce the number of properties you might consider, and I realize that not all properties that have all these features. But I also say that the properties of this exist and can be found.
Definitely, there are properties that are sold that do not have all these characteristics and expectations of these characteristics differ somewhat from the type of property (ie, office versus retail). However, if you are marketing the property as an investment option, the successful vendor will try to match these criteria as closely as possible.