Dc Fawcett’ Best Way of investing in commercial real estate investment for beginners

Commercial real estate investment for beginnersShops, commercial buildings, industries, retail, wholesale, warehouses, hotels and educational institutions come under the commercial property. You can either buy the property directly or indirectly by investing in property companies, developers, house builders or even in funds. However, as a beginner, it might be a daunting task id you don’t have enough funds or have a bad credit. DC Fawcett suggests the best ways for the starters to invest in commercial real estate.

Best Way of investing in commercial real estate investment for beginners

There are so many factors to consider before you think about starting to invest in commercial real estate. One of the main factors is budget and location. Prices for commercial building or complex vary according to the location and area. One of the ways is to ask a professional real estate agent about investing in commercial property. If you are looking to invest in commercial real estate as a beginner, following are the ways.Real estate rating.

  1. Learn what the insiders know

    To be a professional in this trade, you need to think as a professional and take tips from the people who are experienced. You need to know that commercial property is different from the residential property. Even to avail the loan, you make at least 30% down-payment to the commercial property lenders.

  2. Map out an action plan

    The top real estate professionals are able to make out whether the deal is good enough. They make use of exit strategy, i.e. they know what deals they should accept and what not.

  3. Get familiar with key commercial real estate metrics – It consists of:

    1. NOI (Net Operating Income)

      – The commercial property’s NOI is calculated by evaluating the property’s first year’s gross operating income and deducting the operating expenses for the first year

    2. Cap rates – Real estate cap or capitalization is used to calculate the net present value of income generating assets.
    3. Cash-on-cash – Most of the commercial real estate investors rely on financing to purchase properties abide to cash-on-cash strategy in order to compare first-year performance on commercial properties. This approach takes that the investor does not pay 100% cash for the property on one go and won’t keep all the NOI if they have other commitments like paying the mortgage loans. To uncover cash-on-cash, you need to calculate the amount required and stick to your budget
  4. Look for motivated sellers

    Like any other business, the customers’ drives real estate too. You need to find the sellers, who are ready and eager to sell below the market value. Nothing happens or matters in real estate till you find a motivated seller.

  5. Study the neighborhood

    To evaluate the commercial property, you need to study the neighborhood, where it is located in by going to their houses, talking to other neighborhood houses, and looking for the vacancies.

 

Conclusion

Apart from finding and evaluating commercial properties, getting a great price and communication, you need to build a good relationship and rapport with the homeowners.

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How To Calculate Capitalization Rate For Real Estate – DC Fawcett

Real EstateDC Fawcett Virtual Real Estate investing club

Real estate investors should have a method to derive the property value they’re going to buy. This is required as many times; a person ends up paying more than the expected price which reduces the profit when they are selling the property. The Capitalization rate is determined on the basis of the income from other properties and the recent selling price.

DC Fawcett has advised the investors to use this formula to get the exact value.

What is Capitalization?

It is the rate of return on real estate investment property based on the income you expect the property to generate. In other words, the capitalization rate is used for determining the investor’s potential income on their investment. DC Fawcett Virtual Real Estate Investing Club.

Capitalization Rate Calculation

  1. You can derive the capitalization rate by dividing the net operating income on the investment by the property’s current market value. Here is the formula:

Capitalization rate=Net Operating Income/Current market value.

For example, if the recent selling price of a property is $4, 00,000 and the net operating income is $20,000, the capitalization rate has to be calculated.

  1. Divide the NOI by selling price to get the capitalization rate, i.e. $20,000/4, 00,000 = 0.05 or 5%. All that you need is a calculator.

Selling the property

You should know what price to fix for selling the property taking all the expenses and the cost price into consideration. For instance, you own a small apartment or the plot and want to sell it. However, you do not have the idea of what rate the property has to be sold. For this, you need to check the current rate for the property similar to yours. Though you find the property sold three or four months back, the catch is about the net operating income which is sometimes published in the listing. If you get three property cap rates on an average of 9% and your net operating income is $36,000, the NOI cap rate is:

$36,000/0.09 = $4, 00,000 which is your property value.

The decision is entirely yours whether to ask for the price for the property or take it from the market.

Buying the property

When we buy the property, we are on the other side of the transaction. If you target to buy a small apartment, you should check whether the price quoted for the apartment is worth or not and whether you are being overpriced. If the price is $5, 00,000 and the capitalization rate is 10%, here is the calculation.

$5, 00,000 x 0.1 = $50,000, which is the required net operating income.

The capitalization rate is useful as it helps you to get the information about the investment, so interpretation becomes easy and you get the fair idea when you decide to buy or sell the property. The capitalization also helps you to know what amount you are earning on the property.

Conclusion

There are several reasons to justify the property’s capitalization rate, depending on the location, quality, and the surroundings.

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DC Fawcett Virtual Real Estate Investing Club

virtual-real-estate-investing-club-dc-fawcettMany are attracted to real estate business as they have got to know the secrets of becoming wealthy from their friends, relatives, and neighbors. Although it is tedious to find a good buyer, it works out well if you find one.

DC Fawcett suggests many ways like flipping, buying, renovating and reselling the property for gain, purchasing residential and commercial properties & investing in real estate groups.

Read also – what is Flipping?

How to generate real estate investing leads?

Any business depends upon the good marketing strategies. Real estate is not an exception. On the contrary, there are more struggles in this type of business, people make mistakes and fail many times. However, that is not the end of the world. You can rise up, despite your failures by learning from your mistakes and experiences. Following are the guidelines to increase your leads.

  1. Easy Navigation

    Your website should have a clear direction for the viewers which enable them to decide about its prospect.

  2. Newsletter advertising

    This type of advertising enables the viewers to know that the company or the individual does exist who are dealing in real estate or any other product or services.

  3. Effective content

    A good content attracts a lot of audiences in which you can generate leads. Without the great content, lead generation is impossible

  4. Social media

    This is the most important and popular way in generating leads. For better results, it is better if your website and SEO is seen in social media. There will be more possibilities to increase traffic.

  5. Email marketing

    Many marketers use this source to generate traffic and leads. Testing and segmentation determine whether direct mail is right or not. It solely depends on the individuals how they respond.

  6. Traffic generating content

    This is important for getting the viewer’s eyeballs on your website. This increases the audiences, which gets converted into leads. The best ways to generate traffic are:

  7. Blog posts

    This is fundamental for any type of business. As far as real estate is concerned, many look at these blogs to see if they can get the property at a reasonable rate.

  8. Podcasts

    This encourages the visitors to share their experience with the audiences and helps you in increasing the leads.

  9. Social media post

    These posts help you to increase the traffic to your blog.

  10. Videos

    Online videos enable you to drive the traffic to your blog.

  11. Photos

    Photos give the clearest picture of your property to the viewers, audiences and online buyers

  12. E-books

    Just as there are e-books for other products and services, you will find many e-books on real estate investment too.

  13. Socialization

    As a real estate investor, it is important to join real estate clubs and association. This gives you more exposure and experience in this line. If you are new to this business, it gives you the scope to learn from other’s mistakes and experiences.

Conclusion

The above tips are applicable to all businesses.

 

 

 

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