January 27, 2012
What does highest and best use mean in commercial real estate? Generally, it means “the most probable use of land or improved property that is legally possible, physically possible, financially feasible from the market, and which results in maximum profitability.” Highest and best use can be described informally as a probable and legal use that will result in the maximum value for a parcel of real estate.
An attempted analysis of highest and best use involves two considerations:
1 the most likely and profitable use of the site “as if vacant” under the requirements set forth above and,
2 if a property is improved, it is the use that should be made of the property to maximize value for non-income producing properties or, maximize net operating income on a long range basis for investment properties.
In cases where capital expenditure is necessary to renovate or improve an income producing property, these costs must provide a sufficient rate of return for the total amount invested in the site and building improvements.
A highest and best use analysis should consider all legally permissible uses. While it is often simple to exclude uses that are not physically possible, determining which use is financially feasible and generates the highest value for the property often requires obtaining voluminous data and performing extensive series of analyses.
Research and analysis by seasoned real estate professionals can help identify highest and best use to maximize returns.
January 20, 2012
How can you increase the value of your commercial property? Just some thoughts to get you thinking.
The value of a commercial real estate property is primarily driven by the cash flow that the property generates. With each additional dollar that your property pulls in each month, the value of your commercial property increases.
Cosmetic improvements, maintain the properties grounds, good landscaping and rehab of the property can help allow you to increase the rent (or lease amount), reduce vacancies and turn over.
Decrease the expenses by improving the property with more energy efficient technology, reviewing all costs and finding innovative ways to improve your cash flow.
Consider a change in the property’s usage. Sometimes, changing the use of a commercial property can improve the value of the property. You may want to consider subdividing a large building into smaller units.
Properly managed real estate may result in greater income and profits. Property managers maintain and raise the value of real estate investments by handling the logistics of running a property. Construction managers can help you with those improvements and changes you want to make. Consider using their help.
January 16, 2012
According to the WSJ, One of real estate’s least-exciting businesses—warehouses that allow people to store their unused sofas, lamps and other household goods—have become a hit with investors.
Self-storage has long been viewed as a stable business because it is an expense borne out of necessity. “We are a solution to a problem or a challenge that has been life-changing for an individual,” said Spencer Kirk, chief executive of Extra Space. “It’s not glamorous, but it’s stable,” he said. “It’s recession-resistant. and if properly managed, it can produce a great return for an investor.”
Mr. Kirk says the business will continue to benefit from higher rents in part due to the absence of new competition. “There has been virtually no new supply added over the last few years. As an existing operator for self-storage, it bodes well for the future,” he said.
January 16, 2012
What is a tenant rep? A tenant representative is a licensed real estate agent that represents the tenant’s interests, not the landlords, in the lease transaction process. As your tenant representative, PropertyBanc will provide the tools and knowledge to capitalize on current trends and market conditions. We will simplify the process and help you make the best decision for your business. Tenant representation is at no cost to the tenant in most cases because the landlord will pay the fee to the real estate broker representing the tenant.
January 16, 2012
A 1031 exchange is a simple method of selling a property and the acquisition another property in a descent time frame. The property does have to pass certain standards.
In its simplest form, a 1031 exchange is defined as an exchange of property. It is a strategy used to defer the payment of taxes on capital gains. In general, this only applies to the sale of “like-kind” property for use in trade, business or investment. However, there are exceptions.
January 16, 2012
Land contracts are still alive and do work in the right situation even on commercial properties. We have helped buyers and sellers explore a number of options and can provide ideas for your commercial property.