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Feed My Blog...Blogger Will Link for Content

By Rob Beland

Commercial Real Estate Agent with Apex Properties

July 17, 2007 11:19 AM

I'm reaching out to the Active Rain community for your thoughts on commercial real estate and what you would like to know about it...

Have you had clients that had questions about commercial real estate that you couldn't answer?

Have you ever represented a buyer or seller in a commercial real estate transaction and felt like a fish out of water?

Are you a commercial real estate professional that like most of us only thinks you have all the answers but in reality there is that one area where you wish you had a little more knowledge such as 1031 exchanges or ground leases?

I recently started a blog, The Real Estate TrendMill that focuses on commercial real estate in Leominster, MA and throughout North Central Massachusetts. Although the main focus of the blog is the local commercial real estate market I also want to have plenty of information on commercial real estate in general. I want the blog to be a resource for business owners that are contemplating leasing space or buying a commercial property. I also want to be a resource for commercial real estate investors.

I know I have a long way to go if I want to be the "Bloggiest" blog ever but I'd like to be thought of as a valuable resource. One thing I've been noticing about real estate blogs is that there are two categories of blogs and also bloggers for the most part. There are blogs that are geared towards other bloggers and then there are the blogs that are geared towards our customers whether they are investors or home-buyers or anybody else...

The content you write for your customers in your market is in my opinion key to the success of the blog but writing content geared towards other bloggers is important as well since these other bloggers make up the majority of any blogs readership. I, like most of you, would be thrilled to have my blog read by my clients or my potential clients but the reality is that other bloggers are our audience for the time being...

Pat Kitano, from Transparent Real Estate made reference to this fact in one of his recent posts...here is a brief excerpt from his blog...

Hyperlocal content makes for useful and often entertaining reading... but blogging success requires a secondary effort that surprises many new bloggers - interacting with other bloggers to drive traffic. The reason? Most real estate blog readers are the bloggers themselves... the consumer readership hasn't solidly kicked in yet and the bloggers are building their online presence in anticipation of the consumer finding them.

So what is the point of all this and why should you care???

Well to answer the second question, I guess you have no reason to care other than because you as a blogger would like to reach out to another member of this great blogosphere of which we are all a part...

The point of my post is that I need content...simple as that. You all, as business owners and fellow real estate professionals are a big part of my readership and if I can reach out to you for inspiration, my blog will prosper and I will have all of you to thank. As the title of my post states, I will be linking to any bloggers that provide me with ideas for content for my blog. One thing I have learned in the short time that I have been blogging is that link exchanges are not the best idea. I do believe in the power of linking but I feel it has to be done naturally and the way to do it is to place the links directly in the posts. I will certainly give credit where credit is due and hopefully the success of my blog will add to the success of your blog.

Your input is greatly anticipated and I look forward to being a resource for each of you.

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Jared Hokanson

Hokanson Realty & Jared Realty Group - Medford, OR

Your Home Sold, GUARANTEED!*

I got a call from a client on Friday requesting information on financing for a commercial building and business he is looking at that is a fsbo, what advice would you have for someone who is looking at financing both a business and the real estate associated with the business?

Jul 17, 2007 01:16 PM

James Iodice

Coldwell Banker Weir Manuel - Waterford, MI

Associate Broker, Selling Homes and Offices

Rob - Jared poses a great question right out of the chute.

I think your question / comment / concept goes way beyond the linking and topics for the blog. I think you are looking at something I have been questioning for time, which is how commercial tenants and buyers secure there space and or handle facility needs. Maybe a discussion better suited off post in an email.

I took a look at your blog. You have some great posts and good information. I think you are taking the right approach to cover the topics and question you normally encounter in your transactions.

Jul 18, 2007 06:25 AM

Rob Beland

Apex Properties - Leominster, MA

Leominster MA Multifamily Investment Specialist

Jared...great question! Although I'm definitely not an expert, I have personally purchased a business without any associated real estate and am currently working with a buyer to acquire a restaurant without any asociated real esate so I have been learning a lot of this as I go along.

Regarding financing a business, my experience has been that banks don't typically want to get involved with business financing with a few exceptions...Please keep in mind my comments apply to somebody purchasing a small business with sales of less than $1M annually. When you go above that threshold, it's a different ballgame.

If the business has associated real estate, the bank has something tangible they can attach the financing to. When there is no real estate the bank wants to know what there is for tangible assests such as manufacturing companies and their machines, inventory, whatever the case may be. Don't let a seller start talking about 2X or 3X or 5X Gross income or anything like that. They are just trying to get you to pay them in advance for the income that you are hopefully going to earn.
More times than not and in fact probably 99% of the time, the bank is going to look at the buyer's personal credit and financial position when making a decision. They will look to make sure that the business cash flows as well and how established the business is makes a difference. Having real estate included in the deal means making sure the business can afford to pay enough rent to cover the mortgage, expenses, taxes, etc...
The fact is that small businesses are run by people and the people that run the business typically account for the customer loyalty, when a business owner leaves, the customers often times leave too...this is usually the case with a service business like a landscaping company or in many cases a food service business like a restaurant or a diner. This fact makes financing the business difficult since it's hard to say how the new owner will be able to keep the customers coming back.
One thing to always consider is whether or not the business is being purchased by someobody with experience in that industry or currently operating a business in the same industry. A perfect example would be self-storage business which by the way is considered one of the hardest businesses to get financing for and is right up there with restaurants. Self-Storage businesses are basically a large group of metal buildings with no other possible use. If a self-storage business goes under, all that is there is the land for the most part since the buildings are not worth anything. Now if you own a large self-storage business already and you are looking to acquire another business, a bank may look favorably at this deal because you have a history in the business so the risk is not as great.

I could go on and on but the main point is that when you are considering purchasing a business, if there is real estate, you are much better off. Demand to see certified financials for the business and don't let the seller tell you how much cash he takes in that is off the books. A bank doesn't care about income that is not on a federal tax return and you shouldn't either. Look at the value of any equipment, vehicles, merchandise, etc...because this is what you are really buying. If I owned a diner and did a great business but it was all my family and friends coming in then chances are a lot of the sales are going to drop off after I sell so all you will be left with is the equipment and a sign and the task of building up the business again...

If you have more specific questions I would be glad to give you my thoughts whether online here or via email. Good luck with your client.

Rob Beland

The Real Estate TrendMill

I hope this helps...

Jul 19, 2007 06:17 AM

Chris Lengquist

Ad Astra Realty - Olathe, KS

Kansas City Real Estate Investing

I don't know if you have a residential background, but pointing out the differences is a terrific way to gain my readership. I've stopped by your blogs before. I like them. And I dance around, flirt with rather, commercial real estate but have never taken the dive in.

It's a different arena with different rules. At least as far as I've educated myself with.

Here is an idea. See what you think. Why don't we trade blog posts. You do a post for my BBQCapital blog regarding what a commercial real estate investor would be looking for and I'll do one for your blog regarding how a smart/knowledgable residential invesor measure returns. Or something along those lines.

I know you know where to find me. Keep up the good work.

Jul 19, 2007 03:30 PM

Vicki Watzlawick

CORE Realty (The Watz Team) - Algonquin, IL

Illinois Foreclosure Expert, The Watz Team

Rob I think every week you should have a post about the different terms that are used in commericial real estate and what they mean or how they are applied. Like CAP, CAM, GRM, etc. I would definatley suggest my agents read it!

Jul 19, 2007 04:12 PM

Rob Beland

Apex Properties - Leominster, MA

Leominster MA Multifamily Investment Specialist

Vicki - I do like that idea and I have started doing that. I did one post discussing what a Vanilla Box is. I also did a post with a few different commercial real estate terms that I explained in a way that hopefully the average person without any real estate background could understand. Picking out a few of the terms and elaborating on the definition is something that hopefully people would find informative.

Chris - Great idea about trading posts. I'd love the opportunity to post on your blog and would appreciate your contribution to mine. I have done some residential investing in the past with multi-families and it is a different game than what I consider a "typical" commercial property such as an office building or a strip mall or something like that. I also think that investing in residential properties is different all over the country. Where I am, buyers of three families are getting minimal returns on their investment but are able to park their money long-term and avoid capital gains usually through a 1031 exchange. The days of buying a multi-family in this area and selling it for a profit a year later are long gone but hopefully will return. In other states investors are able to pick up blighted properties cheap, rehab them, and make a profit. Here the market is just too tight.You can't flip real estate in Massachusetts like you can in other areas. That's not to say that nobody is doing it, It's just pretty rare and you need to be experienced and you need to work to find the right deals.

James - Thanks for the vote of confidence. I think what you are inquiring about in terms of securing space and handling facilities needs has to do with the process of finding a building to purchase or a space to lease. This starts hopefully with hiring a buyer's agent and then the process begins. As far as the purchase of a commercial property, one thing to consider is hiring a property/facilities management company that does landscaping, snow removal, coordinates sub-contractor work such as electricians, plumbers, etc...and takes care of scheduling preventitive maintenance checks on hvac equipment, inspections of sprinkler systems, and a whole host of other services that a business owner does not want to worry about but must be kept up with.

Jul 20, 2007 02:21 AM

Anonymous

Agent Scoreboard

Rob,

I feel your pain. I don't know how long you've been in the real estate business but in the blogging business its about fresh and compeling stories. It seems that you need to pick your audience and then start the practice of "clipping". You need to read articles from wherever your audience goes in a big way and develop topics there. If you keep popular topics alive, and you have a good spin people will come to you. Hope that helps... We've been in launch mode... so i haven't been paying much attention to my blog, but I'll have some posts up soon.

Jul 20, 2007 02:03 PM

Rob Beland

Apex Properties - Leominster, MA

Leominster MA Multifamily Investment Specialist

Thanks Mike

I love the feedback. I do need to work on discussing current events, news, etc... Rather than just focusing on facts and informational content explaining different aspects of commercial real estate I should be including more posts that have to do with news and events my readers will find informative and hopefully an intelligent dialogue will ensue.

I also need to be focusing on both local news and events but also regional and national news.

Thanks again for all of the comments...

Rob Beland

The Real Estate TrendMill

Jul 22, 2007 07:15 AM

Jared Hokanson

Hokanson Realty & Jared Realty Group - Medford, OR

Your Home Sold, GUARANTEED!*

Rob,

I'd also love to hear about SBA loans and what you've seen work and not work for helping clients with those.

Jul 24, 2007 04:17 PM