Grabel - Wealth opportunities in commercial real estate: management, financing and marketing of investment properties

Contents

Copyright 2012 by Gary Grabel. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

Argus spreadsheets courtesy of ARGUS software. 2011 ARGUS Software, Inc. All Rights Reserved.

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Library of Congress Cataloging-in-Publication Data:

Grabel, Gary.

Wealth opportunities in commercial real estate : management, financing and marketing of investment properties / Gary Grabel.

p. cm.

Includes index.

ISBN 978-1-118-11574-9 (cloth); ISBN 978-1-118-19722-6 (ebk);

ISBN 978-1-118-19723-3 (ebk); ISBN 978-1-118-19724-0 (ebk)

1. Commercial real estate. 2. Real estate investment. I. Title.

HD1393.55.G73 2011

332.63'24dc23

2011028238

This book is dedicated to Mark Hamermesh and Aric Browne: Without their efforts and drive, this book would not have been possible. By taking on their shoulders many of the day-to-day problems and concerns associated with running a real estate company, which owns and operates several million square feet of shopping centers, medical office buildings, and apartment units, they made it possible for the author to focus on writing these pages.

This book is also dedicated to my wife, Rosanna, who has put up with my quirks and idiosyncrasies for over 30 years, especially when I wanted to work on this book rather than spend time in some more enjoyable pastime.

List of Abbreviations

Introduction

This book is the result of many people asking me How can I buy income-producing property? How can I get into the game? The underlying purpose in this book is to set forth a practical step-by-step process on how to acquire commercial real estate and through a real estate vehicle build significant wealth over time. The discussion runs from sourcing a real estate transaction to analyzing the deal to acquiring the sticks and stones to managing real property to improving its value and finally to taking steps to preserve the value created and hopefully passing a good part of it on to your children and your childrens children.

Unfortunately, there is a wealth of books on real estate that in essence say, You cant lose. Go out and buy real estate! You can lose in real estate just as in any other business. I usually buy from someone who has lost; that is, the value of the property and their equity therein has decreased from the date of their purchase. It is therefore essential to understand the fundamentals of the real estate game, including how to evaluate a real estate transaction and how to create value before you take the plunge and start to buy.

The text is geared to the novice who wants to understand commercial real estate as well as the seasoned professional who desires to enhance his knowledge. One of the key teaching tools revolves around setting forth a hypothetical that starts with the basics and then continually builds on the fact pattern to demonstrate real estate principles and theory and enhance the project analysis.

Although the concepts herein can be applied to all types of real estate, the focus is directed toward a project size of 30,000 to 150,000 square feet as is typically found in a neighborhood shopping center rather than a huge office building or a complex of over 500,000 square feet that might be found in a downtown high rise tower or a regional shopping mall.

Many individuals in the real estate field specialize in one area and therefore have a difficult time understanding and learning practical knowledge about other areas of real estate ownership. This text attempts, to some extent, to fill this gap. By covering a broad range of real estate topics from basic terminology and analysis to leasing, financing, marketing, management, structuring a partnership, real estate tax consequences, buying and selling real property, and the steps to take to preserve wealth, hopefully the reader can focus on the areas of his or her deficiencies.

Although I am an attorney by background, Wealth Opportunities in Commercial Real Estate is not intended as a legal treatise; rather, its focus is directed to the practical, day-to-day business aspects of acquiring, owning, and managing commercial real estate. I strongly recommend consulting with an attorney, accountant, and other professionals when entering into a lease, a purchase and sale agreement, or when any technical issues arise.

A thank you to ARGUS Software, who graciously supplied their proprietary software for use in connection with the Cash Flow spreadsheets for this book. These, among other Appendices, can be found at the companion website, www.wiley.com/go/wealthopportunities . This supplementary material will surely provide you with a wealth of examples to review as you read through the book.