Key Factors For Evaluating Commercial Property For Sale

The secret of evaluating commercial property lies within a model where one property can independently be evaluated against another property.

The basis of any model is to ensure that proper calculations are made with regards to the sustainability of any property for sale in the market. This entails doing the calculations. If the calculations do not work then you should not make the investment.

Our model has the following attributes:

A Summary

The summary makes provision for the size of the property to be purchased expressed in gross lettable area (GLA). It also makes provision for the rent that can be obtained for the commercial property to rent. This is crucial since this will provide an indication whether you can compete with other similar properties in the same area. It makes provision for the nett rental income that is obtained from the property since this determines the value of the property.

Variables

The variables include the average interest rate over the past 20 years. It should also include the average inflation rate over the past 10 years which should be factored into the calculations. Annual rental increases should be factored in which will result in the yield to be obtained over into the future for at least a 10 year period. Provision for a vacancy rate is crucial when compiling your model. All expenses are captured in this section,

The Assessment

The assessment is the culmination of all the previous part into one view of the model. This will include the NAV (Nett Asset Value) determined on an annual basis. This will also include the gross rental income associated with the property with all escalations included. All expenses are reflected here inclusive of the monthly loan payments based on the average interest rate over the past 20 years. Calculating the gross rental income less all relevant expenses will result in the pre-tax cash flow on a monthly basis. From here all tax obligations can be calculated resulting in an after tax cash flow calculation. Determining your ROI (Return on Investment) is a direct result of these calculations. The IRR (Internal Rate of Return) is derived from these calculations making it a crucial tool to compare different properties.

Combining all the attributes of a model dedicated to evaluate commercial property for sale will ensure that you make the correct decision time and again. Most commercial property for sale are offered as commercial property to rent. It is therefore crucial to ensure that the correct investment decision is made based on pure calculations.

How to Find Great Deals on Investment Property for Sale

Most investors look in the wrong place to find investment property for sale. Take a quick look on the internet for investment properties and you may think that it’s not possible to find a good property for sale that is not over priced. The key when you are looking for investment real estate for sale is to understand that the best deals are not usually advertised. If you’ve read my latest book, “Commercial Real Estate Investing” then you probably already know that the key to finding good deals on real estate investments is in creating relationships with real estate brokers.

“Pocket Listings” of Investment Property For Sale

Some of the very best deals on investment real estate come from something known as a “Pocket Listing”. This is when a broker knows about a property for sale, but they have not yet officially announced it to the rest of the buyers who are looking for a property. With single family homes, this announcement is usually done by adding the property to the MLS or Multiple Listing Service. With a commercial property, the public announcement can be adding the property to Loopnet.com, mailing a postcard out, or by adding the property to the company’s website.

Why All Investment Property For Sale Is NOT Equal

The real estate brokers job is to get as much as possible for the investment property depending on the owner’s situation. If the owner of a property is in no hurry, and has no compelling reason to sell quickly, then the broker can price the property aggressively and wait for a retail offer to come in. On the other hand, if the seller is motivated by a divorce or business partnership that is coming undone, or perhaps the seller is dealing with an urgent medical condition, then the broker’s job is to get the investment property for sale quickly, even if it means lowering the price or offering some creative financing terms.

So ideally, you are going to work to create a situation where the property needs to be sold quickly, the seller is motivated, but the broker has not yet released the listing to the public. This is the pocket listing situation that you are looking for. The problem is that you can’t simply call up a broker that you don’t know and ask them “Do you have any pocket listings for me?” The answer is going to be no.

The reason for this is that when a broker does have a pocket listing, in most cases the broker is going to call the investors that they know and trust to offer them the opportunity to get a great deal on an investment property before they release the property for sale to the general public.

So your goal when calling or looking for commercial property for sale should be twofold.

1) Get the information about the property including all the income and expenses

2) Create a connection with and get to know the real estate broker

Your best deals probably won’t be the advertised commercial properties that you initially call about. Instead, once you create a connection and rapport with the broker, you’re in a position to get access to pocket listings which is where some of the very best investment property for sale can be found.

Overseas Property For Sale – Egypt Has It All

If you’re looking for an overseas property for sale, Egypt is the country of choice for investors, as investors are benefiting from high returns from both rental yield and capital growth.

Property Investments

In recent years Egypt has started to attract an increasing numbers of visitors and property buyers alike. Apart from the resorts, the majority of property investments are taking place in the major cities, such as Cairo and Alexandria, and the major cities are currently attracting as much as 25% annual capital growth.

When you’re looking for property for sale, Egypt offers old properties, new builds, and off-plans. When buying off-plans (buildings not yet built, and the sale is based on the plans of the building) you get the opportunity to reserve your property at around 30% below market value. The reason properties are offered at a reduced price is to attract individuals who are in no hurry to take occupation, but realise the significant savings of early purchasing. Buy-to-let investors can hope to achieve good rental yields from a well-located property as the climate in Egypt supports a year-round tourism industry. If you’re a looking for a commercial property for sale, Egypt is an attractive location for shopping mall developers, as the total number of malls in the country is relatively low for a population of 72 million.

Tourism

Egypt is a vast and wonderful country and is synonymous with pyramids, Pharaohs, and temples. Egypt is an unmissable destination and it remains one of the world’s most fascinating travel experiences. Throughout history it has attracted many famous travellers, archaeologists, treasure hunters and, more recently, sightseers wishing to see the famous sites of ancient Thebes, Aswan and Cairo. Egypt is also a hotspot for divers as the water is warm, there are beautiful coral reefs that are home to an abundance of colourful sea life, and there are several ship wrecks to discover.

Remember that Egypt is a conservative society, and visitors should respect local customs and sensitivities, and dress modestly. For women especially, the wearing of long skirts or loose fitting trousers, and shoulders covered, discourages physical and verbal attention.

Geography

Egypt is bordered to the north by the Mediterranean, to the south by Sudan, to the west by Libya, and to the east by the Red Sea and Israel. Egypt is in the arid desert belt and it is very hot in the summertime and cool at night. In the wintertime it is warm during the day but cold at night. Most of the country is covered by desert, except in the valley of the Nile River where 95% of the population lives. Egypt is Africa’s second most populous country after Nigeria, and it has the highest population in the Arab world.

Conclusion

Egypt is growing both in the tourist market and the property market. Investors looking for a low risk place in which to invest their money would be wise to seriously consider Egypt. Once people realise that Egypt is more than just history and culture, the Egyptian property market will really escalate, and when that happens, investors who have bought into the property market early are certain to make a very good return on their low risk investment. The crucial point when purchasing a property in Egypt is to find the right property in the right location and getting it at the lowest price possible. When such a purchase is based on careful research and advice, your property can provide you with a secure and profitable investment. So when you’re looking for an overseas property for sale, Egypt can offer you many benefits and rewards.