Commercial and Residential Real Estate in NCR

Commercial and Residential Real Estate in NCR

Commercial Property consists of any property which can be used for commercial purposes which generate income such as retail shops, office spaces, food courts, cineplex, parking structures, conference plazas, warehouses, factories, IT Data Centres, & other shops. They are different from property that may be used for residential or agricultural purposes that although may generate income, are primarily developed for personal, not industrial or commercial use.

From an investment point of view, there are several advantages of investing in a commercial property than a residential property in India. They include:

  • Commercial properties are generally developed after a lot of research. The developer takes into account things like cost of land acquisition, construction and other costs to derive their profit margins. The property is thus generally at a location that is easily accessible and well connected, amid a catchment area with few competing projects.
  • It is easier to lease commercial property for longer duration to corporates creating stable, assured rental income for life.
  • A large office space can be divided into smaller sections if need be, ensuring financial viability of the investment.
  • Property management in commercial properties can be managed by professionals and be paid by tenants ensuring reduced stress for the investor as compared to a commercial property.
  • The return on investment on a commercial property is generally between 9-21%, while for most residential property investments the returns are 1-3%.

Speaking specifically about the Real Estate Sector in the National Capital Region, the residential property rates are stuck at the 2013-2014 levels. There is massive inventory with the developers with some reports suggesting it might take over 4 years for the inventory to clear.

The commercial property sector meanwhile is faring much better with prices up nearly 45% from 2013 levels and vacancy rate below 5% in many micro pockets in Gurgaon. The demand of office space from corporates, ITeS, and retail are the key drivers of this phenomenon.

Residential Property

Residential property is should be the property one buys for their own personal needs. Various types of residential properties include Villas, Apartments, Luxury Condominiums, Bungalows, or plots of land which one plans to develop later. Generally, a person buys residential property only once or twice in their lifetime. Hence one should take their time researching about the property and do so with a clear picture of their current and future requirements in their minds.

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Commercial or Residential? Real Trends for Real Investors

Commercial or Residential? Real Trends for Real Investors

The real estate market consists of constantly fluctuating up-and-down cycles, so continual education is necessary for the savvy investor who wants to know where, or what, to buy next in order to maximize their investment. The average real estate investor has considerable difficulty keeping up with the many changes in lending and market conditions from year to-year and even month-to-month. In the past decade, many real estate investors made huge profits from short term investments such as fixing and flipping houses or as a simple result of the housing boom. When housing prices increased, fueled by a strong economy and low interest rates (along with an increase in risky lending practices), many new investors were able to pull out the equity in their current homes and purchase new homes. Unfortunately, some of the new homes now held as investment property were purchased using these risky loans. With the residential housing market headed towards a downturn, many of these investors do not have the skill or professional guidance to know where and how to invest in the future.

Commercial vs. Residential

The commercial investment market, however, does not reflect this downturn. In fact, buying by investors interested in long-term income has increased. Mr. Stephen Blank from Urban Land Institute stated in an recent article: “I think it’s a clear mandate from people that you’re going to make money the old fashioned way.” (Commercial Real Estate Cycle Peaks and Will Pull Back in 2007. October 2006). In other words, the market will return to normal income producing investments. Short-term investments will no longer be as lucrative and appreciation will slow. The huge profits from the short term “flips” of the past few years will decrease. Investors will no longer be able to ignore the numbers; each potential investment property will need to be analyzed for the long term so the investor can know their return on investment.

Significantly, for the next few years, cap rates are expected to increase. Cap rate, short for capitalization rate, describes how the investment property performs against similar properties in the same area. There is expected to be a surge in the number of renters due to high foreclosure rates and the fall in condo construction. From 2005-2006, there was a rise in vacancies in multifamily properties because of a massive increase of inventory. This increase was a result of a large number of apartments being converted to condominiums, along with new condo construction. Already in 2007, rentals have increased, as the market is moving towards people waiting to buy homes while prices continue to fall. Other upcoming trends for commercial real estate are for warehouses, storage facilities, and office building, which are expected to perform better than previous years.

The residential outlook is much different because many buyers felt that a rebound would occur sooner, some speculated as soon as 2008. Instead, the worst forecast numbers have doubled, surprising even some market analysts. The inventory of homes for sale is grossly elevated, leaving far too many homes on the market unsold and many newly constructed homes vacant. Real estate investors who expected to turn a quick profit and did not foresee the market slowdown own much of this new construction. In a recent article, Chris Isidore, Senior Writer for CNNMoney.com stated “The pace of new home sales are expected to fall to 860,000 this year essentially flat from the estimate of a month ago, but down 18% from 2006 sales”.

Lending Industry

In my article, “Lending Trends 2007,” Tricomm alerted our clients to recent changes in the lending industry. The article focused on how the 100% residential loans were defeated and the tightening up of lenders’ fists with real estate investors. The consulting branch of our firm, Tricomm Worldwide Signature, has directed its Research & Development Department to look for sellers and seller’s agents that are willing to use more creative seller financing terms as an alternative to our clients seeking conventional lending.

We are seeing large amounts of properties being sold, including commercial real estate, using seller financing. In recent months, we have helped our clients purchase seller financed apartment complexes with little money out of pocket. This creative solution will assist the client in growing and establishing a long-term real estate investment business. The same strategies are used to help real estate investors who own residential property unload their property to investors or new homeowners who are unable to qualify for a traditional loan.

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The Benefits of Having a Flat Roof for Your Commercial Building

The Benefits of Having a Flat Roof for Your Commercial Building

When building a new commercial office, many business owners focus intensely on the inside of the new commercial building, but tend to not think as much about the outside of their commercial building, including the roof. When it comes to determining what type of roof to install, either a flat or a slanted, individuals do not understand what these options are and which one is the best. Many contractors and roofing companies are telling individuals to select a flat roof for their commercial building. It not only reduces expenses but it can add value to the entire building.

Possibly the biggest benefit of having a flat roof is the accessibility it provides. When compared to other roofing options, flat roofs are more accessible because they do not have a large slope. There is a minimal chance that an individual will slip while on a flat roof as compared to a slanted or slopping roof. Some businesses like having a flat roof because it gives employees a place to go on their break when the weather is nice outside, especially if there is not a lot of land around the outside of the commercial building

Most people are unaware that even though the name of the roof is a “flat roof,” it is not 100 percent flat. Flat roofs have a very small, almost unnoticeable slope that assists in draining water off the roof that accumulates during a rain storm. This ensures that the roof does not leak and water does not start leaking into the commercial building.

Another added benefit is that is saves room space in the commercial building. With sloping roofs, a lot of times space is lost due to wooden beams holding up the roof which creates dead space. These areas cannot be utilized in any fashion. There is minimal dead space with a flat roof, increasing total space within the commercial building.

They are very easy to build. There is less surface area with a flat than with a slanting roof. If there is less surface area, then not as much raw material is needed to construct the roof. Because there are fewer raw materials needed, the business owner purchasing the flat roof for the commercial building does not have to pay as much money as they would with a slanting roof which requires additional raw material to construct. Flat roofs are also less physically demanding and take up less time to build. These two factors will also greatly reduce the price of building a flat roof on a commercial building.

Of course, the roof’s life expectancy is completely dependent upon how well the business owner maintains it. The business owner should have annual inspections done on the roof. This will not only assist in finding weak locations to fix immediately, but it will increase the overall longevity of the roof. The roof of the home should never be neglected. If a business owner notices something is wrong, like a leak, they should call in for maintenance immediately.

What sets us apart from our competitors? Since 1935, Edwards Roofing has been taking care of the roofs in Northwest Florida and South Alabama.  Only by doing quality work at fair prices can a business succeed for that long, in so small a market place. We are very proud of the relationships we have formed during that time and have many clients that have been calling on us for several  generations.  There is great satisfaction in hearing a client say that their father and grandfather used Edwards and they trust us to take care of their needs now.

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Commercial Building Inspections – Tips for Finding a Reliable and Competent Building Inspector

Commercial Building Inspections - Tips for Finding a Reliable and Competent Building Inspector

If and when planning to purchase a commercial property, the question often arises, ‘How Can I Find a Reliable and Competent Building Inspector for Conducting a Commercial Building Inspection?’ While one could easily write an eBook on this subject matter, this article offers several tips to help you hire a reliable and competent inspector for the purpose of obtaining a thorough and diligent commercial building inspection. So without further ado, let me begin by telling you ‘What Not to Do’.

Never hire a commercial building inspector who was referred to you by the real estate agent or any other outside party who has a vested interest in and stands to gain from the sale of the property.

Although this statement goes without saying, it’s worth mentioning simply because many of those looking to purchase commercial real estate believe it is standard protocol to rely upon the realtor’s recommendation for hiring an inspector. In reality, this practice poses a conflict of interest that can have dire consequences for the party purchasing the property. Unfortunately, real estate agents who knowingly partake in this practice along with inspectors who continue to burn the candle from both ends know exactly what they’re doing and how to get away with it. While there may be a few exceptions to what I am telling you, I can assure you that the majority of inspectors who rely heavily upon referrals from real estate agents for their business are not going to rock the boat by disclosing any information to the client during the course of an inspection that may later serve to jeopardize their relationship with the broker or real estate company who referred them in the first place.

Never hire a Home Inspector to conduct a Commercial Property Inspection.

As for hiring a home inspector to conduct a commercial building inspection, suffice it to say that in most cases, conducting a commercial building inspection is altogether different from performing a home inspection for reasons too numerous to list in this article. However, the proliferation of home inspectors over the past twenty years (everyone wants to be one, especially in those States where home inspection licensing has become mandatory making it relatively easy for anyone to become licensed), hasn’t helped either as this has spawned an increasing number of home inspectors who are still unable to properly inspect a home, much less a commercial building, even if their life depended upon it. Moreover, given the number of significant and distinct differences between residential and commercial property, while experience in inspecting homes may well serve as a prerequisite, it is by no means a substitute for the vast amount of knowledge and experience required and yet to be learned by most home inspectors before they can even begin thinking about conducting a diligent and thorough building inspection.

Aside from ‘What Not to Do’, there are also other criteria you need to consider or at least be aware of in your quest to hire a reliable and competent commercial building inspector. namely:

Know the fundamental difference between a Commercial Building Inspection and a Property Condition Assessment (PCA).

Although this topic warrants a separate discussion, it’s important to note that the terms ‘PCA’ and ‘Commercial Building Inspection’ are often used interchangeably in the commercial sector. This in turn has resulted in a lot of confusion not only among real estate investors and others looking to purchase commercial property but real estate agents as well who more often than not simply do not know much less understand the difference. To make matters worse, the ASTM (American Society of Testing Materials) has also gotten in on the act by promulgating their ASTM Standards for Conducting a Baseline PCA. What this means is that since they happen to be a nationally recognized organization in the construction industry, in certain respects they’re similar to the AMA in the medical profession meaning anything and everything they write on a particular subject happens to bear a lot of weight. The problem arises in that the Standards for Conducting a Baseline PCA are often misunderstood by many in the profession and seldom if ever read by those buying and selling real estate.

To simplify things, all one really has to know is that the difference between a commercial building inspection and a Baseline PCA is like night and day since the later can be performed in a fraction of the time it takes to conduct a thorough and diligent commercial building inspection. The reasoning behind this is pure and simple in that a PCA is essentially a cursory walk-through of the property that relies heavily upon second hand information obtained through interviews and documentation (that may/may not be readily available let alone veritable) normally obtained through the owner and/or occupants of the property. Hence, my advice to anyone who is seriously considering having a PCA in deciding whether or not to purchase a commercial property is to forget it since in most cases a PCA is a total waste of time and money in providing information contained in a property condition report that isn’t worth the paper it’s printed on.

Try to obtain as much information as you can about the company and the inspector beforehand

This is another statement that goes without saying but I mention it because many people feel uncomfortable in asking questions of this nature especially when speaking with someone they don’t already know. However, if you reflect upon what I’ve just said for a moment, the fact you don’t know anything about the company or the inspector should be reason enough to ask all the questions you can to solicit answers without being embarrassed.

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Property Management – The Operation Of Commercial And Residential Real Estate

Property Management - The Operation Of Commercial And Residential Real Estate

Property Management exists for the same reasons that management exists in any business; to run it smoothly and effectively to get results. The role between the landlord and the tenant is the most important but due to mounting responsibilities this role can often become to much for a landlord to cope with, which is why extra help is important; this extra help comes in the form of a property manager.

The help of a property management team would mean that duty’s such as collecting rent, responding to and addressing maintenance issues and advertising vacancies for landlords as well as performing credit and background checks on tenants would be taken away from landlords. This will allow the landlords to get on with other jobs, making their work a lot easier.

For all of the duty’s performed a landlord will pay a percentage of the rent collected every month, this percentage is typically between three and ten. This percentage will pay for duties such as all of the ones named above as well as work such as the construction, development, repair and maintenance on a property.

This provides a face for the landlord. It should also be noted that the real estate market is very competitive, which is why gaining help is important. A property management team allows you to keep your real estate in good condition in order to keep tenants in your real estate and as a way of gaining more.

As a landlord you need a management company that offers a effective, cost effective service throughout the UK. This is because the team can take away daily hassle and let you enjoy your investment.

Many people often argue the point of why not just use a letting agent for your maintenance needs? To put it simply a letting agent is good for finding your next tenant but doesn’t help you with on going management needs where as with real estate team at your disposal you will be able to provide the level of care and help that is needed for your tenants needs. You wont have to go out of your way to hire a building contractor when a tenants pipe bursts or their roof leaks as you will have a building contractor team ready to help.

As well as your actually team it is also a good idea to invest in management software. This software aids the help of the team as it allows them to keep a record of aspects such as property details (room sizes, property condition, home furnishings, fire safety, etc). It also allows you to store images of all rooms and aspects of the property as well as utility details i.e. gas and electricity.

You can also set up a payment schedule, which allows you to track the payments of rent and any other services that you provide. It can also be used to store tenant’s details and the lease details.

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