Real Estate Investing : Gross Lease

People lease commercial real estate properties using either a gross lease or modified gross lease or a net lease. Residential properties are usually leased under a gross lease with the exception of the utility expenses. A gross lease is also referred to as a pass-through lease or a full service lease. When a tenant leases a property using a gross lease, he pays a gross rent and the landlord has to pay the operating costs of the building risking rising operating expenses over the duration of the lease. A net lease refers to a lease where the lessee is responsible to pay for the taxes, insurance and maintenance of the property.

Types of Gross Lease: Full Service Gross Lease: In this kind of lease, the landlord is responsible for the payment of taxes, maintenance, insurance and utilities. All these expenses are included in the base rent paid by the tenant. The lessee is responsible for any property insurance, taxes and utility expenses beyond the permitted building standards. The lessee has to agree to pay his share of any increase in the operating expenses of the building.

Modified Gross Lease: In a modified gross lease, which is similar to a full service gross lease, except that certain basic services such as taxes, maintenance, insurance, janitorial services, electrical services etc. are excluded from the lease. This type of lease is commonly used in multi-tenant buildings where there are different tenants with different needs.

Commercial Gross Lease: The lessee pays the landlord a fixed monthly rent and the landlord is responsible to pay for the operating expenses of the building and its maintenance. The lessee pays for the utilities, maintenance, operating expenses, taxes as well as janitorial services. Industrial Gross Lease: The landlord leases an entire industrial building to a tenant. The tenant has to use the building as per the agreement in the lease, manufacturing and distributing and maintaining an office in it. The landlord will be responsible to pay for the maintenance, operating costs, taxes, insurance, utilities etc. that will be paid for by the lessee in the base rent.

The landlord has to take precaution against lessees with deceitful intent and make sure they verify any information provided by the lessee before signing the lease. The lessee, especially in a commercial building, has to make sure to find out if the lease includes only his office space or also parts of common area such as, hallways etc. The lessee has to make sure that he studies the terms of the lease carefully to ensure he is not paying for something that is not connected with his office space as if a new hallway built in another floor!

There are firms that offer products as well as services to help budding entrepreneurs run a business smoothly.

Real Estate Investing : Gross Lease

People lease commercial real estate properties using either a gross lease or modified gross lease or a net lease. Residential properties are usually leased under a gross lease with the exception of the utility expenses. A gross lease is also referred to as a pass-through lease or a full service lease. When a tenant leases a property using a gross lease, he pays a gross rent and the landlord has to pay the operating costs of the building risking rising operating expenses over the duration of the lease. A net lease refers to a lease where the lessee is responsible to pay for the taxes, insurance and maintenance of the property.

Types of Gross Lease: Full Service Gross Lease: In this kind of lease, the landlord is responsible for the payment of taxes, maintenance, insurance and utilities. All these expenses are included in the base rent paid by the tenant. The lessee is responsible for any property insurance, taxes and utility expenses beyond the permitted building standards. The lessee has to agree to pay his share of any increase in the operating expenses of the building.

Modified Gross Lease: In a modified gross lease, which is similar to a full service gross lease, except that certain basic services such as taxes, maintenance, insurance, janitorial services, electrical services etc. are excluded from the lease. This type of lease is commonly used in multi-tenant buildings where there are different tenants with different needs.

Commercial Gross Lease: The lessee pays the landlord a fixed monthly rent and the landlord is responsible to pay for the operating expenses of the building and its maintenance. The lessee pays for the utilities, maintenance, operating expenses, taxes as well as janitorial services. Industrial Gross Lease: The landlord leases an entire industrial building to a tenant. The tenant has to use the building as per the agreement in the lease, manufacturing and distributing and maintaining an office in it. The landlord will be responsible to pay for the maintenance, operating costs, taxes, insurance, utilities etc. that will be paid for by the lessee in the base rent.

The landlord has to take precaution against lessees with deceitful intent and make sure they verify any information provided by the lessee before signing the lease. The lessee, especially in a commercial building, has to make sure to find out if the lease includes only his office space or also parts of common area such as, hallways etc. The lessee has to make sure that he studies the terms of the lease carefully to ensure he is not paying for something that is not connected with his office space as if a new hallway built in another floor!

There are firms that offer products as well as services to help budding entrepreneurs run a business smoothly.

Getting Involved In Commercial Real Estate Investing

People choose residential and commercial real estate investing for many reasons. They may find that the property market is safer than the stock market, the potential for monetary returns is much higher than in other areas, or they enjoy buying old homes, remodeling them, and selling them for a much higher price than what they bought them for.

Whatever the reasons, investing in property requires people to know a little about the market, how to buy and sell homes quickly, and when to walk away from a potential deal. People who want to invest in should also understand tax laws and land laws in their area before they spend money in the housing market.

Taking a few business or real estate classes is a good idea for those who are just starting out. These classes are offered through colleges, private schools, or agencies. Lectures about selling will provide valuable information about what to look for when buying a home, where to spend money on improvements, and where to advertise when selling a home. Real estate investing will take up a lot of time, but the pay off could be great. Some people will sell a few homes and then retire on the money they have made. By making good business decisions, this can be the reality for many people.

Your not limited to just residential properties either. Commercial real estate investing includes properties such as retail space, office buildings, warehouses, and storage facilities are also have great potential for making money. Investing in this type of thing will generate a monthly income as long as the space can be rented out for most of the year. Those who are careful about who they rent their building to could have a steady income for a few years. Most leases on commercial properties are at least three years or more. Selling these properties can also benefit a person if they can buy another one after making the sale.

When looking at a piece of property, there is more to look at than its potential for making money. People need to investigate the plumbing, electrical, and roof structure before making a purchase. These can be very expensive to replace and may require too much time. While a home or commercial property may be large enough, the property itself may be too small.

It is important to research what these properties are worth and how much they may be worth over time when getting into residential and commercial real estate investing. This will be one of the deciding factors when purchasing property. Since the market is continually changing, property values will constantly shift from high to low. It is important to be aware of these shifts and only buy property when it will be profitable.

About the Author

Craig Thornburrow is an acknowledged expert in his field. You can get more free advice on creative real estate investing and real estate investing at http://www.realestateinvestingguru.com

Getting Involved In Commercial Real Estate Investing

People choose residential and commercial real estate investing for many reasons. They may find that the property market is safer than the stock market, the potential for monetary returns is much higher than in other areas, or they enjoy buying old homes, remodeling them, and selling them for a much higher price than what they bought them for.

Whatever the reasons, investing in property requires people to know a little about the market, how to buy and sell homes quickly, and when to walk away from a potential deal. People who want to invest in should also understand tax laws and land laws in their area before they spend money in the housing market.

Taking a few business or real estate classes is a good idea for those who are just starting out. These classes are offered through colleges, private schools, or agencies. Lectures about selling will provide valuable information about what to look for when buying a home, where to spend money on improvements, and where to advertise when selling a home. Real estate investing will take up a lot of time, but the pay off could be great. Some people will sell a few homes and then retire on the money they have made. By making good business decisions, this can be the reality for many people.

Your not limited to just residential properties either. Commercial real estate investing includes properties such as retail space, office buildings, warehouses, and storage facilities are also have great potential for making money. Investing in this type of thing will generate a monthly income as long as the space can be rented out for most of the year. Those who are careful about who they rent their building to could have a steady income for a few years. Most leases on commercial properties are at least three years or more. Selling these properties can also benefit a person if they can buy another one after making the sale.

When looking at a piece of property, there is more to look at than its potential for making money. People need to investigate the plumbing, electrical, and roof structure before making a purchase. These can be very expensive to replace and may require too much time. While a home or commercial property may be large enough, the property itself may be too small.

It is important to research what these properties are worth and how much they may be worth over time when getting into residential and commercial real estate investing. This will be one of the deciding factors when purchasing property. Since the market is continually changing, property values will constantly shift from high to low. It is important to be aware of these shifts and only buy property when it will be profitable.

About the Author

Craig Thornburrow is an acknowledged expert in his field. You can get more free advice on creative real estate investing and real estate investing at http://www.realestateinvestingguru.com

Real Estate Investing - How to Coach Yourself

Real Estate Investing - How to Coach Yourself Author: D. S. Peter

Some people are not in a position to work with a coach right now. Some are stretched financially, while some are still using the “lone ranger” method. Other people might be uncertain about trying something new. So here is a brief, simple process you can apply to your own situation i.e. “coach” yourself!

1. Clarify your goal Some of us are not moving forward simply because we have not set a goal that inspires us! Make it specific e.g. I will by one property by December 10. And you can stretch yourself, but keep it realistic. If you’re blocked, schedule creative time to play with ideas. Ask someone who is where you want to be for advice.

2. Plan What overall strategy(s) will you use? For example, to buy residential properties will your strategy be area specific, fixer uppers, foreclosures, price range, or a combination? To increase profit will you increase your knowledge (to learn more on real estate investing http://www.buying-investment-property.info and http://www.realestate-investinginfo.com ), switch your real estate investing area or even state, network, or improve performance. For this stage you will also set your milestones to achieve along the way, with deadlines attached (say every 2-4 months). Also list the tasks to achieve along the way in between milestones.

3. Action Once you have the overall plan in place, it’s time to get down to specific action. You might like to list the action steps you will take in the next week, or the next 30 days. When you have completed these actions, it’s time to evaluate, and write the next list of action steps.

4. Self check Having an idea, or desire is one thing. But many of these do not get achieved. This is probably one reason you are reading this article - because there is something in your life you would like to achieve or change, but it hasn’t happened yet. Change rarely occurs without “action”. If you want to be a real estate investor, surround yourself with real estate investors. Talk a friend into doing your goal with you. Set constant diary reminders for the next month, and/or encouraging visual displays on the wall. Announcing your commitment to the world (all your friends) is also a great method to achieve your goal. And if you’re really serious about your goal, it’s hard to find anything more motivating than doing one successful deal. Learning is a lifetime journey.

Good luck! Copyright ? D. S. Peter This article can be published by anyone as long as the reference box remains intact and all links are kept live.

About the Author

Copyright ? D. S. Peter is a successful real estate investor for over 14 years.

Getting Involved In Commercial Real Estate Investing

People choose residential and commercial real estate investing for many reasons. They may find that the property market is safer than the stock market, the potential for monetary returns is much higher than in other areas, or they enjoy buying old homes, remodeling them, and selling them for a much higher price than what they bought them for.

Whatever the reasons, investing in property requires people to know a little about the market, how to buy and sell homes quickly, and when to walk away from a potential deal. People who want to invest in should also understand tax laws and land laws in their area before they spend money in the housing market.

Taking a few business or real estate classes is a good idea for those who are just starting out. These classes are offered through colleges, private schools, or agencies. Lectures about selling will provide valuable information about what to look for when buying a home, where to spend money on improvements, and where to advertise when selling a home. Real estate investing will take up a lot of time, but the pay off could be great. Some people will sell a few homes and then retire on the money they have made. By making good business decisions, this can be the reality for many people.

Your not limited to just residential properties either. Commercial real estate investing includes properties such as retail space, office buildings, warehouses, and storage facilities are also have great potential for making money. Investing in this type of thing will generate a monthly income as long as the space can be rented out for most of the year. Those who are careful about who they rent their building to could have a steady income for a few years. Most leases on commercial properties are at least three years or more. Selling these properties can also benefit a person if they can buy another one after making the sale.

When looking at a piece of property, there is more to look at than its potential for making money. People need to investigate the plumbing, electrical, and roof structure before making a purchase. These can be very expensive to replace and may require too much time. While a home or commercial property may be large enough, the property itself may be too small.

It is important to research what these properties are worth and how much they may be worth over time when getting into residential and commercial real estate investing. This will be one of the deciding factors when purchasing property. Since the market is continually changing, property values will constantly shift from high to low. It is important to be aware of these shifts and only buy property when it will be profitable.

About the Author

Craig Thornburrow is an acknowledged expert in his field. You can get more free advice on creative real estate investing and real estate investing at http://www.realestateinvestingguru.com

Getting Involved In Commercial Real Estate Investing

People choose residential and commercial real estate investing for many reasons. They may find that the property market is safer than the stock market, the potential for monetary returns is much higher than in other areas, or they enjoy buying old homes, remodeling them, and selling them for a much higher price than what they bought them for.

Whatever the reasons, investing in property requires people to know a little about the market, how to buy and sell homes quickly, and when to walk away from a potential deal. People who want to invest in should also understand tax laws and land laws in their area before they spend money in the housing market.

Taking a few business or real estate classes is a good idea for those who are just starting out. These classes are offered through colleges, private schools, or agencies. Lectures about selling will provide valuable information about what to look for when buying a home, where to spend money on improvements, and where to advertise when selling a home. Real estate investing will take up a lot of time, but the pay off could be great. Some people will sell a few homes and then retire on the money they have made. By making good business decisions, this can be the reality for many people.

Your not limited to just residential properties either. Commercial real estate investing includes properties such as retail space, office buildings, warehouses, and storage facilities are also have great potential for making money. Investing in this type of thing will generate a monthly income as long as the space can be rented out for most of the year. Those who are careful about who they rent their building to could have a steady income for a few years. Most leases on commercial properties are at least three years or more. Selling these properties can also benefit a person if they can buy another one after making the sale.

When looking at a piece of property, there is more to look at than its potential for making money. People need to investigate the plumbing, electrical, and roof structure before making a purchase. These can be very expensive to replace and may require too much time. While a home or commercial property may be large enough, the property itself may be too small.

It is important to research what these properties are worth and how much they may be worth over time when getting into residential and commercial real estate investing. This will be one of the deciding factors when purchasing property. Since the market is continually changing, property values will constantly shift from high to low. It is important to be aware of these shifts and only buy property when it will be profitable.

About the Author

Craig Thornburrow is an acknowledged expert in his field. You can get more free advice on creative real estate investing and real estate investing at http://www.realestateinvestingguru.com

Getting Involved In Commercial Real Estate Investing

People choose residential and commercial real estate investing for many reasons. They may find that the property market is safer than the stock market, the potential for monetary returns is much higher than in other areas, or they enjoy buying old homes, remodeling them, and selling them for a much higher price than what they bought them for.

Whatever the reasons, investing in property requires people to know a little about the market, how to buy and sell homes quickly, and when to walk away from a potential deal. People who want to invest in should also understand tax laws and land laws in their area before they spend money in the housing market.

Taking a few business or real estate classes is a good idea for those who are just starting out. These classes are offered through colleges, private schools, or agencies. Lectures about selling will provide valuable information about what to look for when buying a home, where to spend money on improvements, and where to advertise when selling a home. Real estate investing will take up a lot of time, but the pay off could be great. Some people will sell a few homes and then retire on the money they have made. By making good business decisions, this can be the reality for many people.

Your not limited to just residential properties either. Commercial real estate investing includes properties such as retail space, office buildings, warehouses, and storage facilities are also have great potential for making money. Investing in this type of thing will generate a monthly income as long as the space can be rented out for most of the year. Those who are careful about who they rent their building to could have a steady income for a few years. Most leases on commercial properties are at least three years or more. Selling these properties can also benefit a person if they can buy another one after making the sale.

When looking at a piece of property, there is more to look at than its potential for making money. People need to investigate the plumbing, electrical, and roof structure before making a purchase. These can be very expensive to replace and may require too much time. While a home or commercial property may be large enough, the property itself may be too small.

It is important to research what these properties are worth and how much they may be worth over time when getting into residential and commercial real estate investing. This will be one of the deciding factors when purchasing property. Since the market is continually changing, property values will constantly shift from high to low. It is important to be aware of these shifts and only buy property when it will be profitable.

About the Author

Craig Thornburrow is an acknowledged expert in his field. You can get more free advice on creative real estate investing and real estate investing at http://www.realestateinvestingguru.com

Real Estate Investing - Become The Market Value Expert

In the world of buying and selling residential properties for profit, all investors make mistakes. Some mistakes are more easily overcome than others. A few are potentially devastating. One of the most common investor mistakes, and one that can be devastating, is failing to know and understand property values in your target neighborhood.

Fortunately, with just a little bit of effort, you can become THE local expert on neighborhood property values in no time. Here’s how.

Get To Know The Neighborhood

First, there is no substitute for looking at lots and lots of property. Start with your local newspaper. The real estate section is a treasure trove of free information and market research. Each week, every decent local paper has a special insert or pull-out section with local real estate listings, recent sales by neighborhood, for sale by owner (FSBO) listings, and much more. If you’re not reading this section each week, you probably aren’t serious about real estate investing.

Look especially for those houses that have sold recently in your target neighborhoods. Write down the sale price, sale date, and address. Then go look at the houses and make notes about what you see. Keep a "neighborhood notebook" for each of your target neighborhoods. In it, record the list prices, selling prices, and your observations about the condition of the properties, how long they took to sell, and any improvements that helped them sell more quickly.

Watch for "For Sale" signs and open houses. If you truly want to become the market value expert, you won’t miss going through every house that comes on the market in that neighborhood. Again, record all the details in your notebook.

Get To Know The Experts

Second, talk to local Realtors. You’ll meet them as you are out and about looking at properties, attending open houses, and calling on listings. Ask them what market values are doing, what types of houses people are looking for, which features sell and which don’t, any question you can think of that will improve your MVIQ (Market Value Intelligence Quotient). Be sure you write down what you learn in your neighborhood notebook.

Build a relationship with one Realtor whom you trust, and who is willing and experienced enough to help you. Let them know that you plan to be an active investor, and that you won’t waste their time. You won’t need them to take you around by the hand to every listing, but you will ask them to provide you with the listings so you can go yourself. You are looking for a Realtor who understands how to work with investors, and who is willing be a little flexible with you regarding getting you access to properties on your own. Most of the houses you’ll be looking at will be vacant anyway, so keep looking until you find a Realtor who will work with you.

Building a team, including finding a Realtor who will work with you, is the subject of another article I have written. Look for it here: Find The Right Realtor. Get To Know The Values

Third, when you’ve found specific properties you are interested in, ask the Realtor to provide you with suitable "comps". These are listings of properties that are "comparable" to your target property. In other words, houses that have sold recently in the same neighborhood as your target property, along with how much they sold for. These will tell you more about value than any other single source. Once you have a list of comps, don’t just take the Realtor’s word that they are truly comparable. Drive around to each one yourself and verify that the size, style, and condition are at least close to the property you are considering. Throw out any that don’t fit.

Once you have a minimum of three that are indeed comparable, using a little common sense, you should be able to assign an ARMV (After Repair Market Value) to your subject property. This represents your estimate of what the property should sell for after any needed repairs and upgrades. Be somewhat conservative. Rehabs and flips often sell for 3-5 % less than comparable open market homes, so subtract at least that much from your estimate.

Here’s an example, using a 4 bedroom, 2 bath raised ranch built in 1962, 1910 square feet, asking price $138,000.

Comparable A is a 5 bedroom, 2 bath colonial, built in 1902, 2380 square feet, selling price $249,500 in April of 2005.

Comparable B is a 4 bedroom, 1.5 bath raised ranch built in 1960, 1850 square feet selling price $168,700 in January of 2006.

Comparable C is a 4 bedroom, 2 bath, cape cod built in 1968, 1870 square feet, selling price $152,100 in May of 2006.

Comparable D is a 3 bedroom, 2 bath ranch built in 1965, 1900 square feet, selling price $172,900 in December of 2005.

Of these four comps, which is not really comparable? If you answered A, you’re right. This property is not even close to our target property, is it? Even if this house is right next door, it is too different in age, style and size to have any value as a comp. Throw it out.

Now, after visiting the other three and looking at them from the street, suppose we judge that properties B and D are closest to our target property in condition and character. Assume that property C is still close, but due to condition, problems with neighboring properties, or some other factors B and D are just a little more like the house we’re considering.

What conclusions can we draw? Well, if we’ve used good judgment in choosing our comps, and gotten some input from experienced Realtors in the area, we can use an average of the closest comps and arrive at an estimated ARMV of $170,000. Using our "3% rule" would leave us with a conservative ARMV of about $165,000. As you can see a little rounding is fine, but don’t go overboard.

If I were just starting out, or if I didn’t have a lot of experience in the neighborhood, I would ask a few other realtors to confirm my findings.

Get To Know Yourself

Finally, to test your market knowledge and build your confidence, choose three properties that you would be interested in investing in. Using the methods outlined above, estimate an After Repair Market Value for each of them. When you are finished, wait until they sell and see how close you came. If you have been diligent in applying these principles, I’ll bet you came very close indeed. If not, try to determine why.

Maybe your "comps" weren’t really comparable. Perhaps there was something about the property you couldn’t see or didn’t know. Ask the selling Realtor why they think the house sold for the price it did. Be sure to write everything down in your neighborhood notebook. It will soon become an extremely valuable resource- keep it safe!.

Learn to apply the above principles, and within two to six months (depending on how much time you can devote) you’ll know more about market values in your target neighborhood than anyone else in town. That knowledge means confidence, and that confidence translates into investing POWER!

Now, go make more offers!

Real Estate Investing - Residential or Commercial?

Some real estate investment advisors believe that if you are just beginning real estate investing you should avoid commercial real estate, such as office buildings, shopping centers, and warehouses for the following reasons:

It’s more complicated and does require a greater knowledge of law, zoning and leasing regulations, financing etc. Residential apartment buildings also fall into this category even though they’re used as residential property for the tenants it’s still a commercial enterprise for the investor and since it is a multi-tenant commercial building on land zoned for that purpose it will differ greatly from residential property in it’s maintaining, leasing, valuing, financing, and a host of other things.

According to a study in The Economist, residential property investment was $48 trillion and commercial real estate investment was $14 trillion. There are a lot more potential renters in the residential market than in the commercial one. During economic recessions which can occur every 5 to 10 years, marginal businesses fail at a faster rate. This can mean negative cash flow for you because of high vacancy rates if your tenants are included in these volatile businesses. Although residential rental demand also goes through these cycles, there is always a greater number of potential renters for house and condos than there is for commercial properties.

The profitability rewards are bigger but so is the learning curve. Mortgages are structured differently and building insurance is more expensive. Also to consider are the costs of fire suppression, security, and air-conditioning systems along with telephone and internet facilities.

Consider the right type of residential properties.
Location, price and condition. Do your research and find a property in an appreciating neighbourhood. Remember, properties appreciate for only two reasons: inflation and increased demand.

About 70% of Americans live in 3 bedroom dwellings so 3 or 4 bedroom houses or condos should be your target as they are the easiest to sell, the toughest to sell are 1 and 2 bedroom homes. Only consider properties that are in good condition also unless you want a job as a handyman. Fixer-uppers are only good if you have the extra time or are in the home remodeling business which then would make good sense.

Living in it or renting it?
When buying a property as a rental investment, stick to the lower end of the price spectrum. Rental properties should be about 20% lower than the average home price for an area. The best rental market is for moderately priced but attractive houses because if most renters could afford to buy, they would. The goal for rental properties should be for neutral to positive cash flow whereas the goal for a personal residence is affordable payments.

Choose a property with up to 4 units.
A duplex or fourplex can be a great investment because your tenants will be making your mortgage payments for you and you can live in one of the suites. Now some investors will say this is not a good idea and they would never do it because the tenants would always be bothering them for something. I have done this with great success and without any headaches. You just need to make sure everything is kept up and you need to have a good read for people that you allow to be your tenants. So, up to 4 units is great but anything over that starts to get a bit hectic and closer to the commercial side of investing, which for the novice, isn’t recommended.

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