Maximizing Commercial Real Estate Performance

With a little research, planning, and forethought commercial real estate performance can easily be maximized. From the newbie investor to the seasoned professional, a little bit of homework can go a long way in reaping the success in the industry. Formulating a strategy is step one in the process, by knowing the market and crunching numbers a game plan can be put into place. A variety of deal types exist in the commercial real estate market and each investor has their favorite type. From retail to industrial and everything in between nearly all commercial real estate can produce a successful performance level.

In commercial real estate there are three main ways in which to make money; they are cash flow, principal buildup through paying down a loan and appreciation. An investment can offer just one of these ways or all three of them. Cash flow is defined as the money that is left from the rental income after an investor has paid expenses and mortgage costs. As the mortgage is paid down this results in principal buildup. While paying down debt and increasing leverage can aid in the increase of money received with the upside comes the downside of an increased risk. Appreciation is found in a property through a variety of mechanisms including purchasing a property below market value and/or making improvements to the property that will increase the value. Adding value to real estate is one of the easiest ways to increase performance levels.

In some cases, certain attributes can affect the rental value of real estate in a negative way. While some things can’t be changed, such as location, other items can take a small investment to make a big change. Cosmetic changes such as replacing windows, a fresh coat of paint, updated landscaping, etc. can all easily add big value compared to what was spent for updates. Another way to increase performance in commercial real estate is to find good deals. While this may not always be an available option, the better the deal is on the property the easier it is to have instant equity. Some commercial property investors seek out low priced property that can stand to have work done to it then turn around and sell it at an increased profit for not much time or money put into it. Other investors enjoy the appreciation of the investment but employ a buy and hold strategy on the property and are able to realize monthly income as well. Many commercial real estate professionals go by the adage of “You make money when you buy.”

Commercial property investment versus residential property investment does have its ups and downs. The collection of rent in the commercial real estate sector is typically easier than that of residential rentals because the business owner has a vested interest in the space and the community in which they serve with their business. Whereas a residential tenant doesn’t have much (if anything to lose) by walking away from a rental property with unpaid rent fees. Commercial real estate is known for the purpose of generating profit, without profit on an investment it’s not worth much. Rent collected over time will also lead to profit in most cases. The commercial real estate field can be lucrative when business is done smartly.

How to get an affordable commercial property insurance policy

commercial building insurance rates 

As a business owner, you’re constantly watching the bottom line and looking for good deals.

Various risk factors impact the cost of property insurance – like the location, type of business, the building’s construction makeup and exposure to nearby risks. We’ll work with you to help lower your risk and design complete property insurance coverage to meet the needs of your business.

How are commercial property insurance rates determined?

Typically, insurance premiums for commercial properties are set by multiplying the value of the building and its contents by a value that correlates to level of risk. Most of the time, properties with high risk have higher property insurance rates, while lower risk properties cost less to insure.

These are the variables that help determine your insurance rate:

Construction

The materials used in your building’s construction and its overall condition will impact your commercial building insurance rates. Buildings made of more fireproof materials (brick or stone) or those with fire-resistant interior floors, walls and doors cost less to insure. Newer buildings, or those with recent upgrades of electrical wiring, plumbing or the HVAC systems also usually cost less to insure.

Occupancy

The use of the premises will impact the property insurance rate. A restaurant or auto repair shop is more likely to have  higher risks associated with that business than a florist shop, and may cost more to insure. And if your business shares space with a higher risk business, your premiums may increase.

Protection

When your business is located in an urban area with a fire hydrant or fire station nearby, your property insurance rate could be lower. An alarm or sprinkler system in your building can also help lower your rate.

Exposure

Exposure to risk in the surrounding area – such as known criminal activity or the likelihood of loss due to accidents or natural disasters – can impact your insurance rates. Neighboring businesses could also impact your rates – for example, if your business is located near an oil refinery or fireworks factory, your property insurance rates may be higher.

Want to know more?

Call us at (570) 344 0211 or Email bartald@bartalinsurance.com

Help prevent dryer vent fires in your residential properties.

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Dryer ducts should never exhaust into wall, ceilings or other interior spaces.

From 2007 to 2011, clothes washers and dryers caused an estimated 10% of structure fires in non high-rise apartment buildings, and many of those originated in clogged dryer vents.  If you provide laundry services in your facility, you can help prevent dryer vent fires by making sure your equipment is properly installed and taking steps throughout the year to keep it well-maintained.

Use a qualified professional for installation and service.

While some building owners rely on the local handyman to install and service their washers and dryers, most manufacturers recommend that a qualified professional, preferably someone experienced with tenant and guest laundry facilities, do the work. With a new dryer installation, you want the technician who handles the project to:

  • Situate the dryers near an exterior wall, since newer dryers typically carry air and lint approximately 18 feet
  • Extend the dryer ducts to the exterior of the building, and make sure they do not exhaust into walls, ceilings or other interior spaces where their water vapor will cause mildew and mold
  • Use dryer ducts made of rigid or flexible metal, rather than thin foil or flexible plastic; metal is better because lint builds up more easily in foil and plastic ducts, and they’re also more likely puncture or tear
  • Make sections of dryer ducts as straight and short as possible, so as to minimize drying times and the collection of lint
  • Cover outside dampers so as to keep out rain, snow, dirt or animals; they should not be covered with screen or cloth, however, as these will collect lint and clog the duct
  • Make sure the electrical outlets used to power the dryers have the correct amperage, and that the outlets are properly wired

Some practical advice to help keep dryers running smoothly. 

Once your dryers are installed and running as they should, you may not be able to check all the lint filters and dryer ducts regularly, but you can take the following steps to help keep your laundry room safe for its users:

  • Keep the area around the dryers clear of excess dust, lint and combustible materials
  • Always use the lint filters that come with the dryers, and advise residents to clean them before and after each cycle
  • Inspect lint filters and ducts every six months and replace them if they are torn or damaged
  • Inspect the outdoor dampers, making sure they open freely and are not clogged or blocked

Signs that a dryer is performing poorly.

There are several fairly easy ways to determine if the dryers in yourfacility need your attention. Some of these include:

  • Residents are complaining that drying times are too long
  • Clothes are hot to the touch when the drying cycle is complete
  • The outside of the dryer is hot to the touch
  • The laundry room is humid
  • The laundry area smells like something is burning
  • The outdoor vents do not open completely due to low-velocity air

If you’re experiencing one or more of the problems listed above with your facility’s dryers, it may be time to call in a professional to evaluate

An easy effective way to screen prospective tenants

Whether you’re renting a single family home or units in a large condominium complex, screening your applicants is an important part of protecting your rental income.   This can help alleviate uncertainty and questions all landlords seem to have.  Will this tenant pay rent on time? Is this renter going to trash my place?  Do I need to worry about safety?  Is this the right tenant for me? Screening tenants helps you make more money from your property by helping you pick tenants who are likely to pay rent on time every month.  After all rent is the main source of income on your property. One of the best ways to do this is to complete the following five tenant screening steps.

  • Host individual property showings so you get to know a prospective tenant
  • Require a rental application
  • Contact the tenant’s prior landlords to see if the tenant has a history of paying rent on time and taking care of the property
  • Require a tenant credit report and background check

Background checks and credit reports used to be costly and time consuming, not to mention the concern of complying with laws such as the federal Fair Credit Reporting Act.  Today however there are many services available that are affordable.  One service we suggest our clients explore is Transunion SmartMove, as service offered via Nationwide loss control services.  When you use this service  you can:

  • Evaluate prospective tenants quickly
  • Gain access to credit, criminal and eviction reports
  • Choose from cost-effective pricing options with no set-up fees and no minimums
  • Obtain custom reports and leasing recommendations in minutes
  • have the option to defer fees to applicants
  • get a ‘Resident Score’ designed to rate an applicant’s level of risk, and likelihood of costly negative outcomes such as late payment and tenant evictions
  • A recommendation to help you decide whether to accept or decline a leasing application presented in a clear manner

If your interested in more information or in trying the service you can go to:

My Smartmove

You can also receive a discounted rate for the QuickCheck PLUS report bundle.  It’s normally $35.00 but with the coupon code NationwideClients it will be $28.00.

As always if you have any questions you can email us or call 570-344-0211.

 

 

 

 

 

 

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