Monthly archives for January, 2011

The Turtle Always Wins

A Blog of Richard Crenian

There is no question that residential real estate investment was responsible for enabling massive wealth accumulation for many in the first half of the last decade. However looking forward from 2011 and beyond there are many ways in which commercial real estate provides superior and more intelligent investment opportunities for those seeking safer options, truly passive income and good growth potential.

Yes it is true that many institutions and individuals have been looking to the US for bargain priced real estate deals and have been taking advantage of the many distressed homes available. However in terms of management, future potential and security it is hard to beat investing in Canadian commercial properties, especially multi-tenant plazas and shopping centres.

While there may currently be a surge in new US based real estate investment companies and real estate agents touting the benefits of buying foreclosure homes it has of course been proven time and time again in history that when there is a big rush in one direction the best opportunities lay in taking a different route. Not to mention that the housing woes south of the border are far from over.

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Cash Flow is King! A blog of Richard Crenian

In commercial real estate, a property’s value is largely influenced by its net operating income. A commercial real estate owner, therefore, is able to increase his/her property’s value by simply increasing the net income.

Depending on the capitalization rate of commercial properties in that area, increasing a property’s net operating income will increase the property’s value in a substantial manner, but it will also achieve an increase the owner’s cash flow, which is what the ideal would be.

“How to do it?”

There are several ways to increase the net operating income of a property in order to increase the value of the property. In order to accomplish this, you would either have to increase the revenue that is generated from the property, pay down the mortgage, or “value add”.

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Richard Crenian Blogs: Commercial Real Estate Investment – A Comparison

Investing in Commercial real estate tends to be the better investment in comparison with investing in residential real estate. While both sectors can be great investment vehicles and greatly impact your net worth, residential real estate often receives the most attention as an investment option. Although, residential real estate may be the most feasible investment vehicle for most people, investing in commercial real estate add a multitude of additional benefits that are not offered through residential real estate investing.

Here are the 3 reasons why it is smarter to invest in commercial real estate than in residential real estate:

Access to Greater Capital
To a certain degree, it is harder to acquire $150,000 for a residential real estate deal than to raise major capital (under $3M) for a commercial real estate transaction. Why is that? In residential real estate deals, sources of funding are often limited to that of private money, hard money lenders, and traditional financing. If funding from any of these avenues is not available for any reason, an investor would need to acquire funding through a creative avenue via owner financing, lease options, subject to strategies, etc. While not a bad thing in itself, there are simply some real estate deals that cannot be funded with these kinds of creative funding techniques.

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