Should You Lease or Own a Commercial Building with Allen Bu...

How do you know if you should Lease or Own a Commercial Building for your business needs?

The economy is growing, rents are rising, and commercial real estate space is more difficult to find. 

So what questions should you answer to know if you should lease or own a commercial building for your business needs ?

Allen Buchanan is a principal with Lee & Associates in Orange County, CA and a true commercial real estate pro. He has specialized in industrial space sales and leasing since 1984 and provides the following tips for business owners considering purchasing a commercial building. 

Questions to ask before buying commercial real estate

Market
Where is the market in the cycle? Commercial real estate is very cyclical. It is important to consider what is the current state of the market. Is space plentiful or limited? Are capital markets willing to lend with favorable terms? Is there an expected growing demand for space like you need?


Who are You?
What type of company is yours? What are the space needs for your business? Do you expect to outgrow your space in the next three years? Are you making money? A lender will look for a favorable track record including, have you been in business for at least five years? 

If you are stable, have a proven track record, and anticipate the continuation of your business and have the time to benefit from long term appreciation, buying might fit be for you.

What are the Steps to Buying Commercial Real Estate?
If you have been in business for a while, you likely have received numerous calls from commercial real estate brokers. If you are thinking about buying, interview a couple of theses brokers and find out if they can potentially be a resource for the time it takes to find a property.

Find out if you are eligible for financing. The commercial real estate broker can point you to a potential lender. Typically SBA loans and brokers provide some 

How long will it take? To be successful, you should plan on one to two years before you are moving into a new property. The lengthy process includes:
Search
Potential misfire
Loan underwriting
Physical inspection
Appraisal
Build out
Permitted usage question and answer with city

What are the Benefits to Ownership? 
Long term, for the right situation, you can benefit significantly through:
Appreciation: rent increases and demand will push the value of the building up over time. Provided you have the time, this is a huge opportunity.
Depreciation: for the owner of the building, the purchase price or the structure can be expensed over 39.5 years.
Cost stability: when you own a building, you can more easily control the cost of space for your business needs.


For more goto:
www.allencbuchanan.com
https://www.youtube.com/user/abuchana...

ROOF Issues. Who pays?

Summer is a great time to consider an annual roof maintenance before the rainy season is upon us. Are you aware who is responsible for your roof maintenance? How about the repair of your roof? What if the roof needs replacing? If you own and occupy your commercial real estate, you are responsible for all three. But, what if you are a tenant? Knowing these things could save you thousands of dollars. I discuss this and much more on this week's edition of THURSDAY Thoughts for your commercial real estate.

ROOF Issues. THURSDAY Commercial Real Estate Thoughts

Keep your ENTITY Viable. THURSDAY Commercial Real Estate Thoughts

Recently, I was engaged by a property owner to sell his property in Southern California.

We discovered the LLC that owned the buildings was suspended by the Franchise
Tax Board. After some weeks and thousands of dollars, we revived the LLC and
were able to close our sale. DON'T let this happen to you!

Keep your ENTITY Viable. THURSDAY Commercial Real Estate
Thoughts

What to SHOW first? TUESDAY Traffic Tips

Is the order in which you show buildings important? I discuss this and much more on this week's VIDEO tip for commercial real estate professionals.



Bonus. How to PREPARE for a building tour

https://youtu.be/7jZsVBCeI80



What to SHOW first? TUESDAY Traffic Tips

5 Reasons NOT to Sell your Commercial Real Estate

So often, folks in my profession are focused upon the reasons TO do something - like sell your commercial real estate. After all, we make our living selling and leasing buildings.

However, sometimes there are compelling reasons to NOT sell your commercial real estate. Today, I would enjoy sharing a few of those reasons with you.

No transition. As we recently discussed, a sale decision is generally preceded by a transition of some sort - such as selling the business that occupies your commercial real estate. If you no longer own the "tenant", the occupying business, you may prefer to not be a landlord - thus your motivation to sell. However, in the absence of a transition, why sell?

Tax consequences. The sale of your commercial real estate will create punitive taxes that must be paid or deferred. In some cases, the tax man will claim 35-45% of your sale proceeds. Some sellers analyze the after tax proceeds of a sale and determine selling is not a viable option.

No place to move. Southern California has the lowest vacancy of available industrial buildings ever! 98 of every 100 buildings are occupied with very little turnover. If you sell the building that houses your business, where will you move the business?

A very low basis. Remember the tax consequences we examined above? The taxes are generated by the difference in the current selling price and the price you paid - know as your gain. If you purchased your commercial real estate many years ago, chances are your basis is low. If you're fortunate to own your building with no debt - even better! The resulting occupancy costs for a tenant are also low. In the halcyon days, you reap the rewards. When things are a bit tougher, you can afford to lease your building for less because you have no mortgage payments.

An irreplaceable location. Akin to an ocean front cottage, certain commercial properties enjoy locations that cannot be replaced. This could be a main boulevard frontage, proximity to amenities  - hotels, restaurants, or entertainment, favorable zoning, special purpose improvements for your business - ISO 9001 certifications, certain use permits, or an abundance of electricity.

What DON'T You Like? TUESDAY Traffic Tips

Recently, a vendor cold called me. I took the call. Nice enough. When I explained I was pleased with my current provider, an opportunity was missed. I discuss this and much more on this week's VIDEO tip for commercial real estate professionals.



What DON'T You Like? TUESDAY Traffic Tips

Do YOU Have a Back Channel? TUESDAY Traffic Tips

Back channels have been demonized lately in the media as aides and advisors to our President allegedly sought ways to contact foreign governments through secret means. Today, I discuss back channels Ana why they are CRITICAL to our success as commercial real estate professionals. This and more on this week's VIDEO.



Do YOU Have a Back Channel? TUESDAY Traffic Tips

Seller STILL Unrealstic? Try This. TUESDAY Traffic Tips

Last week we discussed UN-REALISTIC sellers and allowing the market to be the bad guy. You've now done that and the seller REMAINS unrealistic. So, what should you do? Really, it boils down to one of a couple of options. I discuss this and much more on this week's VIDEO for commercial real estate professionals.



Seller STILL Unrealistic? Try This. TUESDAY Traffic Tips.

An UNREALISTIC Seller - Now What? TUESDAY Traffic Tips

We've all had them. I've one now. So what should you do? Not take the assignment? Try to convince him his asking price is ridiculous? Today, I discuss unrealistic sellers and a way to get them to see the light. This and much more on this week's VIDEO tip for commercial real estate professionals.



An UNREALISTIC Seller - Now What? TUESDAY Traffic Tips

Use THIS to Solve ALL the Deal's Problems. TUESDAY Traffic Tips

Very early in my career I received some advice from one of my mentors, Paul Earnhart. The advice went something like this - solve all the deal problems or you won't get paid. So how do we know just how far to go in solving a deal's issues? I discuss this and much more in this weeks VIDEO TIP for commercial real estate professionals.



Use THIS to Solve ALL the Deal's Problems. TUESDAY Traffic Tips

It's not ALL about the Market. TUESDAY Traffic Tips

I believe we would all agree the way to repeat business from your clients - aside from doing a great job for them - is to stay top of mind and relevant. Today, I discuss a great way to do those things. This and much more on this week's VIDEO tip for commercial real estate professionals.



It's not ALL about the Market. TUESDAY Traffic Tips.

Your Deal has ISSUES! TUESDAY Traffic Tips

Whether you've been around 20 minutes or 20 years, you know transactions encounter problems - they have issues! Today, I discuss a simple way to insure you are positioned to solve ANY problem that arises. This and much more on this week's VIDEO tip for commercial real estate professionals.

Your Deal has ISSUES! TUESDAY Traffic Tips

100% of you have DEALT with this. TUESDAY Traffic Tips

You've done your best. You've made a great presentation. You forward a standard agreement for your prospect to sign. And then, those dreaded words - I'll have my attorney review it and get back to you. Boom. Buzz kill. Is the prospect REALLY concerned about the legal ease or is there something else? I discuss this and much more on this week's VIDEO tip for commercial real estate professionals.



100% of you have DEALT with this. TUESDAY Traffic Tips

Today, I Need your HELP, Please. TUESDAY Traffic Tips

I really need your collective wisdom, today. How frequently should you follow up with a prospect? We generally follow up in the manner we believe is appropriate. But how much is TOO much? If you will kindly leave a comment, I will feature some of your answers next week. This and much more on this week's VIDEO tip for commercial real estate brokers.



Today, I Need your HELP, Please. TUESDAY Traffic Tips

They are TOPS for a reason! TUESDAY Traffic Tips

Ever noticed how you play better when paired with better players? Get to know em. They are the top producers in your field, your office, your profession. If you will adopt this simple strategy, you can take your brokerage business to the next level. This and much more on this week's VIDEO tip for commercial real estate professionals.



They are TOPS for a reason! TUESDAY Traffic Tips

Opposites ATTRACT. TUESDAY Traffic Tips.

Today's tip was hatched from a conversation with my friend Natalie Wagner from our Santa Barbara office. Thanks to Natalie! We tend to target too large and prospect too small.  We should do just the opposite. This and much more on this week's VIDEO tip for commercial real estate professionals.



Opposites ATTRACT. TUESDAY Traffic Tips.

STOP Giving Advice. TUESDAY Traffic Tips

Say what? This from a guy who makes a point of advising us every week. What's up? Today, I discuss a VERY important part of the advice you give and more importantly, when it's requested. This and much more on this week's VIDEO TIP for commercial real estate professionals.

STOP Giving Advice. TUESDAY Traffic Tips

90% of you DON'T do this. TUESDAY Traffic Tips

Today, thanks to my friend David Mudge from Lee Riverside and Rod Santomassimo of the Massimo Group, I discuss a subject that nine of ten brokers fail to do. This and much more in this week's VIDEO Tip for commercial real estate professionals.



90% of you DON'T do this. TUESDAY Traffic Tips

Are you in a DEAL Hole? TUESDAY Traffic Tips

The TV streaming industry refers to a "show hole" - that sinking feeling you get when you've binge watched every episode of Breaking Bad and you wonder what will consume you viewing time. We experience a similar sinking feeling when we near the end of our pipeline - "deal hole". Today, I discuss a remedy for "deal hole". This and much more on this week's VIDEO tip

Should you CONFIRM Appointments? TUESDAY Traffic Tips

No brainer, right? YES, you should. We must manage our time wisely. However, is there something you're missing? Are you giving folks an excuse to cancel your meeting? I discuss this and the California RSVP on this week's VIDEO Tip.

Today, I go Activist. TUESDAY Traffic Tips

No, not with pink kitty caps, but just as important to our industry. 1031 tax deferred exchanges are VITAL to the commercial real estate business. Today, I solicit your help in writing your D.C.
elected officials to let them  know your stance on this most critical topic. IPX 1031 exchange has made it easy for you. Just click on the link and you will be led to a portal to write your representatives. This and much more on this week's VIDEO tip.

www.ipx1031.com

#cre Brokers SUCK at This. TUESDAY Traffic Tips

Today I discuss a topic ALL of us can stand to improve because typically we ALL suck at it! This and much more on this week's VIDEO tip for commercial real estate.

STOP Saying This! TUESDAY Traffic Tips

STOP Saying This. TUESDAY Traffic Tips. Are you asking your client for permission to fail? If you are saying this, chances are, yes. I discuss this and MUCH more in this week's VIDEO tip.

Six Commercial Real Estate Lessons Learned in 2016

I’m sure many of you reading this post have broken all of your 2017 New Year’s resolutions. That's what a week back to the grind will do for you. What appears to be a good lifestyle change in the fog of December 31st quickly becomes fodder for the refuse once the reality of life kicks in. So, I won't bore you with my resolutions but instead provide you with some commercial real estate lessons I learned last year. 

Lesson one. Commercial real estate is woefully behind our residential counterparts when it comes to technology. Our industry is dominated by old, grey haired men. We haven't embraced technology. Quite the contrary, we shun it. Have you ever attempted to conduct an on line search for a commercial property? Forget about it! The options are limited, clunky, and costly. Plus, to truly gain any knowledge about the offering, you must contact a broker. You'll be lucky to get a returned call. The reason? Our data is differently shared. We aren't bound by boards of Realtors, like our residential brethren. Thus, you need a key to the walled garden -  a commercial broker - to see inside. 

Lesson two. The key to a sustainable source of transactions is your network. Chances are, your network is comprised of three sets of professionals – those upstream from your deals, downstream from your deals, and others unrelated to your business. Build your network with those whom you can trust and refer to them generously Team with your network in creative ways – introduce a contractor to a building owner, give a talk at a trade group, or author an article for an industry publication. In the process, you add tremendous value to your clients and help your network build their business. 

Lesson three. Champion content marketing. Approximately nine of ten searches for commercial properties begin on line. If you refer to Lesson one above, searchers become frustrated as they realize commercial queries aren't as fruitful as residential. Therefore, a digital presence is critical. Rich, helpful, and timely videos, blog posts, and “how to” articles, are the best way to build an on line presence. If folks can’t find you on the web, you're invisible!

Lesson four. As business people, we only have our time and our knowledge to share. If you are generous with both, your life is more meaningful. 

Lesson five. Find a way to focus on your strengths. Every business day contains tasks that expose a weakness – whether it's a lack of technological skill, an aversion to details, or a reluctance to prospect.  Chances are, someone is close by whose strengths are your weakness. A collaboration – blending differing skill sets to affect a positive result – is frequently the answer. 

Lesson six. Don't be afraid to go “old school” – such as: Drop by in person vs calling, avoid an email and mail a handwritten note, or attend a tour of your listing.