August 27, 2014
In Part 1 we discussed the types of services performed by commercial real estate professionals. In Part 2 we will look at specific tasks a commercial real estate broker can expect to perform.
Commercial Real Estate is an exciting and rewarding field of study and can lead to dozens of different career opportunities. Whether someone is starting their first small business, developing a parcel of land, or considering an investment in real estate rather than an investment in a mutual fund or money market, the understanding of commercial real estate is fundamental to their decisions.
To begin your career in this sector of the industry you’ll need to understand exactly what you’re selling, how it is priced, how it is financed and what legal documents must be used to convey the sale or lease. Let's begin introducing you to the key elements necessary to be successful in commercial real estate.
You will need to examine the diverse forms that commercial property takes and the important terms used by those in the field to explain and understand a type of property. Next you will need to explore the different methods of determining value in the eyes of property users, investors, real estate professionals and appraisers. You will also need to learn how commercial real estate can be financed and how it may be leased. There is also a need to perform an examination of the legal documents including listing contracts, sales agreements and lease contracts.
Your responsibilities as a commercial real estate professional include:
For Sellers or Property Owners:
- Hold or Sell Analysis – Analyze the market to determine what course of action is best for a property owner. Is it better to hold onto the property longer, or would an owner be better suited selling the commercial property? This analysis may include projections of cash flows, and determination of internal rate of return.
- Property Management– Assist the owner by leasing and / or managing the day to day situations that arise in any real estate investment. Management may include suggestions of how to create more value in the property. 3 story multi-tenant Office Building with central common atrium.
- Property Leasing – Finding tenants for a property owner’s commercial real estate. This may include advice on creating a niche for the property, or ways to attract more solid long term tenants.
- Property Sale or Marketing – Determining the best course of action in order to maximize the sales price on a property and find the best possible buyer.
For Buyers, Tenants or Investors:
- Investment Analysis – Provide an investor or buyer with comparisons of various properties or types of property and their cash flows or investment returns in order to determine what situation may be best for the investor or buyer.
- Site Selection – Assist the investor or buyer with locating a site that meets the client’s needs. Assist with demographic data to support the client’s business or investment goals. An agent may also be required to assist with determining the site’s suitability based on zoning regulations, environmental conditions and financing considerations.
- Cash Flow Analysis / Return on Investment – What kind of return can an investor expect on a particular real estate investment? Agents provide projections of potential future income and analysis of potential return on the property.
For both Sellers / Owners and Buyers / Investors:
- Property or Business Valuations – Any property owner wants to know what their property is worth to a buyer and what the highest sales price or lease price is possible in the current market. Buyers or Investors want to know what a fair price may be for the same property or business, and will want to know what the best investment may be at this point in time.
- Feasibility Studies – Conduct a market study with the help of Real Estate Appraisers and engineers to determine the highest and best use of a property, or forecast a project’s likelihood of success.
- Exchange Opportunities – Tax-deferral benefits may make it worthwhile to exchange the property, or use a 1031 deferred exchange.
Commercial Real Estate Professionals can be rewarded for their quality work and adherence to ethical standards. Learning the fundamental methods and tools used are critical to the success of both the professional and their clients.
VanEd offers online licensing programs in many states, including Colorado, Nebraska, Texas and Oklahoma. Visit us online at http://VanEd.com to learn more about beginning your career in Commercial Real Estate. We also offer continuing education for those licensees interested in moving into the commercial field.