Archive for month: June, 2021

As a commercial real estate investor, you may be seeking out the next opportunity right now, or just keeping your options open for future investments. New investment opportunities offer a great chance for you to diversify and grow your portfolio, or simply a chance to trade out a lower performing property for something that will bring you more value in the long run. Whether you currently have a vast array of property types or you’ve focused on one primary type like office buildings, you may be wondering about other ways to increase your investments — and your income. One type of commercial property that can help you grow your portfolio is commercial warehouses for sale.

Commercial warehouses come in all sizes, and they can be used for small, local businesses selling items online or for large, multi-state or multi-national companies with huge ecommerce and sales success. They are found across the country in order to serve their customers, who range from businesses to consumers to even a single company storing items until they are needed. No matter the size of the warehouse, there are a few key benefits investors have found when investing in this type of commercial real estate property. Let’s dive a little deeper into investing into the warehouse property type.

Why Invest in Commercial Warehouses

Investing in commercial warehouse properties for sale often makes sense for people. These leases tend to be much longer term, so you won’t have to constantly seek out a new tenant. With options for a longer lease, commercial warehouses can be a great property for triple net leases, where you can pass off many of the maintenance and tax costs to the tenant. You’ll see a higher return on this property type in most cases, as well. While commercial warehouses may have a higher entry point, most investors make their money back relatively quickly with this high value opportunity zone real estate.

Right now, we are still in the post-pandemic market. During the past 15+ months, ecommerce boomed, which means that there has been a great demand for commercial warehouses for sale across the country. People got used to online shopping and have shifted much of their shopping habits away from brick and mortar stores. This trend of online shopping and businesses needing warehouse space is not going away any time soon. That makes this a great time to invest in commercial warehouses to grow your commercial real estate portfolio.

3 Pros of Commercial Warehouses For Sale

Because commercial warehouses are in high demand, both from businesses and from their customers who are continuing to shop online necessitating more warehouse space for processing orders, these three advantages can be found with this type of commercial real estate:

• Higher return on investment
• Long-term leases
• Lower maintenance needs and costs

3  Cons of Commercial Warehouses

Now, as with anything, there are cons to investment opportunities. So you have the best information going into any investment, you should know these three challenges associated with investing in a commercial warehouse:

• Higher entry costs
• Longer timeframe for finding new tenants
• Technological advancement may outpace the space

Top Tips to Finding the Best Commercial Warehouse Opportunities

When you’re looking for the right commercial warehouse to invest in, there are a few key things to keep in mind. Location is very important to these types of businesses, but often in a different way than other properties you may currently own. Here are four elements of the location to understand when seeking out a commercial warehouse space to invest in.

Location: Distribution centers and warehouses are often located near large population centers. This means there will be better access to more trucks for cross-country delivery. But a large population area doesn’t necessarily mean a big city, which would have more traffic and increased costs. You can find  warehouses properties for sale in every state, and in most cities too. In most cases no matter where the warehouse is located, investors are able to plan for reliable monthly income with few landlord responsibilities, especially when tenants and landlords agree to a NNN lease.

Space: With a commercial warehouse, there needs to be plenty of space for delivery of product. The business relies on receiving products, as well as processing orders and distributing products. This means they will need to have space for trucks to come and go and unload or load materials. Commercial warehouses are often best situated near transportation, like highways or interstates, as well as airports or ports (if located near oceans and large rivers used for transportation). Because the costs of bringing in materials and shipping them out is usually more than half of the expenses these businesses see, location really matters for warehouses.

Storage: Aside from needing space for loading and unloading, commercial warehouses can be used for other things than ecommerce. The changing supply chains now mean more businesses have a need for extra storage or manufacturing space. Some businesses or product types need climate-controlled commercial warehouse space, and across the country the industry has seen a demand for cold storage during vaccine distribution. Storage for products, manufacturing, or other needs as supply chains, businesses, and offices change is continuing to grow.

Height: A unique element to commercial warehouses is the need to understand the importance of height (floor to ceiling space inside the building). The property’s square footage only tells part of its storage capacity, in floor space. But with height, this gives investors and tenants a better idea of the unobstructed space within the building, representing the stacking potential of warehouse contents like crates and boxes.

Work with a Pro to Find the Right Commercial Real Estate for Sale

When you partner with a commercial real estate broker who has your goals in mind, you are better equipped to find the right listings and properties to grow your portfolio. At Sands Investment Group, our brokers across the country work with you to identify your goals, define success on your terms, and find the properties that fit your needs including industrial properties, office spaces and a variety of commercial properties. If you’re ready to discuss adding a commercial warehouse to your portfolio in the post-pandemic market, contact the broker team today by calling 844.4.SIG.NNN or sending an email.

If you are in the market to do some investing, look no further than a self-storage unit to bring in some cash. If Covid-19 taught us anything, it is that the financial world can change on a dime, but real estate investors would prefer something a little more stable. According to Bloomberg Markets, storage space is “… the number one alternative investment.” Compared to other forms of real estate investments, self-storage investing enjoys many attractive attributes: Resistant to Recession, Relatively High Returns, Opportunities for Consolidation, Lower Breakeven Occupancy Rate, Low Maintenance and Less Hassle. Owning a self-storage unit is an investment that will pay dividends without breaking the bank of time or money. 

Advantages of Self-Storage Investments

A self-storage facility has many advantages. With a low overhead cost, this asset class allows for an impressive potential income. The smaller and mid-size units do not need much hands-on management, and can get by with only part time managers. A self-storage facility also does not have the challenges and headaches that a rental apartment or housing unit might have. 

Month to month leases provide the ability to change rental fees more quickly, and there are so many self-storage units around, offering a big pool for investors. 

With fewer moving parts to a storage unit (no bathrooms, no human tenants, no grandiose expenses), investing in a self-storage unit is a great idea for positive cash flow. They are also very stable investments, even when the economy is not, and can be used by renters in various ways. US News and World Report said,  “The flexibility of self-storage facilities makes them incredibly resilient through all economic cycles because people always seem to find a use for them.” Even if the market or the world’s health is unstable, people will always find a use for their storage unit. 

Purchasing Your First Self-Storage Property

Just like other commercial real estate investments, self-storage properties are listed and sold based on cap rates, which directly relate to the investments NOI. This is how much cash flow the investment produces after accounting for all expenses and income. The higher the capitalization rate, the higher return investment is likely to be achieved and the better rate of return for the investor. Prior to purchasing your first storage property, it is important to put together a cash flow analysis, looking at all expenses relating to operating the self-storage business, including:

• Management fee (at least 5% of gross rents suggested).
• Payroll (for larger facilities).
• Utilities.
• Property insurance.
• Advertising or marketing.
• Real estate taxes.
• Office supplies.
• Repairs and maintenance.
• Online software.
• Phone or internet.
• Lawn care and pest control.
• Trash service.
• Credit card processing fees.
• Miscellaneous fees.

The property should have adequate cash flow to cover all of the expenses listed above in this article and any debt service. If it is an underperforming property, it may not have enough cash flow to cover expenses and require property improvements.

Most self-storage facilities are Class B or C facilities, especially those owned by inexperienced or small-sum investors who invest minimally. Many of which older in age, need some improvements, and are not performing to standards of the market. This gives an opportunity to investors to add value by providing capital improvements, raising rents, expansion, limiting costs, and developing better management processes, among other areas of improvement.

The most ideal self-storage facility to find is one that meets the following criteria:

• Proper signage with facility name and number easily visible.
• Many advertised unit sizes at market rents.
• Proper lighting (ensuring the facility is safe at night).
• Security cameras.
• Proper drainage (meaning units won’t flood or freeze shut during inclement weather).
• Attractive building or buildings (fresh paint, clear branding, manicured lawn, appears safe).
• Automatic gate with 24-hour access.
• A website with online rental and payment capabilities.

A success story

Dan Hogan is one of the successful self-storage entrepreneurs, having bought some land in 2020 and worked it into a successful self-storage business today. 

Dan was attracted to self-storage for two reasons. “With the self-storage business, I saw two things immediately: managing the facility was very simple and could be done with one employee or one and a half employees. Second, the facility would get to the point where it would throw off cash flow. And it’s proven to be true,” he says. 

After 11 years in business, Hogan is not only making money, but he is thriving and at 90% capacity. He is also getting ready to add 65,000 square feet to his business. Despite the upheaval of the past year amidst Covid-19, his self-storage facility is going strong. 

“Personally, it is nice to have the comfort that we have equity in self-storage. There aren’t any guarantees in our other business whereas the self-storage model has demonstrated for years continuous incremental growth with incremental profit. And the peace of mind that brings is infinitely valuable.” 

No matter what stage of life you are in, investing in self-storage is a good way to find some stability in an uncertain world. Whether building your own or buying an existing business, the sky’s the limit for this successful investment opportunity. Read his story here.

What Others are Saying

“The bottom line is that if we go into a bad housing market, people have to put their stuff somewhere. When the economy is good and people buy too much stuff they have to put it in storage. You’re winning as the market goes down, and winning as the market goes up.” – Joel Cone, US News

 

“Self-storage is a unique asset class. It has a reputation of providing relatively high yields and has shown to be relatively resistant to recessions due to its lower declines and default ratios versus other asset classes.” – David Thompson, BiggerPockets

 

“One of the hallmarks of a recession is the movement of consumers into less spacious accommodations. As wages stagnate, and the employment picture gets grimmer, homeowners and renters tend to downgrade the size of their homes, but they still need a place to store their stuff. Self-storage facilities benefit from this demand and can see increased rental rates during a downturn.” – Ari Rastegar, SpareFoot“

 

Let’s assume you had $200,000 to invest in 1994 and put your money equally into two investments. One investment for $100,000 in a self-storage REIT and reinvested all earnings while you put another $100,000 into the S&P 500 and reinvested all dividends. By 2017, the self-storage REIT would have grown to $4,026,413 while your S&P 500 stock fund would have grown to $532,243. Self-storage outperformed the large capitalization stocks index by a whopping $3,494,170.” – David Thompson, Bigger Pockets

 

Work with Real Estate Experts to Buy a Self-Storage Facility

When you’re ready to start the conversations with net lease experts about an investment in storage properties for sale, the team at Sands Investment Group can help. We have facilitated transactions of many self-storage facilities across the country, ensuring that investors not only find the right opportunity but get the best deal when adding to their portfolio.  SIG’s self storage experts can discuss all the factors and considerations in investing in a storage property and help you identify the listings that meet your goals. From single net lease opportunities to an absolute NNN lease and triple net real estate, Sands Investment Group has you covered. If you’re ready to make a smart net lease buy for 2021 and purchase a self-storage property or similar commercial real estate properties for sale, our broker team is ready to assist with the growth, expansion and management of your portfolio. Contact the team by calling 844.4.SIG.NNN or check out our current self-storage listings to get started with your next self-storage investment.

When conducting a 1031 exchange, investors can utilize a 1031 exchange intermediary for an easier process. The term 1031 exchange comes from the Internal Revenue Code (IRC), section 1031, which states, “No gain or loss shall be recognized on the exchange of real property held for productive use in a trade or business or for investment if such real property is exchanged solely for real property of like kind which is to be held either for productive use in a trade or business or for investment.”

Read more →

Honoring CRE Female Humanitarians

GlobeSt.com and GlobeSt. Real Estate Forum are pleased to reveal our top picks for 2021 Woman of Influence professionals in the category of humanitarian. Originally published on GlobeSt.com.

Read more →

As the NYC subway returns to 24-hour service, indoor dining expands to 75% capacity, and indoor social gatherings expands to a 250 person limit, it’s a welcomed sight to see New York City re-opening! And, we are very much looking forward to attending in person this June 16-17 for NET LEASE Spring 2021.

Read more →

As an investor searches for their next property opportunity, there are many different types of real estate that may jump out as a possibility. From fast food restaurants to strip malls and everything in between, real estate can be a lucrative investment opportunity. In 2021, especially, it can seem like there are many good options for investments. One such investment that can add significant value to a growing real estate portfolio is a CVS for sale.

Read more →

If you’ve been researching investment opportunities in commercial real estate, you have probably come across many terms you are unfamiliar with. It can seem overwhelming to figure out if investing in real estate is truly what you want, especially when you don’t understand what is being discussed.

Read more →