| What commercial property types should you buy? | | | | Retail |
| You should consider the pros & cons of each | | | | Retail properties are properties that are occupied by |
| property type, as well as, have a good understanding | | | | one or more tenants and the property is utilized for |
| of your investment objectives and your experience. | | | | retail purposes. |
| These factors will help lead you to your ideal | | | | A free standing retail, strip center with an anchor |
| commercial property. | | | | tenant is a well known commercial retail business such |
| Listed below are the most common commercial | | | | as a national chain store or regional department store |
| property types. | | | | strategically placed in a shopping center so as to |
| Apartments/Multi-family | | | | generate the most amount of customers for all of |
| Apartments or multi-family buildings are usually the | | | | the stores located in the shopping center. An |
| first choice for new commercial investors. Apartment | | | | Unanchored retail center is a center which is occupied |
| management and financing is very similar to | | | | by multiple tenants of which none are anchor tenants. |
| residential, and so new investors feel more | | | | Single tenant investment grade retail properties are |
| comfortable with them. The main disadvantage with | | | | properties that are net leased to one investment |
| apartments, is that they are management intensive. | | | | grade tenant (BBB- rating or higher). |
| In order for an apartment to be considered | | | | Office |
| commercial property, it must have 5 or more units. | | | | The different categories of offices include: |
| There are numerous sub-types of apartments: | | | | Suburban Garden Office |
| Low-Rise Garden Apartments | | | | Suburban High Rise Office |
| Mid-Rise Apartments | | | | Medical Office |
| High-Rise Apartments | | | | Central Business District (CBD) Office |
| Student Housing | | | | Potential office buildings should have a minimum of |
| Military Housing | | | | 85% occupancy and is located on or near a main |
| Townhouse Style | | | | thoroughfare and easily accessible. Properties that |
| Co-op | | | | have more than 20% of total revenue from owner |
| When you are looking at properties to purchase, pay | | | | occupied or owner affiliated tenants, will usually have |
| close attention to the location and general market for | | | | a higher interest rate on any loans. |
| that area. You will want to avoid properties that are | | | | Mixed-Use |
| located in economically depressed or seasonal areas. | | | | These properties will be a combination of any of the |
| Also, the property should have acceptable aesthetic | | | | above property types. A real estate development of |
| qualities to be competitive with market standards and | | | | mixed use properties, should be complementary to |
| have a minimum occupancy of at least 85%. | | | | each other. |
| What if the property you are evaluating has inferior | | | | Healthcare |
| physical characteristics or is in an economically | | | | These property types are nursing homes, congregate |
| depressed area? | | | | care and assisted living centers. Properties should be |
| You may have a higher interest rate, higher reserves | | | | close to retail and community services. Be cautious of |
| and tighter underwriting constraints. | | | | properties in economically depressed or seasonal |
| Mobile Home Parks | | | | areas. Also, be sure that the property complies with |
| Mobile homes can be a wonderful investment, | | | | ADA requirements. |
| especially if you own the land and sell off the mobile | | | | Hotel |
| home. You're just renting dirt at that point! If you're | | | | Hotels are characterized as either Full Service or |
| not familiar with mobile home investing, you need to | | | | Limited Service. |
| read "Deals On Wheels: How To Buy, Sell And | | | | Full Service Hotels can be further divided into Luxury, |
| Finance Used Mobile Homes For Big Profit And Cash | | | | Upscale, Mid-scale, and Extended Stay hotels. |
| Flow" by Lonnie Scruggs. This book is a gem! Lonnie | | | | Limited Service Hotels can be further divided into |
| explains how to buy and sell mobile homes on a note. | | | | Mid-scale, Economy, Budget and Extended Stay. |
| His presentation is very basic and understandable. | | | | When considering hotel properties, the property |
| Now back to mobile home parks. Mobile Home parks | | | | should have a stable operational history. A property |
| are rated as 1 Star, 2 Star, 3 Star, 4 Star, and 5 Star. | | | | with a history of four or less years should be |
| The Star ranking is based on the conditions and | | | | scrutinized. The minimum acceptable occupancy is |
| amenities of the park. | | | | usually 60%. Lenders also prefer franchise affiliated |
| A 3 Star park usually has a mix of single and double | | | | hotels with franchise agreements extending beyond |
| wide homes that are in good condition. The park is | | | | the term of the proposed loan. |
| attractive and offers some amenities. | | | | Industrial |
| A 4 Star mobile home park usually only has double | | | | These property types will have usage for industrial |
| wide homes that are skirted and in good condition. | | | | purposes only. Such as |
| The homes will have concrete patios or raised | | | | Warehouse-single tenant |
| porches. | | | | Warehouse-multi tenant |
| A 5 Star mobile home park can be characterized as | | | | Manufacturing |
| having deluxe accommodations, with a wide range of | | | | Research & Development |
| amenities and services. The homes are usually set | | | | Flex Space |
| back from the curb with paved streets, sidewalks, | | | | Light Industrial |
| street lights and signs. The park is located in a | | | | Heavy Industrial |
| desirable neighborhood and accessible to retail and | | | | Self Storage |
| community services. The homes are late model | | | | Also is called Mini-Storage, it is used for personal |
| doublewides and modular homes in excellent condition. | | | | storage for lease by consumers. |
| The mobile home park should have at least 85% | | | | Other Specialty |
| occupancy and be located in desirable areas. Also, be | | | | These property types are unique and the financing |
| cautious if the park has too many homes for sale | | | | them can be difficult. They includegas stations, oil |
| (more than 20% of total pads) or more than 20% of | | | | change facilities, etc. |
| total pads are rented homes owned by the park. | | | | |