Brian Fielding Shares How to Get Started in Commercial Real Estate Investing

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Commercial real estate advisor Brian Fielding knows that oftentimes people are more likely to invest in residential real estate because it is something with which they are more familiar. They own a home, and they know what it takes to keep up a home, approximate the taxes, and be more aware of local laws and regulations when buying, selling or adding onto a residential property. However, commercial real estate advisor Brian Fielding has been quoted numerous times saying that savvy investors often find that commercial real estate is the way to go for both short- and long-term financial gains.

There are several things that investors need to know about commercial real estate, but with some time and effort, everyone can learn the ins and outs very quickly and enjoy the many benefits of commercial real estate ownership.

1. The benefits of commercial real estate.

There is a wide range of benefits that come along with investing in commercial real estate. For one, it helps to diversify an investor’s risk in their real estate and overall investment portfolio. When commercial real estate owners lose one or two tenants out of the ten tenants in the building, the owner only loses 10-20% of their income, as opposed to losing a renter in a residential piece of real estate, where the owner would lose all of their income. Tenant rights are also almost always much stronger for residential tenants than commercial tenants. Courts tend to be more lenient with apartment and home residents, recognizing the basic needs for personal housing.

2. Cash flow.

Commercial real estate leases tend to have longer-term commitments than what one finds in residential property investments, and often, those tenants have an established financial history.  While it is true that a local pizza parlor might have limited historical financial data, many commercial tenants are extremely strong and their credit can be financeable. Indeed, if the tenant has a good Moody’s rating, investors will find that lenders will be more than willing to lend monies on the basis of their term. For example, if the investor has a very creditworthy tenant with a 20-year lease commitment, lenders will often tailor their terms to that period of time, allowing the investor to leverage their investment heavily.

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Essential Commercial Real Estate Terms Shared by Brian Fielding

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Before getting involved in the commercial real estate market, Brian Fielding believes that it is essential investors take the time to learn all that they can about the market. While commercial real estate can be a great investment, it is important that no one goes into the market blind, and the more that each investor knows, the easier it will be for them to be able to make smart decisions about how and when to invest and which properties to choose. To help these new investors, Brian Fielding offers understanding about common industry terms and how they are used.

  1. Cash on Cash: This term refers to the relationship between the return annually on a property and the investment first made on the property. By diving the income on the property each year by the amount of the investment on the property, this number can be determined. This number can be used to compare competing or similar properties to determine their performance.
  2. NOI: Also known as the Net Operating Income, a positive NOI indicates that a property’s annual income is actually profitable. A negative NOI means that the property is losing money. To find the NOI of a property, Brian Fielding shares that the operating costs for a year must be subtracted from the total income on the property for a year. The resulting number will be positive or negative and reveal whether the property is profitable.
  3. Capitalization Rate: This number will show the value of a property and can help determine future profits that the property may produce. Brian Fielding shares that this number can be found by dividing the income of the property by its total value. This method works for properties that are regularly producing an income for the investor.
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Understanding Different Types of Leases from Brian Fielding

When considering investing in commercial real estate, Brian Fielding of Fielding Investments and Fielding Companies knows that there are many things to consider. One of the biggest factors of a great commercial real estate investment is the type of lease that tenants will sign. Here, this commercial real estate advisor gives a quick overview of the four most common types of leases: Gross Lease, Single-Net Lease, Double-Net Lease and Triple-Net Lease. He gives some bullet points about what each lease and how it can benefit you, the investor.

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