faq
faq
Frequently Asked Questions
What does a commercial real estate broker do?
A commercial real estate broker is a licensed professional who is qualified to help various clients buy, sell or lease real estate properties. These properties are generally used for commercial purposes. If someone wants to use a property for their home, they will need to seek out a residential real estate broker (and YES, I would be happy to help you find a qualified residential agent or broker, just tell me what you’re interested in on the “Contact Us” page of this website).
A licensed commercial real estate professional works much like an airline pilot– the pilot is not the airplane but you need one to take off and to land. A commercial real estate broker is not YOUR business but he can help you take off and land with confidence.
What is the difference between a commercial real estate deal and buying a house?
Generally the biggest difference comes down to due diligence. Residential purchases deal with general inspections which is typically a quick one day inspection. Residential purchases are also cheaper and are more likely a homestead. Residential deals are emotional purchases that can usually be closed withing 30-45 days. Commercial property purchases involve property that is being used for business purposes, so there is more liability in the property and the land connected to it. The inspection process is extremely extensive, depending on prior usage, so the feasibility period is much longer and closing on commercial real estate deals can be a very long process. We shorten that process considerably.
How are lease rates quoted for commercial property?
Commercial lease rates are usually quoted by price per sq.ft. per month or per year. For example: 30,000 sq’ space could be quoted at $20/sq’ and that translates into 20×30,000 making the annual rate $600k, when divided by 12 that would be $50k per month (not including the CAM).
What are CAM charges?
These are all of the NNN (referred to as Triple Net) charges such as taxes, insurance, and common area maintenance. The landlord sets the term but your agent can determine how the rate compares to other commercial properties in the area for your type of business and provide you an analysis.
What is commercial real estate lending?
Commercial real estate lending is the process in which a buyer of commercial property acquires financing or mortgages necessary to make the property purchase. Without commercial real estate lending, a potential buyer would need to have all of the funds necessary to purchase the property. Instead, commercial real estate lending allows businesses and commercial entities to acquire financing (like a loan) to purchase their property and pay the lender back over time. We have a lender that will fund your deal, especially if you have been turned down before. Just click on the “Contact Us” button on the bottom of this page to schedule an appointment for consultation.
What do commercial real estate underwriters do?
A commercial real estate underwriter is responsible for helping in the assessment of risk of a commercial real estate loan. The underwriter must be able to analyze the value and risk of both the commercial property, as well as the borrower for the loan.
When a commercial real estate loan is offered, it must go through the commercial real estate underwriter, who will then scrutinize the loan and compare it against the risk that the lender is willing to take on. The underwriter may evaluate statistics like the credit history of the entity taking on the loan, as well as the market value of the commercial property.
What are tenant improvements?
Tenant Improvements are any additional build out required by user for it’s intended use. This money is allocated by the landlord and may require plans, permitting, and the hiring of contractors.
Who pays for tenant improvements?
It is negotiated. However, the Tenant usually pays and the landlord can credit a certain amount of that.
What is a 1031 exchange?
This is an investment transaction where an investor that sells a property can transfer that amount over to another property to purchase. They then have a limited time frame to identify the property and close it.
How do I list a property for sale or lease?
We will be happy to list your property and advertise it to maximize your exposure. My team will feature it on our websites and all the commercial listing outlets, and even social media. Contact us today using the link at the bottom of this page or on the menu at the top of the page.
Do I need a broker to look at properties?
Generally speaking, a broker (who is often times part of a larger firm, called the brokerage) is needed to facilitate potential buyers gaining access to view the property.
While it’s not a strict requirement for a buyer to view properties, they may not be able to get the same levels of access to the property without them. However, think of your commercial agent as your advocate, the one who will studiously look out for YOUR interest in this most important step in your business. Your commercial real estate broker or agent works for you.
A buyer could choose to view properties online, which does not require a broker. However, some properties are not easy to locate online, and you won’t have as detailed of information as a broker can get.
Alternatively, you could choose to talk to a seller directly to gain access to additional information or to be granted access to enter the building itself. While this is a possibility, not all sellers are going to be available at times that are convenient for you, or they may choose to only allow buyers to visit through their broker.
What is the LOI or letter of intent?
A letter of intent is a document that has been written up to declare the intentions of the writer. From a commercial real estate point of view, the letter of intent describes what the terms of the real estate transaction are. The letter of intent is used to allow two parties (the property seller and the property buyer; the Lessor and the Lesee) to agree on all terms of the proposed deal prior to going to contract. Your commercial real estate broker or agent can prepare this for you and ensure that your interests are looked after.
Is a letter of intent legally binding?
Typically letters of intent are NOT legally binding. However, it is important to read everything you sign!
What do commercial real estate lawyers do?
Commercial real estate lawyers are responsible for handling various real estate transactions for commercial properties. Lawyers who specialize in commercial real estate can either work for an attorney, who are then contracted as needed, or work directly for commercial real estate brokerages. Lawyers may work as general counsel for transactions or may be directly involved in the transaction itself.
How much is commercial real estate commission?
When it comes to commercial real estate commission rates, there is no specific number that brokerages need to go by. Each brokerage will have different commission rates for their brokers and not all brokerages will provide their rates to the public, except by inquiry.
Commission rates are negotiable, just like other variables that are part of a commercial real estate agreement. The two primary factors that will impact the commission rates are the brokerage themselves and the market value of the property (or the transaction value).
Certain types of commercial real estate properties will have higher commission rates and others will have lower rates on average. It’s not uncommon to see commission rates ranging between 3% to 10%, but it all depends on the property itself, how much a buyer is willing to pay, and the brokerage.
The easiest way to find out the commission rate is to call a commercial real estate brokerage and ask.
What is commercial real estate cap rate?
Commercial real estate cap rate (which is short for capitalization rate), is the rate of return of an investment in commercial real estate, based on the amount of income it is expected to generate. This statistic is generated to help an investor determine the potential return on their investment in the property.
The commercial real estate cap rate of a property can be determined by taking the net operating income and dividing it by the current market value of the property. The net operating income can be determined by looking at the annual return on the property after subtracting any operating costs of the property.
Can I ask you for advice?
If you have any further questions about commercial real estate, feel free to send us a message or schedule an appointment using the “Contact Us” button below and we’ll be happy to help.
- +1 954.633.7577 Ext 106