Real Estate Journal — Industrial / Distribution Centers — May 27 - June 9, 2016 — 7C
www.marejournal.com
M id A tlantic
NAI S ummit
By Anthony Diaz, NAI Summit Why you should buy commercial real estate
I
love commercial real estate. The question is why? The answer from an
appreciation of the building. Yes historically of all assets classes Commercial real es- tate has been the best hedge against inflation. All most people have to do is think back of what prices were when you were younger. When there is inflation most of the times rents increase with inflation and when rates do increase typically the value of the building increases as well. Lets talk about safety. If you have a large stable company in many cases it is safer then an individual. And many com- mercial real estate buildings
can have multiple tenants. Plus you have full control over how you manage your build- ing and when to sell unlike most mutual funds or stocks that are run by managers and boards where you have no power over the day to day operations. Also Commercial Real Estate is a hard asset it is tied to something tangible unlike a stock that has no se- curity. With the stock market there are many factors outside our control and some of the movements are based on com- plex business models. What is great about commercial real
covers the mortgage you are not forced to sell the asset. You determine when to sell and the goal obviously is to sell when prices are higher then what you bought the property for. With some assets likes stocks the only way to actually achieve the income is to sell the asset, unlike real estate which has a monthly income. Also in most cases overtime lease rates typically go up not down and with a fixed mortgage overtime this could be very beneficial. Lets not forget on top of an increas- ing income you get the capital
estate is that was based on and will probably always be based on a basic need. The need for shelter and a place to conduct business. I guess that is one of the reasons banks love to loan money against this asset. Well since it is an election year I will leave you with a quote: “I made a tremendous amount of money on real estate. I’ll take real estate rather than go to Wall Street and get 2.8%. Forget about it” – Ivana Trump. Anthony Diaz is Assis- tant Vice President of NAI Summit. n
investment s tandpo i nt i s t h a t i t has been the most profit- able type of real estate you can own through the history of our
Anthony Diaz
country. It is stated that over 48% of American millionaires made their fortune in real estate. We actually have one of them running for president today. So let’s exam what makes commercial real estate so attractive. Where else could you buy something and only pay 20% of what it cost? How you do this in real estate is through a mortgage. The key here is to get an appreciation or return on your dollar that is greater then the rate the bank is charging you and remember that the return is based on 100% of the property not just on the 20% you put down. Also if the property has good cash flow it will pay back the mort- gage for you. This is what you call leverage. There is some type of leverage in the world of stocks through a margin loan but good luck margining 80%, it is not going to happen and the stock market historically has been much more volatile then commercial real estate. For example if you put down 20% and cover your mortgage by the cash flow of the property and overtime you receive a 30% increase on your property. That 30% increase is much greater then you think, it actu- ally is a return of 150%. How? Remember you only put down 20%. You purchase a million dollar building and put down 20% which is $200,000. Lets say our mortgage is covered by the cash flow of the property, and your building appreciates 30% to 1.3 million overtime. That is a three hundred thou- sand profit but remember you only put down $200,000 of your own money. This does not include paying down the mortgage from the cash flow and possible tax benefits. Also thank goodness interest rates are historically still low. Cash flow is the key to sur- viving the real estate swings of the overall real estate mar- ket. Because when times are bad as long as your income
NAI SUMMIT 3435 WINCHESTER RD, SUITE 300 ALLENTOWN PA 18104 610.264.0200 NAISUMMIT.COM
2300 Hanover Avenue Allentown
2124 & 2118 Hanover Avenue Allentown
3850 Sierra Circle Center Valley
FOR SALE MULTIPLE BUILDINGS, VARIETY OF USES
FOR SALE INDUSTRIAL BUILDING ON 7.3 ACRES
FOR LEASE DEVELOPMENT OPPORTUNITY
Lehigh 94,026 SF $3,350,000
Lehigh 2.36 AC Call for details
Lehigh 15,357-33,517 SF $3,680,000
COUNTY BUILDING SF PRICE
COUNTY AVAILABLE SF RATE
COUNTY BUILDING SF PRICE
FEATURES Industrial building with additional 1.6 acre parking lot included, B3 zoning, 10 drive in doors and 8 dock doors, 18’-20’ ceiling height in warehouse, several interior drive-thru doors, administrative offices, kitchen and break room, interior coolers and onsite garage for truck repair, located directly off Hanover Avenue with easy access to Airport Rd, Routes 22 & 378, 3 miles from LV Int’l Airport
FEATURES 2.36 acre Office Pad site in Class ‘A’ Stabler Corporate Center, zoned Industrial/Commercial with neighboring office and medical buildings, adjacent to The Promenade Shops at Saucon Valley, close proximity to The Center Valley Club golf course and new 5-story hotel/ banquet facility currently under construction, located just off Routes 309 & I-78 providing easy access to PA Turnpike, NJ and NY
FEATURES 3 buildings on 8.85 acres, 33,517 SF one story office/showroom building, 15,357 SF one story showroom building, service building and ample parking, B3 Zoning allows for a variety of uses, multiple entry points, excellent visibility on busy road, over 43,700 vehicles per day, located directly off Hanover Avenue with easy access to Airport Road, Routes 22 and 378, 3 miles from LV Int’l Airport
FOR MORE INFORMATION ON THESE PROPERTIES, PLEASE CONTACT FRANK T. SMITH, CCIM, CPM, 610.871.1682
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