Longmont , CO
(720) 600-9513
Longmont , CO
(720) 600-9513

Is an Apartment Building the Best Investment Right Now?

Category: Land for purchase

Is an Apartment Building the Best Investment Right Now?

July 31, 2024

Increased Multifamily Development

Across the United States, and in Colorado specifically, multifamily development has dramatically increased. As real estate and land become more expensive, developers are turning to high-density housing to solve the issue.

The new multifamily development pattern also aims to ease affordability. With more options, consumers will have increased negotiating power, as there will be less demand for each unit. This leads us to the question many commercial real estate investors are asking: Should I invest in an apartment building right now?

Is an Apartment Building the Best Investment Right Now?

The short answer is that it depends on your portfolio and investment strategy. For some, an apartment building would make a great addition; for others, another investment type might suit best. 

The good news for the apartment sector is that rental growth has remained steady even with significantly more supply. Colorado isn’t seeing the rapid property value increases or rental demand that it saw a few years ago, but things haven’t gone sharply in the other direction either. Continued population growth in Colorado and a significant need for housing inventory have kept the market steady.

On the other hand, with buyers and renters having more housing options to choose from, owners of multifamily developments have certainly lost some of their leverage. To attract customers, investors must own properties with a specific value proposition (newly renovated, top-notch amenities, etc.) to ensure their building stands out.

Focus on Your Strategy

While some will tell you that now is the best time to invest in an apartment complex, and some will tell you it’s the worst, be sure to focus solely on your strategy. Each investor approaches their goals differently, so it’s up to you to decide which next step is right for you. 

If you have questions about commercial real estate, please contact Steve Longenecker and Northern Colorado Commercial Real Estate at WeBrokerCORealEstate or 720-600-9513.

We give out $250 gift cards for referrals that become our real estate clients.

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New Development vs. Resale: Which is Right for You?

July 2, 2024

New Development vs. Resale

There are two paths in commercial real estate: new development and resale. Depending on your investing strategy, one might better suit your portfolio.

New development and resale each have pros and cons. Your real estate broker likely has experience with both and can help you determine which is the right fit for you. 

New Development

New developments in commercial real estate provide unique opportunities that can make it the ideal option.

Pros

The pros of new development primarily center around being able to design and build the exact property that you envision. You often make compromises in resale, as no building will check every box perfectly. With new developments, however, you are free to create the space that will function perfectly for your business or tenants.

Cons

The most obvious cons of new development are the time and expense of building something from the ground up. Coordinating contractors, getting permits, obtaining construction loans, and dealing with zoning and code requirements can be a hassle.

Resale

Resale purchases are an effective way for many to start investing in commercial real estate.

Pros

Resale transactions are very efficient in comparison to new developments. In a matter of weeks, you can own an income-earning commercial property. Eliminating the construction phase makes resale an attractive option for those on a shorter timeline. 

Cons

In the resale market, you may face elevated levels of competition for a highly desirable property. In a competitive market, property values can become inflated, decreasing cash flow opportunities. Additionally, a resale property may require renovation or remodeling to make it the right space for your business. 

Which is the Right Path for You?

If you are unsure which path (new development or resale) is right for you, please contact Steve Longenecker and Northern Colorado Commercial Real Estate at WeBrokerCORealEstate or 720-600-9513.

We give out $250 gift cards for referrals that become our real estate clients.

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Choosing the Right Building Site for Your Commercial Property

May 23, 2024

Resale or New-Build?

Resale or new-build properties: Which one is right for you? Commercial investors commonly choose to purchase already-built property to rent out or use for their business. Others, however, focus on finding vacant land to accommodate new construction. 

The development process of vacant land requires the right contractors and sticking to a strict budget to ensure a solid investment. For those with the time and expertise, development can bring substantial returns in commercial real estate. 

Choosing the Right Building Site

Choosing the right building site is a primary factor behind the success of a commercial real estate investment. Here are a few things to consider to guarantee you select the best piece of land:

  • Zoning: If the zoning isn’t correct, you won’t even be allowed to begin construction. Make sure the sites you are looking at have the proper zoning to accommodate your desired commercial building type.
  • Traffic: Does the type of property you’re building need to be visible? Analyzing traffic patterns around the parcel is essential.
  • Size: Each piece of land will have building size restrictions. If you’re planning to build a sprawling office complex, you need to ensure the land has space for adequate parking, walkways, etc.
  • Soil Testing: Nothing is worse than buying a building site only to find poor soil conditions. Be sure to recruit a geotechnical expert to conduct the proper soil testing before purchasing.
  • Utility Access: If you are looking for land in more remote locations, you need to determine the access to utilities. Significant expenses can be associated with connecting to power, water, and sewer lines.
  • Construction Access: Depending on the scale of your construction, a general contractor can help you determine the access needed for machinery. Easy access to a building site can save time and money.
  • Neighboring Sites: What do the neighboring sites look like? If they are already built out, make sure they will be a good fit with your new commercial property. If they are vacant, it’s crucial to understand the zoning so you know what may be built in the future. 

Helping in Your Search

At Northern CO Commercial Real Estate, we take pride in helping you find the perfect building site for your next development project. If you have questions about commercial real estate, please contact Steve Longenecker and Northern Colorado Commercial Real Estate at WeBrokerCORealEstate or 720-600-9513.

We give out $250 gift cards for referrals that become our real estate clients.

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Location, Location, Location: Does it Really Matter?

August 17, 2023

Everyone has heard the infamous real estate saying “location, location, location”. But how much does location really matter?

For many years, real estate professionals have touted location as the most essential aspect of any property. It seems to make sense that a home in a desirable neighborhood would be an ideal place to live. Additionally, buying a short-term rental in a resort town where people love to vacation is a savvy investment strategy. 

The question, therefore, is: What about commercial properties? Does location matter as much in commercial real estate?

Does Location Matter in Commercial Real Estate?

The short answer is yes. Location matters greatly in commercial real estate. The longer answer is that it heavily depends on the type of property.

For example, location is vital when considering potential property options for opening a restaurant, as the building and sign need to be visible to passersby. If your restaurant isn’t in a highly-visible location, you will miss out on many potential customers. 

On the other hand, you must consider location differently if you are considering purchasing commercial real estate to open a storage facility. Your building may not need to be exposed to quite as much foot and vehicle traffic, but you will need a location that provides easy access for your target demographic with storage needs. 

Additionally, to make a commercial real estate investment profitable, you may need to consider different locations based on price. Depending on the business and your goals, a prime location with a hefty price tag may make sense, or a smaller price tag with a better cash flow may be the best option. 

Working with a highly-qualified commercial real estate broker is the best way to find the property and location that is right for you. Please contact Steve Longenecker at WeBrokerCORealEstate or 720-600-9513 regarding any commercial real estate needs in Longmont, CO, and our neighboring communities.

We give out $250 gift cards for referrals that become our real estate clients.

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How to Maximize Your Building’s Cap Rate

April 26, 2023

Maximizing Your Building’s Cap Rate

Maximizing your commercial real estate building’s capitalization rate, or cap rate, tends to bring the best return. 

A cap rate considers a building’s current market value and net operating income and produces a percentage that shows the investment potential. Additionally, a higher cap rate typically leads to higher risk, so each investor needs to determine their comfort level based on their situation. 

What Affects Cap Rates?

There are various ways that cap rates can be affected. The following are factors to pay attention to when evaluating the investment potential of a property:

  • Market Trends: Market trends substantially impact a building’s value. When there is strong demand, a building will be worth more. When there is a large influx of supply, a building’s value may drop. Any change in a property’s value will ultimately alter the cap rate for better or worse. 
  • Leases: Cap rates are dramatically affected by the amount of income the building produces. The types of leases in place and the rental rates are crucial in maximizing returns. 
  • Location: The location of any piece of real estate is essential. If you are looking to draw a specific tenant or demographic to increase rental income, you need to be in the correct location. 
  • Condition: The condition of the building can have a major impact on cap rates. A property that needs little to no updating will likely draw higher-paying tenants but will have a heftier price tag. 

Finding a building that doesn’t just excel in one of these categories is crucial. To maximize your property’s cap rate, you must ensure it has the best combination of the abovementioned factors. 

For example, just because a building may be in perfect condition, a bad location may result in a lower cap rate. Or, if the real estate market is strong, but the leases in place don’t have great terms, you may be leaving money on the table. 

Your commercial real estate agent will work with you to understand your investment goals and strategy, and help you find the right property to fit your needs. Please contact Steve Longenecker at WeBrokerCORealEstate or 720-600-9513 regarding any commercial real estate needs in Longmont, CO, and our neighboring communities.

We give out $250 gift cards for referrals that become our real estate clients.

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Opportunity Zones in Commercial Real Estate

February 1, 2023

Opportunity zones encourage private real estate investors to seek new investments in lower-income areas. Tax incentives reward investors who take advantage of the opportunity zone program. Tax deferrals, general reductions, and adjustments of capital gains taxes make opportunity zone investments appealing. 

What is an Opportunity Zone?

An opportunity zone is an often up-and-coming area with a distressed economy. The general goal in deeming an area an opportunity zone is to find an influx of funds to kick-start the economy and create new jobs. 

The government aims to entice investors with tax benefits and, in return, see new development, land improvement, and property renovations. The establishment of new recreational facilities, restaurants, etc., creates more jobs in the community. Furthermore, even the construction and renovation processes provide job opportunities for community members seeking work. 

Who Should Invest in Opportunity Zones?

Typically, long-term investors are the ideal fit for investing in opportunity zones. Investors only realize some tax benefits after a specified period (10+ years). Therefore, if investors hope to liquidate their assets before taking full advantage of the tax incentives, opportunity zone investing may not be the right strategy. 

If you are unsure whether or not opportunity zone investment is an option for you, consult your team of local real estate professionals. Please reach out to Steve Longenecker at WeBrokerCORealEstate or 720-600-9513 regarding any commercial real estate needs in Longmont, CO, and our neighboring communities.

We give out $250 gift cards for referrals that become our real estate clients.

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#longmontcommercialrealestate #commercialrealestatebroker #northerncoloradocommercialrealestate

What to Consider Before Your First Development Project

September 14, 2022

What is Commercial Real Estate Development?

Commercial real estate development involves purchasing a piece of land or an existing structure and creating a new facility. This could mean purchasing land and building an apartment complex or buying an old commercial warehouse and renovating it into a wedding venue. 

As you might imagine, the development process has many moving pieces. Some investors shy away from development projects and stick primarily to buying already-built structures. However, when done correctly, development can yield significant profits for willing investors.

What to Consider Before Development

Before beginning a commercial real estate development project, there are a few essential items to consider.

Risk

While the risk of development tends to be higher than simply purchasing an existing structure, it can pay off in the long run. Before developing, be sure you fully understand and feel comfortable with any associated risks.

Financing

There are many types of commercial financing, including lines of credit, construction loans, and portfolio loans. Connecting with an experienced commercial lender will help you determine the right kind of financing for your project.

Building Site

Choosing a piece of land or structure can be one of the most challenging parts of the process. Your real estate agent will help guide you through contract negotiation, zoning regulations, and any necessary inspections. 

Construction

As the developer, it’s your job to bid out and supervise construction. Managing subcontractors can be time-consuming, so it’s important to allot enough margin to navigate challenges that arise through the construction process. 

Sale or Leasing

Finally, when all is said and done, you must be sure you have the right sales or leasing team to market your new development and find the right buyer or tenant. 

Build Your Real Estate Team

Before beginning your first commercial real estate development project, you should spend time assembling the right team. Please contact Steve Longenecker at WeBrokerCORealEstate or 720-600-9513 with any questions or if you have any commercial real estate needs in Longmont, CO, and our neighboring communities.

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Commercial vs. Residential Real Estate Investing

August 16, 2022

Commercial vs. Residential Real Estate

Some real estate professionals have strong opinions on whether it’s best to invest in commercial or residential real estate. The truth is that your financial position and your goals will determine which investment is best for you. In the end, each strategy has its own pros and cons.

Your residential real estate investment could be a single-family home, condo, townhome, and anything up to a quadruplex. Commercial real estate is anything that has 5+ dwelling units, office buildings, retail space, hotels, etc. To decide which path is right for you, let’s look at some of the benefits of the two types of real estate investment.

Pros of Commercial Investment

While it may be tougher to get started due to higher costs, there are some great benefits of commercial real estate.

  • Well-Qualified Tenants: In residential properties, you typically work with families or groups of people as tenants who may not treat the property as you would. In commercial real estate (aside from apartment buildings), your tenants are well-qualified businesses that likely won’t create as much wear and tear on the property. 
  • Lease Terms: In commercial real estate, five to ten-year leases are common, which means there is significantly less turnover than in residential leases. Additionally, triple net leases are often used, meaning the tenant handles all property expenses directly, significantly reducing the property owner’s maintenance costs.
  • Appreciation: In residential real estate, the value of a home is heavily dependent on comparable homes in the area. For commercial properties, the building’s value is almost purely based on its cashflow potential and thus can appreciate very well over time without being affected by the surrounding structures.
  • Return on Investment: The larger scale of commercial investment properties typically correlates to a greater return on investment. While it may require more cash to begin investing, the cash flows almost always beat residential properties. 

Pros of Residential Investment

There are also many pros to residential real estate that may make it a better fit for some. 

  • Large Tenant Pool: As opposed to working primarily with businesses, residential real estate has a large pool of tenants and buyers. A larger tenant pool ensures that vacancy rates stay low and cash flow is consistent. 
  • Starting Cost: Residential real estate is often much more affordable than commercial properties. The lower starting cost makes it easier for investors to start in the industry. 
  • Recessions: Businesses are always quickly impacted by an economic downturn which inevitably affects their landlord. Companies may go out of business or look to cut down on costs, and suddenly commercial properties are hard to market. Residential real estate, however, typically stands strong, no matter the state of the economy, as people always need a place to live. 
  • Fewer Rules: Commercial real estate comes with many zoning laws, regulations, and paperwork. Because residential real estate doesn’t involve renting to businesses and is typically smaller scale, there are significantly fewer rules to follow.

What is Best for You?

If you are curious about what investing strategy might be best for you, it’s important to connect with a real estate professional to discuss your options. Please contact Steve Longenecker at WeBrokerCORealEstate or 720-600-9513 if you have questions about the commercial real estate market in Longmont, CO, and our neighboring communities.

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Supply Chain Issues in Commercial Real Estate

August 14, 2022

Surging Supply Chain Issues

As we all know from news headlines, COVID-19 spurred supply chain issues in many sectors of the economy. Commercial real estate is one of the many industries that continues to feel the ripple effects. 

When the pandemic began and put the global economy on hold, many businesses were caught without products. Thanks to online retailers, consumers could still shop from the comfort of their homes, but companies couldn’t keep up with the demand. Additionally, residential and commercial construction quickly began feeling the effects of supply chain shortages in various ways.

Shifting Demand

E-commerce allowed businesses to continue to reach customers even when in-person operations stopped. The rapid rise in e-commerce created a shifting demand in the commercial real estate market. 

Companies that hadn’t prepared for large volumes of online shopping and shipping began to acquire substantial warehouse space. The warehouse market tightened as demand remained strong, and prices began to rise. 

Commercial Construction

As with most other sectors, commercial construction continues to face challenges due to supply chain issues. Kitchen appliances, raw materials, windows and doors, and steel components are all seeing extensive lead times that are delaying completion. 

Additionally, shipping and product costs have increased dramatically, which, in turn, has made the construction process and the final product much more expensive.

The Solution

There is no doubt that supply chain issues will continue to impact the commercial real estate industry for some time. The best solution is to partner with a real estate professional that understands the impacts and can advise you accordingly.

Please contact Steve Longenecker at WeBrokerCORealEstate or 720-600-9513 if you have questions about the commercial real estate market in Longmont, CO, and our neighboring communities.

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WANTED TO PURCHASE: 1-2 acres of agricultural land near Longmont, CO

February 10, 2022

We have a new landscaping client who is looking to purchase a few acres of agricultural land near Longmont, CO.   Here are the details:

  • East of 287 out to I-25, preferably in Weld or Larimer (not Boulder) County
  • May consider a larger plot (5 acres max) and now even a home (NEW)
  • Need water rights included or at least available
  • Business is looking for nursery space

Please contact me if you are aware of anything that might fit, thanks !

Steve Longenecker, Broker

Northern Colorado Commercial Real Estate
720-600-9513, WeBrokerCORealEstate.com
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Refer a Client to us and receive a $250 gift card!

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