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FROM THE DESK OF BRUCE BOSSOW
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Why would someone want to lease their own property without using the benefits of a qualified commercial broker?
DIY (Do it Yourself) landlords have been "performing brain surgery on themselves" forever, with mixed results, at best. There are only two reasons why they would attempt to find their own tenant:
1)
Because they can. There have been occasional markets where they are so many tenants vying for limited space that no broker is needed. I assure you, now is not that time.
2)
Because they think they are going to save the broker's commission. This is a misconception for a number of reasons. Brokers are in the business of EXPOSING a property to the marketplace and brokers have tools and expensive vehicles to make that happen. Individuals are limited in this respect and can only generate minimal exposure. This translates to more months on the market and lost revenue during that time. A broker's exposure program can get it done faster and actually SAVE you money. Also a prospective tenant will automatically expect a landlord to lower the asking rent if he doesn't have a broker. It's just human nature to use that as leverage to get a better deal. He's in effect trying to save the SAME commission as the landlord is trying to save. The fact is there is only ONE commission and both parties can't save it.
If you need help leasing a property that you own, call one of our friendly qualified professional brokers. Financially speaking, this makes sense.
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Warmest Regards,
Bruce Bossow
President
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$445,000
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11806 Coral Street
Fully leased 4-flat. Huntley - new on market 4- flat completely remodeled in 2017. 2,800 SF plus basement separately metered. Broker has interest 11.46% cash on cash return.
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REDUCED
$314,900
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77 E. Crystal Lake Ave.
Downtown Crystal Lake investment fully leased 3-unit office with dentist on 1st floor anchor. New roof in 2018. 15 car private parking lot. 8.6% cap rate. Price just reduced.
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REDUCED
$237,900
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3922 Main Street
Remodeled former Bank building.
McHenry - Unique rehabbed former bank (circa 1915) with original vault in downtown near commuter train and adjacent to city parking lots. Houses professional engineering offices currently with 1,624 SF functional basement. Exposed brick, lots of natural light. Reduced to $237,900.
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$165,000
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7512-16 Hancock Drive
Wonder Lake
Affordable starter investment.
Begin building a real estate investment portfolio with this fully leased mixed use property with one residential tenant and 3 commercial ones. New roof in 2014. 11.2% cap rate.
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615 Industrial Drive
32,000 SF
Investment
Bruce Kaplan and Kevin Kaplan
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800 Cog Circle
56,310 SF
Retail
Heather Schweitzer and Heide Casciaro
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6919 Cog Circle
2.52 Acres
Land
Bruce Kaplan and Kevin Kaplan
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102 Cass Street
19,850 SF
Investment
Bruce Kaplan, Kevin Kaplan and Joe Billitteri
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2220 Tech Court
9,440 SF
Industrial
Bruce Kaplan and Kevin Kaplan
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333 Judd Street
10,000 SF
Industrial
Bruce Kaplan and Kevin Kaplan
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TAX REBATE-ACT NOW!!
If you are a McHenry County homeowner, you may be entitled to a piece of a $15 million pool of money that the McHenry County Board has voted to give back for Valley Hi Nursing Home overcharges. A notice went out with your real estate tax bill received last month. The catch is that you need to apply for your share of the money by going on line at
www.mchenrytreasurer.org and click on Valley Hi rebate by July 31. We are told that hard copy applications may be picked up at the Treasurer's office at 2100 N Seminary Ave, Woodstock. Apparently 88000 properties are eligible and as of 6/15 only 27,500 people had applied. The writing is on the wall that the County is going to get to keep the bulk of this money if you don't take a few minutes to get in your application. $200 or $300 is worth a few clicks. Do it now! You will need a copy of your last tax bill with the PIN number on it.
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Valuating Investment Properties Using Cap Rates!
Investment properties are valuated using several criteria, one of the most important which is capitalization rate (a.k.a. cap rate), which is the ratio of the net operating income a property generates to the purchase price or value of the property. For example, if you pay $2 million for a property that has an annual net operating income of $140,000, the property's annual cap rate would be 7%. A good cap rate is one that generates a meaningful amount of cash flow. What level of cash flow is "meaningful" depends the return you are willing to accept for the risk you take when investing in a property.
TYPES OF CAP RATES
Commercial investment property brokers commonly refer to 2 types of cap rates:
- a "going in cap rate"
- an "average cap rate"
The former is the projected cap rate for the first year of owning a property, while the latter is the projected average cap rate over the course of the lease. Although going in cap rates are known for being more accurate than average cap rates, the latter can be quite useful for valuating investment properties whose tenants have demonstrated a stable net operating income year after year, thus making it easier to predict an average cap rate over a long period of time.
To legitimize projected cap rates that are used for property valuation, investors refer to market cap rates that are extracted from recently completed real estate transactions. However, it is important to note that cap rates for similar types of commercial investment property can vary. For example, a Walgreens located in Florida may have a different cap rate than a Walgreens located in New York due to a difference in location, consumer access, lease terms, market demographics, and other factors. This is why it is important for investors to consult an experienced broker before they decide to acquire a particular property.
Call Jeff Gitt 314-757-1031 at
Westwood Net Lease Advisors to discuss these topics and many more to learn all your options!
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DOES YOUR BROKER HAVE A PLAN?
At the risk of giving away trade secrets or otherwise proprietary information, I want to devote this month's column to Marketing Plans for getting commercial properties lease
d or sold. Some brokers promise you the world and tell you what you want to hear in order to secure an exclusive listing for your property. Most professional brokers will create a customized marketing plan tailored to your specific property. Without such a plan coupled with effective implementation, the sale or lease of your property is left to dumb luck.
What is a marketing plan? Each parcel of real estate is somewhat unique. A good broker has a skill set that will enable him or her to create a written description of the attributes, features and benefits of any given property. That information can then be packaged into custom formats and shared with the world in a multitude of ways. A marketing plan, then, is a written
outline of exactly how that broker intends to expose that property to the market.
Below are 8 key elements of a highly effective commercial real estate marketing plan:
- Signage-Twenty to 30% of all calls into a brokerage come from signs. If you don't allow one, you are hurting your exposure.
- Electronic Databases-seems like most prospective buyers/tenants who don't call on signs start by searching the internet for their information. Specific data bases cater to commercial properties and are the "go-to" sites for data. CoStar and Loopnet are the kings. And there are others like Totalcommercial.com and CREXI.com. Brokers pay huge sums to be able to put their listings in these services and search these golden resources for available properties. Some data bases are geared to brokers and others are aimed at the general public.
- Company Website-most companies today have a website where prospects can log on and do a property search. Visits to the website are driven by a well conceived marketing strategy and search engine optimization (SEO) plan.
- Direct Mail-Some firms have their own company newsletters which are sent out via snail mail or electronically. Certain properties may warrant buying a targeted mailing list and doing a direct calling or mailing campaign to likely prospects.
- Advertising- This has changed over the years. Newspaper display and classified ads are not big call generators anymore and tend to be expensive. Our advertising consists of selective trade publications when warranted (e.g. Food Industry News is a good one for restaurants). Beyond that we use e-blasts to proprietary email lists that are compiled and kept constantly updated. Many of these lists are aimed at brokers who specialize in the property type being marketed.
- Trade Associations-Commercial real estate has numerous trade organizations. Mailing to and networking with the members of these organizations is an integral part of a complete marketing plan.
- Public Agencies-Each property lies in a governmental jurisdiction (city, town, county). Most communities have economic development committees that monitor and actively promote commercial properties. Various Chambers of Commerce keep data bases on available properties for sale and lease. Making sure properties are exposed to the correct personnel can make the difference in a broker's success rate.
- Publicity-sometimes referred to as "free advertising", many publications accept press releases about properties of interest being marketed by brokers. Large or unique properties tend to get the most play.
Holding your broker accountable to implement a written marketing plan is key in increasing the odds of a property selling or leasing. No plan can guarantee that even a well orchestrated effort will be 100% effective. Overall demand and proper pricing have considerable bearing on whether a marketing plan can be effective. But without a plan, you are casting your fate to the wind.
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Premier Commercial Realty
9225 S. IL Route 31 | Lake in the Hills, IL 60156
Bruce Bossow, x 12 847-732-3462
Bruce Kaplan, x 20 847-507-1759
Heather Schweitzer, x 15 815-236-9816
Heide Casciaro, x 26 847-774-5660
Joe Billitteri, x 21 847-833-5004
Kevin Kaplan, x 13 309-261-0920
Chris Yuan, x 24 312-927-6333
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