A Tool to Quickly Analyze a Property

A Tool to Quickly Analyze a Property

I thought I would share my proforma spreadsheet for analyzing commercial properties.  This is a basic tool, but it’s one I use frequently. You can get the spreadsheet by subscribing to my newsletter.

There are some incredibly in-depth tools out there for analyzing commercial properties.  The spreadsheet that’s given as part of the CCIM 101 course is incredible.  It’s able to forecast 10-years down the road, but it is so detail heavy that it can make your eyes cross, your hands sweat, and truly wonder if commercial real estate is anything you want to get involved in. Please understand that I’m not making light of a tool of that magnitude.  In fact, I will use it when analyzing million-dollar shopping centers.

However, there are times when I just want to quickly analyze a property to understand if it is worth digging into deeper.  That’s where this little proforma comes in.  It isn’t mean to be an end-all/be-all.  It’s just a starting point.

The spreadsheet was given to me by my investing partner who said I was free to tweak it and share it.

Without further ado, let’s take a quick walk-through.

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Tools of the Rich #1 – Depreciation

Tools of the Rich #1 – Depreciation

An October 13th, 2018 article in the New York Times discussed how Jared Kushner avoided paying almost no federal income taxes several years running. According to the article, Kushner, who has a net worth of $324M plus, paid little to no taxes from 2009 through 2016.  Just by my first two sentences, you can see the slant of the article – how things are tilted unfairly toward the rich.

To avoid paying taxes, the article pointed out that Kushner used “depreciation, a tax benefit that lets real estate investors deduct a portion of the cost of their buildings from their taxable income every year.”

Before we get too far into this post, let me state one thing – I didn’t vote for the current president nor do I like how he’s running the White House.  That will be the most political I say on this blog as I’ve tried to be very apolitical.  However, I’m going to defend Mr. Kushner’s use of depreciation throughout this post and I don’t want anyone to believe I’m doing so for political reasons.  I’m doing it strictly because it’s the right thing to do.

As we get started, let me be clear.  The depreciation “tool” is available for every real estate investor, but you must get in the game to use it.  Otherwise, you’ll just be standing on the sidelines, wondering how come there are others running up and down the field.

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What are the Poor Four?  And are They Keeping You from Being Wealthy?

What are the Poor Four?  And are They Keeping You from Being Wealthy?

I read the most astounding paragraph in the June 19th, 2018 edition of USA Today.  In Wealth of Millionaires Surges 10.6% to top $70 Trillion for the First Time, David Carrig was reporting on the World Wealth Report 2018 recently released from global consulting firm Capgemini.  It was the third paragraph of the article that really caught my attention,

The number of high net worth individuals (HNWI) – which Capgemini defines as those having investable assets of $1 million or more excluding primary residence, collectibles, consumables and consumer durables – grew almost 10 percent, or 1.6 million to 18.1 million in 2017.

After reading the title of the article, I wondered if this was supposed to be a shocking paragraph?  Was it something to get the readership wound up enough to raise their collective fist in anger and yell, “Life’s unfair?”

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The Investment Property Process

The Investment Property Process

If you’re looking to purchase an investment property, whether it be a residential single-family home or a commercial building, the purchasing process is very similar.  While there are some differences between the two processes, I thought they are close enough that I thought we should take a quick run through to get a discussion in place for future articles.

For discussion purposes, residential properties are single family homes, duplexes, triplexes, and quadplexes.  Commercial properties encompass everything else including retail, office and industrial buildings as well as multi-family projects of five units or more.

The investment purchase process for both residential and commercial properties looks like this:

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6 Real Ways to Build Long-Term Wealth

6 Real Ways to Build Long-Term Wealth

Becoming wealthy is not something that happens overnight. Sure, some people win the lottery or have a windfall of money from an unexpected inheritance, but you should not be holding your breath for something like that to happen to you.

Instead, to build real wealth, you need to think long-term. Rather than living lavishly, it’s important to adopt a lifestyle of disciplined saving and investing. These simple actions can help almost anybody grow a massive nest egg over time.

Here are six of my favorite ways to gradually grow real wealth.

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The Attack of the Side Hustle!

The Attack of the Side Hustle!

When I purchased my first commercial building, I was a property manager.  Therefore, it was natural for me to accept the same role for our investing group.  It dove-tailed nicely into my day-to-day routine.  I could field calls throughout the day for my own property as well as from the portfolio I managed.  Everything rolled together well.  It was a comfortable fit.

I didn’t know it was called a side hustle then, but I was creating a new stream of income (albeit small) and having fun while doing it.

Fast forward eight years and I’ve found myself in an uncomfortable situation.  I’ve grown my portfolio to fifteen properties with more on the way.  I’m now overwhelmed by the level of work I’ve created with the management duties.  The income created from this side hustle is nice, but it’s nowhere near the level I earn as a commercial real estate broker.  It’s not even an amount that I could subside on if I decided to solely do my side hustle.

Therefore, I was faced with a choice – continue to drown or seek immediate help.

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What Does Your Broker Invest In?

What Does Your Broker Invest In?

I’m going to rant against some of those in the financial services industry.

You see, I’m a commercial real estate broker who loves the product he represents.  My clients can see and hear my enthusiasm when we talk about their needs, whether it be buying, selling, developing or leasing. 

A lot of my excitement stems from the fact that I own real estate.  I own various types of commercial property.  From small retail strip centers, a couple office buildings, a ground leased property and even a couple residential rentals.  I love real estate.

It’s one of the reasons I started Building-Income.  I wanted to share my excitement for the product.  I’m always looking to buy another piece of property.  It’s how I’m going to secure my retirement and leave a legacy for my family.

It’s one of the best investment vehicles out there and I wish everyone could feel the excitement I do.

However, there are some in my industry who don’t feel the same way.  They take their commissions and run.  They buy anything but real estate.  If they invest in anything, it’s the stock market or some other get rich quick scheme.

Now, I’m not against the stock market or investing in a business.  I’ve invested in both.  It’s just that I believe a real estate broker should practice what they preach and put their money where their mouth is.

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Cleaning Up after Forty Years – Rosewood Retail - Part 4

Cleaning Up after Forty Years – Rosewood Retail - Part 4

In May of 2017, a tenant at our Rosewood Retail property moved out.  Spokane Vitamin Supply had been in the building for more than forty years.

We had only owned the building for seven years, so we didn’t enjoy their entire run of tenancy.  The business had changed ownership at least twice.  In our records, there was a transfer of ownership in 1993 to Mr. Smith (not his real name).  Then in 2015 the business was sold again to the Williams family (not their real name).

Initially, Mr. Smith was going to close his business instead of renew his lease.  He was an older gentleman and didn’t actively run the business anymore.  He operated the business as a way to keep a couple employees working since they had been loyal to him for so many years.  The employees were now ready to retire which would allow him to shutter the business.

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