Tag Archives: Tips and Tricks

The Essential Guide to Hiring a Real Estate Broker

If you have currently made the decision to invest in commercial real estate for the first time, diversify your investments, undergo a commercial lease renewal or find a new location for your business, you will need the services of a commercial real estate broker. Why? Generally speaking, the many advantages provided by a commercial real estate broker can help ensure you are protected as your deal proceeds.

Many people aren’t aware of how much more advantageous it is to leverage a real estate broker for such important transactions. Whether you’ve never used a real estate broker before or are looking for a better fit for your situation, finding the right person takes a bit of research. Fortunately, this guide to hiring a real estate broker will further highlight the distinct advantages offered by commercial real estate brokers as well as outline several important considerations you should make while hiring.

What Is a Real Estate Broker?

To successfully begin the hiring process, it is essential to realize what, exactly, a real estate broker does and what sets a broker apart from other real estate professionals. While all real estate professionals, including agents, consultants, associates, realtors, and brokers, can sell real estate, brokers have a distinct advantage over the others.

Most brokers have more training than a realtor or agent. They are also typically held to a higher knowledge standard. In most cases, a broker must take college-level coursework and hold either a bachelor’s or higher degree or have at least two years of real estate experience before completing the certification requirements. Most often, brokers work as independent agents and may have agents working for them.

Why Use a Broker?

For business owners used to negotiating their own deals, hiring a broker can seem unnecessary. At the beginning of a search for commercial property, many people are tempted to undergo the process on their own, but that is usually not in their best interests – and it doesn’t help financially. Tenant and Buyer representation is at no cost to the client; it’s paid through the commission of the lease/sale from the seller.

While it is true that some professionals manage to complete the buying process alone, they’ve done just that – they’ve accomplished the process but are likely missing out on real advantages. Commercial real estate brokers offer a wealth of advantages to clients that aren’t easily undertaken by a busy business owner with multiple other responsibilities.

Primarily, commercial brokers are more effective because they’re accustomed to performing legal real estate negotiations and navigating jargon-filled contract and lease documents, ensuring your negotiations will be handled correctly and in a timely manner without taking away from your other responsibilities. Their vast breadth of knowledge regarding the local markets, as well as local zoning procedures, can help you maximize your profits and alert you to findings the average professional is not aware of. In addition, even brokerage fees are often split with the listing party, minimizing your expense.

How to Find a Broker

Once you’ve decided to use the services of a commercial real estate broker, you’ll need to locate candidates for the job. In most markets, there are two primary ways to do this:

Referrals from Former Clients

Utilize your contacts and find associates who have been satisfied with their broker. Ask which aspects of working with this broker they were happy with, as well as things they may change about the experience. Strengths and weaknesses can vary from a client’s perspective, so don’t be afraid to get multiple opinions. Ultimately, you’ll want to know whether they would work with the same broker again.

Online Reviews and Resources

As with any other service, brokers are subject to a wealth of reviews and critiques online. You can find reviews on multiple online real estate sites like LoopNet, but the gold standard for reviews is often Google itself. Read as many as possible, both positive and negative, and build an overview based on the average.

What to Look for in a Broker

If, during your search for broker candidates, you’ve found one or more potential professionals you like, the next step is determining their qualifications. While all brokers in the state must meet the same minimum qualifications, you’ll need to ensure the broker will meet the needs specific to your unique situation. Look for the following:

A Broker in Your Niche

Your property needs are unique depending on the sector of business you occupy. Ideally, a broker with expertise in your asset type will be able to provide personalized insight into the market, identify the buildings that best meet your needs, and come equipped with knowledge regarding the zoning, licensing, fees, and other specifics of the purchase. Moving forward, a broker in your niche can continue to aid with future purchases.

An Expert in the Target Area

Similar to a niche expert, a broker who is an expert in your target market should have a depth of knowledge regarding laws, resources, restrictions, zoning, and proposed developments an outsider would not. In addition, area experts should property lists readily available for your perusal, drastically reducing the time necessary for your new property search.

Superior Communication

Communication is essential for any real estate broker. Do they return phone calls or emails in a timely manner? Did they take the time to discuss your needs, wants, must-haves, and other aspects of your search? Most importantly, does your broker follow through as promised?

A Well-Connected Professional

When you’re searching for a real estate broker, you need a full-time, experienced professional who makes commercial real estate their business. Such professionals are usually well-connected in the area as well as within your niche, which will likely afford you the opportunity to begin building other essential relationships within the community. These relationships have the potential to lead to additional investment opportunities, business networking connections, and more.

Getting Started in Commercial Real Estate

Finding an individual you believe to be your ideal real estate broker is only part of the battle; now, you’ll need to set up a telephone or in-person meeting to ensure the relationship works for both of you and solidify your agreement. If both broker and client are on the same page, the relationship can begin positively.

Begin by telling your broker crucial information about the properties in which you are looking to invest. Be sure to specify the asset type, class of properties, classification of properties, desired area, and ideal price range. It is at this point that your broker has the opportunity to demonstrate the expertise and communication skills you identified in the steps above. A professional real estate broker who is an expert in your niche as well as in your target area should return communication fairly quickly, as the bulk of the current listings should be accessible as needed. Your broker should have an information-rich list of properties that may meet your needs and be willing to discuss negotiation techniques, fees, commissions, and the presence or absence of in-house services to help bring your project to completion.

If the initial consultation went well and you’ve established a relationship with your broker, you’re well on your way to a commercial property deal. As the deal proceeds, good communication, transparency of all fees and policies, and other fair-practice behaviors should remain in place, protecting you and your assets along the way. Finally, always remember to treat your real estate broker as a professional whose time and expertise truly matters to your bottom line; if the broker meets all the qualifications and criteria listed above and treats you well in return, you’re bound to have a business relationship that will benefit you both for years to come.

COBE is THE Trusted Brokerage for Commercial Real Estate in Phoenix

If you’re looking to buy commercial real estate property in or near the Phoenix area, it’s time to consult with a broker you can trust. COBE’s commercial real estate broker team can help you finalize the ideal transaction to meet your needs.

With over 50 years of combined experience and $500 million of combined real estate volume, we’re confident we are the right solution for your commercial real estate needs.

Request a Consultation by Phone at 480-610-2400 or Contact Us Online Today.

The Top Five Commercial Real Estate Investing Tips

Pros Offer Tips for Best Commercial Real Estate Investing

The advantages of real estate investing have been touted over the years as a profitable, consistent source of passive income that can continue to generate funds over the span of many years. While both residential and commercial real estate investments have proven to meet each of these qualifications in recent years, commercial real estate often holds better financial rewards for investors as compared to residential properties. However, there can also be increased financial risk depending on the terms of your deal.

No two commercial real estate investments are the same. Identifying these key differences and using the information available to pinpoint which properties to invest in, when the opportunity is ideal, and how to proceed once the time is right are crucial to determining whether a commercial real estate investment will be successful or ultimately fail. This brief set of commercial real estate investing tips is designed to assist potential real estate investors in reviewing some of the most important strategies, common mistakes, and other risks associated with commercial real estate investments.

1. Know Your Market

“Know your market” is a common catchphrase among residential realtors and commercial real estate agents for a reason; it is essential to know as much as you can about the market area you’re considering before you pursue investment. Not only does each unique area have its own characteristics, but its own supply and demand as well. Before you make a purchase, you’ll want to investigate your target market to determine the needs there, as well as the probable success of an investment.

Research the current supply of commercial investment types in the area, focusing on those you hold most interest in. In addition, keep an ideal working size or function in mind, including any improvements you’d be willing to make to a property. If multiple properties of this type and size are currently on the market, you may risk entering a saturated market.

Alternatively, if you are open to numerous types of properties, watch for property types that seem underserved for the area. These properties are often more in demand than the average property and have the potential to be lucrative. However, additional research regarding the potential for future growth should not be overlooked.

2. Commercial Property Type Matters

There are many commercial property types, and each comes with its own unique set of challenges and advantages. For instance, multi-unit, commercial residential properties usually demand the services of a maintenance staff or individual, available 24/7 or as emergencies occur for each individual unit. Commercial office or retail space comes with unique maintenance issues of its own, while industrial properties often require special licensing for technicians working around large machinery.

While there are certainly many considerations other than maintenance involved with commercial properties, such as security, repair costs, and more, the point is that it is essential to determine your readiness for handling the issues that come with each property type.

In addition, the supply and demand and ultimately the profitability of commercial property is largely dependent on the type of property you’ve chosen.

In general, commercial property consists of five main sectors, including multifamily, office, retail, industrial, and special purpose. However, within those types exist subgroups, such as hotel properties, medical facilities, and many others. Extensive research into which types are most profitable in your chosen market can help you make the most of your commercial real estate investment.

3. Build Up Adequate Down Payment & Reserves Funds

Commercial property investment requires, on average, a larger initial investment than residential property. Property values are usually higher, and when coupled with regular 20 to 30% down payment requirements, you’ll need more capital up front. Consider, too, that any immediate expenses you’ll need to undertake, such as remodeling, maintenance, rezoning, and other fees, are typically more substantial than residential real estate costs.

As such, you should build a contingency fund into your initial cost estimates for your commercial property purchase. This fund will help pay for unexpected expenses in excess of the purchase amount, expenditures for improvements before you find renters, and other various costs. Depending on your lender, you may be required to show a 5 to 15% contingency budget.

After you’ve made your purchase, it’s ideal to have additional capital reserves to cover expenses if further unexpected situations or the need for other improvements arise throughout the life of the loan. If you need to replace a roof or cover expenses between tenants, for example, having cash in a reserve fund or account to meet these needs is a good practice. Plan on reserving between three and five percent of your gross rent for these purposes.

4. Do Your Due Diligence

In commercial real estate, due diligence isn’t just an expression used for “doing your research,” although that is primarily the gist of what you’ll do during this time period. For the commercial real estate investor, the due diligence time period is where you’ll do comprehensive research on the property you’ve chosen. Information you’ll need will include:

  • Your financial statements
  • Previous owners’ profits and losses
  • Tax returns
  • Surveys (if necessary)
  • Property tax and zoning information
  • Property inspections
  • Feasibility studies

With your necessary information in hand, determine whether your property can be used as you intend (crucial if you’re developing vacant land), which improvements it can feasibly or legally support, as well as what the local market looks like for both of these factors. Due diligence is also the perfect time to learn all you can about the city or county that covers the property, particularly regarding permitting, zoning, applicable ordinances, and associated fees.

Finally, you’ll need to do your due diligence regarding your lender and other investors as well. Speak with others who have worked with this broker to get a feel for what’s expected of you during this time as well as what their procedures for due diligence consist of. If you’re entering a partnership or real estate investment trust, you may want to consider conducting a background check.

5. Plan for the Unexpected

Planning for the unexpected may seem like an oxymoron, but preparing yourself to experience at least a few setbacks, unplanned hurdles and even failures along the way will make dealing with them once the situation arrives much easier. Whether you’re starting a partnership or real estate investment trust, awaiting confirmation from a municipality or forging a construction contract, working with other people has the potential to alter your timeline beyond your initial plans. Taking precautionary steps like building plenty of extra time into any improvement timeline to account for unexpected delays or increasing your contingency funds to cover potential additional costs unique to your property type can prevent you from financial and emotional stress later.

Once you’ve made your initial investment, it’s also important to remain flexible regarding your expected returns. Potential hurdles include waiting for tenants, changing management, and implementing your initial rental terms. Your timeline and capital reserves should be able to withstand these common issues.

Work With a Seasoned Team

If you’re considering investing in commercial real estate, I urge you to use these five tips to your advantage. You’ll find yourself better prepared to enter into the commercial real estate world, and your first meeting with your broker will proceed smoothly. A wealth of other commercial investing tips, tricks, and advice can be found elsewhere on this blog.

When you’re ready to learn more about either commercial real estate investing in general or the properties currently available in the Phoenix area, contact COBE Real Estate at your earliest convenience. Our seasoned brokerage team can assist you on your way to commercial real estate ownership with all the necessary precautions.

Complete our contact form to request a consultation, or call 480-610-2400.

2017’s Major Developments and 2018’s Opportunities

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COBE Real Estate’s 2017 Highlights and 2018 Projections

It’s hard to believe that its time to start another year already! 2017 brought several incredible successes to COBE Real Estate, we are grateful for these opportunities, and hope to continue to grow and achieve even bigger things in 2018.

At the end of 2016, we looked at some of COBE’s highlights from the year, and mentioned things that had us excited about 2017. ( you can read that article here ) As we close out the year, we thought it might be a good time to reflect on those projections, as well as some additional opportunities 2017 brought us.

2017’s Success and Opportunities

Downtown Phoenix

Last year we mentioned the renovations to the Phoenix Warehouse District and how it was primed to once again become a thriving area of the valley.  This has proved to be true for not only the Warehouse District, but much of Downtown Phoenix.  With developments like Block 23, Downtown’s first urban grocery and mixed use high rise, several residential projects ,and a 25 Million Dollar make-over for the Arizona Center, Downtown Phoenix is a booming market.

A recent closing of COBE Real Estates offers a clear example of the interest in Downtown Phoenix. COBE Real Estate broker TJ Zaharis represented the sale of 136 E Washington, a 4,138 SF building directly across the street from the new Block 23 Development. This property had 9 offers in 1 week, and closed for over $140k over the asking price, after 2 weeks on the market.

We are excited to see the continued growth in Downtown Phoenix as it becomes a hub for business, education, culture and entertainment.

Growth in Queen Creek and San Tan Valley

Predicted to be prime growth areas of the East Valley in 2017, Queen Creek and San Tan Valley met expectations.  Pinal Professional Village has continued to grow, COBE Real Estate represented 3 building sales in the development during 2017, and Queen Creek has remained focused on advancing economic development. Queen Creek’s population is projected to reach 44,700 in 2018, an increase of over 10,000 since 2016. The population increase, along with strong demographics such as an average household income of $103,589, has encouraged growth in retail.

COBE Real Estate represented the sale of 8.98 Acres of land in Queen Creek on Ellsworth Rd, which closed after a rezoning to C2.  This rezoning will allow for the development of Retail Shops and Pad along Queen Creek’s major thoroughfare.

These areas will continue to be centers of growth in the new year, for medical and professional services, and retail alike.

Retail and Restaurants

With the number of articles and reports we see about retail giants closing stores, and the “Retail Apocalypse” one would assume that 2017 was not a strong year for retail in the valley.  The Greater Phoenix retail market gained momentum however. Leading in employment and population growth, the Greater Phoenix Market posted strong performance, with its net absorption rate reaching the highest figure in years.

Restaurants seem to be especially benefiting from the growth. The East Valley welcomed over 27 new restaurants this year and Gilbert has seen a wave of new eateries and bars join its downtown scene.

COBE Real Estate Broker TJ Zaharis helped local Henhouse Café secure their third location at the growing Mesa Riverview outdoor shopping mall, and Linda Miskho represented Buffalo Jump Winery in the leasing of their first Arizona location in Chandler, AZ.  The Shops at Agritopia were another hotspot of activity, Backyard Taco was joined by Orange Theory Fitness, Colair Beauty Lounge, Coldfront Cryo and Argo Real Estate. The amount of interest in this location clearly illustrated the growth and demand for retail in this Southeast Market Corridor, which we expect to continue into 2018.

Looking towards 2018

2018 will see continued growth in Greater Phoenix Area.  In an article posted by Wallet Hub, which ranked the Best Places to Find a Job in 2018, Chandler, Scottsdale, Peoria and Gilbert Ranked Top 5 in the Nation. Chandler, Peoria and Gilbert also landed the Top 3 for Highest Employment Growth.

This will continue to attract work forces and businesses, and foster further development.

Tempe is predicted to hold its place as one of the hottest office markets in the country. This area remains desirable due to its walk-ability and an abundance of restaurants and retailers, which help occupiers attract and retain top talent.

There is also increasing interest for development and redevelopment in Mesa.  Several large scale mixed-use projects are in the planning stages, focus remains on the Light Rail to create sustainable, transit-oriented development, and promoting Downtown Mesa as the hot area for entrepreneurs, artists, students and businesses stands as a key priority for the City of Mesa.

Additionally, the “Downtown Façade Improvement Program” which is designed to assist property owners and tenants in making improvements to the appearance of their building frontages, is helping bring new life into the area, encouraging the development of a younger, hip arts and culture vibe downtown.

Currently under construction downtown, The Artspace Lofts, will provide 50 units of live/work space for artists and their families. The project will include 1,450 square feet of ground floor commercial space for nonprofit arts organizations and creative businesses as well as 2,900 square feet of community space for events, exhibitions, and educational programs.

Another development, Falcon Field Business Center, a 96,000-square foot speculative industrial facility designed to attract manufacturing and/or distribution users to the Falcon Field District, is expected to complete construction in May. Mayor John Giles believes this will be any excellent addition to Mesa “The decision by EastGroup Properties to bring a new light industrial facility for aerospace and defense companies to the Falcon Field District is a great endorsement of our business-friendly environment.”

We are excited to see this increased interest and growth in the East Valley, and anticipate 2018 will be another year of terrific opportunity for COBE Real Estate and our clients.

6 Ways a Property Manager Will Benefit Your Investment

Property Manager

6 Benefits of Hiring A Property Manager

A Commercial Property can be an excellent investment, however being a landlord is a full-time job and requires many hats. For this reason, many investors choose to hire a property manager, assuring the property’s long-term profitability and efficient management.

 Here are a few of the benefits a property manager can offer:

  1. Tenant Screening: An experienced property manager will help ensure tenants are a right fit for the property and that they are compatible with neighboring tenants. This additionally aides in tenant retention, as those who are happy and feel their needs are met, are more likely to stay for longer periods of time.
  2. Marketing and Advertising: A full service property management service will have access to several platforms, and possibly a designated team, to market any vacancies your property may have. This will offer a significant advantage when it comes to filling your properties quickly and avoiding long vacancies
  3. Maintenance: Repair and Maintenance expenses are inevitable, whether its basic repairs or emergency failures. An experienced property manager has a network of vendor contacts, as well as the problem-solving skills, to find the best solution in a timely and cost-effective manner.
  4. Accounting: Financial Reporting is the key to measuring a property’s performance. Property managers will provide comprehensive reports including budget vs. actual variance analysis, profit & loss statements, general ledgers, and bank reconciliations.
  5. Rent Collection: Having a third party between the owner and tenant is often an effective way to aid the rent collection process.  A property manager will consistently follow and enforce the owners rent collection policy, handle tricky situations, collect late charges and serve any legal notices.
  6. Legal Issues: Any property may be encumbered by legal issues or subject to code requirements and government regulations. Knowledgeable property managers are familiar with local, state and federal regulations and codes and can help identify compliance issues that may require further legal counsel.

An experienced Property Management Service can increase the efficiency and profitability of an investment, while also relieving the property owner from some of the time and stress that is entailed.

For more information on COBE Real Estate’s Property Management Services Click Here  or Contact Us 

Dave Collins

Vice President / Senior Advisor

Dave’s background includes extensive experience with over 20 years in real estate investments. Dave’s expertise in real estate investment is a critical factor in assuring favorable rates of return for clients of COBE Real Estate.

Dave obtained a bachelor’s degree in Japanese from Brigham Young University, and a Master of Business Administration degree from Brigham Young University. He is active in several local and national groups including the Downtown Mesa Association, National Oil Recyclers Association, The East Valley Partnership and The Boy Scouts of America. He is also an active supporter of PREHAB of Arizona, La Mesita, and the Mesa Story Telling Festival.

Purchasing Commercial Real Estate: Identify the Right Property

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5 Factors to Consider When Purchasing a Commercial Property

There are several details to consider when looking for suitable commercial real estate to purchase. We all know the old adage “location, location, location” is true for commercial properties just as much as it is for residential. But there are many other issues to consider as well:

  1. Location, Location, Location.  This is still the No. 1 priority. You need to have good visibility, close to customers, workers, and vendors or suppliers. Businesses need to be convenient to customers to the extent that they have a location where the customer can find with easy accessibility.
  2. Physical condition. After identifying the general location, research the history of the property. Consider how the building was previously was used, the wear-and-tear, whether there are any environmental issues or potential liability issues, such as asbestos or lead paint. Verify the building was properly permitted and walk it with either a license general contractor or building inspector.
  3. Allowable uses. If your business is an accounting firm, you likely need commercial office space. If you are a manufacturer, you need an industrial space. Either way, you need to make sure the zoning allows you to do what you need to do on the property.
  4. Adequacy of access and parking. You need to make sure your customers can park and take into consideration whether access is compliant with laws such as the Americans With Disabilities Act.
  5. Opportunity for expansion or leasing. Entrepreneurs often have a rosy outlook about growth and so the potential to expand is a consideration as is the flipside – if you don’t grow as much as planned, can you lease out extra space?

Each of these five factors contribute to the overall satisfaction with your space and success of your purchase. A Commercial Broker can help you identify the right space, and navigate the purchasing process.

For more information on purchasing or to view available properties visit COBE Real Estate 

Brad Broyles

Senior Advisor

Brad Broyles is a real estate professional with over 11 years of experience in real estate investments, management, development, leasing and sales.

Since joining COBE Real Estate in March 2013, Brad has participated and closed over $50 million of commercial real estate transactions. Prior to joining COBE Real Estate, he spent 4 years as a Vice President of Commercial Banking which he was responsible for managing and selling a $30 million commercial portfolio. Brad also specialized in business start-ups, SBA lending, cash flow capital and special asset management. His unique business and real estate background allows him to be the best representative to any business owners who are wanting to expand or relocate their company.

Brad has a Masters of Real Estate Development from Arizona State University and a Bachelors degree in Accounting and Finance from the University of Phoenix. He is a member of the Arizona Small Business Association and is active with the Mesa Chamber of Commerce.

brad@coberealestate.com

Building Wealth in Commercial Real Estate Investment

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Exploring the Rewards of Commercial Real Estate Investment

by Brad Broyles

Commercial real estate investing can be very rewarding, both financially and personally. For many business owners and entrepreneurs, the objective of investing in commercial real estate is for wealth and security, which can be grown into a portfolio and passed down to future generations. Commercial real estate also offers an abundance of tax benefits for investors and increased diversity on their investments.

Office/ Retail Investment Property with Parking Lot

Commercial real estate investment offers the following advantages:

Higher Potential Income: The biggest reward of investing in commercial real estate is higher potential income. Typically, commercial properties have a better return on investment, which could average from five to twelve percent, while single-family home properties struggle between one and four percent annually.

Longer Leases: The hallmark of commercial real estate is the attractive length of leasing contracts.  Residential properties are typically set for one year, while commercial leasing contracts are set for three up to twenty years.  These leases offer impressive returns and considerable monthly cash flow to investors.

Investment Property: 2 Office Buildings, Warehouse and Fenced Contractors Yard

Cash Flow: Commercial investing has one very clear advantage: a relatively consistent stream of income. Remember, the tenants are business professionals and need the property for company operations. Therefore, rental payments are steady and thus deemed a reliable monthly income.  Some commercial properties consist of more that 1 unit, resulting in multiple streams of income.

Tenants Pay Property Expenses: In most leases, tenants will also pay operating expenses on a commercial property. This is commonly known in the industry as triple net (NNN) lease. Triple net leases generally state that the lessee must pay the building’s real estate taxes, property insurance and maintenance costs, in addition to monthly rent.

Lower Vacancy Risk: Another perk, is that commercial real estate provides lower vacancy risk with leases spread over several units or properties. Typically, vacancy rates range between ten to fifteen percent and can be leased within two to four months.

Auto/ RV Sales and Repair Investment Property

Building significant wealth through commercial real estate investing requires planning, patience, and persistence. It may take time, but the right property investment  it will generate genuine wealth and security that can carry on for generations.

For more information on how COBE Real Estate can help you find your next investment visit COBE Real Estate , or for listing information visit our Property Search 

Brad Broyles

Senior Advisor

Brad Broyles is a real estate professional with over 11 years of experience in real estate investments, management, development, leasing and sales.

Since joining COBE Real Estate in March 2013, Brad has participated and closed over $50 million of commercial real estate transactions. Prior to joining COBE Real Estate, he spent 4 years as a Vice President of Commercial Banking which he was responsible for managing and selling a $30 million commercial portfolio. Brad also specialized in business start-ups, SBA lending, cash flow capital and special asset management. His unique business and real estate background allows him to be the best representative to any business owners who are wanting to expand or relocate their company.

Brad has a Masters of Real Estate Development from Arizona State University and a Bachelors degree in Accounting and Finance from the University of Phoenix. He is a member of the Arizona Small Business Association and is active with the Mesa Chamber of Commerce.

brad@coberealestate.com
(480) 610-2400
Cell: (480) 797-5266