Misconceptions About Commercial Real Estate

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					Commercial real estate is a wonderful, exciting business that can offer a wealth of
opportunity for those who look for it! Many people are often hesitant to enter such a
market as commercial real estate for many different reasons. In fact, there are some
major misconceptions about commercial real estate which I am going to address here.
  Many people who hear about commercial real estate, but aren't necessarily in the
business, often use the expression "Location, location, location!" Many people
associate this expression as the truth, that the three most important attributes about a
property are "Location, location, location!"
  I am here to tell you- this is absolutely not the case! Now, I am not going to say
location is not important, but what if you have a beautiful location for a mountain
resort, complete with snowy hills, a perfect location for a lodge, and beautiful
mountain views? What you want to do to the property is improve it for a weekend
getaway for romantic couples with a beautiful lodge, resort, luxury type housing, and
perhaps some individual cottages overlooking the green forest. Sounds great, right?
  The perfect location- you can't beat it! But, you learn that the zoning for this
property is residential, R1, to be exact. The use is only one single family residence per
acre, and no commercial property allowed. What happened to your "Location,
location, location?" It flew out the window!
  The most important aspect of a property is the use. What is it intended for by
designation of the city or county? It does not matter where the property is, if you
cannot get the zoning that is in the realm of your intended use.
  It is possible to get properties rezoned, especially as cities change and grow. Be sure
to consult with the city or county to determine if these changes are even possible,
because you do not want to buy a property that you cannot rezone, and be left with an
unprofitable property on your hands.
  Most people believe that commercial real estate is complicated and you need a
special education or know how to succeed in the business. Many think that
commercial real estate is filled with international finance, heavy and complicated
math, complicated tax rules, and forms and applications that are just too complicated
to understand correctly.
  I am happy to tell you this misconception is the worst, because it puts a road block in
front of many people's aspirations to become a commercial real estate insider. Let me
put this misconception to rest. There is math involved, and most of it is not at all
complicated: simple ratios, adding, subtracting and multiplying. What is even better is
you don't have to do the math. There are others who can do that for you. The same is
true with property management, inspecting the property, and doing the year-end tax
report. In fact, commercial real estate is less complicated than residential real estate
because you can focus your energies on a single deal that will be worth perhaps 10, 20,
even 50 residential deals and more!
  Let me put it into perspective for you. If you owned a business (many of you may),
would you create strategies, keep the books, manage the many locations, sell on the
front floor, and take out the trash after the day was over? I think not! Commercial real
estate is made up of many people whom are there to help you with whatever you need.
You must position yourself as a real estate insider, which is a leader in the business.
  Another misconception is commercial real estate is management intensive, that you
must manage every property you own. Let me tell you when you end up owning 10 or
more properties, this is almost impossible to do! You do not have to actually manage
your properties yourself, so you can concentrate on creating more deals. Hire a
company or set a team in place to take care of this "day-to-day" business.
  As you can see, what is passed around in dialogue about commercial real estate is
not always true. Before you take everything to heart, be sure to get your facts straight.
In fact, many people in this profession speak about commercial real estate as a
business in which only the savvy and sophisticated can succeed. They often act this
way because they want to keep people out of the market by differentiating themselves.
If you were in this position, you would too!
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