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Los Angeles Real Estate Law Blog

Bank not always needed to buy property with commercial leases

Some banks in the Los Angeles area and other parts of the United States currently have concerns about the state of the economy, and for this reason, they are not eager to lend money to investors. This has created new opportunities for alternative lenders to step in and meet the needs of investors who need capital to purchase properties featuring commercial leases. In fact, these lenders have already raised significant amounts of capital for secondary real estate financing.

Banks remain wary of financing non-residential real estate, even though more than 10 years have passed since the Great Recession of 2008. These institutions are especially cautious about financing new construction. This has caused more developers to become lenders themselves, essentially acting as shadow banks.

Green tech impacting properties with commercial leases

Many industries in Los Angeles and other parts of the country are increasingly focused on being environmentally friendly. Commercial real estate is no exception. For this reason, it is reasonable for investors to expect the market for properties featuring commercial leases to incorporate green technologies now and in the future.

The benefit of green technologies is that they drive cost savings for buildings on utility bills and also promote energy efficiency. They also help with conserving resources. However, in addition to lowering operating costs and saving on capital expenditures in the future, green technologies draw business leaders as well as workers who are passionate about the earth.

Augmented reality to impact properties with commercial leases

Technology continues to transform the landscapes of many sectors of the economy in Los Angeles and elsewhere, and real estate is no exception. Specifically, augmented reality is expected to have an increasingly major impact on the market of properties featuring commercial leases. Here is a glimpse at what augmented reality is and how it may impact property owners in the years ahead.

Many consumers have become familiar with the term of virtual reality -- an experience that is immersive, as it fully covers people's fields of vision. However, augmented reality takes things a step further. Augmented reality is a type of additive experience that enhances people's fields of vision with extra elements.

Lead paint and property management issues

California property managers have certain responsibilities regarding the health and safety of the people who live in their properties. One of the most practical ways to manage the risks associated with rental property is to ensure there are no dangerous substances or toxins present that could cause harm. Among the most potentially hazardous substances is lead paint.

Lead paint can cause serious harm, and for this reason, it has been illegal to use it in new structures for a long time. However, it is still present in some places, specifically in older buildings. Landlords and property managers have the responsibility of ensuring that there is no lead paint present, and if there is, taking steps to notify renters of the hazard. 

Positive outlook for properties with commercial leases

Experts recently described the first few months of the year of 2019 as positive with regard to the market for non-residential properties. Part of the reason for this is that more investors are optimistic about the market for properties with commercial leases, in Los Angeles and elsewhere. Another reason for the positive view of the commercial real estate market is that people in general feel good about the United States' economic conditions overall.

Real estate executives recently reported that the real estate market sentiment has increased since volatility in the capital market in the latter part of 2018 has subsided. In addition, investors are less worried about what may happen to the interest rate now compared with last year. On top of this, equity and debt are still broadly available for high-quality investments in commercial properties.

Valuing properties with commercial leases involves various steps

According to experts, the market of non-residential properties is currently valued at $10 trillion. For this reason, investors who have been contemplating purchasing properties featuring commercial leases may be wise to jump into the real estate market this spring. Here is a look at a few ways in which investors in Los Angeles can figure out the values of the various commercial properties they are targeting.

The first common property valuation approach is called the cost approach. With this method, investors look at how much money they would need to rebuild properties. Factors considered in this approach are current land costs and construction material costs. This approach is ideal to use when locating a comparable real estate property is difficult.

Tips may help with buying building with commercial leases

Taking the plunge into the non-residential property industry in Los Angeles can most certainly be intimidating. The reason for this is that owning a property featuring commercial leases involves more than simply overseeing a physical building: it also involves managing people, and a business in general. However, a few tips may help new investors to navigate the world of property ownership.

First, it is paramount that individuals who are interested in buying commercial properties set aside ample time for assessing a potential deal. Many new investors underestimate how much time is needed to determine how expenses will be handled in a lease situation. These expenses include utilities, parking lot maintenance and exterior maintenance, for example.

Some info on properties with commercial leases missing online

Modern technology is altering the way in which investors look at the non-residential property market. For example, listing services on the World Wide Web highlights properties featuring commercial leases in a variety of markets. Investors in Los Angeles can therefore obtain a large amount of valuable information regarding commercial properties instantly. The problem is, though, that these listing services still exclude other important pieces of information that might impact how valuable a property is.

As an example, investors likely will not find out about incentives designed to attract buyers to various properties, like special financing, tax credits and tax abatements. Such incentives affect commercial real estate's occupancy cost. For this reason, investors may want to seek information about such incentives from real estate brokers prior to buying their next properties.

Proptech to benefit properties with commercial leases

A brand-new generation of software platforms is changing the world of property investing. These new platforms can monitor energy and water use in buildings, for example. These applications, called proptech, offer promise to investors in Los Angeles who are interested in purchasing buildings with commercial leases, as they provide a new way of generating value for their tenants.

A particularly valuable service that proptech offers is providing tenants with on-site access to services designed to enhance their quality of life, such as medical treatment. Other proptech perks that investors can take advantage of include being able to monitor such factors as safety status and steam consumption. They can also monitor indoor temperature and occupancy.

Climate change may impact properties with commercial leases

For investors in Los Angeles and elsewhere, measuring risk against opportunity is paramount. In the real estate market, investors are especially concerned with the increased risk they face due to climate change, as natural disasters cost damages totaling over $300 billion in 2017 -- a record. For this reason, investors who are interested in buying properties featuring commercial leases may want to more aggressively calculate climate risk as well as its potential effect on their property portfolios.

Large real estate companies have already poured resources into making these calculations to determine how rising sea levels and frequently occurring extreme weather are impacting their portfolios. Failure to do this may cause investors to be unprepared for the worst. Meanwhile, those who are proactive may put themselves in the best position to outperform their competition.

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