Monica Villasenor believes commercial real estate is a
profitable sector that anybody can invest in. Her own experience
proves it. After being fired from her job as a dental hygienist
when she was five months pregnant, Villasenor realized it
was time to take a risk and pursue her dream to become a
real estate investor. Within 3 years, she managed to acquire
almost $5,000,000 of commercial real estate. She also created
the reality television program, “The Making of a Millionaire,” which
followed her first venture to convert apartments to condominiums.
Says Villasenor of herself, "I"m stubborn...my sheer tenacity
and dedication gets things done that others may view as impossible."
Her recently released book, audaciously titled “The
Best Damn Commercial Real Estate Investing Book Ever Written!”,
teaches potential investors everything they need to know
about building wealth in the commercial real estate sector.
“I thought investing in commercial real estate would
be the same as investing in residential real estate, but
it’s a whole different ball game. This is the book
I wish I would have had when I first started,” says
Villasenor, who lives in Las Vegas, one of the fastest growing
cities in the US. “Most people think that investing
in commercial real estate is beyond their means. That actually
is not an accurate statement. It’s actually easier
than purchasing residential real estate.”
The Commercial Real Estate
Boom
Although the first residential real estate boom in the Internet
era has snagged in the United States and elsewhere, commercial
properties continue to be a hot play. Among the factors
in the commercial boom are the growing availability and
variety of options for small-time investors, according
to analysts and industry experts like Villasenor. Not everyone
who invests in commercial property has to buy retail space,
fix it up themselves and find leasees.
Real estate investment trusts (REIT), which are usually
in the form of mutual funds centered on commercial properites,
are generating more and more investor interest, according
to the National Association of Realtors (NAR). Some trusts
and commercial investments allow investors to pool their
money with others to purchase properties such as strip malls
and office towers.
"We expect the flow of capital into commercial sectors
to remain strong throughout the year, driven by large portfolio
transactions and REIT privatizations, as investors continue
to value diversification,” said Cindy Chandler, a Charlotte,
North Carolina-based realtor who is one of the 1.3 million
members of the NAR, North America’s largest trade association.
The performance of the commercial real estate sector is
not just limited to the United States. The spike is global,
with the major centers in Europe, Asia and North America
all showing increased rental rates because of demand. According
to the investment advisory firm Pacific Security Capital,
Hong Kong rental rates rocketed 37 percent year-over-year
in 2006 to an average square-foot price of $69.12. In London
and Madrid, asking rent prices were by 17 percent year-over-year
while in Toronto rental rates rose nine percent and in New
York seven percent.
The Forecast
While commercial investment has seen gains globally, observers
have mixed outlooks for the future, with speculation ranging
from continued boom to slowdown to bust. Right now, the
trend has been upward profits for the commercial real estate
industry as a whole, the NAR says. From January to April
of 2007 a record $157 billion was invested in commercial
real estate, a year-over-year increase of $60 billion (that
total does not include transactions valued at less than
$5 million and excludes the hospitality sector, according
to published reports).
"The overall office market has been booming, the industrial
sector is holding its own, retail is a bit sluggish while
apartments are strong with some condo conversions reverting
to rental," says Lawrence Yun, NAR senior economist. "We
expect fundamentals to remain basically sound for the commercial
sectors."
At least one leading real estate investor sees the potential
for huge gains in regions of the United States where population
shifts are occurring. Christopher Cole runs a Phoenix-based
holding company of real estate finance and management firms
that oversees almost $2 billion in property investments.
He predicts commercial investment is only beginning in
some regions.
“With the aging of the baby boomer, a massive population
migration is moving to the South and to the West. It is literally
going to require the rebuilding of the United States,” he
says in an article published in Exduco.net. He sees opportunity
in that overhaul, adding, "In real estate, if you keep
yourself in front of long-term demographic trends, you will
prosper."
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