Table of Contents

Acknowledgments xi


Introduction 1


Part One The Basics 5


Chapter 1 Why Commercial Real Estate? 7


Real Value, Real Ownership, Real Estate 8


The Control Factor 10


Financing Options 10


The Leverage Edge 11


Tax Benefits 11


Access to Information 13


Easy Troubleshooting 13


Overcoming Fear 14


The Bottom Line 18


Chapter 2 Real Estate 101 21


What Is Real Estate? 21


Types of Income Properties 21


What Real Estate Can Do for You 23


The Search Begins 23


Purchase and Sale Contracts 24


Closing 25


Education 26


Real Estate Lingo 28


The Bottom Line 29


Chapter 3 Assembling the Team 31


The Broker 31


The Attorney 36


The Certified Public Accountant 38


The Bottom Line 41


Chapter 4 Getting the Money 43


Obtaining a Home Equity Loan 44


IRA Accounts 46


Cash Value of Life Insurance 47


Customized Creativity 47


The Use of Options 48


OPM 49


Ask Your Banker 49


Present Sacrifice for Future Benefits 50


The Bottom Line 52


Part Two The Big Six Formula 55


Chapter 5 Location: Planting Investment Roots 59


Evaluating Locations 60


Industrial Properties 68


Short-Term Gains and Declines 68


Long-Term Gains and Declines 69


The Bottom Line 70


Chapter 6 Building Quality and Design Efficiency: Ensuring the Long-Term Viability of Your Portfolio 73


Class A Buildings 75


Class B Buildings 76


Class C Buildings 76


Class B Apartment Buildings 77


Class B Retail Strip Store Centers 78


Class B Office Buildings 79


Industrial Properties 81


The Bottom Line 82


Chapter 7 Tenant Profile: The Right Fit 85


Factor No. 1: Rental Rate and Terms 86


Factor No. 2: Gross or Net Lease 87


Factor No. 3: Size of Units 87


Factor No. 4: Impact of a National Tenant 89


Factor No. 5: Right of First Refusal 90


Factor No. 6: Potential Condo Buyers 91


Factor No. 7: Parking Considerations 91


Factor No. 8: Undesirable Mix of Tenants 92


The Bottom Line 93


Chapter 8 Upside: Maximizing the Return on Your Holdings 95


Tenants Can Set the Price of a Building 97


Upside Strategies 98


The Bottom Line 107


Chapter 9 Financing: Choosing the Fiscal Formula That Matches Your Goals 109


Before You Begin: Your Credit Report 109


Financing Components and Dynamics 111


Appraisal 118


The Advantages of Dealing with Local Banks 118


Ideal Financing 121


Getting Your Loan Approved 122


Private Lenders 122


The Romance of Leverage 123


Infinity Return 125


All-Cash Buyers 126


Burn the Mortgage Quickly 127


Mortgage Brokers 127


Healthy versus Unhealthy Debt 127


The Bottom Line 128


Chapter 10 Price: Looking Beyond the Price Tag to See the Big Picture 129


The Price-Is-Too-High Syndrome 130


Things to Know 132


The Bottom Line 140


Chapter 11 Anatomy of a Big Six Deal 143


Adam’s Manor 143


The Sellers 144


Listing the Property 145


The Buyer 147


Setting the Stage 148


The Buyers’ Strategy 149


Sealing the Deal 152


Brokers Meet the Sellers 154


Now What? 161


The Bottom Line 162


Part Three Moving Forward 165


Chapter 12 Management and Leasing to Enhance Your Investment 167


Managing Apartment Buildings 170


Managing Small Retail Centers 175


Managing Small Bay Warehouses 179


Managing Office Buildings 183


The Bottom Line 188


Chapter 13 Condo Conversions: Big Money in Small Apartment Buildings 191


My Start in Condo Conversions 192


Criteria for Converting Small Buildings 195


Critiquing the Units 197


Announcing the Conversion 200


Announcing the Improvement Program 202


Handling the Unsold Units 203


Legal Requirements 204


Bradford Terrace: A Mini Case Study 205


The Bottom Line 211


Chapter 14 One Good Investment Is Worth a Lifetime of Labor 213


The Shift: by Jeffrey Cohen 215


I Came to New York: by Christine Marie 219


Love at First Sight: by Tony DeRosa 222


If I Never Made Another Deal: by Cliff Suchman 225


You Can Never Know Too Much: by Anthony Dilweg and Andy Roberts 228


I Made It in Buying: by Kenneth D. Rosen 231


The Bottom Line 235


Glossary 237


About the Author 247


Index 249

About the Author

KENNETH D. ROSEN, CCIM, is the founder of Kendar Realty, Inc. Since 1975, he has bought and sold $500 million in investment real estate. He is a two-term past president of the Miami Association of Realtors and the recipient of numerous awards, including Miami Realtor of the Year. He has been active as a volunteer Guardian Ad Litem for abused and neglected children and is a 20-year volunteer skipper for Shake-A-Leg Miami, a nonprofit sailing center serving children and adults with disabilities. He is a 32nd degree Mason and a Shriner.