Post about "Management"

Investing in Real Estate – Should You Buy Residential Or Commercial Property?

We hear this often from real estate investors: “What’s the smarter move? Residential or commercial investment property?” It should come as no surprise that there isn’t a one-word answer to this question. You’ll arrive at your best choice — the one that maximizes your chances for success — by working through a decision process that includes some “global” issues, some local and some that are entirely personal.DefinitionsLet’s start with some terminology. For the purposes of our discussion, we’ll define as residential any property that derives all or nearly all of its income from dwelling units. Single-family homes, multi-families, apartment buildings, condos, co-ops are all residential. (FYI, the tax code classifies any property in which 80% or more of the gross income comes from dwelling units as residential, so many mixed-use properties can be classified as residential for tax purposes.)For commercial property, we’ll use a typical layman’s definition: property that derives its income from non-residential sources, such as offices, retail space and industrial tenants.Why do I say that this is the layman’s definition? Because appraisers and lenders would consider large (>4 unit) apartment buildings to be commercial investment property since they are bought and sold strictly for their ability to produce income and not as a potential personal residence for the owner/investor. However, it will suit our discussion better to treat all apartment buildings as residential properties.Global IssuesWhat are the global issues that should affect your choice to buy residential or commercial property? The state of the U.S. economy certainly tops the list. If you believe we are in or are on the brink of a recession, then it makes sense to be cautious regarding commercial property. You will have to rely on businesses to occupy your commercial space, and if they’re struggling to survive or simply deferring their plans to expand, then rental rates may soften and demand for space decline. Replacing a lost tenant — especially one lost unexpectedly (in the middle of a lease, or the middle of the night) because of a weak economy — can take longer than it might in unstressed economic times. When the economy and employment are strong, of course, you are likely to see the opposite. Service businesses need more space, retailers open more stores, distributors need more warehouses.Another issue is the cost and availability of financing. Interest rates are always important to investors, but there is one situation that may strike you as counter-intuitive. When home loans are readily available and mortgage rates drop, it’s not uncommon to see an increase in apartment vacancies, making apartment buildings less desirable as investments. The reason? Low mortgage rates and easy credit often mean that individuals can own a home at a monthly cost that is the same — or less, after taxes — than renting. So part of your potential tenant pool may be lost to home ownership.Local IssuesIn the real world, each of these global issues comes with a “however” attached. You need to stay on top of your local market because that market may contradict the national trend. For example, highly restrictive zoning regulations can mean that commercial space is always in short supply in a particular location, recession notwithstanding. And the cost of single-family homes in your community may be so high that there will always be a strong demand for rentals. Think globally but act locally (with apologies to environmentalists for borrowing their slogan).Personal IssuesYou could buy a property and then insulate yourself from it by turning over every aspect of its operation to a management company. But if you’ve never operated a property yourself, how would you know if the management firm is doing an acceptable job? Most investors begin as hands-on managers and your chances of success will be greater if you choose a type of property that you’re comfortable with.So, at the personal level, will residential or commercial suit you better?Unless you were raised in the woods by wolves, there is a very good chance that you’ve spent most of your life in a residential dwelling unit: a single-family house, a condo or an apartment. You have a first-hand understanding of the rights, obligations and appropriate behavior of a residential occupant. If you were a tenant, you probably also know something about the roles and responsibilities of both tenant and landlord. It is for this reason that first-time investors often lean toward buying a small residential building. You may not know the fine points of leasing and landlording, but you understand the basic ground rules. This is familiar and comfortable territory.Of course, some novice investors come to real estate with a background in business and perhaps as a commercial tenant. If that description fits you, then becoming a commercial landlord may be an easy transition. You already have firsthand knowledge of how commercial lease deals come together, and what the parties typically expect of each other.The Pros and the ConsLike any of your investment choices, each type of property has its pros and cons. For example:Residential Pros:1. Residential units are generally easy to rent. Turnover in housing is high, so your pool of potential tenants tends to be large.
2. Leases are generally short, especially for apartments, so you can keep pace with the rental market. This means cash flow tends to be fairly strong with a multi-unit residential property.
3. Financing residential property is usually fairly straightforward. For smaller properties, the process is similar to financing a home.
4. The cost per unit tends to be lower for residential than commercial. The more units you have, the less likely it is that a vacancy will severely impact your cash flow.
5. You could live in one of the units of a multi-family property. Obviously it’s easier to keep an eye on the property if your eye is actually there.Residential Cons:1. Residential properties usually require a lot of hands-on management.
2. Residential properties usually require a lot of hands-on management. (That’s not a typo. I said it twice.)
3. With a single-family home, one lost tenant equals 100% lost rent.
4. Multi-family houses tend to be older and therefore may require more repairs and maintenance.
5. Residential tenants don’t keep office hours, so you can get a call or complaint at any time of day or night.
6. Larger multi-unit properties generally have a lot of traffic in common areas and will require greater upkeep.
7. Did I mention that residential properties usually require a lot of hands-on management?Dealing with commercial tenants is quite different. Ideally, it’s business, not personal. You may require a personal guarantee on a lease, but you should expect to have more of a business-to-business relationship.Commercial Pros:1. Typically leases are longer, with built-in rent escalations. Five years, with options to renew is not universal but certainly quite common. Except perhaps for small offices, few businesses would be willing to go to the expense of becoming established in a particular location without a guarantee of more than just one year.2. Many commercial leases pass through to the tenant a pro-rata share of certain expenses (or a pro-rata share of the increase in certain expenses, over a base). For example, the tenant may be obligated to pay its pro-rata share of property taxes and common-area maintenance. This helps stabilize the cash flow for the landlord and makes that cash flow more predictable.3. Management is less hands-on than with residential. Renewals are less frequent. Many commercial leases are written to include the requirement that the tenant be responsible for interior repairs, HVAC maintenance, glass breakage, etc.4. Depending on the type of space (i.e. more common with retail and high-end office), the tenant may fit-up the space to suit itself. The landlord may give a one-time fit-up allowance or a period of free rent, but the interior finish then becomes the tenant’s responsibility to maintain.5. Because the property’s value is strictly a function of its income stream, you have the opportunity to create value by enhancing that income stream. In other words, you don’t need to rely on general market “appreciation” to increase the value of your property, but can take steps to do so yourself.Commercial Cons:1. Trying to purchase a commercial property on a shoestring may not be a realistic plan. Lenders are generally tougher underwriting commercial loans, especially if you have no experience operating commercial property. Down-payment requirements tend to be higher, as do interest rates. Loans are for shorter terms and often have a “balloon” requirement (i.e., must be refinanced before the nominal end of the term). The property will have to pass muster in terms of its projected cash flows and debt coverage ratio.2. Leasing a commercial space can take much longer than leasing a residential unit. After a tenant is identified and basic terms agreed upon, it is usually necessary for attorneys for both sides to negotiate the language of the lease. The complexity and cost of this process can vary greatly, depending on whether you are dealing with a local or a national tenant.3. Filling a vacancy can take much longer than with a residential unit. Commercial leases will typically require that a tenant exercise an option to renew well before the lease expires — perhaps six to as much as twelve months prior — so that the landlord can have ample time to look for a new tenant.4. Financing commercial property can be more complex than with residential. You’ll need to demonstrate to the lender that the property will perform at a level that can can cover the debt service with room to spare.5. If you don’t have experience being a commercial tenant, then becoming a commercial landlord may require that you get familiar with some concepts and skills that are particular to the commercial world. You’ll want to learn about “tenant mix” if you own retail space, about commercial insurance and about the billing and reconciliation of pass-through expenses.While there is certainly no right answer to the question, “Residential or commercial?” there is probably a best answer for you. Do you want the hand-on involvement of residential? Do you have the resources for commercial? Do you want the potential for higher cash flow, and with it the possibility of greater risk? Do you prefer a more modest but more predictable return? Consider your objectives and preferences carefully, and evaluate your resources — time, money, skills — realistically. With a bit of luck, the answer should jump off the page.

Hot Selling Products Wooden Duck Wholesale This Week

An ornament is a decoration. The significance of ornament has risen dramatically in recent years. Because ornaments are one of the best home decor products, interior designers are stressing their use to enhance the home’s look. Wooden duck ornament is a piece of delicately carved decorative art. Wooden ducks can be used as both beauty and luck to the abode.

First of all, a duck is any cute-looking waterbird that is relatively small and short-necked, which symbolizes love, family, vigilance, clarity, protection, feelings, grace, good fortune, and strength.

Duck ornaments as a symbol of Love

Ducks have the same privileges as love birds regarding marriage, relationships, love, and affection. Paintings of duck couples can be found in bedrooms, and bath towels folded in the shape of ducks can be found in hotels, offering a warm and affectionate sense. It’s been known since ancient times that having a pair of duck paintings or showpieces in the house provides good luck in partnerships.

The Duck couple has been memorialized in wedding presents such as wooden carvings and even in the language of love. This is because these ducks are monogamous, meaning that once they find a partner, they stay together for the rest of their lives. As a result, they have become the ideal emblem of devotion, marriage, and love. In the Korean wedding ceremony, it is customary for a man who intends to marry to purchase a pair of live ducks as a gift for his future wife. This tradition allows for using wooden ducks instead of actual birds to symbolize matrimonial harmony.

Duck ornament as a symbol of vigilance

A wooden duck ornament represents vigilance, which is the act of paying attention to what is going on around you. It could be for safety reasons or to keep an eye on prospective opportunities. Ducks are recognized for their affinity for water. Flowing water is frequently associated with transformation and clarity. Ducks are hence symbols of clarity, honesty, and simplicity.

Duck Ornament from the point of Vastu

Vastu is concerned with the flow of energy into your home and life. In Chinese Vastu, the duck occupies an important position. Ancient Chinese believe that keeping ducks in the home always brings good luck and fortune. Keeping a pair of wooden ducks can help you find your soul partner more quickly or resolve marital disputes. They claim that it promotes internal peace and calm and cooperative relationships among the structure’s occupants.

Duck ornament as a show-piece

A showpiece is a must-have for every home decor. Wooden ducks ornaments offer a lovely touch to a corner or embellish showcase, making your property appear more aesthetically pleasing.

Duck ornaments as gifts

Gifts may bring a smile to anyone’s face, whether it’s for a particular occasion or simply to express affection to those you care about. showpieces are wonderful for displaying your special, priceless moments and gift memories, as well as giving you pride of place in their hearts. The wooden duck ornament will serve as an ideal present for your friends all family for the occasion of birthdays, housewarming, or casual get-togethers.

Hey, This Is My Story!

I am just now concluding that narcissism is a virus that has infected everybody in the world that is breathing air. I even apply this to my own life with a great deal of regret.

Nobody wants to admit they have narcissistic leanings in their life. And yet, if you listen to them, and even listen to yourself, you will see it. I did not know how aggravating it was, but I was to learn pretty soon.

Recently I had a heart attack and had a stent put in one of my arteries, the widow make her. It was this experience that showed me the level of narcissism in my own life.

When anybody would call me and ask how I was, I would mention that I recently had a heart attack and had a stent inserted in one of my arteries. Before I can even get to the end of that sentence, the person on the other end of the line will say, “Oh, a couple of years ago, I had a heart attack and had two stents put in.” And then they would go on and on and on about their condition and experience.

When I thought we had come to the end of that conversation, they then mentioned, “And I have a cousin who had a heart attack and had several stents put in him I can’t remember how many.” Then, were all down another rabbit trail. I sure would like to catch that rabbit.

Coming to the end of this conversation, I said, “Well, I hope you’re doing well.” To which I got the reply, “Thank You, I appreciate that.”

Hanging up the phone, I thought a bit that the person on the other end of the phone did not allow me to tell my story.

For me, this heart attack was quite an experience that I never expected to experience. I know my father had several heart attacks, but I never assumed he had willed it two me. It’s during these times that you think seriously about dying.

I have been tempted to spread the rumor that I won the million-dollar lottery for the week. Once that got out, I would get all kinds of calls to hear my million dollars’ story. But, of course, I know that they would want to be put on my Christmas list.

The discouraging point is nobody wanted to know the story of my heart attack. My heart attack was an opportunity for them to brag, or so it seemed, about their heart attack or their uncle’s heart attack or somebody else’s.

After going through a heart attack why do I want to hear about someone else’s heart attack and how they got through it.

Of course, that is my narcissism coming to the surface. I want everything to be about me and center on my life. I’m not sure what to do or how to deal with this narcissistic virus that seems to be penetrating my life.

I don’t think I will bring this up with my doctor the next time I visit him. I suspect he would send me to his psychology friend, and I certainly don’t want that kind of examination. I don’t think I could pass.

The one thing I have learned about this narcissistic virus is that there comes a point where it explodes. I didn’t know that before, but I found out just recently.

Another friend called and asked about me, and I said I just had a heart attack and had a stent implanted in my artery. Again, before I could get to the end of that sentence, they began explaining how they also had a heart attack several years ago, and they had four stents put in. Then they went on and on about their heart attack and how it changed their life, and what they did to keep from having another one.

I don’t know what triggered my explosion, but all of a sudden, I heard myself saying, “Hey, stop right there. This is my heart attack, not yours. This is my story, not yours.”

Then without hesitating, I went into my story in every detail I could think of at the time. I only wished I had recorded it so I could know what I actually said.

Just before I hung up, the person on the other end said, “Well, I’ll be praying for you, and I hope you get better.” Then there was that infamous “click.” And the conversation was over.

I hung up the phone and turned around only to see the Gracious Mistress of the Parsonage staring at me with one of her “stares,” and I heard her say, “What in the world did you just say?”

At that moment, I knew I was in for some trouble, so I said, “I’m not sure; what did I say?”

I knew she would tell me what I said, so I didn’t need a recording of it. But I kind of lost control because of that narcissistic virus that has infected me.