Author Archives: Pete Baldwin

Pete Baldwin

About Pete Baldwin

Pete Baldwin is the designated broker and owner of Platinum Realty Network with offices in Scottsdale and Flagstaff, Ariz. With over 25 years of experience in business and real estate, Pete specializes in country club communities and second home investments, including large commercial portfolios. He also owns an Arizona branch of a family-owned, Montana-based company Baldwin Log Homes – Arizona Territory and has become the area leader in full-custom, handcrafted log homes in Northern Arizona. For more information, please visit www.PeteBaldwin.com.

finance

Buying Commercial Property Through Commercial Mortgages

Buying Commercial Property Through Commercial Mortgages

As we’ve all heard; the sky is falling, everyone is unemployed and the there will be no more small business. OK, maybe I’m exaggerating a bit, but I can walk away from a local news broadcast feeling like I’ve been diagnosed with a fatal disease and have only three days to live.

Moments later I’m back in my office grinding out phone calls to existing clients and prospects that are looking to buy a commercial building with the right frontage and signage opportunities, but of course, they want to buy the building at 50% off. So no, the sky isn’t falling, small business is strong and growing and the commercial buildings with the right amenities are all but gone or have multiple offers on them.

This is my favorite question from clients: “What percentage does a seller typically expect to reduce their price by when they list their property with you?” Of course I tell them that the seller would most likely expect to get what they are asking for the property. Clearly, we are beginning to see the commercial real estate market become more of a seller’s market than a buyer’s market.

If a seller has a great piece of commercial real estate in a good neighborhood with C Class zoning or better it’s like having a rare coin – everyone wants it and buyers are seemingly willing to pay extra for it. I am speaking of Scottsdale and the areas of close proximity. Vandalism, theft, burglary and simple external obsolescence are just a few of the reasons other areas lose value and simply don’t come back for years until the entire area is redeveloped.

How did we get where we are today? As historical trends show and continue to show decade after decade; commercial real estate ebbs and flows follow residential free falls. We see this happen about every 8 to 12 years depending on the economic health and vitality of the country and world. We knew that property values here in Arizona eventually had to slow down but we didn’t expect the significant drop that we had. The great news – the Scottsdale real estate market hit bottom 17 months ago and we are slowly creeping back up; with very little inventory currently available.

Let’s not forget how this mess started; Mortgage Backed Securities, including but not limited to Residential and Commercial Mortgage Backed Securities. First, a quick definition of a commercial mortgage backed security – A mortgage-backed security (MBS) is an asset-backed security that represents a specific claim on cash flows that originates from mortgage loans through a process known as securitization.

The process of securitization can be complicated and convoluted, and is highly dependent on the jurisdiction within which the process is conducted. The basics are this: Mortgage loans or notes are purchased from banks and other lenders and assigned/sold to a trust, then the trust assembles these notes into pools. The trust then securitizes the pools of notes by issuing a mortgage backed security. Residential mortgage backed securities are backed by single family to quad-plex or four family housing units. Commercial mortgage-backed security (CMBS) are secured by commercial and multifamily properties, such as apartment buildings, retail or office, hotels, schools, industrial properties, commercial sites, etc. A CMBS is usually structured as a different type of security than an RMBS.

Fannie Mae and Freddie Mac are the most common securitization trusts in the United States. So what happened? It’s been suggested that the inherent complexity surrounding the securitization of commercially backed mortgages can suffer from and are highly prone to steep and quick changes in underwriting standards. It’s believed that the U.S. subprime mortgage crisis was in large part created by competitive private mortgage securitization. Additionally, there was a lot of securitizing that was “not on the books,” so a lot of the securitizing firms’ balance sheets were less transparent.

What does this mean for us here in the Phoenix and Scottsdale areas? Keep your eye on both the residential and commercial markets in your area; these provide excellent indicators of your ‘local market’. Are new small businesses opening up? Are rents getting more expensive? What I’ve found is that landlords and owners are charging more for rent and getting more when selling. This is a good thing and means that particular market is on the rise.

I always recommend retaining a professional commercial real estate broker familiar with the area you are interested in. Make sure your broker provides demographics, current sales and rental information and understands your needs.

Commercial Mortgage Lenders, Commercial Real Estate

Commercial Mortgage Lenders: What You Need To Know

If you’re in the market for a commercial loan, whether it’s an investment, a refinance or you’re just trying to get pre-qualified to begin your search, then read on, we have some answers for you. First, know about the different types of commercial mortgage lenders who are able to assist you in getting your loan. Commercial mortgage lenders range in type from large commercial banks to private individuals who invest in trust deeds. So, let’s get started.

Portfolio Lenders

Portfolio lenders create commercial mortgages with the intention of holding the loans in their investment portfolios. These lenders can often offer consumers greater flexibility in the loan granting process than lenders who make mortgage loans with the intention of selling them. The two most common types of portfolio lenders are commercial banks and life insurance companies.

CMBS Conduit Lenders

Commercial Mortgage Backed Securities (CMBS) are a type of security investment secured by commercial mortgages. CMBS are generated by “conduit” lenders, who originate commercial mortgages with the idea of securitizing them, arrange them into asset pools, and then selling standardized sections of these pools to investors on the open market. The interest payments on the properties securing the CMBS offerings are passed through to the investors as interest income.

Sub-Prime Lenders

Sub-prime lenders specialize in making loans to people whose low credit scores prevent them from obtaining financing through conventional commercial mortgage lenders. Subprime lenders may be owned by banks, and the loans they generate may also sometimes be securitized. Money that is loaned does not meet “prime” standards, which puts these loans into the riskiest category of loans typically sold in the secondary market.

The collapse of the real estate market is often blamed on the huge number of subprime loans processed over the last few years.

Private Investors and Funds

These commercial lenders are also sometimes called “private” or “hard money” lenders. One of the differences between these lenders versus institutional lenders is that the loaned funds come from private individuals or a group of private individuals, instead of from a company’s assets.

The other difference is that private lenders are willing to receive loans with higher levels of risk and maybe even significant variability in return for a higher return rate on the investment. For example, loan-to-value ratios for hard money loans are often under 65% and credit scores, if required, are usually under 500.

Borrowers should also realize that there are other sources of capital besides their local bank. For example, private or subprime lenders may be good choices for individuals who have been turned down by banks because of low credit scores or little collateral. Depending on individual loan needs, one of these sources will likely be a good fit for you.

SBA Loans

Finally, there are refinancing and Small Business Administration (SBA) loans. Refinancing is used to pay off any old debt from the money of a new loan that uses the same collateral. Usually, the borrower can choose to refinance when interest rates are lower or terms of the new loan are better than the original.

The purpose of SBA’s Loan Program is to assist small businesses in getting the credit that they need to get started. However, applicants must first meet SBA’s definition of small business.

So what commercial properties use these various loans? Quite a large variety. Some examples of commercial properties are apartments, shopping centers, malls, office buildings, warehouses, car dealerships, day care centers, golf courses, convenient stores, facilities, theatres, health care facilities, motels, raw commercial land, casinos, churches, gas stations, medical buildings, subdivisions, and more.

Find good commercial mortgage lenders as they can be the key to your businesses success or failure. Never hesitate to consult with your commercial real estate broker regarding lending referrals and term recommendations. If they’re up on current markets then they will typically know what the latest and greatest deals and interest rates are.

 

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These tips are provided by Pete Baldwin, designated broker and owner of Platinum Realty Network with offices in Scottsdale and Flagstaff, Ariz. With over 25 years of experience in business and real estate, Pete specializes in country club communities and second home investments, including large commercial portfolios. He also owns an Arizona branch of a family-owned, Montana-based company Baldwin Log Homes – Arizona Territory and has become the area leader in full- custom, handcrafted log homes in Northern Arizona.

For more information about commercial mortgage lenders, please visit www.PeteBaldwin.com.

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Top 5 Reasons To Buy Commercial Real Estate Now - AZNOW.BIZ

Top 5 Reasons to Buy Commercial Real Estate Now

1.      Commercial lending is the best it’s been in decades

Don’t believe what you hear when it comes to commercial loans not being available; they are plentiful and at the lowest interest rates I’ve ever seen on commercial property. Small Business Administration (SBA) loans were once known as long and painful and about as much fun as a root canal! Well, the times have changed and so have SBA Loans. Be sure to get with your real estate broker to locate a dependable and professional SBA lender. You will be pleasantly surprised with the results and products you find.

2.      The Bargains are far and few between

The word on the street is that commercial inventory is high. In some cases this is true, but I can tell you from first-hand experience that certain areas in the Phoenix area, such as north Phoenix and north Scottsdale, have very low inventory. A lot of the inventory you will find may not be suitable for you and may typically be in a bad location, have problems, etc. In other words – the good buys and good properties are nearly gone! Don’t take my word for it; get your real estate broker to pull comps and listings for you. Don’t wait any longer; get out there and find that piece of property you need!

3.      Different commercial verticals are on the rise

Whether it’s healthcare, general office or anchor retail, residential areas that realized significant growth four or five years ago are finally getting the local commercial amenities needed to help these communities thrive. The simple act of going to a grocery store has been very cumbersome for some outlying residential subdivisions. The good news is these empty commercial buildings are finally filling up, and the sellers are offering great incentives to buyers such as tenant improvements, deep discounts and even seller carry-backs in some cases.

4.      Commercial growth and construction will begin to increase again

While the inventory flies off the shelves and vacant properties fill up, commercial construction will once again begin to increase leaving the commercial buyer in a supply and demand dilemma. Let’s face it; we all want a good deal, and if you look hard and long enough you and your commercial real estate broker will find one; but be ready, the odds are you’ll have to act fast to get your offer accepted.

5.      Commercial Real Estate Brokers are in The Know

When you make the decision to start your real estate adventure, make sure you work with a local commercial real estate broker who knows where the deals are, what’s happening with current growth patterns, and what large employers are in the area. He or she should also have in-depth knowledge of the city’s zoning laws where you are looking. These key pieces of knowledge and good negotiation skills are going to be your secret weapon when it comes to getting a good deal on your next commercial real estate purchase.

So, you’ve heard me rant on and on about how you need to buy commercial real estate now. I can’t stress to you enough that the good properties are not getting cheaper, interest rates will likely get higher and commercial construction will, again, begin to pick up leaving the commercial buyer with a sense of, “I missed the boat.”

Stop waiting; don’t miss the boat, and get out there and buy the property you need; and remember to hire a licensed commercial real estate broker for all of your commercial needs.

Happy Buying!

[stextbox id="grey"]These tips are provided by Pete Baldwin, designated broker and owner of Platinum Realty Network with offices in Scottsdale and Flagstaff, Ariz. With over 25 years of experience in business and real estate, Pete specializes in country club communities and second home investments, including large commercial portfolios. He also owns an Arizona branch of a family-owned, Montana-based company Baldwin Log Homes – Arizona Territory and has become the area leader in full- custom, handcrafted log homes in Northern Arizona. For more information, please visit www.PeteBaldwin.com.[/stextbox]

Seller Carry-Backs & Financing, Commercial Real Estate

Seller Carry-Backs And Creative Financing For Your Commercial Buyer

Commercial Real Estate: About Seller Carry-Backs and Creative Financing

Not everyone can get financing on a commercial building for one reason or another. Maybe the buyer’s credit isn’t where the banks require for their lending programs, or maybe the desired real estate won’t appraise for the published asking price; this is where asking the seller to carry the note becomes a viable purchase strategy.

Sellers who agree to finance all or part of the purchase price receive or create documents, such as a Deed of Trust, that evidence the terms and conditions of the loan. The seller carry-back documents are typically recorded in the public records just like a standard mortgage would be.

Seller carry-backs can be in the form of mortgage, trust deed, land contract or possibly a lease purchase. Most carry-backs are secured by a promissory note.

If there is an existing loan secured to the commercial real estate, alternatively, sellers might let buyers take over the existing loan payments, provided the loan is assumable. If it’s not assumable, the loan will remain in the seller’s name. The difference between the sales price, minus the down payment and the existing loan, is the “assumed” equity the seller would carry as a loan.

Sellers agree to carry part or all of the financing; here are some of the reasons:

  • It’s a soft or depressed real estate market — owner-carried financing will attract a greater pool of buyers.
  • The buyers cannot qualify for a commercial or SBA loan.
  • The seller is facing capital gains on the sale of the property and can defer that portion which is financed.
  • The financing gives the seller a better rate of return than a money market account making the commercial building or land a great investment and income-producing property without the hassle of ownership.
  • Sellers sometimes want a monthly income.
  • The property is non-conforming and lenders won’t touch it.
  • Often sellers can receive a higher sales price in exchange for offering owner financing.

Drawbacks to the carry-backs:

  • The buyer might default on the payments, causing the seller to initiate foreclosure proceedings
  • After foreclosure, making up back payments to the existing lender, if there is an existing loan, paying closings costs and real estate commissions, the seller might not be left with any equity.
  • Sellers who carry back mortgages have tied up cash by securing it to the property.
  • If the buyer files bankruptcy after a period of non-payment, the property could be tied up for months, if not years, in bankruptcy proceedings.

Converting the note to cash

There is a large pool of private investors in the marketplace who regularly buy seller carry-backs. However, they do not pay face value. Investors look at the yield they will receive over the term of the investment, and this yield can be increased if the investor pays less than the outstanding balance due, therefore buying the note at a significant discount.

The discounts vary across the board, but sellers can expect to lose 10 to 30 percent of the unpaid balance, depending on the following:

  • Seasoning: This is how long the seller has been receiving payments on the carry-back financing. A seller who has received timely payments over a 12-month period will receive more cash than a seller holding a brand new mortgage.
  • Interest rate: The higher the interest rate, the lower the discount. A lower interest rate will attract investors who want a higher discount.
  • Mortgage term: Long-term mortgages such as a 30-year mortgage are not as attractive to an investor as a short-term mortgage; therefore, long-term mortgages are typically sold at higher discounts than short-term. Most carry-back mortgages are five- or 10-year balloons.
  • Prepayment penalties and late charges: Carry-back mortgages that contain a prepayment penalty and a late charge are also more attractive to investors, which affect the discount rate.
  • Loan-to-Value Ratio: Lower loan-to-value ratios receive more favorable discounts. Higher ratios are considered greater risk and the discounts are steeper.
Investors also consider the type of security, its appraised value, location, amenities, condition and the credit-worthiness, if known, of the buyers. All of these factors come into play and make a difference when selling the note. Savvy sellers create attractive notes just for this reason.

The investor/buyer may ask the seller of a carry-back mortgage to pick up all costs associated with the sale of the note and mortgage such as: the title insurance policy, escrow fees, document fees, appraisal fees, real estate commissions, courier fees and, of course, the final recording fee.

[stextbox id="grey"]These tips are provided by Pete Baldwin, designated broker and owner of Platinum Realty Network with offices in Scottsdale and Flagstaff, Ariz. With over 25 years of experience in business and real estate, Pete specializes in country club communities and second home investments, including large commercial portfolios. He also owns an Arizona branch of a family-owned, Montana-based company Baldwin Log Homes – Arizona Territory and has become the area leader in full- custom, handcrafted log homes in Northern Arizona.

To learn more about seller carry-backs and commercial real estate, please visit www.PeteBaldwin.com.[/stextbox]
Capitalization Rates, Commercial Real Estate

Capitalization Rate: True Value Or Complete Nonsense?

Many real estate investors determine the value of an income property by using the capitalization rate, also known as the “cap rate.” However, this is absolutely the one most misused word and concept in real estate investing.

What is it? A real estate broker prices a business and its associated building by taking the Net Operating Income (NOI), dividing it by the sales price or, alternatively, the current market value; then you get the “published” capitalization rate.
While brokers, sellers and lenders are fond of quoting deals based on the cap rate, the way it is typically used, they really shortcut the true use of the real cap rate.
For example, let’s say the property has an NOI of $155,000, and the price is $1,155,000.
$155,000 / $1,155,000 = 13.4% cap rate

But what does that number really mean? Does it tell you what your return will be if you use financing? Absolutely not. Does it take into account the different finance terms available to different investors? Absolutely not. Then just what does it show?

What the cap rate above represents is merely the projected return for one year if this property were bought with all cash. Not a lot of us buy property for all cash, so we have to tear the deal down, piece by piece, to find the cash-on-cash return on our actual investment using leverage (debt).

Let’s calculate the debt service, subtract it from the NOI, and calculate the actual return. If the debt terms, loan-to-value (LTV), or our return requirements change, then the whole calculation must be performed again.

In order to correctly calculate a cap rate and get an accurate comparison, you must know the correct income and expenses for the property, making sure that the calculations of each were done in the same way as explained previously.

This information is not part of any public record. The only way to access the information would be to contact a principal or accountant in the transaction, and that’s typically hard to do because of confidentiality reasons. Serious brokers can typically get this done without a hitch.

So what do you do when you’ve found the property that looks great, and the listing broker tells you the cap rate is 13.4%, and you have to move on the property right away? How do you know if it is worth pursuing or if the cap rate is on the mark?

The real question is not how much I — or another investor, or even an appraiser — values a property at but, rather, it’s the value at which you can attain your investment goals that is reflective of your borrowing power. This will give you an intelligent starting point for the analysis.

If you learn how to do this, it will give you a leg up on 90 percent of the brokers and investors out there. Critical to this calculation is that the NOI is figured consistently with industry norms. The generally-accepted definition of NOI is:
Gross Income — Operating Expenses = NOI

The income and expenses must be verified.

In short, before accepting the NOI presented by the listing broker, understand what is behind the numbers. This is known as “normalizing” the numbers. You can also tweak the numbers to reflect the way you will own and manage the property.

Read more…

Four Things to Know Arizona Commercial Real Estate

Top Four Things To Know About Arizona Commercial Real Estate

1. Different geographical areas bring very different results

When you are looking to invest in Arizona commercial real estate, different geographical areas of the market can have dramatically different results in terms of investment return, including things such as occupancy rate and tenancy terms. As an example, north Scottsdale and Tempe have completely different demographics but may attract similar tenant types due to similar industries, medical parks and office facilities.

Make sure your commercial broker provides demographic information and property comparables in the areas you are looking. It’s very important to have your expectations in the right place when you are looking to buy commercial investment properties.

2. Don’t always believe what you hear

You may be surprised to find that your local market is doing much better than you think it is. With bad news being the seemingly hot news trend, I can tell you as a commercial real estate expert that most of what you hear isn’t true.

North Scottsdale’s commercial real estate market hit bottom months ago and has been on the steady rise ever since. Most offers I make for my clients are greeted with a multiple-offer counteroffer requesting highest and best in return. It’s crazy out there right now with multiple offers, multiple buyers and a lot of investors; in fact, the market here in Arizona is the most competitive I’ve seen — and that’s a good thing.

3. Is there still prime investment opportunities in Arizona?

You bet there is, but your commercial broker will have to work hard to find those bank-owned and “bottom dollar” deals.

Investors love Arizona for many reasons — great weather, beautiful scenery and there are really no natural disasters to speak of. In fact, big companies such as Wells Fargo, American Express and Chase have chosen Arizona as the place to house their large data warehouses because there are no natural disasters like earthquakes and tornadoes.

Why do I go on about all of this? Because investors from all over the world have come to the Phoenix area to buy up all of the surplus and bank-owned real estate. If you’re waiting for the market to hit bottom, it already has; get out there and start your research as soon as possible. You don’t want to look back a year from now and say, “I wish I would have taken advantage of low prices when I had the chance.”

4. Rents are up!

Tenants are paying more per month now than they have in years. Because local spending is up in metropolitan Phoenix and its surrounding suburbs, small- and medium-sized businesses are finding the need to expand and grow into commercial space. The demand for standard office space and industrial office space is at an all-time high right now and is demanding premium pricing from an investor’s standpoint.

Have your broker look for buildings in areas near successful residential subdivisions and big box retailers. With gas prices high and the preference to live “greener,” prospective tenants don’t like to commute and prefer to work closer to home.

In summary, Arizona has taken a beating in the past with respect to residential and commercial real estate, but Arizona has always proven its resiliency by bouncing back stronger than ever. Residential sales are breaking records, certain sectors of commercial real estate are red hot, and there is no better time than now to get out and buy real estate. Find a commercial broker that will work hard for you and provide information in a timely fashion so that you will have the opportunity to succeed in making your first or your next real estate purchase.

Happy Investing!

[stextbox id="grey"]These tips are provided by Pete Baldwin, designated broker and owner of Platinum Realty Network with offices in Scottsdale and Flagstaff, Ariz. With over 25 years of experience in business and real estate, Pete specializes in country club communities and second home investments, including large commercial portfolios. He also owns an Arizona branch of a family-owned, Montana-based company Baldwin Log Homes – Arizona Territory and has become the area leader in full- custom, handcrafted log homes in Northern Arizona. For more information, please visit www.PeteBaldwin.com.[/stextbox]

Increase demand Arizona commercial real estate

Changing Office Demands In Arizona: Is Office Space Becoming Obsolete?

An estimated 450,000 U.S. office jobs have moved offshore in recent years, and that number will likely grow as high as 3.4 million by 2015, according to a study performed at Columbia University in New York. And those aren’t the only jobs that are vacating U.S. offices. Further research shows that 44 million U.S. workers have traded in their cubicles for home offices; the number is projected to rise to 51 million by 2012.

I am sharing these statistics because they spell opportunity, not trouble. In fact, real estate economists predict new demand for office space will exceed 410 million square feet by 2015, 75 million of those square feet are here in Arizona alone.

With this increase in demand for commercial space, it is no wonder one must move quick in Arizona’s commercial market. However, you need to be smart.

No matter how competitive the real estate sector is, you need to keep in mind what trends are most likely to shrink and expand.

First look at industry movement; we all know that industry shifts are nothing new. Starting with farming and agriculture, the next in line was factory jobs and later corporate and information technology. Experts say the service, creative and design industry jobs will drive the demand for commercial space over the next five to 10 years.

You can check with your local community economic growth reporting offices, which are located within city hall, government reporting or small business administration offices. Colleges and universities will often release economic area growth reports so you can stay informed as to what the growth patterns are in your Arizona community.

Another great approach is to check economic reporting in major metropolitan papers so that you can keep tabs on national growth trends that could ultimately affect your community.

Arizona is widely becoming known for it’s industrial and major corporate office space growth; however, we seem to be more industry niched in the online product arena, such as godaddy.com in Scottsdale, and professional focused companies in the medical and representative areas, such as insurance and legal.

Every now and then you will find an international brand headquartered here such as Dial soap, also based in Scottsdale. With all of that said, reaching out to the professional, focused office categories such as medical and information technology seem to occupy at a faster rate and have longer term leases.

Commercial real estate here in Arizona is ripe with opportunity for investors and small business owners alike. Small Business Administration (SBA) lending is at an all-time high with interest rates lower than they’ve ever been, so there is no time like the present to get out, create an opportunity for yourself, and take advantage of good prices on commercial real estate. Last but not least, it is extremely important that you hire a broker that is not only knowledgeable about the area but also has an understanding of your business.

[stextbox id="grey"]These tips are provided by Pete Baldwin, designated broker and owner of Platinum Realty Network with offices in Scottsdale and Flagstaff, Ariz. With over 25 years of experience in business and real estate, Pete specializes in country club communities and second home investments, including large commercial portfolios. He also owns an Arizona branch of a family-owned, Montana-based company Baldwin Log Homes – Arizona Territory and has become the area leader in full- custom, handcrafted log homes in Northern Arizona. For more information, please visit www.PeteBaldwin.com.[/stextbox]

Fair and profitable deals, renting commercial property

Commercial Corner: Keeping Deals Fair, Yet Profitable

The Negotiating Power is Shifting with Office Leases

With the economy showing positive signs of recovery, savvy business owners and professionals are getting smarter about where they put their office and how to run it more efficiently — and for half of the expense.

They are asking for lower rents, more benefits and less responsibility.

With the surplus of office space available, renters are now in a place of negotiating power when it comes to leasing a commercial space. However, there are a few things that you as a property owner can do to make sure that you keep your negotiating power in place and keep it fair, yet profitable for you.

1. Change name for type of office space

By adding in higher level titles to an office space such as an “Executive Suite” or “Commercial Loft,” you can give more value to the space as well as make it more attractive. By placing more of a “city style” approach in the marketing of your space, you can attract larger prospective tenants. This can also help you create more of a demand for the space which puts you in a better place when it comes to who you lease to and exactly what the terms should be.

2. Market constantly, even when you are at a no-vacancy status

The negotiating power has shifted in the commercial arena, however the owner can have a bigger advantage if they have an ongoing plan to market the space in the community. I am not referring to paying for advertising the space; simply look at the properties that are in areas where professionals like attorneys, real estate brokers, insurance brokers and chiropractors are in need of clean, intelligent space and reach out to them either by phone, mail or online. Keep in touch with them every other month by reaching out through a direct mail piece or phone call; you never know when they will be on the hunt for a larger office space or a different location.

3. Add value and partner with virtual service companies

Professionals need support staff now more than ever. However, the expense of having onsite receptionists can be costly. Reach out to a virtual services company in your area, and add them into your potential offerings or even advertising.

Dentist offices are popping up now with their receptionist on a large computer flat screen to check in patients. This can save hundreds, even thousands of dollars to professionals. Make sure that you do your due diligence before you tie your building brand name to a virtual service company. A few places to check online: odesk.com or guru.com.

4. Target home-based companies and give incentives to move

Because office space has become more open and available as well as affordable, small business owners and professionals are shifting from being at their home office over the past few years to an offsite location. It’s nice to get out of the home and head to a quiet place to get some work done. Not to mention, this saves people from having that feeling that they need to work whenever they walk in the front door of their home. This is an excellent selling point. Make enticing offers to include the benefits of it being an affordable solution as well as a way for business owners to separate home from the office.

5. Hire a Broker that can locate surpluses and shortages

It is vitally important that you have a broker on your side that is not only knowledgeable about the area where your building is located, but knows where there are gaps and opportunities as well. Ask them simple questions such as, “What are your client’s average occupancy rates?” and “How well are you connected in the professional community?” Another great question is, “Have you helped your clients/investors market their property to fill their available spaces? If so, what did you do for them?”

[stextbox id="grey"]These tips are provided by Pete Baldwin, designated broker and owner of Platinum Realty Network with offices in Scottsdale and Flagstaff, Ariz. With over 25 years of experience in business and real estate, Pete specializes in country club communities and second home investments, including large commercial portfolios. He also owns an Arizona branch of a family-owned, Montana-based company Baldwin Log Homes – Arizona Territory and has become the area leader in full- custom, handcrafted log homes in Northern Arizona. For more information, please visit www.PeteBaldwin.com.
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Maximizing Investment with Mixed Use Medical, Phoenix, Ariz.

Commercial Corner: Maximizing Investment With Specialized Medical And Mixed Use Medical

Real estate development in Phoenix and the surrounding areas has always been trend setting and market changing. When newly developed, outlying residential areas boomed, what lacked in these areas was retail, medical and industrial commercial. Over the past five years, the commercial sector has been heavily overbuilt and is now undergoing a zoning face lift.

With the changing landscape of the many different medical sectors brought on by health care reform, the way physicians are doing business has changed dramatically.  While working with different medical professionals through the years, the changes I’ve seen have been dramatic and impressive regarding the way they develop business relationships and partner with other physicians and medical professionals to take advantage of the forthcoming health care changes, minimize their overhead and create a better, more convenient experience for their patients.

Over the years, is has not been uncommon to travel across the country to different cities for different care specialties, such as cancer treatments, diabetes centers, eye disorders centers, etc. Now physicians are coming together and combining mixed use medical with hospitals or medical specialty as the anchor; they then add retail, office and even hospitality so that medical stops can now be a one-stop shopping experience. It’s like going to the mall and getting medical treatment or checkups while you are there!

Several of these mixed use complexes are sprouting up all over the Phoenix area in cities such as Maricopa, Gilbert, Mesa, Peoria, Goodyear, Scottsdale and Surprise. These areas render great income-generating investments for investors that like the medical sector.

Here are a few tips for you to consider when looking to purchase commercial property for this type of mixed use:

1. Always use a commercial broker familiar with this type of project and the medical industry: Ask the broker you are looking to work with what their experience is in dealing with mixed use, more specifically specialized medical. Check out a few projects that they have worked on or helped coordinate for other investors in this area. A portfolio check is always a great way to make a decision regarding which broker has the strongest mixed use experience and the most knowledge to help you get the most out of your mixed use investment.

2. Rely on the broker’s knowledge of local demographics or the ability of being able to obtain the demographics: Get reporting from your local small business development organizations on not only the demographics but the communities spending habits as well. This will help you when determining what type of retail or hospitality space to put in the area you are looking to invest in.

3. Get a medical professionals list and reach out: To better position your investment and make it more attractive to potential tenants, you can have your broker obtain a list of medical professionals via your local chamber, hospital directory or even local insurance directory logs. Have this list ready to send out an email or direct piece with the benefits of medical mixed use to entice them into moving over to your commercial property. Mixed use is a great incentive for physicians to make an office move. They increase their profitability with this approach as well. It is a win-win situation for the physician, medical practice, investor and the patient or visitor to the complex.

[stextbox id="grey"]These tips are provided by Pete Baldwin, Designated Broker and Owner of Platinum Realty Network with offices in Scottsdale and Flagstaff, Ariz. With over 25 years of experience in business and real estate, Pete specializes in country club communities and second home investments, including large commercial portfolios. He also owns an Arizona branch of a family-owned, Montana-based company Baldwin Log Homes – Arizona Territory and has become the area leader in full- custom, handcrafted log homes in Northern Arizona. For more information, please visit www.PeteBaldwin.com.
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Build Your Commercial Portfolio: Where to Invest

Commercial Corner: Diversifying Your Commercial Real Estate Portfolio

As the economy improves nationwide, Arizona is paving the path for commercial investment portfolios and green development projects. Remember to work with an experienced commercial real estate broker when doing your research.

Here are the different commercial sectors worth consideration as you grow your investment portfolio:

1. Apartment Complexes

Invest in Apartment Complexes to Build Commercial Real Estate Portfolio

Apartments are stronger than ever due to the large residential foreclosure surge that began several years ago. Because of credit requirements and a more conservative residential loan process, there are a lot of individuals that continue to need economical housing options. In addition, vacancy rates in apartment complexes are now at an all-time low. Make sure that you have your commercial specialist pull and provide a three-year history on the vacancy rate for the property; however, keep in mind if the occupancy rate is consistently high, look at the potential in the area, and take that into consideration.

2. Industrial Buildings and Complexes

Industrial buildings are becoming the new black in real estate investment portfolios. They continue to be a popular target for investment as jobs, residential housing and new building start rates begin to come back and stabilize. Industrial jobs and the need for industrial space will continue to increase as the economy moves in a positive direction. New technology businesses are a great target for industrial buildings as they demand more space for call centers and staff.

3. Retail Commercial Space

Retail space took a big hit because local businesses were forced to close due to the lack of local spending caused by the economic downturn. As local companies begin to re-enter the retail commercial space, they will be looking for good locations that are economically priced. A trend with new retail brick and mortar stores has started to rise as they strive to find locations that are more neighborhood niche focused and/or located in cozy commercial cul de sacs.  Buildings that have more character and patio possibilities seem to be getting more attention from retail outlets.

4. Office Space

Diversifying your commercial real estate portfolio in Phoenix, AZ; Photo: Flickr, alexliivet

Office space is always in demand, however the key to finding good office locations is to do a solid area check to make sure that the office space is in a good traffic area, and there should be an easy ingress/egress by way of freeway or main street. Office space is a privilege for most and again our recovering economy is forcing businesses to hire and expand, which means they will need

more office space. When looking to add this piece to your portfolio, parking in these structures is a plus, so make sure your parking space ratio is high and make sure your broker asks for more parking spaces in the property negotiations.

When looking for these different commercial sectors remember to keep these three important factors in mind:

1. Check for job growth in the immediate area with your local economic reporting office.

2. Location, location, location
You need to look for convenience, functionality, and stay away from the areas that have undergone functional obsolescence or are simply outdated for modern use.

3. Look for strong anchors and local businesses that draw commerce into the neighborhood such as big box stores or smaller niche retail outlets.

Above all, always remember to find a commercial real estate broker that works and thinks along these terms. Use them as a resource and create a winning team to make your investment project successful!

[stextbox id="grey"]These tips are provided by Pete Baldwin, Designated Broker and Owner of Platinum Realty Network with offices in Scottsdale and Flagstaff, Ariz. With over 25 years of experience in business and real estate, Pete specializes in country club communities and second home investments, including large commercial portfolios. He also owns an Arizona branch of a family-owned, Montana-based company Baldwin Log Homes – Arizona Territory and has become the area leader in full- custom, handcrafted log homes in Northern Arizona. For more information, please visit www.PeteBaldwin.com.[/stextbox]

How to Search for Commercial Real Estate in Scottsdale, Ariz.

Commercial Corner: How to Search For Commercial Real Estate

Although the commercial market seems dismal in certain areas of Metro Phoenix, the Scottsdale area seems to only have taken a ‘gentle’ hit. With investors flying into Phoenix from all over the world to look at commercial properties for investments, they tend to start their search in the upscale Scottsdale area where there is a very healthy mix of industrial, light industrial, office, office/warehouse and mixed use which tends to fit the palette of the many different types of investors.

The overall sense of urgency when buying a commercial property seems to be relatively high in Scottsdale; in fact, the mindset of buyers coming into Scottsdale is to find a great buy in a great location. The reality is that those great deals are snapped up sometimes before they hit the market or they are just simply gone, so the buyer’s expectations are not met.

Let’s face it, the mindset has to be realistic, especially in Scottsdale, which is a popular place with a tremendous amount of wealth. Is there availability? Yes. Is everything priced cheap? NO. Working with an experienced commercial broker is a necessity in this market.

Here are the top five things that you can do to make the process smoother for you when searching for commercial real estate:


1. Find an Experienced Commercial Broker That’s Connected

What I mean by “connected” is to interview commercial agents and ask them how they send updates to clients. Can they tweet or text you, maybe even send video downloads to your phone with details on the location? The key to ‘connect’ is that you both have the means to send and receive details on properties in a short period of time so that you can make decisions faster for a smoother transaction.

2. Have Your Commercial Broker Provide You with a General Growth Plan

This is key to any successful investment; you need to have your broker provide a growth plan for the location you are looking at with the details of the particular use. Take a quick 30 to review this plan with your broker and make sure that you are both on the same page.

3. Get Valuable Demographic Information for the Area you Intend to Buy in

This information is pretty straight forward, however your broker should be able to dig deep into the community, pull up detailed reports and present them to you so that you can have all of the information in front of you prior to making the investment decision. A few reports to look for are not only demographics but info and psychographics as well.

4. Set Your Expectations Low From the Start

I know that is the complete opposite as to what you want to hear when you are investing, but it’s a very competitive market. Don’t get anxious and jump on just any property, and make sure that you have a broker that acts aggressively on your behalf. Once you find that property and the research is done, take action. Also make sure that your broker eats, drinks and sleeps commercial and investment properties so that they are active and informed for your investment benefit.

5. Do Research on your Competition and the Businesses Surrounding Your Potential Purchase Area

Property owners can have significant impact on local events and property values. Make sure that you take the time whether it is on your own or with your broker to really get to know the area that you are looking at. Is it up and coming? How is the traffic? What do surrounding buildings and business look like? What is the potential in the area? You might even be able to grab area growth plans from the county; ask your broker for these details.

[stextbox id="grey"]These tips are provided by Pete Baldwin, Designated Broker and Owner of Platinum Realty Network with offices in Scottsdale and Flagstaff, Ariz. With over 25 years of experience in business and real estate, Pete specializes in country club communities and second home investments, including large commercial portfolios. He also owns an Arizona branch of a family-owned, Montana-based company Baldwin Log Homes – Arizona Territory and has become the area leader in full- custom, handcrafted log homes in Northern Arizona. For more information, please visit www.PeteBaldwin.com.[/stextbox]