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Recent Blog Posts
What CRE Investors Should Know Before Adding Restaurant Property to Their Real Estate Portfolios
With more restaurants offering delivery services to their customers, and the popularity of food delivery services rising, the interest in the restaurant investment sector is growing at an unprecedented rate. Unfortunately, far too many investors dive into this industry without fully understanding its risks and nuances. As a result, they increase their risk of significant financial loss. Be proactive and avoid such a fate with help from the following information.
A Closer Look at the Restaurant Investment Boom
From a distance, it might appear that the entire restaurant industry is booming. However, upon closer inspection, current trends indicate that growth is confined mostly to Class A properties. All other properties are seeing little (if any) growth - and in many areas, closure rates for Class B and C restaurants are increasing. As such, investors wishing to break into the restaurant sector are encouraged to focus their sights on high-end properties. Just keep in mind that, because of the current boom, competition in the Class A restaurant sector is exceptionally high.
Tips for Increasing Your Agility in Today's Volatile CRE Market
Real estate has always operated in a cycle. Prices and interest rates drop, offering opportunities to seasoned and new investors alike. Then they rise again, causing what is known as a real estate downcycle. In these downcycles, some investors fall to the wayside, either through bankruptcy or because they leave the market in an attempt to preserve their remaining wealth. Others get creative, increase their agility, and manage to hold on to their businesses until the next real estate boom. Learn how you can be a part of the latter group, even in today's increasingly volatile commercial real estate (CRE) market.
Relevancy and Real Estate
Many of the issues occurring in today's real estate market can be traced back to a lack of relevancy. In fact, countless department stores, toy stores, restaurants, and hospitals have gone bankrupt because they failed to stay ahead of the curve or were unwilling to change. The very same thing happens to investors as well. Thankfully, by using the following three strategies, you can decrease your company's chances of experiencing such a fate:
Getting Your DuPage County CRE Zoning Variance Approved
In DuPage County, and virtually every other county in America, most land is zoned, or designated, to be used for specific things. For example, a plot of land could be zoned as single-family residential, in which case it could not be used to build an apartment complex or open a business. In most situations, large areas are made up of plots of property that are zoned in the same way. If you want to open a business in an area that is zoned as residential, you will have to get what is called a variance, or exception, to the zoning rules. In order to open the business, you would need a commercial real estate zoning variance.
Types of Variance
There are two types of variance available, and you need to apply for the correct one when seeking a commercial real estate zoning variance. The two options are:
- Area Variance – An area variance is quite common, and used when compliance with a specific zoning law would create an unreasonable restriction on the use of the land. For example, if a plot of residential land is oddly shaped, making it difficult or impossible to build a home on it while complying with standard setback requirements, an area variance would be granted.
Bitcoin in Real Estate Transactions - Wave of the Future or Total Bust?
Bitcoin, though introduced back in 2009, has made little headway in the real estate market. Still, there are enthusiasts who still believe Bitcoin real estate transactions (and other blockchain exchanges) are the wave of the future, and even real estate professionals have a mixed opinion about the future of cryptocurrency in real estate. What does all this mean for investors who are looking to sell or buy a property using blockchain, and how can a seasoned real estate lawyer help to mitigate the potential risks of such a transition? Learn more in the following sections.
Bitcoin Transactions in Real Estate
Last fall, a Miami condo made national headlines when its listing announced that the seller would only take Bitcoin for the transaction. The price, which was set at 33 Bitcoins, amounted to about $544,500 at that time. While others had allowed cryptocurrency for real estate transactions, this was the first ever “Bitcoin only” transaction.
Two Things to Consider About Your Potential Condo Deconversion Investment
Just as trends come and go in other business arenas, they also make their mark in the commercial real estate world. The condo deconversion is one of the latest booming trends to hit commercial real estate, but some experts believe this may be more than a trend that will fade with time.
There are a few simple realities behind this reasoning: condo deconversion is based on restructuring older properties, and alternatives to new construction are continually in demand. There are - and will continue to be - older properties in need of modernization, and at the same time, real estate investors in need of more affordable construction methods. This makes the condo deconversion business model very appealing in commercial real estate, which means the market will likely continue to see a lot of them in the future.
Small-Scale Investors to Be Denied a Break Under New Tax Law
The Tax Cut and Jobs Act went into full effect at the start of 2019. Sadly, this new law will fall short on delivering some of its promises. A prime example is the small business tax benefit, which was supposed to allow taxpayers who made less than $157,500 ($315,000 for a married couple) to deduct 20 percent of a pass-through business’ income from their overall taxable income. Yet, in what many call a “shocking” and “counterintuitive” move, the Treasury announced that taxpayers who use triple net leases will be blocked from claiming the deduction.
What might all this mean for your investment portfolio, and what can our seasoned Naperville real estate lawyers do to help? The following information explains further.
Triple Net Leases - The “Gold Standard” in Commercial Real Estate
For better or worse, triple net leases are considered the “gold standard” in commercial real estate - and for good reason. In addition to requiring the tenant to pay the landlord for their rent and utilities, they must also submit payment for any outstanding costs, such as those related to maintenance, insurance, landscaping, or property taxes. In short, triple net leases leave for the landlord to manage or check up on while renting out their property. They simply use the money to ensure that all costs related to the building are covered; the rest is considered their return.
Is the House-Flipping Market Headed for a Cool-Down?
During the housing market crash of 2017, investors flocked to pick up every distressed property that they could find. Many sold their assets to other investors. Others remodeled the properties and rented them out, securing themselves a fairly steady cash flow. Still others decided to “flip” their houses and sell them. This last group of investors, otherwise known as “house-flippers” have become commonplace in the last decade, but with fears of a market cool-down mounting, many are now selling their assets and bowing out. Should you do the same, or is now the time to hold onto your assets?
The answer to this question may depend greatly on your current situation.
Profit Margins Shrink as the Cost of Repairs and Mortgage Prices Rise
Although there are many factors affecting the house-flipping market, one of the biggest is the shrinking profit margin for investors. A healthy housing market means mortgage prices are on the rise. Since flipped houses tend to come at a premium price, many buyers are lowering their expectations. Some are even willing to make the repairs themselves if it means the difference between renting a little longer and owning their own home.
Evicting a Commercial Tenant for Rent Delinquency
Business owners of all types can experience a drop in sales and fall behind on their bills. Unfortunately, when this happens, it can leave the landlord in a difficult predicament. On the one hand, commercial property owners know it is usually easier to keep a current tenant than it is to find a new one, so they may be willing to wait out a slow season for a delinquent commercial tenant.
On the other hand, the lack of payment can cut into the investor's profits, perhaps to the point that it places them at risk for financial problems themselves. As such, it is important that investors not only understand the eviction process for a commercial tenant who is behind on their rent, but that they also carefully consider their options before moving forward with the process.
Should You Evict Your Commercial Tenant?
Preparing Your Commercial Real Estate Property for Premises Liability
The success and overall performance of a commercial property depends on a variety of factors. Perhaps one of the most influential is the way that owners (both property and business owner) handle and prevent personal injury liability situations. Bound to occur at some point, these incidents can cost all involved parties a great deal of time and money. Thankfully, the following sections can help you learn how preparing your commercial real estate property for premises liability can help to protect your asset (and your bottom line).
The Potential Consequences of Ineffective Premises Liability Protection
During the year 2017, more than 53,000 personal injury cases were filed in the United States. Many of these cases likely ended in a settlement, but not all. In either case, these lawsuits cause business and property owners to lose millions of dollars on an annual basis. Attorney fees, settlements, and court costs are just a fraction of the costs that can be associated with such cases. Money may not be the only loss that a business or property owner experiences; one's reputation and image can also be irretrievably damaged if the case goes poorly or receives a lot of publicity.
How Can the Owners of Malls and Shopping Centers Recover from the Impending Downsizing of Specialty Stores?
Mall and shopping center owners have barely had the time to develop a game-plan for the expected closures of 142 Sears stores, a requirement in their bankruptcy; now they are learning that several other specialty stores may not be renewing their commercial leases in the upcoming years. Gap and L Brands, which owns popular stores like Bath & Body Works and Victoria's Secret, are among two of the biggest retail chains that are expected to scale back between now and 2020 - and that is creating all kinds of issues for the owners of malls and shopping centers. How can they recover? Is it even possible?
Instinct, Intelligence, and Intuition Necessary for Navigating the Volatile CRE Market
The real estate market will shift and change; dips and recessions are going to happen. These are simple facts that commercial real estate life must accept. Moreover, the way an investor navigates the challenges of their market (deciding whether to sell or hold, remodel or slash prices on existing space, negotiate a deal with an existing tenant or find a new one, etc.) often has a significant impact on their real estate portfolio's future health. As such, the commercial real estate (CRE) market practically demands that investors are intelligent, intuitive, and able to listen to their gut instinct - even when it bucks the trend.
1730 Park Street, Suite 117, Naperville, IL 60563
630-778-3818
