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Commercial and Investment Real Estate: Tools of the Trade

CE – 6 Hours – TREC Approval #49147

Written by Edward S. Smith Jr.

 

The two basic types of commercial customers and clients are users and investors. Each type focuses on different reasons for purchasing property.

Sometimes, the reasons overlap and we have user-investor customers and clients. When you add to this the many different types of commercial

and investment properties, you can see all the brokerage opportunities available in the commercial real estate field.

 

The information needed to sell and lease commercial and investment property falls into several categories: ownership information, specific details of the building or space, and financial data. In addition, it is necessary to recognize the role of other professionals who will be part of the transaction. This and subsequent units will address what you need to know about each of these areas.

 

The 6-Hour Course will Cover:

Chapter 1: Commercial Real Estate Opportunities

  • Types of Commercial Property and Customers
  1. 1. Types of Commercial Properties
  2. 2. Kinds of Commercial Buildings
  3. 3. Commercial vs. Residential Real estate
  4. 4. The Business Cycle
  5. 5. User Customers
  6. 6. User – Investors
  7. 7. Investment Clients
  8. 8. Capitalization Rates
  9. 9. Developers
  10. 10. Tenant Buyer Representatives
  11. 11. Summary of Opportunities
  • Gathering General Property Information
  1. 1. Ownership information
  2. 2. Third Party Advisors
  3. 3. Attorneys
  4. 4. Accountants
  5. 5. Financiers
  6. 6. Special Funding Programs
  7. 7. Listing Information Checklist
  8. 8. Commercial Inventory

Chapter 2: All About Office Buildings

  1. 1. Classifications of Office Buildings
  2. 2. Class A
  3. 3. Class B
  4. 4. Medical Space
  5. 5. Class C
  6. 6. Office Building Considerations
  7. 7. Phones and computers
  8. 8. Treatment of Utilities
  9. 9. Hours Open
  10. 10. Ancillary Services
  11. 11. Parking
  12. 12. Net vs. Rentable Square Footage
  13. 13. Add On Factor
  14. 14. Loss Factor
  15. 15. Floor Plans
  16. 16. As Built’s
  17. 17. Tenant Improvements
  18. 18. Lease Clauses
  19. 19. Common Area Maintenance
  20. 20. Gross Leasable Area
  21. 21. Tax Escalation Clause
  22. 22. Option to Buy
  23. 23. Assignment of lease
  24. 24. Assumption Agreement
  25. 25. NNN Lease
  26. 26. Right of First Refusal
  27. 27. Office Buildings as Investments
  28. 28. Office Building Checklist
  29. 29. Total Rent Per Foot
  30. 30. Rent per Month

Chapter 3: Retail Properties

  1. 1. Retail Buildings
  2. 2. Anchor Tenants
  3. 3. End Cap
  4. 4. Tenant Mix
  5. 5. AM Side
  6. 6. Far Corner
  7. 7. Plain Vanilla Shell
  8. 8. Finishing Space
  9. 9. Restaurants
  10. 10. Cash Business
  11. 11. Gas Stations
  12. 12. Retail Zoning
  13. 13. Permitted Business Uses
  14. 14. Location
  15. 15. Demographics
  16. 16. Percentage Leases
  17. 17. Retail Check List

Chapter 4: Industrial Buildings and their Physical Characteristics

  1. 1. Site Inspections
  2. 2. Size of Buildings and Sites
  3. 3. Truck Access
  4. 4. Column Placements
  5. 5. Ceiling Height
  6. 6. Loading
  7. 7. Floor Plans
  8. 8. Percentage of Office Space
  9. 9. Technical Services
  10. 10. HVAC
  11. 11. Sprinklers
  12. 12. Refrigeration
  13. 13. Floor Drains
  14. 14. Environmental Issues
  15. 15. Phase I Inspections
  16. 16. Phase II Inspections
  17. 17. Phase III Inspections
  18. 18. Marketing of Industrial Properties
  19. 19. Industrial Property Checklist

Chapter 5: Introduction to Financial Analysis

  1. 1. Investment Analysis Worksheet
  2. 2. Line by Line Review
  3. 3. Income Section
  4. 4. Expense Section
  5. 5. Repair and Maintenance
  6. 6. Case Study Mountain View Mini Mall
    1. a. Potential Rental Income
    2. b. Vacancy Adjustments
    3. c. Operating Expenses
    4. d. Net Operating Income
    5. e. Market Value
    6. f. Review

Chapter 6: The Value of Investments

  1. 1. Rate of Return
  2. 2. Leverage
  3. 3. Initial Investment
  4. 4. Cash Flow Before Taxes
  5. 5. Equity
  6. 6. Cash on Cash Return
  7. 7. Internal Rate of Return
  8. 8. All Cash Purchase
  9. 9. Leveraged Purchase
  10. 10. Investor Strategies
  11. 11. CCIM Institute
  12. 12. Annual Property Operating Data form

Chapter 7: Forecasting Cash Flows

  1. 1. Cash Flows
  2. 2. Case Study: Mr. Smith’s Office Building
    1. a. Problem Review
    2. b. Lease Notes
    3. c. Other Considerations
    4. d. Location Information
    5. e. Current Rent Roll
    6. f. Income Analysis
    7. g. Expense Analysis
    8. h. NOI
    9. i. Review Form
    10. j. CFBT
    11. k. Cash On Cash
  3. 3. The Spreadsheet
    1. a. Problem review
    2. b. Lease Notes
    3. c. Vacancy Adjustment
    4. d. NOI
    5. e. CFBT
    6. f. Upside Potential
    7. g. Cash On Cash
    8. h. Market Value
  4. 4. Real Value
  5. 5. Other Approaches
  6. 6. Revised Calculations
  7. 7. Assumptions
  8. 8. Brokerage

Chapter 8: Depreciation and Cash Flow After Taxes

  1. 1. Depreciation
  2. 2. Leasehold Improvements
  3. 3. Cost Segregation
  4. 4. Cash Flow After Taxes
  5. 5. Return of Equity
  6. 6. Return on Investment

Chapter 9: Selling Property: Capital Gains Taxes and1031 Exchanges

  1. 1. Capital Gains Taxes
  2. 2. Calculating Capital gains Taxes
  3. 3. Commercial Properties
  4. 4. Depreciation Recapture Tax
  5. 5. Commercial Example
  6. 6. 1031 Exchanges
  7. 7. 1031 Rules
  8. 8. Examples

Chapter 10: Dealing With Other Brokers

  1. 1. Overview
  2. 2. Commission Overrides
  3. 3. Referral Agreements
  4. 4. Co brokerage Agreements
  5. 5. Co brokering Open, Non-Exclusive Listings
  6. 6. Noncircumvention & Nondisclosure Agreement
  7. 7. Showing Records
  8. 8. Showing Record Master File System
  9. 9. Notice of Showing

Chapter 11: Marketing For Success

  1. 1. Internet
  2. 2. Advertising
  3. 3. Print Media
  4. 4. Classified Ads
  5. 5. Press Releases
  6. 6. Commercial Flyers
  7. 7. Broker Open House
  8. 8. Electronic Communication
  9. 9. Communicating with Commercial Brokers
  10. 10. Communicating with Customers
  11. 11. Database Marketing
  12. 12. You and the Web
  13. 13. QR Codes
  14. 14. Social Media
  15. 15. E-Mail Signatures
  16. 16. Property Marketing Plan
  17. 17. New Business Marketing Plan
  18. 18. Building your Business

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