Preface xi
Acknowledgments xiii
Notes on Reading This Book xv
Introduction xvii
CHAPTER 1 Just What Is Commercial Real Estate? 1
CHAPTER 2 People versus Contracts 5
CHAPTER 3 Why Invest in Commercial Real Estate? 11
Lease Duration 11
Assignment of Lease 15
The Tenants Pay the Outgoings 17
Tenants Earn Their Income on Your Premises 18
Landlord Pays for Improvements to Commercial Premises 21
Certainty of Collecting Rent 22
Upward-Only Rent Reviews 24
Government Interference 25
Management Overhead 27
CHAPTER 4 The Downside of Commercial Real Estate 29
Much More Difficult to Acquire Commercial Tenants 29
Banks Will Lend a Smaller Proportion of a
Commercial Property 30
CHAPTER 5 The True Value of Real Estate 33
CHAPTER 6 How to Overcome the Disadvantages of Commercial Real Estate 41
CHAPTER 7 How to Attract a Tenant 45
Who Wants to Run a Funeral Business? 45
Finding a Tenant for a Warehouse in an
Oversupplied Market 50
The Power of the Internet 55
Many Prospective Tenants Know Your Building 56
Engage a Real Estate Firm or Property Management
Company to Find a Tenant 59
Wait for (or Cause) a Zone Change 60
Split a Single Tenancy into Multiple Tenancies 62
Consolidate Multiple Tenancies into One 64
The Ultimate Way to Attract a Tenant 66
CHAPTER 8 How to Increase Rental Income (and hence the Capital Value) 71
Helipads 72
Cell Phone Towers 73
More Rooftop Antics 74
Naming Rights 76
Air Space 77
Parking 81
The Humble Webcam 89
Interior Remodel 93
The Triple Win of Alarm Systems 100
Rent Reviews to Market 101
CHAPTER 9 What Were the Disadvantages of Commercial Real Estate? 103
CHAPTER 10 Finding Commercial Real Estate 107
Newspaper Advertisements 107
Real Estate Firms 112
The Internet 114
Keeping Your Eyes Peeled 116
Networking 118
Word of Mouth 118
Helping Other People 124
The 100:10:3:1 Rule 126
Summary 130
CHAPTER 11 Analyzing Deals 131
Due Diligence 132
Four Questions to Ask about Any Commercial Property 142
Return on Investment 144
CHAPTER 12 Negotiating Commercial Real Estate Deals 155
The Uncooperative Seller 156
Other Negotiations 159
CHAPTER 13 Financing Commercial Real Estate 163
Proposal for Finance 166
Summary Paragraph 171
General Description of Property Offered as Collateral 174
Property Portfolio Statistics and Cash Flows 176
Statement of Assets and Liabilities 177
What to Include in the Appendix 178
How to Use the Proposal for Finance 179
Umbrella Loans 182
CHAPTER 14 Structuring Commercial Real Estate Ownership 183
CHAPTER 15 Managing Commercial Real Estate 187
Tenant Selection 188
Rule Enforcement 189
Rent Reviews 190
How to Get a Tradesman to Do Your Work First 190
Accounting 193
Summary 193
CHAPTER 16 How to Beat the Average 195
Geography 196
Zone Changes 199
Proximity to Views 200
The Center of Town 200
High Technology 201
Leasing and Management Tactics to Beat the Average 202
Combining All Methods of Beating the Average 202
CHAPTER 17 Raw Land 205
Best Choice Properties 208
Spring Mountain Ski Ranch 211
The Benefit of Having Great Partners 214
Getting Back to Commercial Real Estate Investing 216
CHAPTER 18 Extraordinarily Odd Commercial Deals 217
Oil in Them Thar Hills 219
Marine Farms 222
CHAPTER 19 Property Ventures Limited 225
Five Mile 230
CHAPTER 20 Never Sell 233
CHAPTER 21 Thirteen Golden Rules of Commercial Real Estate Investment 239
Golden Rule 1: Risk Is Equal to Yield 239
Golden Rule 2: Ensure Safety of Principal 240
Golden Rule 3: Control Your Liabilities 240
Golden Rule 4: Add Value to a Deal 241
Golden Rule 5: A Broker or Agent Must Bring Something to the Deal 242
Golden Rule 6: Real Estate Is a Long-Term Investment 243
Golden Rule 7: The Number of Voting Partners Is Directly Proportional to the Failure of the Project 244
Golden Rule 8: You Are Going to Be in a Lawsuit 244
Golden Rule 9: It Only Takes One Deal to Go Broke 245
Golden Rule 10: It Only Takes One Deal to Make a Million Dollars 245
Golden Rule 11: The Value of a Property Is Limited by the Tenant’s Ability to Pay Rent 246
Golden Rule 12: Appreciation and Inflation Are Compounded Annually 246
Golden Rule 13: You Cannot Give Kindness Away—It Is Always Returned 247
CHAPTER 22 Investing Abroad 249
CHAPTER 23 Live Life to the Fullest 261
About the Author 269
Appendix: Resources 271
Index 281
Dolf de Roos is a New York Times and Wall Street Journal bestselling author and prolific real estate investor. He is the Chairman of Property Ventures Ltd, an innovative publicly-held property investment company with holdings ranging from office towers to vineyards, and a founding director of Best Choice Properties. His other real estate titles include Real Estate Riches, The Insider's Guide to Real Estate Investing Loopholes, The Insider's Guide to Making Money in Real Estate, The Insider's Guide to Tax-Free Real Estate Investments (all from Wiley), and 101 Ways to Massively Increase the Value of Your Real Estate without Spending Much Money, from Timelife Direct. For more information, visit www.dolfderoos.com
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