Brian Fielding of Fielding Investments shares some of the most common terms in the commercial real estate market and what they mean for potential investors.
Now that a new year has begun and the commercial real estate market is showing a number of promising trends, Brian Fielding knows that individuals are looking for ways to become players in the market. These individuals want to make sure that they can secure an investment that will show them a strong return, and commercial real estate is one of the smartest ways to guarantee such a return. However, those who are interested in the market must first establish a strong understanding of it, and must know everything from the most important steps toa successful commercial real estate purchase, to the jargon that is used in the industry. To aid those who are interested in purchasing commercial real estate, Brian Fielding shares his expert knowledge on some of the most important terms used in the market.
Cap Rate: Also known as capitalization rate, Brian Fielding shares that this term refers to the method used to determine the value of a property that is producing a regular income. The number is calculated by taking the income of the property and dividing it by the total value. This process is used to determine the possible future profits on the property.
Net Operating Income (NOI): The NOI is used to determine the annual income of a property for the owner. A profitable property should produce a positive NOI. Brian Fielding reveals that this number is found by first determining the property’s gross income for the year. The investor must then subtract their total operating costs for the year. This will determine the property’s NOI and whether or not it has been profitable.
Cash on Cash: This term refers to the rate of return on an investment property. The cash on cash return measures the relationship between the down payment and investment already made on a property and the annual return. This number is found by dividing the annual dollar income by the total dollar investment. Brian Fielding points out that once the cash on cash return is determined it can be used to compare the property to competing ones.
With knowledge of the industryand an understanding of key terms, individuals should rest assured that they will be able to make informed decisions about investing in commercial real estate. Brian Fielding is glad to offer this key information to aid others as they take advantage of the real estate market and begin taking the steps to pick a profitable property. For more information visit http://brianfielding.com/.
Brian Fielding reveals that staying informed about these trends is important for a number of reasons
When investors are looking at commercial real estate properties, they must always be up to date on new trends in the market. Brian Fielding reveals that staying informed about these trends is important for a number of reasons, as such factors may decide which type of commercial real estate is the most desirable for an individual investor. These factors may also determine which property an investor will buy. There are many trends that need to be noticed, but below, Mr. Fielding shares three that are especially important in the coming year.
High demand on apartment spaces: Many areas, especially urban areas, are seeing a high demand for multifamily apartment spaces. A quality apartment space then is a great investment, however, its popularity will depend on where it is located says Brian Fielding. These urban locations, for example, must be in close proximity to subways and other mass transportation.
High demand: Many areas are seeing a high demand for a specific kind of property, be it office spaces, industrial spaces, or apartments. In these areas, Brian Fielding shares that it is very common that there are not enough quality properties to fit this demand. For that reason, those investors who make the right purchases will see their properties in high demand and will not experience high vacancy rates. Both of these are keys to a successful property.
More jobs means more demand for commercial properties: When companies find that they are able to finally expand after years of recession, they will hire more employees to meet their customer demand. Many cities are experiencing this increase in employment, and as a result, companies are expanding to larger and better spaces. Office spaces especially are seeing a high demand, making quality office spaces a ideal purchase for those who are thinking about investing in commercial real estate properties.
Property Investment Guru Brian Fielding reveals his take on how the commercial property investment market is shaping up in 2015.
Brian Fielding is known throughout the industry as being one of the leaders in assessing the potential value of commercial, office, retail, and industrial assets. With over 40 years of experience in the field, Brian Fielding knows what to look for in real estate investments, and how the market is expected to go for the rest of 2015 and well into 2016.
Property Investment Guru Brian Fielding manages properties from coast to coast in the United States including assets in Texas, Connecticut, New Jersey, New York and Mississippi among others. He maintains that the commercial real estate market is somewhat inflated due to increased demand for investment capital.
“I believe that nothing is better than commercial real estate for both near and long-term investments,” said Brian Fielding. “In our portfolio, we have increased our holdings in net-lease properties as well as redeveloped properties that others have rejected for minor environmental contamination.”
“Over the past few years, investors have target net-leased properties that have already been developed and leased to a wide range of retailers. This type of property has been extremely resistant to the recession and continues to do well in 2015.”
To many investors, it has made sense to invest in major retailers such as Walgreens, CVS, Family Dollar, and WalMart through the purchase of properties, rather than purchasing their stock at multiples as high as 20 times future earnings.
“While cap rates have pressed some assets into the 4 – 6 range, the advantages of owning the underlying asset and enjoying the benefits of depreciation have a special allure.”
The professional investor is better equipped to manage the challenges of owning environmentally challenged assets, and, of course, the return that can be realized on them is equally increased.
“While the general public is overly afraid of the term contamination,” Real Estate Investment Guru Brian Fielding said, “professional investors realize that a property that has been labeled as contaminated may present a minimal health hazard, and can be remediated over time. Of course, there are some properties where this is true, but there are many more properties where there is no real danger and where new technologies can help in turning the property into an excellent long-term investment with strong returns.”
Brian Fielding maintains that the commercial property investment industry will continue to be strong going into the second half of 2015. For more information about the state of the industry today, or more property investment advice from Brian Fielding, visit http://brianfielding.com.
Brian Fielding believes that commercial real estate can always be a wise field for those who want to make investments that will offer them a future return. However, just like with any business, being successful in commercial real estate means being knowledgeable about the market and choosing the right investments. Here, commercial real estate expert Brian Fielding discusses things that buyers should consider about a property before they make a purchase.
Where it is located: Location always matters. It is one of the biggest factors in determining the value of the property as well as its future potential. It is essential that an investor looks into the surrounding neighborhoods and businesses around the property that they are interested in to determine who lives there, and which kinds of businesses thrive in the area. This can show them if the building has potential for its surrounding community and whether it will be impacted by the local economy.
Property uses: Some investors purchase a property for a specific purchase. Brian Fielding reminds investors that not all properties can be used for any purpose, and many have restrictions on how they can be used. This may determine if the property should be purchased as zoning laws may include some commercials uses but not others. Office spaces, for example, may not be rented as retail spaces.
Condition: The condition of a property can cause additional costs to the initial investment on the property. Brian Fielding says that when investors are not careful they may miss repairs and other problems with the property that may also decrease their profit by delaying the time in which they can start renting the property. Being cautious about a property can prevent these problems from happening and can help an investor better determine the value of the property that they are purchasing.
For those looking to make a wise investment in the New Year, Brian Fielding always believes that commercial real estate is an excellent choice for a purchase that ensures an opportunity for a great return on the investment. With just days until 2015 begins, it is important for investors to understand how the market will look in the next year, and so far, Brian Fielding reveals that the New Year looks like it will be one with a number of stunning prospects.
One of the advantages that the commercial real estate market is seeing at the end of 2014 is the continuing recession recovery. The growing job market has allowed a number of businesses to recover financially, and this has allowed them to expand. These companies are acquiring more employees and are in need of larger spaces. Additionally, at home businesses are reaching a point where they need a commercial space to conduct their business. Brian Fielding reveals that the result is office and retail spaces are starting to see a higher demand.
Brian Fielding shares that those who own these spaces and rent them should see the demand result in a decrease of space vacancies and an increase in rent prices as a result. Office spaces, retail spaces, and industrial properties are all seeing these trends, especially in areas that are in high demand. The demand is so great that there are additionally a number of new industrial building projects that will be starting in the New Year. Because of all these promising trends in the market, Brian Fielding knows that now is the perfect time to consider truly investing in commercial real estate and taking advantage of the strong market. Commercial real estate has a number of advantages over other choices such as residential real estate purchases, and with this expert knowledge from Brian Fielding, you can make wise investment choices and reap the rewards of a commercial real estate purchase.
Brian Fielding finds Partnering in Real Estate Investments, Beneficial
Fielding Investments shares that successful commercial real estate investors share many best practices and traits. With over 40 years in the industry, Brian Fielding of Fielding Investments understands what it takes to be successful in commercial real estate. In order to help those who are just entering the industry, Mr. Fielding is sharing these tips for a long and prosperous career in commercial real estate.
Know the area.
One of the most powerful weapons that a successful commercial real estate investor has in their arsenal is first-person knowledge of the area they wish to invest in. Fielding Investments shares that the knowledge of an area gained from living and working in that community is simply invaluable in the commercial real estate industry. Fielding Investments shares that in fact, out-of-town investors spend extremely large sums of money on data and surveyors to find out just a fraction of what those living in the area already know.
Having a partner in the commercial real estate industry has many advantages shares Fielding Investments. For one, you are not solely required to come up with or find financing for your venture. Quite possibly, your partner can be well connected and might even have access to more capital than you do. In addition, financial institutions are oftentimes more comfortable lending to a partnership than to just one investor. Brian Fielding founder of Fielding Investments always encourages newer commercial real estate investors to find a partner who has experience in the industry; who can help guide them through the ins and outs of commercial real estate investment. From calculations to maintenance and tenants, there is a lot to consider and having an experienced partner can make the difference between a venture that succeeds and one that fails.
Brian Fielding reveals why scaling in commercial real estate is so much easier than in residential real estate.
When it comes to scaling in the real estate industry, it is much easier for an investor to manage multiple commercial real estate properties than it is for them to manage a large number of residential real estate properties. When investing in residential real estate, it is important to be nearby to each of the properties to ensure that there are no major problems. The same is true for commercial real estate investments. However, instead of one person looking over one single-family unit, that person has to look over dozens or hundreds of units. This expense is more justified for commercial real estate than it is for residential real estate. Managing large properties also cuts costs on things like maintenance and landscaping, which is a huge plus for investors shares Brian Fielding.
We have become diligent readers of your blog and news releases and thank you for being such a valuable resource.
My partners recently formed an “investment group” that studies various ways in which we can invest for our future. Our friend Bob has taken the lead on commercial property investment and presented our group with an offering of a well-known electronics retailer’s store in a neighboring state. At first rather excited at the opportunity, we have been following the disturbing financial reporting associated with this retailer and wonder if you could give us some advice on whether this would be a safe investment.
Jeff G – San Diego, CA
Dear Jeff [and partners],
We steer clear of individual recommendations and admit to knowing little more about your electronics store retailer’s financial stability than has been readily available in a variety of financial journals including the Wall Street Journal. However, I am responding to your question because it begs commentary on establishing investment criteria.
While it is very tempting to base a purchasing decision solely upon the quality of the underlying lease and the financial strength of the tenant, the prudent investor looks well beyond the surface and uses careful judgment as to the underlying value of the building and its location. Everyone has heard the basic maxim of real estate, “location, location, location”, and it appears that this is all the more true for your considered investment. You need to ask yourself if the tenant were to close this store or get into economic distress, does this size building in this location demand a premium in the future and is the current rent so below market that you are well positioned to find a new tenant and enjoy even greater return [keep in mind that you will likely have to make some major renovations for a new retailer … so plan on budgeting for that event from day one]
While you would love to rely on the creditworthiness of your tenant for dependable returns, keep in mind that your site will likely remain open if you “read” on location is correct … perhaps being one of the few stores that the national retailer will want to modernize and keep operating as it works to right its corporate “ship”.
We are thinking of buying an older building on a great corner in our neighboring community. My partners worry that the property is “dated” and not terribly attractive. Do you have any advice on this type of concern?
Bill and Mary G.
Dear Bill and Mary,
Congratulations on your new venture! We wish you all the success in the world.
Actually, I am pleased that you broached this topic. Few new investors are able to assess an investment property when it is [currently] unattractive. If you have been satisfied that the building is structurally sound and well positioned, you may only need to have an architect and/or interior designer help you determine if some paint and minimally invasive construction can turn your ugly duckling into an exciting “new offering”.
Wonderful examples of old industrial buildings converted into “Creative Space” abound in a number of communities [West Los Angeles first comes to mind, but there are examples in most any city] … investors recognizing the value of the bow truss structure allowing for open space soaring ceilings. While the highest end conversions have cost up to $100/ft., there are many more minor renovations that have led to incredible returns for the insightful investor. Similarly, we have seen structures come to life with nothing more than a stroke of bold colors and perhaps some inviting awnings.
If you have the eye and understand the costs … all the better. However, if there is any question, many professionals will be happy to make creative suggestions, hoping that your acquisition of the asset will lead to new future business for their firms.
So what happens after the U.S. reports a growth in the economy and encouraging employment trends? The stock market took a one day major fall! It seems to go without saying that one needs to expect volatility in the various stock markets and advisor Brian Fielding suggests that this simply reality suggests that prudent investors should try to balance their portfolio by adding commercial properties to their holdings.
“There is no one avenue that guarantees protection from the vagaries of the efforts to create a nest egg for retirement and for a ‘head-start’ for one’s heirs, but solid tenants in quality properties is an important hedge to consider.”
While shares of Fortune 500 companies adjust to quarterly reporting and concerns over economies internationally, as tenants, these companies can provide a reliable return to their landlords. Further, the tenant’s excellent credit history allows the savvy investor to finance his/her purchase, often with long-term financing at very attractive rates.
Brian Fielding does not suggest forgoing investments in stocks, bonds and, perhaps, commodities. Rather, he ascertains that one should consider balancing that portfolio with quality commercial assets, preferably with strong, creditworthy tenants.
“We not only own the stocks of fine companies such as WalMart, but we also enjoy owning properties with their tenancy. We chose our assets carefully, weighing term, rental rates versus the local comparative indices and a variety of other critical factors such as projecting sales numbers to make an informed decision. It certainly does not hurt that a number of lenders were eager to compete for the financing element.”