A quick definition of terms
"Commercial real estate" refers to the class of real estate that is also called investment or income. Examples of such properties include:

• Office buildings
• Restaurants (including franchises)
• Retail
• Self-storage (Mini-storage) / industrial
• Strip malls
• Hotels (also called "hospitality")
• Multi-family / apartment buildings

Why invest in commercial property?
Unlike residential real estate, commercial property is evaluated, bought, and sold based purely on numbers - on a set of factors that describe what kind of return on investment you can expect with the property. Most commercial real estate is expected to make a return for you on an on-going (monthly) basis.

Total realized returns for commercial real estate have outpaced the stock and bond markets on a risk-adjusted basis (NAREIT and NCREIF are realty indices):

Over the last few months there has been a crisis of sorts in the credit markets, fueled by defaults in the sub- prime residential mortgage market. What, you ask, do residential mortgages have to do with commercial lending? Plenty, it turns out.

One of the vehicles that sub-prime lenders use to create liquidity on their balance sheets is a CDO, or Collateralized Debt Obligation. Defaults in sub-prime loans have created defaults (or covenant violations) in the underlying CDO. Alas, investment banks and buyers of securitized debt (the mechanism for CMBS or commercial mortgage backed securities) also use the CDO market to create liquidity. CDO investors have not distinguished between the two, and are holding back from further investment in CDOs. The timing is not good - investment banks have significant debt (at least $40 billion) that was priced as if it could be sold through the CMBS market. In addition, this debt was underwritten and priced before the stricter guidelines put into place by the rating agencies. Now that the market has lost liquidity, pricing of debt has become more difficult. ...More...
 

 Paul,

I want to express my gratitude for the prompt and professional job you executed in both leasing my building in Missoula and subsquently procuring the buyer for the same property. ...More...

What you'll find on this site

• Listings - includes properties for sale or for lease
• 1031 exchange - learn all about 1031 terms, definitions, and rules. You'll also find a calculator to figure out your capital gains, taxes and net adjusted basis on a property you're considering exchanging
• Development investments - includes offering memorandums for investments in which you can participate as a tenant-in-common (TIC).
• Info for buyers - learn about the buying process, evaluating properties, investing in commercial property with your IRA funds, and financing purchases
• Info for sellers - learn about the marketing services I offer sellers, and the sale-leaseback concept
• Education center - learn more about advanced topics such as depreciation, cost segregation, and other financial analysis techniques. Also includes a dictionary of real estate terms. I am continually adding to the set of articles in the Education Center.
• Contact me - Contact me for a FREE personalized investment analysis
• Links and resources - includes lists of suggested reading and useful links

I'm experienced with optimization of leverage, cash-flow analysis, return on equity (ROE), internal rate of return (IRR) - all tools that help me maximize investment returns for my clients. I use simulations and other techniques to understand the impact of such variables as vacancy rates and interest rate fluctuations on your ROE. I also work with investment bankers on CMBS (commercial mortgage-backed securities) to finance single-credit-tenant properties. To understand more about each of these terms, please visit the site's Education Center.