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Commercial Real Estate Leasing Guide

Commercial real estate lease is a contract that creates and defines the legal relationship between the landlord or lessor and the tenant or lessee. In exchange for payment of rent and other considerations, the landlord grants to the tenant the right to possession and use of all or part of the property, subject to certain terms and conditions, for a specified period of time. In most types of commercial real estate, leasing provides the bulk of revenues available to service the mortgage loan; thus, understanding and accurate evaluation of lease terms and conditions is crucial to underwriting a loan. Lease obligations often require post closing management by loan administrators as well.

There are two primary considerations from the investor’s perspective:

  • Poorly drafted leases can create economic problems for the borrowers, which may put at risk his or her ability to make loan payments.
  • If the investor takes the property back, he or she will have to live with the terms and conditions of the lease, unless provision is made that the investor has the option to terminate it. In most foreclosure situations, however, tenants paying rent are a valuable commodity.

The rules and regulations should be understood before leasing the property, and an agreement should be drafted. There are some items to be followed.

  • It must be perfectly defined and include all details of the parties of the lease, including the correctly-spelled full name of each party, the nature of the legal form, and the state of domicile for the partnership, or corporation. Individuals may sign for themselves, any general partner for a partnership, and the president or secretary for a corporation. If there is any question on a corporation, a copy of the resolution of the board of directors granting signing authority should be attached. If the signer is acting as an agent for a principal, written authority from that principal should be attached.
  • Demised premises should be precisely identified, in terms of building address, floor number, suite and store number, and area in square feet to be leased. A floor plan or drawing of the space in relation to the entire property is very helpful. Inadequate identification can invalidate the lease. The lease should also state whether parking rights are exclusive or nonexclusive, and whether specific parking spaces are designated for the tenant. For parking, separate charges should be noted by the reviewer.
  • The term of the lease should be stipulated, in years and odd months. Lease commencement and termination dates should be clearly stated, as well as the date on which the first rent payment is due. Any renewal options should also be noted.
  • The tenant should clearly understand exactly how the rent and contributions for expenses are to be paid, because there are considerable variances, even within a given market.
  • The lease should define a number of conditions for maintenance, utilities, and equipment. The tenant’s obligations related to repairs should be clear to ensure they maintain the space in good order. The tenant’s rights to alter the leased space must also be carefully defined.
  • If the landlord abates rent during restoration and agrees to restore it in a reasonable time, the tenant cannot cancel the lease or sue the landlord for a breach of the lease if the tenant’s space is damaged.
  • The lease should be clear that it is retained by the landlord. In the age of sometimes-unnecessary lawsuits, the landlord may be sued because of external environment problems beyond his control.
  • The rules and regulations of the building should be attached as an exhibit to the lease.

How to Get a Real Estate License

A career in real estate can be highly rewarding. To be able to sell real estate, it is mandatory to obtain a license.

A career in real estate is becoming increasingly popular and can be a lucrative and challenging option. Apart from the knowledge and experience required to excel at this business, obtaining a license is also very essential. To be able to be an agent or a broker, a license is mandatory. The licensing procedure is different in every state and the State Real Estate Commission lays down the requirements and specifications for the same. The common steps to get a license would be to fulfill the minimum age requirements, the educational qualifications, experience requirements, and qualify the licensing examination. Specifications regarding the amount of training required, the length, and method of study, vary from state to state. The procedure in some of the states is mentioned below.

Obtaining a New York License

To obtain a New York real estate salesperson license you would require the following:

  • Should be 18 years of age or above
  • Should complete 45 hours of Qualifying Real Estate Courses
    Successfully qualify The New York Real Estate Examinations
  • Should complete and submit a Child Support Statement

To obtain a broker license you would require the following:

  • Should be 19 years of age or above
  • Should be a resident of New York City or should be admitted for permanent residence by law
  • Should have a minimum 1 year experience either as an active licensed real estate salesperson or in the real estate business.
  • Should complete 90 hours of specific approved Real Estate Courses. Those having a degree with real estate majors can apply for a waiver of the courses.
  • Should successfully qualify The New York Real Estate Examinations.
  • Should apply within two years of qualifying the exams.
  • Should have a valid business address
  • Should complete and submit a Child Support Statement

License renewal is required for both brokers and salespersons, every two years.

Obtaining a California License

To obtain it in California, you would require the following:

  • Should be 18 years of age or above
  • Should provide proof of being a legal US resident and of being free from conviction of crime.
  • Should be willing to provide fingerprints.
  • Should complete 3 Real Estate Courses, as per the specifications of The Department of Real Estate, before or within 18 months of qualifying the Real Estate examination.

To obtain a broker license, you would require the following:

  • Should be 18 years of age or above
  • Should provide proof of being a legal California resident. In case of being a resident of another state, a consent to Service of Process with The Department of Real Estate should be filed.
  • Should provide fingerprints.
  • Should have a minimum 2 years experience either as an active licensed real estate salesperson or in the real estate business.
  • Should successfully complete 8 approved college-level courses before qualifying the Exam.

License renewal is required for both brokers and salespersons, every four years.

Obtaining a Florida License

To obtain an associate’s license in Florida, you would require the following:

  • Should complete 63 hours of classroom training of the Florida Real Estate courses.
  • Should fulfill post-licensing educational requirements.
  • Should qualify the exams with a minimum grade of 75.
  • Should submit Form Re 2050-1 for activation of the license after qualifying the examination.

To obtain a broker license you would require the following:

  • Should have an active sales associate license.
  • Should have a minimum 12 months experience in real estate during the 5 year period after the application.
  • Should have completed 72 hours of classroom training of specific Florida Real Estate courses.
  • Should qualify the exams with a minimum grade of 75.
  • Should submit Form Re 2050-1 for activation of the license after qualifying the examination.

To obtain an agent license you would require the following:

  • Should be 18 years of age or above.
  • Should have a high school diploma or its equivalent.
  • Should be free from conviction of crime and should provide fingerprints.
  • Should complete courses as per the specification of The Florida Real Estate Education Requirements.

The training required to meet the requirements of these examination is provided by many colleges and many online study programs are also available. Since licensing is state-specific, you will need to do a lot of research in order to obtain the right information regarding the procedure in your state. Once you select the appropriate course and qualify the examination, you can successfully obtain the real estate license.

Developing Your Real Estate Marketing Plan

You have just begun an ambitious plan of setting up your very own real estate business and you are in need of some marketing ideas. Here are some ideas for people like you out there.

For any kind of business to prosper, what you need, besides quality service, is marketing. It is all about developing your contacts and networking among the populace. So, marketing is the heart and soul of the real estate business.

Market Research: The Foundation

Without research, you cannot understand whom to market your services. You have to identify your target clients and the nature of market dynamics in your area. Know the needs of your clients, identify your competitors, and what kind of facilities they are offering to clients.

You must have a detailed information database of real estate prices in your target areas. Also, make a record of recent sales and purchases in your area, if possible. Once you finish your research, you will know your target clients, interested in real estate investment, their needs, the options to fulfill their needs, the realtor competition, and their tactics. Knowing all these, now you can devise your marketing plan, that will create your contact network and help you in aggressively competing in the field, for your share of clients.

Marketing Ideas

Here are some marketing tips that will help you to net clients.

Business Cards
Business cards, the traditional marketing tools, are still the most important forms of marketing. Personally meet and distribute your agent card in business circles, as well as to prospective buyers and sellers. What people want is a person whom they can trust, to find a buyer for their property or who can find them a place in a good locality, providing help in transactions along the way. Give that personal touch in your marketing, rather than just relying on huge banner advertisements.

Advertise in Newspapers
Internet is overtaking the print media slowly and surely, in popularity. Still, newspapers remain the best options for placing your real estate advertisements. Place your advertisements and listings of properties available for lease and sale, along with your contact number.

Advertise on the Internet
Start your own site on the Internet through web designing, which will have all the detailed listings of properties, which are available for lease or sale. You can even set up an interface, wherein prospective buyers could enter their expected real estate investment demands and sellers can fill in theirs. This way, you can get clients online.

Referrals from Past Clients
Encourage referrals from past clients and provide them with some incentives for the same. If you will offer good service to clients, your name as a good agent is going to spread by word of mouth.

If you keep improving and innovating your quality of service, people are bound to remember you as the guy who got them their dream home. Provide a detailed brochure of information about the locality to clients shopping for a home. You can provide additional value-added services like helping clients to get mortgage loans. This can include photos as well as information about events in the area. Never forget the personal touch.

Hope these ideas have given you some food for thought. You could come up with more innovative marketing ideas, if you really put your thought into it.

Real Estate Agent Commission

It is common knowledge that a real estate agent will charge you a commission whenever he carries out any real estate transaction. Moreover this commission varies according to the type of real estate and geographical area. The following article tries to explain the role of an agent or broker, his commission and closing costs.
Any person who has been authorized by his or her client to act as an agent in the sale or purchase of land is a realtor. It can be a person, group of persons, firm or a company. In United States the licensed real estate brokers are authorized to make real estate sales and purchases. The Department of Real Estate or the Department of Licensing of the State government provides the realtor with licensing or authorization to sell. In some cases, the Real Estate Commission (regulatory body) also provides authorization. The people who hold valid license are known as real estate brokers. On the other hand a person who does not hold a license but works under a licensed broker is known as a salesman or a real estate agent. Commission earned by the either varies from case to case and also from state to state. Though the real estate commission rates vary as per states, the average commission charged by realtors is about 6% of the deal, with several commission dropping down to 5.2% or some prices rising to 6.5%, in really costly deals.

Real Estate Agent and Broker

As mentioned above, the real estate market in United States is accessible through licensed brokers , who are empowered to either sell or either officially inquire for purchase. The real estate brokers have a team of agents working as their employees. These agents are largely classified into listing agents and selling agents.

The listing agents do the job of finding a real estate through the Multiple Listing Service as per the specifications of their clients. The selling agents as the name suggests, do the job of finding potential customers for the real estate. Now when a property is sold, both the listing and selling agents become involved in the deal. The commission split, in a majority cases, is a straight 50:50 split. However, in some cases one agent many end up getting more or less, as per the circumstances. The commission is though paid to the broker, a part of comes down to the agent along with the conventional real estate agent salary. This kind of mechanism is seen in almost all real estate deals. In some cases, the agent receives the commission and then a small portion is forwarded to the brokerage firm.

Real Estate Agent Commission

The standard commission is often affected as a result of several factors such as the selling price or the buying price of the property. The commission in several cases, is also affected by the time span within which the real estate was sold. The commission in such circumstances is in the form of cash. However the norms of Real Estate Settlement Procedures Act are applicable to the act, meaning that the agent cannot give off any favors or deal in kickbacks. The customer or client is protected by the Department of Housing and Urban Development.

Some commission rates, as of 2010, have been listed below:

  • Delaware: about 5.7%
  • Idaho: about 5.1%
  • Hawaii: about 5.5%
  • California: about 5.2%
  • New Hampshire: 5%
  • Tennessee: 5.6%
  • Wyoming: about 5%
  • Alabama: 5.3%

This commission is subject to change and it must be also noted that there are several agents or broker firms who provide certain legal documents and registration, transfer, assessment and appraisal services, for which they charge extra.

The problem is commission on real estate marketing is not mandated by any certain body, it is just ascertained by convention. Most of the agents and broker firms disclose all closing costs and charges to their clients, hence you can take multiple opinions while signing the attorney documents or any contractual document.

How to Start Investing in Real Estate

Real estate has always been a good investment option. It is also a much safer option compared to other forms of investment such as the stock market. However, before you invest your hard-earned money, it is necessary that you are aware of the risks and expected returns from the investment. So, this article will give you some pointers on how you can go about beginning your foray into the real estate business.

Market Study
If you wish to invest in real estate, but have a limited budget, then conduct a thorough market research to know about attractive investment opportunities. By doing a careful study, you will understand which property deal suits you the best and will generate the maximum returns.

Fix Your Budget
First fix the budget for your realty investments. Decide what is your investment capacity first. Before you decide the amount to be invested, take into consideration factors such as your annual income, current liabilities, monthly expenses, etc.

Finalize the Type of Property
There are different kinds of properties you can choose from. Apartments, row houses, independent villas, bungalows, penthouses, offices, shops, residential plots or commercial land are some options which you can explore. Be aware that commercial establishments will cost much more than the residential ones.

Finalize the Location
Location plays a crucial role in all kinds of real state investments. Whether you get good returns for your property will depend on where your estate is located. So, study the areas in the city and find out the current property rates and scope for further price appreciation there. Ideally, you can try to invest in upcoming locations where you can get properties at cheap prices.

Check the Developer’s Reputation
Checking the reputation of the property developer/builder from whom you will be purchasing the property is extremely important. You should buy a property from a developer who has a good track record of delivering properties on time and having the best construction standards and quality in the real estate industry. Make sure that the developer has followed all the necessary laws while constructing the project and there are no controversies and legal hassles.

Check the Plan
The next step is to check the floor plans with the developer. Visit the developer and understand each and every minute detail and specification of the project. Take along a property agent/realtor whom you know so that he can guide you in your property selection.

Get Finance from Lenders
Real estate is one of the biggest investment options in the life of any person and a lot of money is required for that. So, you might feel the need for finance and hence you should approach top banks with your income and personal information details. Also take the project details to get your loan sanctioned easily.

One way to invest in real estate is by selling a property you own and buying a new one for higher returns. So use these tips and some advice from an expert before you dabble in the world of real estate.

Tips For Buying a Commercial Property

If you are considering investing in brick and mortar and are thinking of buying commercial real estate, there are many points of consideration. Unlike any other investment, putting your money here, can be a tough decision to make.

Investment Tips

Commercial real estate investment is all about creating a cash flow generating asset and all your efforts need to be directed towards ascertaining its potential value. It’s no secret that these are times of economic recession and the real estate market has taken a beating. However, if you think optimistically, this is a time of opportunity, as a piece of real estate, which was beyond your reach in boom time, can be bought at a substantially lower price today. Here are the major points of consideration, while purchasing a commercial property. These are certain pertinent questions, which need to be asked, that help you assess the profit potential of a real estate investment and make your choice simpler.

What Kind of Property are You Looking For?
Even before you can start thinking about this investment, you need to have a plan about the revenue generating mechanism or business plan, that is going to reap cash for you, through this investment. Are you planning to buy a rental property, business premises for your company, or a shop? If you make up your mind regarding this, you’ll know what type of property to look for. That will simplify your search.

What’s Your Budget?
The next thing to ponder upon is to come up with a maximum purchase limit. If you are planning to make the purchase using a mortgage loan, then you need to decide on the maximum down payment, that you could make. A knowledge of your purchase limit will see to it that you don’t go overboard, when negotiating on price and land up in a soup. Start looking for banks that offer commercial real estate mortgage loans, once you decide the property, which you plan to buy. There are many financing options to choose from.

How to Search For Them?
There are various channels through which you can search for such properties. Online and print classifieds are a place to start your search from. Approaching a real estate agent is one of the best ways of searching, as they have extensive databases of properties for sale. They can find you a property, that fits within your price range and requirement. Be on the lookout for properties being auctioned.

How to Evaluate the Revenue Potential?
When it comes to evaluating the value of real estate, with respect to commercial gain, location matters. Consider what is the scale of profits, that you can hope to make, from those premises. If it’s a rental establishment, calculate what is the cash inflow. If you plan to open a shop or your company office there, location is the most important factor.

Ensure that title of the property is clear and get an architect to evaluate the structural solidity of the building, if it’s an old one. See if there are any pending tax payment issues associated with it. Get a real estate consultant to provide you with a valuation of the property, according to current market prices. This is known as an appraisal. When all of your homework is done and you choose a property, make an offer to the seller yourself, or via his real estate agent.

Negotiate for a fair price and arrange for a mortgage if the deal goes through. See to it that all the legal formalities are handled properly. A real estate attorney can handle it for you. Once you buy the property, you could either opt to manage it on your own or let a management firm handle it for you.

To sum up, leave no stone unturned in evaluating the earning potential of a property before you buy it. If the potential is substantial, the risk you take while opting for a mortgage loan, is lessened.

Land Buying Tips

If you are thinking of making a land investment, for building a home or for business; it is very important that you study as much about it, as possible, before you buy it. Its value has a reputation of appreciating over the years. So, buying land is almost always profitable. However, the rate at which the value appreciates, is totally dependent on the rate of development around the area. So, make sure that you choose it smartly.

Tips on Buying Land

Land remains the most sought after asset in the world. All things can be manufactured, but land can’t. It is the most sound investment to make. It is a more secure investment than stocks or bonds. However, investing in terra firma can be quite a tricky business. There are many issues to deal with and many things to watch out for. It can be a complicated business and one needs to carry out the whole business very carefully. Here are some tips, for those who came in late, in search of their promised land.

Location, Location, Location
When it comes to buying land, there are three important things to think about, which are location, location, and location. Yes, location matters. First of all, if you are clear about what purpose you are buying it for, your search is simpler. It helps when you know exactly what you want. See that you have electrical connections around your land so that you can get one easily, when you go into the construction phase. Water supply is another thing to look out for.

If water ain’t there, not much is going to grow there and life will be difficult. Ensure that your land is easily accessible by road. This is very important, as otherwise, transporting building material during construction becomes difficult. Also, it’s good to choose land, that is close to your place of residence. Otherwise, commuting will consume a major part of your time. Be ready for a lot of travel, to choose your promised land. Start with real estate advertisements in papers or approach real estate agents.

Check Topography and Surface Features
Check the topography of the land carefully. Avoid marshes and lowlands, as they are difficult to build upon. Hill slopes are also tough terrains to build upon. If you intend to buy it for agricultural purposes or otherwise, it is a good practice to get the soil type and quality checked.

Check if the land has an underground base of bedrock, that can hold water. If the bedrock’s there, possibilities of finding water underground are greater and may solve your water needs, in times of scarcity. If you are buying it for residential purposes, you must think from a landscaping point of view and evaluate it accordingly.

Ensure Title Clearance
Ensure that the land title is clear and there are no legal problems associated with it. Get the legal papers checked for authenticity. Many adventurers who were careless, have been conned by false papers and duped out of their life’s earnings. Take legal advice and professional help in making your purchase agreement.

Market Research
Research market prices in the area before going into a deal and agreeing on a price. Get a real estate appraisal. This way, you can ensure that you are paying a reasonable price. It is better to pay for the land in cash directly, instead of going for real estate loans. Loans can be very costly and can put a lot of financial burden. Saving money and buying your land within that budget, is a better option.

Land dealings are never simple. Rounds of negotiations and bargaining go on for days, before a price is agreed upon. The process can be even more complicated, when estate agents are involved in the process. Be patient and persistent. Ensure that everything about the deal is carried out through proper legal channels and consult a real estate attorney.

Tips For Choosing a Realtor

A realtor is a real estate professional who is a member of the National Association of Realtors. This association follows very stringent code of ethics and the members work full-time as real estate professionals. They are licensed by the state to help people in buying and selling properties, and need to meet set standards of education, experience, and examinations. A real estate agent may not be a realtor. If you are interested in buying a property, it is better to choose a realtor over a real estate agent.

How to Choose a Realtor

  • The first step is identification. You can ask your friends and relatives for referrals, or look for advertisements in websites and local newspapers. Identify around three or four of them, call them up and fix appointments for interview.
  • Interviewing realtors will help you in understanding their approach and personalities. This will let you access whether any one of them would be the right person to help you search a home or not.
  • It is important to check whether the person you are interviewing is actually a realtor or not. You can ask him to
  • show his work permit so that you can rest assured that you have chosen a genuine agent.
  • During the interview ask questions like – how often will you provide new listings? When can I expect to hear from you? How fast will you call back if you miss my call? etc. The realtor’s answers to these questions will give you a clear picture about his capabilities and style of working.
  • An experienced realtor has more contacts and is generally more updated than newcomers. Therefore, ask for the agent’s work experience and try to figure a rough idea about the number of dealings he has conducted so far.
  • Ask the agent if he is Internet savvy because agents who are well-versed with the Internet are more likely to send an immediate email about new property listings, and respond to your queries quickly.
  • Look for strong negotiation skills. An agent who is an expert negotiator can be of great help in settling issues between the buyer and the seller, and can conduct the whole process in a clever and efficient manner.
  • Select an agent who has mostly handled dealings from the buyer’s side as he will be proficient in it.
  • A realtor who handles property dealings under your price range and understands your requirements will be able to help you better in your search.
  • Referrals and testimonial letters can help in identifying a good realtor who knows his business well. Therefore, do not hesitate to ask for these documents during the interview.
  • Even though the seller party is liable to pay commissions to property agents, do not simply assume it. Talk about the agent’s charges for the complete process so that there is no confusion about it.
  • After the interviews, take time to analyze which realtor will be the best for you, make up your mind and appoint him as your property agent.

Selecting a realtor over a regular real estate agent helps, because they can access Multiple Listing Services (MLS) which is specifically available for members. This service informs members about new property listings in a particular area and increases the chances of finding a suitable house for the buyer. You can also choose to buy a house without a realtor, but then, you need to be extremely cautious and take legal advice, if required. As said before, owning a property is a dream and buying a house involves a lot of money. So it is simply not viable to choose a person who is not competent enough to help you find the best deal. That’s why, do all that it takes to find a good and reliable realtor and once this job is done, he will help in cracking the best property deal for you.

The Need to Retain Real Estate Agents for Buying or Selling

22Whether you are a buyer or seller of property, it requires a lot of effort to find the right price for the property and not get duped into giving out the property at a loss or buying one at an overrated price. Quite often, you may have noticed the fact that when it comes to dealing with properties, we approach real estate agents to help us out even though they act as the middlemen. These agents wouldn’t help us out for free and knowing the fact that they need a price to help you get the best and affordable deals, almost all of us rely on their help.

Despite several options of reaching to the right buyer or seller such as newspaper advertisements, the Internet, etc. we tend to depend on the real estate agents for reasons that are well known to anyone who have availed their services and have received lucrative benefits out of it. While you get lured with other options, here is why you should choose real estate agents to help you out.

They know all about the price of the property – For all those who are a part of the business especially when they have spent years doing the same thing, they can determine the price of a particular property at a single glance. They are known to understand all the aspects related to the property especially the neighbourhood, the accessibility and the amenities that the property enjoys. Therefore if you are a buyer or a seller, you can get to know the right price of the property and nothing exaggerated.

Sharp negotiation skills – The agent tends to be a messenger from both ends. If you are the one hiring them for your needs, they would, by all means, be able to convey all your requirements to the other end. The prime task that they would do on your behalf would be to negotiate the price for the property whether you are selling or buying it. With their sharp negotiation skills, they would, by all means, ensure that you can buy property online in london at the most affordable rates and not get duped of what you deserve.

Helps you in acquiring liveable houses – If you are a buyer, you would always want houses that are fit to live in. This includes the house being in the best condition where the walls are intact, the roof is safe, no leaking pipes and several other essentials that are known to keep the house worth living. If you cannot approach the owners to fix anything wrong, the real estate agent would help you in acquiring homes that are perfect in structure and nothing that would have you investing in it all over again.22

Experienced Real Estate Agent

In today’s technology driven world, it is true that you can shop for a property online and get a sneak peek into it; however, a professional realty agent is matchless for the job. Buying a property is not altogether performing the job; rather it also needs to be a good deal at good location with good prospects.

How can a realtor help you?

The experience of real estate agents in buying and selling different properties will greatly benefit you in getting most out of your deal. These professional agents will successfully market the property to the prospective client for the sellers and for the buyers; they will surely make a critical search in finding an amazing deal. Their full time profession of buying and selling realty frees the client from handling all the tedious particulars.

Benefits to the buyers and sellers-

The real estate agentscan offer great help in understanding your needs from the deal and will assist you in getting best out of it. They are the spectacular resources for providing useful information regarding the property trends and prices. These professionals could save you from headaches by offering special assessments and assistance.

There is varied nature of costs added to owning a property such as taxes, insurances, maintenance etc and real estate consultants can make you understand this in detail. Not just buying or selling, if you are looking for a deal on rent or willing to lease out your property, they will discuss the terms and conditions in detail with the other party.

Carrying the whole dealing procedure professionally on papers is of utmost importance and therefore it is important to hire the services of professional and experienced real estate agents. They will keep you up to date about the various deals available that suits to your needs well.

Finding an agent –

There are plenteous things you may consider to pull back the curtain and appropriately assess real estate consultants for your deal. Search online for the real estate agents offering services in your nearby area. These agents offer tremendous services to their clients by listing the suitable properties online and reducing their efforts of visiting the realtor’s office.

They online publish the portfolio of the properties listed in their area for sale, purchase and rent. Picking a winner is important to carry out your transactions as huge financials and long term relations are involved. The experience of the real estate agents is portrayed in their previous deals and present conversations. Depending on the years of operations into realty business you will ultimately come to know their skills and expertise. Hire their consultants to get the best possible deal.