If you plan to purchase an investment property, you should consider getting a commercial property analysis before any real estate deal. Incomplete research can sink the deal on any real estate. You must understand everything about it before making the purchase.

Many individuals consider several factors when they get a property analysis. The location of the land is very important. Is the land in area that is appreciating? Are there other business property buildings around this place? Also, the price of the asset is very important. Are the taxes expensive? Are there any local government and zoning laws? Finally you should see if the investment property is a source of potential rental income.

All investors must realize that commercial real estate has different guidelines and regulations which must be followed different from residential real estate. You do not want to purchase investment commercial land to find out that you are not permitted to lease it to a specific type of business. You may also be prohibited from making certain improvements on your property which go against the zoning laws. As an investor, it is important to go to City Hall and educate yourself on the local governmental rules and regulations which will govern what you can do with the land. Make sure you are able to do all that you plan on the property in question. Taxes are very important to consider when you are conducting a commercial property analysis. Many local municipalities offer tax breaks or incentives for business property owners who fall under a certain business-type or industry. You may also be eligible for a tax reduction, if you meet the applied deadlines. If the region charges taxes on commercial real estate at a high rate, investors could be unpleasantly surprised…especially if they do not consider taxes in their commercial analysis.

Many lending companies participate in programs which fulfill a variety of different business and community needs. There are many issues lenders take into consideration which influence whether a loan can be granted. Such issues include zoning requirements or economic make-up of the community. Commercial property analysis professionals can evaluate many factors that can help you decide whether or not to pursue a loan for that particular site.

Since your time is very expensive, you should be efficient when contacting your sellers, lenders or brokers concerning a site. Evaluating analysis information can be time consuming, but may cost you the deal if the investigation is not done thoroughly.

Securing the appropriate documents and information for your commercial venture can be hard for you to accomplish on your own. This is one of the reasons why you may want to hire a professional. This person can allow you to maximize your time. You should be able to focus on generating profits from your investments. You should have your commercial land analysis conducted by a professional; consider employing a broker or using investment property software to help you get that commercial real estate you have always wanted.

By: Andrew Stratton

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As we speak Residential Property, financial institutions, stock markets and bank’s interest rates are offering very poor returns & even poorer security for investors. Currently Commercial Property is offering the best returns to investors and also offering the most security for investors.

This is a general guide to Commercial Property in New Zealand for would be investors.

Firstly if you are looking to invest in Commercial Property it is important to identify what your investment goals are. These may range from short term capital gains by buying and selling to long term cash cow investment and even negative investments that are deliberate tax deductible. Once you have established what your goals are you can then determine the type of commercial property you should pursue.

The age old adages of high risk = high return and low risk = low return are simplistic ways to differentiate between the types of commercial property investments available. That being if you are looking for a long term investment with capital growth you will most likely look at low risk investments such as properties with banks, petrol stations and other similar solid tenants. However if you are looking for short term capital gains most buyers will look to either purchase a property at a sharp price for resale, add – value to a property for resale or acquire a vacant property with the intent to tenant it for resale as well as other capital gains vehicles.

Once you have identified what type of investment you wish to pursue the next step is to identify what areas you wish to invest in. I recommend that investors should predominantly invest in areas they are familiar with (so that they can readily view the property and are also able to readily assess the local market), however if investors have valuable and reliable investment advice to call upon then this rule need not apply. However be wary of individuals touting themselves as commercial property experts, whilst many may claim they are the majority without doubt are not.

Next is how you plan / strategise to purchase the property. If you are looking to secure any property at a sharp price never underestimate the power of an unconditional offer. An unconditional offer can be compared to flashing a briefcase of money in front of the vendor and more often than not tempts an owner into accepting a previously unacceptable price.

Once you have purchased a property it is important that you have a clear plan and goals that you wish to achieve. As Commercial Property is generally a business investment it is important to treat it as such, ie if the numbers stack up then a vendor should seriously consider selling and reinvesting that capital in another project. Never underestimate the value of making a smaller gain right now and reinvesting the money into another project.

A clear exit strategy is a central element for business decisions in general and no more so than in Commercial Property. Too often Commercial Property vendors think with their emotions rather than with their heads in their decision making. Commercial Property is a business investment and I cannot stress the importance of seriously considering offers if they stack up.

In summary Commercial Property is at present one of, if not the best investment vehicle available in New Zealand. My best advice for would be investors is to align yourself with an individual experienced / knowledgeable in Commercial Property. The value of having one trusted agent / broker or adviser will be immeasurable over the long term. Repeat business will also ensure that you also get offered the best properties first.

By: Benjamin Jones

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Over the past year the commercial real estate market has begun to reawaken and the significant number of transactions leave one with the feeling that reference is not to a momentary phenomenon but rather to a real change in trend, which heralds the coming of a new period in the window of opportunities for executing transactions at attractive prices and with handsome returns.

Why should foreign residents invest in Israel?
When examining any type of investment and real estate in particular, one should check the essence and quality of the transaction on the one hand and the alternatives at the investors’ disposal on the other hand. The commercial real estate market in Israel, which suffered serious setbacks over the past 10 years of recession, has only began to reawaken over the past year. This phenomenon opens the window of investment opportunities to foreign investors, as real estate prices have not yet reached a peak.
For illustration purposes, if we are refer to a productive real estate transaction in the United States of America with AAA tenants, the returns that can be expected for the transaction stand at approx.5% – 7% in the event that the transaction was successful. In Israel, however a productive real estate transaction with AAA tenants would yield average returns of 7.5% – 10%.

It should also be noted that the prices at which properties are sold and the returns that are calculated in relation to the transactions have been determined according to “dated” leases that do not yet reflect the awakening that has taken place in the branch. Id est, there is further potential for profits latent in each transaction as a result of the improvement in the value of the real estate and increases in the value of leases in the future.

Financing real estate transaction in Israel differs from procedure abroad
Executing real estate transactions and productive real estate transactions particular is, for the most part, a financial transaction. We have often read that because of unsuitable loan conditions transactions do not eventuate, as the profitability of a transaction often relies on the financing ratio that the bank authorizes, the interest-rate and finally the method of repaying the loan which leads to examining the flow of cash that remains in the hands of the investor.. What is required and how is the financing ratio for foreign residents interested in acquiring real estate in Israel determined?

A financial affidavit – Because of the fact that foreign residents do not have a permanent income in the State of Israel, they are obligated to furnish a financial affidavit signed by an authority in their country of permanent residence. In the absence of this financial affidavit, it would be impossible to raise a loan. It is important to remember that the financial affidavit is used as a yardstick for determining the financing ratio to which the borrower would be entitled.

Personal guarantees -The vast majority of loans granted in Israel require personal guarantees. In contrast to the acceptable procedure abroad, the banks are not prepared to grant loans against a pledge on the property.
The financing ratio – the financing ratio is determined according to a number of major parameters. Firstly, an appraiser’s evaluation: Any loan acceptable to the bank will be determined subject to an appraisal received by the bank from a real estate appraiser. The financing ratio that the investor receives is derived from the appraiser’s assessment and not from the price of the property. Secondly, the nature of the investment: in a productive transaction the financing ratio would be affected by the quality of the tenant and could reach a level of 85% financing. In venture transactions, the financing ratio could decrease significantly to an average of 50%-60% financing.

Of course, the quality of the financial affidavit assists in determining the financing ratio to which the investor would be entitled. Since any loan taken requires a personal guarantee, the more economically solid the investor the greater the chances of receiving a higher financing ratio.

The key to structuring a successful transaction
Because of the fact that foreign investors execute transactions at a great distance from their places of residence, they have to operate with extreme caution and make sure that they are working in pursuance of the following keys factors:

A commercial environment – Much time should be invested in an in-depth research into the business environment of the property for investment. Care must be taken to ensure that it has not been static from an aspect of price and percentage leasing in relation to other properties in the area, as a deviation of over 20% to what is acceptable in the region should be a warning light and why we were entitled to such a premium should be examined thoroughly.

Taxation programs – foreign investors pay tax on their profits according to the treaties existing between their countries of permanent residence and the State of Israel. The key to building a sound real estate transaction is formulating a taxation plan appropriate for the existing treaty between the country in which you reside and the State of Israel. Proper tax planning could save many tax payments and increase the profitability rate.

Fiduciaries – Prior to executing a transaction, assistance by a qualified realtor or attorney at law who specializes in real estate etc. is vital, as they are key factors in analyzing the transaction. They know the market and the existing trends and in most cases act as your contact people in the country.

A fiduciary assists both in analyzing and formulating the transaction and most important of all he/she takes care of the property for you once you return to your permanent country of residence.
A fiduciary should only be chosen after a personal meeting or by the recommendation of someone whom you know personally. In any event it is extremely important to ask him/her to furnish additional recommendations in order to get an impression from other bodies.

By: Shlomi Ben Ishai

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