Commercial Property Leasing – Know These 4 Key Facts About Your Property Market

In commercial and retail real estate today the leasing process is critical to the income achieved by landlords and property investors. It is wise for a commercial real estate agent or broker to offer a comprehensive leasing service as part of specializing in Investment Property. There are plenty of lease deals to be done; it is just a matter of finding them.

Many times you will see market pressures on vacancy, lease occupancy, and rental levels entering into the lease negotiation between the tenant and a landlord. Make sure that you as the leasing agent have a total and comprehensive awareness of the prevailing market conditions and that you share that information directly with your client as the landlord. Prepare them for the real facts of a rental negotiation.

The landlord must be thoroughly briefed about the property market conditions prior to any negotiation with a tenant. Realistic rental levels together with appropriate lease terms and critical dates should apply to any lease negotiation in today’s business environment. Every lease negotiation becomes a strategy taking into account the conditions of the property and its improvements, the current vacancy levels, market rentals, and the requirements of investment performance.

Here are some tips to help you with understanding the property market today and the prevailing lease conditions:

  1. The levels of vacancy relating to your town or city and the property type will have an impact on incentives and market rents. Look at the potential for oversupply and understand how it may impact the future rentals and investment performance. New property developments coming into the market will shift the balance when it comes to vacant space and the quality of buildings offered for occupancy.
  2. Review the market rentals that apply within the property type and your location. Those rentals will need to be tracked and monitored for future lease negotiations and the conditioning of your clients when it comes to lease is under negotiation. Understand the impact and the relationships between market rentals, outgoings, and incentives.
  3. There are different rental strategies when it comes to outgoings recovery. In any new lease, there will be decisions to consider relating to outgoings recovery and therefore the setting of gross or net rental. Levels of market rental will apply in each case so you will need to understand the averages that apply to outgoings within the property type given your location, your town or your city.
  4. Talk to business owners and tenants regularly. Ask questions about lease occupancy and lease termination. You will soon find tenants considering property change due to the pressures of expansion or contraction within their business today. You can track all the tenants locally through specific processes of direct contact, database, cold calling, and door knocking. Every leasing agent should have a comprehensive awareness of the leasing intentions of every business within their territory. In understanding the leasing intentions of tenants locally, your professional leasing services become more valuable to the landlords of the area. That will then help you in closing more leasing opportunities and listings.

So these are some important factors to understand when it comes to leasing property locally. Take the time to connect with tenants in your market today and review the prevailing market conditions when it comes to rental, incentives, lease documentation, and property improvements. Track the enquiry rates coming to your office regularly so that you can profile tenant leasing requirements for today’s market.

Everything A Real Estate Agent Doesn’t Want You To Know-Part 1

MONEY MATTERS

Are you planning on buying or selling a home? Maybe refinancing? Perhaps you’d just like to pick up a few tips on home buying, selling and mortgage borrowing-if so you may want keep track of Money Matters in the months ahead as I will be giving out all kinds of tips and insights as we approach the home buying-selling season. I will be discussing a wide variety of real estate and mortgage financing issues you should know (Things real estate agents don’t want you to know). Well, good agents won’t have a problem with you knowing this information but the part-timers and less ethical operators would certainly prefer you not know what I am going to share with you!

You see, buying or selling a home is the largest investment of a lifetime for most people and it is a BIG business deal…a transaction composed people, emotions, contracts and cash…all the ingredients for legal and financial pain if you don’t know what you are doing. Real estate agents earn a commission when a home is sold whether they are the listing agent, the selling agent or both. Real estate agents typically (and legally) represent sellers in a real estate transaction and not buyers. Yet, every day, homebuyers refer to the real estate agent as “my real estate agent”…they are not your real estate agent…they are the home seller’s agent and agents have a legal duty to get the best selling price for the seller. Further, anything you tell them can and probably will be used against you to extract a higher selling price out of the deal. Sellers on the other hand are often manipulated into signing long term listing contracts for up to a year by an agent who will simply throw the listing into the multiple listing service (MLS) and hope another agent sells the property for them.

For agents, the name of the game is to get listing contracts…a common slogan amongst real estate agents is: “if you don’t list, you don’t last”. Once an agent gets a listing contract from a home seller, they will get the bulk of the commission when the house is sold whether they sell it or another agent sells the home. Not many sellers know this fact and many are swooned into long term listing agreements with hopeful promise of selling their homes at the highest possible price only to find out they don’t. Agents will say and do most anything to get a listing contract shy of breaking the law. And the big question for home sellers is are you working with a part time or full time agent? What is their background in marketing and sales? Do you really want to sign a long term listing agreement with a part timer that has one toe in the tub and no business background? Were talking about a business deal right?

Whether you are buying a home or selling a home you should be clearly aware that you will enter into legally binding contracts and relying on mortgage lenders to provide financing for the project. The question then becomes; how much do you know about contract law and mortgage financing? What are the most important elements of a contract and how does that impact you as a buyer or seller? This series of articles is generally drawn from my E-Report (101 Real Estate Tips for homebuyers, sellers and money borrowers). The report is designed as a crash course to provide you the information you need to know to protect your legal and financial interests whether you are a homebuyer or seller. This series of articles will touch upon the information you should know to keep from making blatantly stupid mistakes that could hurt you legally and financially and we’ll try to have some fun in the process…

Which reminds me! If you would like to receive a FREE copy of my E-Report: 101 Tips For Homebuyers, Sellers And Money Borrowers, go to smart Books website, send us an email and requesting a copy and we’ll send it to your email address within 24 hours-absolutely free-Another Ezine Articles Exclusive! Don’t forget to say you saw it at Ezine! Stay tuned!

Copyright © 2006

James W. Hart, IV

All Rights reserved

Expired Listing Letter and Real Estate Marketing Tips

The expired listing letter is a valuable asset for real estate marketing plans. Expired realty listings refer to contracts that have expired between homeowners and their agent. Realtor contracts generally last between six and twelve months. If the listed property is not sold during the contract period, sellers can enter into a new listing agreement with their current realtor, hire a new agent, list the property as for sale by owner, or take the home off the market.

Investors use the expired listing letter to solicit business from the seller by offering to buy their home or help them sell it. In order to find expired property listings, investors must subscribe to the Multiple Listing Service (MLS) database; a service that provides lists of nationwide properties for sale to realtors.

Investors who have never used expired listing letters can easily locate sample templates online. Investors will need to adapt marketing letters to suit sellers’ circumstances. A good place to learn and share expired listing marketing ideas is by participating in real estate forums or networking groups.

In addition to using expired listing letters, investors will need to develop a marketing plan and follow-up strategies. Most investors incorporate multiple marketing tools such as postcard marketing, direct mail, referral marketing, realtor flyers or brochures, and cold calling.

The expired listing letter is generally used to solicit sellers, but some investors use these letters to solicit realtors. Working directly with real estate agents can be a profitable niche for investors willing to develop close working relationships. Realtors do the majority of legwork while investors earn profit by closing the deal.

Investors who are unfamiliar with marketing strategies should consider hiring a marketing specialist and copywriter to create expired listing letters and brochures. Real estate investors often use a variety of prospecting tools.

They might start with an introduction letter, followed by a postcard and a phone call. Or they might start with a phone call and send a folder filled with a marketing letter, client testimonials, and a list of successful real estate closings. Regardless of the marketing strategy, the primary goal is to locate motivated sellers, purchase properties below market value, and earn profit on each expired listing transaction.

In today’s competitive market investors must stay on top of changing trends and create marketing campaigns that make them stand out from the crowd. Sellers often receive dozens of expired listing letters once their real estate contract expires. This is where creating unique marketing strategies can really pay off.

Private investors who dedicate their time to locating expired real estate listings often work with sellers that are frustrated their home did not sell during the listing period. The last thing these people want to hear is empty promises. They want to sell their property. Investors who focus on solving this problem can earn the seller’s business by focusing on their needs and explaining how they can help sellers accomplish their goals.

Real estate investing is a competitive industry. In order to become successful in this arena, investors must be committed to finding solutions for sellers. This can be accomplished by building a strong network of realty experts, developing a strong marketing plan, and utilizing strategies that will attract motivated buyers and quickly close real estate deals.

Real Estate Agent Tips

Few felt the financially tragic effects of our economic collapse in a way similar to commission-based real estate agents. Many aim to endure the economic storm with hopes of brighter days to come; however, if agents ignore the market shifts, the sun may never shine again. Changes are many and all of different origin, some direct and others indirect; regardless, time to assess what has happened, forecasting what is to come. In doing so, agents will understand the new dynamics, increasing the ability to flourish in the new real estate climate.

Let’s begin with legislative changes and progress to shifts in consumer mentality. After reviewing both, we will analyze what adjustments in your approach to business are necessary to survival, and moreover, how to take profitable advantage of the situation. The financial overhaul bill (that passed through the senate on July 15th) carries with it a regulation preventing banks from acquiring Credit Default Swaps for mortgages. CDS’s are used to protect banks from default on loans. The protection once allowed banks to provide mortgages to more people with less risk. Next, the new Consumer Protection Financial Bureau will oversee mortgage bonds and examine banks. Our mortgage giants, Fannie Mae and Freddie Mac, who are responsible for 90% of American mortgages, will undergo restructuring, including increased regulation. The government threatens to break apart companies of great size who influence bank lending in some fashion. Do not be misled by the apparent simplicity of these regulations, as the results carry deep influence, penetrating the entire economy.

Since 2007, the state of our economy has crippled and struck fear into the hearts of many Americans, stimulating action from our elected officials. Individuals superficially recognize the steps leading up to our economic misfortune, though a general lack of profound understanding blinds most from recognizing and predicting what such drastic changes will do to consumption spending in our real estate market. Also, there is a heightened fear of home purchase, as many of the players on the way to acquiring a mortgage have been exposed as untrustworthy. All things considered, mortgages will now be much harder to acquire, while Americans are hesitant to buy. The buyers market will be a mere fraction of its previous self.

The turmoil has left real estate sales people caught in limbo, expecting the market to pick up at any minute. However, these new regulations will prevent a quick pickup, regardless of low prices and interest rates. Furthermore, the liquidity in real estate will dissipate. Why? Limiting the actions of Fannie and Freddie constrain the secondary market of mortgages, diminishing a large portion of mortgage activity. Next, removing Credit Default Swaps will force banks to decline individuals who seek mortgage funding – the same individuals who, in the past, would not be concerned with potential rejection. Combined, the effects will reduce the number of loans available to the public AND eliminate the majority of house shoppers, leaving few people with the means, capacity, and willingness to purchase real estate. Regardless, many houses are for sale, and they will eventually be sold. Also, everyone needs a place to live, regardless of mortgage availability. Now that we, in general, see the current and future changes, it is time for my friends, the real estate agents, to capitalize.

Lets rationalize. Loans, for those who can get them, are very inexpensive thanks to the extremely low interest rates. Property is priced very low (thanks to lack of demand), though few can access enough cash to buy. I warn you, DO NOT just blindly expect the market to pick up naturally. Furthermore, when it does pick up, nothing will be the same.

Who are the future buyers?

Cash-rich individuals or companies with strong financial histories will dominate property purchase. The new regulations are designed with a common goal – eliminating risky mortgages to risky borrowers. Expect property purchase primarily from investors. More specifically, investors will dominate the market, as they have the cash to take advantage of low interest rates. Furthermore income property will dominate investment purchase. Investing to “flip” property will no longer be a profitable endeavor, as it will be difficult to find buyers to flip the house to, considering the reduction of the buyers market. Also, houses will trade hands less frequently, so the opportunity to consistently earn commission on sale may fade. Lastly, those unable to qualify for loan will likely become part of the renting population – income property will take over the market! Remember, it’s income property investors who will buy, and renting will increase. Use these forecasts to your advantage.

How to appeal to future buyers

The houses for sale now will eventually sell, though not often, as the loss of real estate liquidity will pit agents against one another in the battle for the dwindling number of listings. In addition, finding buyers will take more time, meaning greater delay between paychecks. Regardless, the easiest sale will be to income property investors.

I suggest situating yourself in an area with a strong renters market – housing statistics are available online for every U.S. city. Find cities close by with many renters. Personally, I suggest areas surrounding colleges and universities, as rental demand rarely declines. Highlight your property listings with the most desirable cash flows. You will serve yourself well to learn to value cash flows with varying rent and occupancy levels. Next, you should learn of the best options to acquire appropriate financing for buyers. The financing terms are critical to ensuring a profitable investment, and if you provide investors with all the info necessary to succeed, chances of sale will skyrocket.

Market your units/houses with detail regarding the cash flows: probable rent, average rent in the area, property taxes, HOA dues, capitalization rate (if done properly) etc. Also, investors are not always located in your area, so advertise online by making your own website and blog, cross promoting with other real estate blogs or investment websites.

Add new activity to your business

It is time to begin managing properties for your investors, for multiple reasons. Firstly, houses simply will not turn over at the rate they once did, leaving you with fewer commission opportunities. Secondly, if your primary clients are investors, the opportunity to manage the purchased property will likely present itself… frequently. Take advantage! With the added income from managed properties, no longer will you claw for sales, desperate for commission checks. Naturally, you will face added competition from real estate agents with the same idea, but provide a competitive advantage by streamlining your management business – use online software. Property management seemingly missed the technological revolution, stubbornly maintaining archaic methods of collecting payment and handling tenant relations. Lower your service fees with increased efficiency. Handle all tenant relations online, and manage your rentals from any locale. Live a good life!

This message is not intended as a means to relish in bad news; the intent is to provide a heads up to those agents still waiting for the old way of operation to suddenly click once again. New laws will not allow your business to operate as it once did, so stay ahead of the game, and take advantage of the recent and upcoming shifts in Planet Real Estate. Rentals, rentals, rentals! That’s what it’s all about now, so make sure to adjust your sales techniques and your daily activity, or be a casualty of this economic battle. This is not a guess or a wild attempt to predict the future – it’s the law. Heed my advice, and, again, live a good life.