This article is probably not what you think it is about.  Most people think about timing a particular market, hoping to buy at the very low and sell at the very high.  However, in commercial real estate investing, the most successful investors haven’t timed the market -they simply became the market and held on.

During the 1990’s real estate recession Sam Zell was famous for saying: “stay alive til ‘95″

Meaning don’t sell, but simply hang on!  Most commercial real estate investors are not that worried about market price gyrations as they are cash flow.  Obviously cash flow can be extremely volatile when you are talking about properties that are extremely cyclical like a mall or a hotel.  However, there are other properties that are not cyclical and offer very stable cash flow, with escalation policies in the long-term lease contracts.

Don’t you find it interesting that you never see a member of the Forbes 400 under the Real Estate Category swinging a hammer, refinishing hardwood floors, mowing the grass.  More importantly, they didn’t do those things to get to where they are.  They spent their time wisely and hired these services out, so they could properly scale their business.

My business partner and I developed a course called 3 Net Lease Profits, that let’s beginner investors take advantage of this opportunity.

We believe cash flow should be the main focus in commercial real estate investing.  Some people have used the strategies we outline in the course to build multi-million dollar publicly traded companies.  Others have simply used the strategy to buy one property and spend more time with their family without worrying about retirement or the stability of their job.

In summary, we believe that if you have an opportunity to educate yourself on investing in commercial real estate to add cash flow and stability into your financial future you should do it.

To boot, we also think the quality of the education is important.  Rather than hunting and pecking through a million web-sites, we have a consolidated course with interviews from real estate professionals, case studies of actual deals, editable excel worksheets, course book, and another guidebook for all of your real estate investing needs.

The workbooks are also valuable because they give you a list of lenders that have experience in dealing with with unique commercial real estate deals.

I think its important to have a course rather than just a simple ebook from somebody who just wants to make a quick buck.

Heard about the huge gains ready to be made in commercial real estate investing, but wary of the risks? You’re right to be cautious. While the potential for high profits does exist, real estate investing isn’t something you want to jump into without knowing a fair amount about the potential pit falls. Even if you have experience buying and selling residential properties, you still have some things to learn about working with commercial properties.

The first thing to understand before you get in too deeply involved is commercial real estate isn’t suited to every investor. Investors who do best have considerable understanding of one specific industry or can pay advisors to conduct research for them.

Once you’ve chosen an industry, the next thing you’ll have to learn is how to evaluate commercial real estate. Naturally, since you already have a good idea on the property values in the industry you specialize in, you can probably sniff out a few valuable properties without too much effort. Still, there are certain things that factor into a property’s value that affect investors differently than those buying or renting the property for their own business.

If you really want to learn the ins and outs of commercial real estate investing, one of the best things you can do to start off is read through a good real estate investing handbook. This will introduce you to both the financial, legal, and commercial aspects of the field. Ideally, the handbook will also provide you with a good step-by-step plan for getting started, give you tips for increasing your profits and decreasing your workload, and point out any dangers you might run into along the way.

Keep in mind that every investor has their own strategies and tricks for finding good investments and making them pay off. While a lot of handbooks claim the strategies could work for anyone, the reality is that not everyone will have the personality to work with that particular strategy. That is, while the strategy itself might be sound, it may not work so well for someone who just doesn’t have the personality traits needed to implement it correctly. That’s why before you choose a commercial real estate investing handbook, it’s a good idea to learn a little about the author to get a sense of whether their strategy is something you could really do yourself.

Once you’ve read through a couple of good, thorough handbooks and think you’ve got the gist of things, you might want to consider joining a commercial real estate investing club. This will give you a chance to discuss anything you might not understand with other investors and get precise answers to your questions. Don’t think you have to be a full-time investor to join, either. While some clubs do have certain entry requirements, many accept all levels of investors.

Investing in commercial real estate carries certain risk venture, but once you get a handle on the basics of commercial real estate investing, you’ll be able to decide for yourself whether or not the risks are worth the rewards.

If you drive through the business district of any city or town you will see commercial triple-net lease properties: for example all the major restaurants such as; Burger King, Taco Bell, Kentucky Fried Chicken, Pizza Hut, the automotive after-market such as; Goodyear Tire, Pep Boys, Jiffy Lube, retail outlets such as; Toys R Us, K-Mart, and Home Depot to name a few. Most of the real property occupied by these companies are owned by real estate investors and leased to these companies under a triple-net lease arrangement.

What Are Some Advantages Of A Triple-Net Leased Property

There are several advantages. First, the monthly lease agreement provides a very predictable, long term income stream to the property owner. Second, since there are no property expenses (taxes, maintenance, or insurance) to be deducted, the income stream is not impacted by future increases in property operating expenses. The property owner (investor) can enjoy a rental income stream, without property management or property expenses.

Subject to the credit worthiness of the tenant and the terms and conditions of the lease agreement, the investor can enjoy a high degree of security and should expect to have additional rental income over time as the inflation hedge feature of the lease agreement comes into play.

Can a Triple-Net Leased Property Be Used To Complete A Real Estate Exchange? A triple-net leased property can be an excellent replacement property in completing a real estate exchange transaction. Many real estate investors dispose of their management intensive properties such as apartment buildings, duplexes, and office buildings, hoping to find management-free properties producing long term, predictable income. If you are thinking of disposing of your business or investment-held property, would like to “Pay No Capital Gains Tax” and reinvest into a management and headache free property, the purchase of a triple-net leased property through a real estate exchange, can be just what the doctor ordered.

If you’re just getting started in real estate and wondering how to get real estate investing financing, you’re not alone. As the saying goes, “It takes money to make money,” and in the field of real estate investing-where large sums of money change hands with each purchase-many people assume that saying is doubly true. The fact is, though, with a little insight into the ways of professional real estate investors and a little smart thinking, you can make money in real estate investing even without a huge bank account to tap into.

Many people new to real estate investing place their hopes on getting a personal or business loan from a bank to finance their foray into this field. Unfortunately, though, even if you would normally qualify for a loan, your chances of convincing a bank to loan you money to buy and/or fix up real estate you intend to sell are slim to none. Don’t start worrying yet, though, because there are a few other sources of financing available that are very realistic.

Your best option is to seek out mortgage lenders. First of all, these lenders are already involved in the real estate market and won’t be put off by your “risky venture.” They’re very well aware of how they stand to profit from lending to smart, skilled investors. Another advantage is they usually offer more flexibility than most commercial banks. After all, they’re used to lending out fairly large sums of money, which often means negotiating with customers to find workable interest rates and payment terms.

That said, they are still businesses lending for a profit and many take a dim view of some types of real estate investing. That’s why if you’re going to try to get a loan from a mortgage lender, it’s best to look for those lenders that specifically advertise their willingness to work with unconventional borrowers or those with bad credit. This goes even if you have perfect credit. It just signifies that the mortgage company is ready and able to consider lending to people besides traditional home-buyers, which is ultimately what you’re looking for.

Another option you might consider is that of  working with a private mortgage lender. These individuals do essentially the same thing for you that a commercial mortgage lender would. You can often find these people via commercial mortgage lenders and real estate agencies.

While these sources of financing are easier to work with than commercial banks, there are some drawbacks. Number one is the interest rates, which can be shockingly high. That’s why you only want to take out one of these loans if you’re sure you can get the property rehabbed and sold within a short period of time.

If you’re new to real estate investing, there’s one piece of advice you need right now. Maybe you’ve found a great, cheap fixer-upper you’re sure you can sell for a profit, but before you start making deals with the seller and signing contracts, make sure you have your financing lined up first.

Getting financing for real estate investing may not be the easiest part of this business, but it can be done. Once you know how to get financing for real estate investing, the rest is a matter of knowing which properties to buy and how to get them earning quickly.

Want to try your hand at investing in non-residential properties, but wondering where you can turn to get commercial real estate financing for your new business venture? While finding this type of financing isn’t always easy for the beginning investor, once you know the steps to take, getting financing for your commercial investments becomes a lot easier.

Before you get your hopes up too high, though, you should be aware that the majority of those plans to get make a million overnight by grabbing up commercial real estate for no money down are nothing but scams dreamt up by people trying to sell you something. Getting some serious financing to help you in your plans is absolutely possible, but your chances of becoming a commercial real estate investor for free are slim to none.

In this field, the next best thing to a free lunch is owner financing. This is where the seller keeps up a second mortgage so you won’t have to invest any of your own money. As you might have guessed, though, getting this type of financing is extremely rare. We’re talking unicorns and hen’s teeth, here. Even in cases where you can get a deal like this, the seller is ultimately getting a better deal and making a profit off you.

So what’s the most realistic option? If you need financing for commercial real estate purchase, your best bet is to go through a mortgage lender. The average commercial bank just won’t take the risk of lending money to commercial real estate investors, but mortgage lenders are a little more used to high risk loans. In particular, look for a lender that specifically mentions its willingness to work with unconventional borrowers or those with bad credit. This will help you find those lenders that are open to taking on a little risk.

Don’t be fooled into thinking you can easily get a loan to cover all your expenses, though. For one thing, most commercial real estate financing loans won’t cover more than 75% of the property’s appraised value. The rest of the money you’ll have to come up with yourself. You’ll also need to put a fair amount of effort into proving that the property has enough debt-repayment potential.

If you don’t think a commercial mortgage lender is for you, you can always look for a private mortgage lender. These individuals, often called angel investors, offer financing for property with a good chance of high returns despite a high risk. Unfortunately, they’re not too easy to find.  First talk to a commercial mortgage lender about your chances of obtaining financing and while you’re there, ask if they can connect with any private mortgage lenders.

Obtaining commercial real estate financing isn’t so easy to get if you just jump in and expect someone to throw your dreams a “no money down” life preserver. If, however, you’re skilled at choosing investment properties with low risks, but the potential for high returns, you shouldn’t have much trouble getting financing through a mortgage lender.

Through the 3Net Lease Course University Partners offers, credit quality is it’s own section.  As it is perhaps one of the most critical areas an investor must focus on.  After your tenant moves into your building or you buy the building your tenant owns - you have a vested interest in your tenants business.

From an investor’s perspective, a triple-net-leased property’s price should reflect the tenant’s ability to meet the terms of the lease. The capitalization rate indicates this variable risk factor, because it directly represents the relationship of the stipulated net income to the price a knowledgeable investor is willing to pay. The higher the risk that a tenant may not be solvent over the long term, the higher the cap rate should be.

A tremendous amount of information is available to assist in evaluating the current and future financial strength of a tenant. If it is a public company, the credit rating is fairly easy to determine through a number of sources, including sites available on the Internet such as http://www.companysleuth.com/, http://www.zacks.com/, and http://www.freeedgar.com/.

The trend toward mergers and divestments adds another dimension to credit reviews. Even though the resulting entity usually is stronger than the original company, the risk of the unknown can be perceived as a negative factor.

If the business is complex or privately held, contact a fee-based tenant underwriting service for added assistance.

Clearly the residential real estate market is in a recession.  Now, some of the commercial real estate market is entering a recession.  I’m not claravoiant so I don’t know what the future will look like, but I am fairly certain people will continue to work on their car, g, Tet the prescriptions filled at pharmacies, and occasionally eat out.

I have just listed the characteristics of major tenants for triple net leases.  It should also be pointed out that although several retail property companies are having more vacancy than last year, several are continuing to expand.

Jamie Woodwell, the senior director of commercial/multifamily research at the Mortgage Bankers Association said, “The global credit crunch meant a net decline in the balance of mortgages held in commercial mortgage-backed securities, collateralized debt obligations and other asset-backed securities, but banks, thrifts, life insurance companies, Fannie Mae, Freddie Mac and nearly every other investor group increased their holdings of commercial and multifamily mortgages during the quarter.”

The bottom line is this:  DO NOT WAIT on the perfect environment to invest.  If you do - YOU WILL NEVER INVEST, AND YOU WILL GET LEFT BEHIND.

If you’ve been looking for triple net lease sample forms online, you’ve probably discovered they’re not too easy to find. Look up the phrase “triple net lease sample forms” in any of the major search engines and you’re presented with a bunch of poorly designed sites run by people who are more interested in selling you something than in helping you out by supplying free sample forms.

That doesn’t mean it’s impossible to find these forms online, though. When you need to find sample lease forms on the Internet, the best place to start your search is with the Web sites of real estate agents that deal with commercial property. Often these sites will offer collection of lease form intended to help out current clients and attract new clients to the sites.

These really are ideal places to get your forms because the free forms provided by real estate agencies are almost always written by lawyers who specialize in lease forms. Of course, you’d hope this would be the case with any sample form out there, but all too often it’s not.

Just as important as the fact that they were professionally written is the fact that the forms real estate agents use are almost guaranteed to be completely up-to-date. The problem even with sites for real estate investors is that the forms they offer may have been collected months or even years ago and are no longer current. That means they could leave some gapping legal loop-holes or even lead you into creating a lease form that’s legally invalid, leaving you open to all kinds of financial losses and major headaches. Considering what’s at stake, you’re better of taking the time to find correctly worded, up-to-date forms than just quickly downloading any sample you find.

While real estate agency sites are the best places to find sample forms, they’re by no means the only places. Other good places to get them are sites for commercial real estate investors. The sites you choose to get your forms from should provide professional level content that’s regularly up-dated. If the articles on the site are this high quality, usually you can be sure the sample lease forms they offer are at least good enough to give you an accurate idea of what needs to go into a triple net lease document. Keep in mind that some of the best sites for real estate investors are paid membership sites. If there’s a site you’ve been thinking about joining anyway, drop the administration an email asking if their site offers lease forms to members. If they do, there’s a good reason to finally sign up.

These are the two best places to find samples of triple net lease forms, but there are also certain places you don’t want to get your forms from. Those are the junk sites that just have a little filler content and a bunch of ads for various investment programs. Sites like these are highly unlikely to provide good sample forms.

If you need quality triple net lease sample forms, stick to real estate agents and investor sites with high quality content and, with a little hunting, you’ll find some forms you can use.

Obviously, there are more opportunities at the international level regarding commercial real estate investing than there are simply in your own country.  However, I think it is important to still fully understand the local commercial real estate market you are investing in and know the applicable

Here is an excerpt from an interview I found on NREI’s web-site:
Expert Q&A James A. Fetgatter, CEO of the Association of Foreign Investors in Real Estate (AFIRE)

This month, the Global Real Estate Monitor connected with James Fetgatter, CEO of the Association of Foreign Investors in Real Estate (AFIRE), to discuss foreign investment activity in the U.S. commercial real estate sector.

GREM: For AFIRE members, what are their thoughts on the current economic downturn the U.S. is experiencing?

FETGATTER: Foreign investors are for the most part taking a “wait and see” attitude about the U.S. economic downturn. Whether the U.S. is in a recession has been a question for some time now and foreign investors sometimes have less of a “feel” for the economy than those who reside in the U.S. In fact, it is often difficult for investors living in other countries to distinguish between the troubles in the residential markets with the state of the commercial market. This is especially true for upper management and Boards who may be reading major media reports.

Although foreign investors may be slightly cautious about the U.S. economy, they still consider the U.S. to be the most stable and secure real estate market in the world. The resilience of the U.S. economy is well known and can be relied upon to protect asset values for the long-term investor.

I made the bold impressions.  I find it interesting that international real estate investors are investing in the United States.  Hopefully, the foreign investors that buy our book will utilize our triple net lease strategies.

Common Conversation regarding having rental property: Why don’t you get into the rental business?
I don’t want to deal with tenants!  Some don’t pay, then if something breaks you have to fix it, and of-course it would probably happen at the most in-opportune time, like when I’m on vacation

Triple Net Leases are so good, that the slang term for them for real estate professionals is a “Hell or High Water Lease”  Meaning coming hell or high water, the tenant is going to continue to pay for everything, and you are just going to sit back and collect your check every month!

Sometimes this slang-term also refers to a type of triple net lease which requires the tenant to rebuild after a casualty, regardless of the adequacy of insurance proceeds, and to pay rent after partial or full condemnation. These leases are not terminable by the tenant, nor are rent abatements permissible. The concept is to make the rent absolutely net under all circumstances, equivalent to the obligations of a bond: hence the “hell-or-high water” moniker.

This is a brief summary of what the maintenance clause will look like in a triple net lease contract:

Z Company has signed a new 15 Year NN Lease with a projected Rent Commencement Date of 7/1/2007. The Lease includes 4, 5-Year options to extend with 10% rent increases in each. Z Company pays real estate taxes directly, is required to maintain general liability insurance additionally Z Company is required to reimburse Landlord for insurance policy premiums related to fire and property damage. Landlord shall be responsible for all HVAC repairs and replacements during the first year of the Lease; thereafter Z Company shall be responsible for all repairs and replacements up to $500 per occurrence and no more than $1,000 annually. Because the parking lot is concrete, Z Company is responsible for the repair and maintenance.

The maintenance on the HVAC is required because usually, you are acquiring a new building and their might be some problems with the initial installation.  The good thing is that whoever installed the HVAC will usually do the repairs for free.  Additionally, the HVAC unit will probably be under-warranty so this is not a significant risk at all!

When considering lease options as a landlord or tenant, the full terms of the lease should always be read before committing. In the case of a triple net lease, make sure that all the terms are clear and agreed upon by both parties. Consulting a lawyer who specializes in real estate is an excellent idea.

So go get’em, come hell or high water, I think Triple Net Leases are a good deal for any serious real estate investor, that wants to break into the inter-sanctum of commercial real estate.