Commercial real estate investment is reaping benefits for investors

Unlike residential real estate, Commercial real estate investment is evaluated, bought, and sold based purely on numbers - on a set of factors that describe what kind of return on investment you can expect with the property.

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Commercial real estate investment

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‘Commercial real estate investment’ refers to the class of real estate that is primarily meant for investing money for profits later on. Examples of such properties include:

• Restaurants (including franchises)

• Retail

• Office buildings

• Self-storage (Mini-storage) / industrial

• Strip malls

• Hotels (also called "hospitality")

• Multi-family / apartment buildings

Why invest in commercial property?

Unlike residential real estate, Commercial real estate investment is evaluated, bought, and sold based purely on numbers - on a set of factors that describe what kind of return on investment you can expect with the property. Most Commercial real estate investment is expected to make a return for you on an on-going (monthly) basis. With the retail boom and increasing return on investment in the commercial real estate market, the value of commercial real estate have grown by leaps and bounds, particularly, in the commercial areas, where the local retail shops and shopping complexes have been replaced by huge and swanky malls.

What to expect?

Remember though! Commercial real estate investment is a long term opportunity, do not expect to increase you net worth over night. No one is going to profit all the time. Real estate investors have to suffer through times of little to no cash flow - it is part of the game.

This may cause panic but if you can stick with it for the long term, cash flow will increase. Investing especially in real estate is not for the weak of mind or body. It can be frustrating, and stressful. But for successful investors the rewards are priceless.

Forming a Corporation – Investors

You’ve come up with the best idea since sliced bread, figured out a business name and formed a corporation. There is, however, one small problem. You need money. Welcome to the world of investing.

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forming corporation, investors

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You’ve come up with the best idea since sliced bread, figured out a business name and formed a corporation. There is, however, one small problem. You need money. Welcome to the world of investing.

Business Funds

Unless Bill Gates is your friend, money is going to be a problem for every new business. Even the might Google had to hunt for cash with one of the founders of Sun Microsystems finally kicking down a much needed $100,000. Whether you decide to pimp your business plan to anyone breathing or beg your step-mother for funds, here are some issues to consider.

Investors are looking for the best deal, to wit, the most stock possible in an entity. If you are asking them for cash, they have the leverage. Don’t be so desperate that you give away the farm. All to often, I speak with individuals who started a business on a whim and have become disillusioned because they have lost equity in the business.

Assume I start a corporation and need funds. My neighbor agrees to kick in $20,000 for 20% of the stock. Things go great, but four months later I need another $50,000 for inventory and cash flow. My aunt agrees to kick in $50,000 for another 20% of the stock. Yikes, I am not even through the first year and I have given up 40% of the equity!

What happens in year two when I need a $100,000? I give up more stock and suddenly own less than 50% of the business. Inevitably, this leads to feelings of resentment and bitterness. “It was my idea, but now these blood suckers are going to get most of the money and they aren’t even working on the business.” This sentiment is so common that it would be laughable if it weren’t so depressing.

As a general rule, you should only sell ownership in a business as an absolute last resort. Instead, try to get loans from investors, banks, home equity lines and even credit cards.

If you must sell stock to raise funds, be very careful when valuing the stock. You should place a value on each share as though the company was already a raging success, not just starting out. Further, make sure you sell only small allotments of stock such as three to five percent. If you owned IBM, how much of the ownership would you sell for $20,000?

In Closing

When starting a corporation, guard equity as though it is the Holy Grail. If you don’t, you risk becoming a disillusioned shareholder down the road.

Finding Your Match: The Art of Meeting the Right Investors

Finding the right investors can be a lot like dating. Making the right moves can lead you to meeting your match.

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VC,venture capitalist,investor,private offering

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Copyright 2006 Stephen Furnari

In my practice, I meet with many entrepreneurs. Listening to their stories is a poignant reminder about just how difficult it can be to find the investment money they need to grow their businesses. Many often ask me about the best ways to raise money for their businesses. Believe it or not, often times my answer begins with a story about my dating life. It goes something like this:

Although I was not blessed with Brad Pitt’s good looks or the best conversation skills, thankfully, I did catch the height gene and measure in at about 6 feet, 2 inches. Now, by Midwest standards, this is no significant thing, but in New York City, for whatever reason, it was one way to differentiate myself from many of the other guys in the singles scene. So, when I went to parties or out with friends, instead of competing with every other guy for the attention of the same group of women, I would try to meet the women who were taller than most of the men in the room. Knowing my dating limitations, I played the odds that were most favorable for me.

For me, the strategy was a success. Last year in November, I married a 6-foot tall brilliant and beautiful woman!

Finding the investment money you need to grow your business is not that much different than my dating story (albeit, maybe a little less fun). To be successful, you first have to put yourself out there and meet a lot of people. But, then, and perhaps most importantly, if you are aware of your company's limitations and you focus your efforts on the funding strategies where you have the greatest odds for success, you will find more money, faster and with less effort.

For some of you who will have immediate positive cash flow and assets you can afford to use as collateral, a bank loan may be the best, and certainly the fastest, way to get started.

For those of you who have a business model that is scalable into the 9-figure range, with principals who have prior entrepreneurial success, and/or businesses in the latest hot industry, VCs or angel groups may be a viable option.

For the rest of you (who incidentally represent 99% of the people who come through my office doors), serious consideration should be given to finding a Joint Venture Partner or executing an "extended" friends & family private offering-at least to give yourself enough time to grow the business to a level where you can more seriously consider one of the other two funding options.

One more thing. When I was single, I did not date tall women exclusively. If a shorter woman came my way, I obviously would not turn her down for a date! It is the same situation with pursuing a funding strategy. Just because you focus your efforts on one funding strategy, like seeking a Joint Venture partner, doesn't mean that if you meet a VC who offers you an opportunity to pitch your story you should not take it! The point is, you will ultimately have more success if you concentrate the majority of your efforts on one focused strategy.

Remember, efforts directed towards looking for investment money will be time spent away from doing what you do best: growing your business and achieving your financial goals. You need to be both strategic and realistic about it. The idea is to pursue the strategy where you will have the greatest odds for success.

To receive your free copy of the Target Investor Inventory, a powerful tool to help you rapidly discover potential investors within your professional network, contact me at: sfurnari@furnarilevine.com.

Five Ways Small Cap Companies Can Attract Big Investors

Start using the proven strategies Wall Street’s top companies use. These simple yet effective steps your investor relations director can take right now to dramatically increase your company’s exposure and attractiveness to investors thus bolstering share value and shareholder support

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Investment stocks shareholder awareness business marketing

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If you work for a publicly traded company, there are simple yet effective steps you and your investor relations director can take now to dramatically increase your company’s exposure and attractiveness to investors thus bolstering share value and shareholder support. These are simple, yet proven strategies for gaining and maintaining a loyal and ever-increasing investor following. Read ‘em and reap.

[1] Stay One Step Ahead of your Investors – Provide accurate and timely information about your Company

How do most investors tell a good stock from a bad one? They don’t…it tells them. It tells them by its trading activity, volume, chart history, etc. But most importantly, it tells them at the click of a button: "View Latest Headlines".

In fact, do that right now. Go online (where most investors conduct their due diligence and make their trading decisions) and view your company’s last five press releases just as an average investor would. Based on what you see, is your company’s stock a buy?

If you recently repainted the building; that’s great! Brag about it at the next office party. But if your company just signed a multi-million dollar global distribution deal--- spend the few hundred dollars on the press release. Better yet…try dividing that one big PR into three or four smaller PR’s. When it comes to substantive positive news, quantity is better than quality, also known as the Shotgun Effect. When the news is not particularly flattering or general housekeeping stuff, the reverse is true; keep those announcements few and far between if possible.

Also keep your company’s website current. Be sure all recent press releases are reflected on your company’s website and the information is updated quarterly. If your company is not growing or changing enough quarter by quarter, somebody is not doing their job. (For help with your website IR section or shareholder awareness campaigns, try contacting the people at www.EvergreenMarketingInc.com.

[2] The Whispers of Happy Shareholders can be Deafening

Word of mouth is still the best advertising there is. If you get the chance to speak directly to any of your shareholders try asking them how they first heard about your company. The answer will most likely be, "from a fellow investor". There are people out there right now who know enough about your company to recommend it to everyone they know….or not. They’re called shareholders. The key is keeping that army of voices well supplied with a steady stream of good news to spread.

Remember, your shareholders can promote and discuss your company and its investment potential in ways and places that you legally cannot. In this Internet / information age, you, as an executive of a publicly traded company, are one of the few who do not have total freedom of speech. Those shareholders are your not-so-silent majority out there for (or against) you on the World Wide Web, 24/7 in places you probably don’t even know exist.

If you really want shareholders to get excited enough about your company to tell everyone they know about it, try getting one of them on the phone sometime or sending a personal email; even if it’s just to say hello and thank them for their support. Speaking directly to the CEO of a company they own stock in is like talking to the Governor to some investors. I’ve seen it. More importantly, I’ve heard about it.

[3] The Hungry Cat Makes the Best Hunter

If a tree falls in the woods and there’s no one there to hear it, does it still make a sound? Who cares! But if your company releases positive news and there’s no one there to hear it, someone will care; your shareholders.

Nothing discourages current shareholders (as well as potential future ones) more than seeing a stock end the session with little or no increase in share price or volume on a day when positive news is released. Sure, the wire services are global, but more than likely, it will only be your existing shareholders who will be watching for and (hopefully) reading your company’s press releases.

As we discussed earlier, the best way to attract future shareholders is by utilizing current shareholders to help do the "hunting". Think about this; if every one of your shareholders fully understood and believed that if there were twice as many of them, the share price might be twice the price it is now. You must keep your army of shareholders constantly growing if for no other reason than the fact that all of your current shareholders will eventually sell your stock and move on…it’s only a question of when.

[4] Get Organized. Get Ready. Get Going!

All eyes in the room are on you. "Okay Boss, what’s the plan?" And then you answer….

Your corporate plan to increase shareholder support and awareness is like a roadmap that details the fastest and shortest route to your destination. Planning the trip is the easy part. Getting everyone else on board for the ride may take some work. That "work" starts with everyone knowing what their specific duties are and the most effective way of carrying them out.

This leads us to; "Get Going!" Activity creates productivity and productivity creates new shareholders, as well as helps keep existing ones. You should put together a 30 to 60 day calendar that outlines your shareholder awareness program. You should be able to identify specific developments that should take place during each week.

In the beginning, be sure to avoid the getting ready to get ready trap. Once you have the bulk of your operation and team in place, get them started. Don’t get too discouraged if your early results are less than hoped for. This type of undertaking is more like running a marathon than a sprint. It may take a few small steps at first to get your operation up and running for the long haul.

[5] You Cannot Expect What You Are Not Willing to Inspect

Delegation does not equal leadership. You need to stay updated from those actually implementing your shareholder awareness and support programs. What they do right and what they do wrong will determine the success of your program. Your management (and inspection) of the program and those implementing it are key factors in achieving your goals.

I’m sorry to say the bulk of investor relations duties are often viewed as a necessary evil. However, if you want your stock to reflect a strong market capitalization you need to be willing to go the extra mile. On behalf of your shareholders, take charge of your investor relations program then let everyone involved know exactly what is expected of them.

These simple yet effective steps will have a huge impact on how current shareholders as well as future investors view your efforts to gain their support by first supporting them. Leadership is easy….if you’re willing to assume it.