Commercial Real Estate

The Irish Real Estate Market Is Worth Investing In

Though the costs of property in Ireland rose in the year 2006 on aggregate, there are still figures that have put a dampener on the spirits of buyers looking to invest money in such properties because the rate of increase in Irish properties has slackened off after August of 2006. Furthermore, there is no reason why the trend of slow rise in the value of Irish property will gather pace, because there is no evidence to show that this will not continue in the near term.

However, between the years 2000 and 2006, there were unprecedented raise in the value of Irish properties, which even tripled during that time period. The bad news is that since the year 2007, the demand for residential homes in Ireland has slackened, which has caused prices to also dip and thus not making a very attractive investment proposition to would-be investors in Irish real estate.

The trouble is that for the first time since way back in 1994, there has been decrease in real estate prices on quarterly basis, and even before this time, real estate prices fell in and around Dublin mainly because of increase in supply in Dublin Urban area and declining interest rates and also because of certain issues with infrastructure. Even in the larger urban centers in Ireland, prices of real estate have begun to stagnate and demand has also fallen as a consequence.

At present, real estate agents in Dublin have gone as far as offering incentives in an effort to woo more buyers, and also to avoid lowering of their sale prices.

Buying Property in Scotland

When you are in the market to buy property in Scotland, you could come up against certain terms that could cause some confusion and so you need to learn about what requests for ‘offers over’ and closing dates for offers mean. It is normal to see homes advertised for sale at prices ‘offers over’ X number of pounds, and this is a way in which sellers hope to get highest bids for their properties.

Still, if you are a purchaser and cannot bid the X number of pounds, you need not lose heart since you can still make a lower offer because properties in Scotland often sell for prices below ‘offers over’ prices, and if properties remain sold for a long period of time, it is always possible to pick them up at prices lower than ‘offer over’ prices.

Another point worth noting as far as property buying in Scotland goes is that many properties are now being sold at fixed prices, in a manner just like is found south of the border in Wales and in England. The reason for this change in attitudes is that those purchasers that are from outside of Scotland are generally discouraged by ‘offers over’ prices and so selling properties at fixed prices is a means of wooing these buyers.

Another means employed by sellers of property in Scotland is to use a ‘closing date’ in which the onus is on the purchaser to make their formal offers on the property by a specific date, much like in a blind auction.

The England Real Estate Scenario

As far as the England Real Estate scenario goes, it may come as a bit of a surprise to learn that among all the countries in the European Union, England is ranked among the highest as far as home ownership goes and in fact there are as many as 65% of all Brits that own a home in England.

However, the England real estate market has seen many ups and downs and during the early nineties. There was quite an unprecedented fall in the values of different real estate properties in that country, and in the month of October in 1995, England home prices were only around fifty-five thousand pounds (approximately one hundred ten thousand dollars) for an average home, though the market has since made a big recovery.

Six years later, in the year 2001, those homes were valued at eighty-five thousand pounds or about one hundred seventy thousand dollars. Since the year 2004, the real estate market in England has gone from strength to strength and in fact the prices of average homes in that country had risen to all time highs. However, this rise in prices has since subsided and in fact, has even fallen slightly in certain parts of the country.

The year 2005 saw the prices of homes begin to rise once more, and barring some unforeseen raise in interest rates, buyer demand should continue to remain strong. If you are in the market for long term property in England, you should consider buying character and period homes or even property by the waterfront, or properties in the heart of London – these real estate properties are certainly among prime properties.

Property in Wales - An Ideal Investment!

Now is an ideal time to get into the real estate business in Wales, and according to figures for February, the value of homes in Wales shot up by one percent, and because the value of real estate having escalated by as many as 8.5 percent in the last year, there is reason to smile if you have invested your money in real estate in Wales.

If you had invested money in real estate in Wales, you would have reaped handsome dividends since the region has experience price inflation of a bit over two percent in the month of February. You would do well to put your money on terraced homes that had the greatest rise in the previous year and prices of this home typically rose ten percent over what they were one year earlier, and even semi-detached homes were good movers showing an increase of 8.6 percent in one year.

Even according to latest figures on real estate in Wales, there is reason to believe that the prices of real estate in that country would remain quite firm in the short term, which means that if you have the money, then you would do well to invest it in real estate in Wales. The fact is that, at present, there are not enough numbers of homeowners that are offering their properties for sale, and the numbers of new homes are also not enough to keep pace with demand, which means that you should try and be one of the lucky ones that have picked up a home in Wales.

Commercial Real Estate & Capitalization Rate (CAP)

The capitalization rate or CAP rate is a means to measure the cash flow ratio with its capital cost or in some instances the current market value and it is derived by simply dividing the annual cash flow by its cost or value. Thus, a building costing one million dollars that produces one hundred thousand dollars by way of positive cash flow in a year would be said to have a CAP rate of ten percent.

You can use the capitalization rate to measure the speed with which your investment will pay for it in terms of net cash flow, and if the example above is considered then this would result in the building being completely capitalized in ten years.

The advantage of having a higher capitalization rate with respect to investing in commercial properties is that when such a rate is high you can expect high rental income from the commercial property and that would translate into requiring less down payment amounts. Thus, if you were an experienced real estate investor you would immediately write off those commercial properties having low capitalization rates and would even prefer to invest in commercial property with capitalization rate higher than the rate of interest paid for loans taken.

There are several different types of capitalization rates that you will come across when wanting to invest in commercial properties and you should be well acquainted with each so that you get the best out of your investment. Thus, look at net, proforma or gross CAP rates that are often used by brokers and know the most appropriate one, if you don’t want to end up paying more than is appropriate for the commercial property.

Avoid The Most Common Commercial Property Leasing Mistakes

Perhaps, the most common commercial property leasing mistake is not allowing sufficient time to research the property, make inspections, and weighing your options. You should thus allow for a period of six to twelve months in which to look over the facilities, and sometimes longer in case you need to ask professionals to do the assessment.

Next, you may fall into the trap of neglecting long term priorities and may instead settle for the near term solutions. It is thus necessary to evaluate more than short term needs and look at square footage such as number as well as size of rooms, floor plan type whether open, private or a combination of the two, communications and parking needs, access as well as security needs and to factor these for the long term as well.

Lack of proper knowledge is another common mistake made in leasing commercial properties and it is unwise to make decisions regarding location without knowing all the facts regarding each and every different choice, and you should realize that making mistakes will reduce your profits and cause you additional exposure financially.

And, when you look to acquire the commercial property, you may choose to take it on ‘as is where is’ basis that can be risky despite the premises looking alright to the eye since there could have been changes to the building code or the infrastructure could be inadequate or even broken. Thus, you would be better off to get a guarantee as to the ADA, building, safety, fire and zoning codes.

Residential Property Vs Commercial Property

There is a lot of debate going on with regard to which the better option between residential properties and commercial properties is, though many experts are of the opinion that commercial property is a better option as compared with residential property. Probably the most obvious reason why this is the case is that there are no tenants complaining to you in the middle of the night as is the case with residential properties.

Nevertheless, residential properties are often preferred because they are a more known quantity as compared with commercial properties though if you consider the rise of Donald Trump you should come to realize how profitable owning commercial property can be. You can understand the advantages of owning commercial properties when you consider the higher rate of return you get from this type of property.

Another factor working in favor of commercial properties is that the rent you get is based on a percentage of monthly profits earned by the company which means that if the company makes money so do you and if the property is located in a central part you can expect even better rents which is not the case with residential properties.

Then, there is the advantage of minor repairs and problems being fixed by the commercial renter rather than having to ask the landlord to fix them as is the case with residential properties. And, commercial properties are also sure to have networking as well as cabling done which will help push up its market value and commercial properties also appreciates faster than residential properties.

How to Determine Actual Market Value of Your Commercial Property

Perhaps the best and some might even say, the only way of determining the actual market value of commercial property it so look at comparable sales which are recent sales of similar types of commercial properties in the same neighborhood or in a similar neighborhood in the vicinity of your commercial property. Such a method is known as market comparison and it is most often used by licensed real estate appraisers.

You can achieve very accurate figures if you used comparable sales to determine the actual market value of your commercial property since theoretically if three similar properties are sold for similar prices, the fourth property would also sell for that kind of price. However, in practice this is seldom the case and this can be attributed to the fact that properties would be of different sizes and also of different ages.

Thus, your best bet would be to make an educated guess and to help you in this regard you should ask for and obtain a ‘Property Profile’ that is available in many states and which documentation provides considerable amount of information about each different commercial property. Thus, you could get information regarding the property such as zoning type, year of construction, lot size, square footage and also comparable sales.

To sum up, you should check out commercial properties sold within the last six months that are similarly located, and then compare apples for apples and also analyze needs such as cost of repairs which should be reflected in the costs.

Make Money with Commercial Property Rentals

The advantage of getting into commercial property rentals is that if they come with a triple-net lease it means that you don’t have much to manage; rather, you can expect good return on your money. The only trouble is that the market is not that easy to get into and there is also a strong possibility of ending up with cash flows that end up being in the red especially if you have vacant storefronts that remain vacant for twelve months at a stretch.

In fact, a triple net lease will mean that you get the tenant to pay the rent as well as the taxes and even the insurance. What’s more, many companies even find it more expedient to rent property rather than tie up their capital in land and buildings. Thus, when you opt for triple net lease you are virtually guaranteed that you get some money back on the amount that you invested and you also won’t be affected by any rise in property tax or insurance rates since the tenant will be paying these amounts as too costs of maintenance.

As mentioned, the only drawback to your idea of making money from commercial real estate rentals is that your property may remain vacant for a year or even more and finding a suitable tenant is also something that takes time unlike in the case of residential real estate. Thus, your best bet would be to either get somebody to mentor you or study in-depth the market before you venture in commercial real estate rentals.

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