Financials
What is Net Operating Income (or NOI)?
Revenue minus all operating expenses
What does the status "Research Status" mean on Copper?
Input on advisor side that notifies the interns/marketing analysts to search and find information from Reonomy on the Address/Owner provided.
What is usable square footage?
The actual space you can occupy in a commercial rental property
What are the three classes of buildings? What do they mean?
Class A, B, & C.
Class A buildings are the newest and highest quality. They tend to be less than ten years old and are typically located in or near the Central Business Districts and/or most desirable locations of major cities (like New York City). Their locations are highly visible and have high traffic counts for both vehicles and pedestrians.
Class A properties have the most luxurious finishes, newest technology, and strongest amenity packages. For example, a Class A office building may have marble floors, high speed internet, and outdoor patios with fantastic views. In addition, it may be highly energy efficient as evidenced by an LEED certification.
Building Class B are well maintained, but may be slightly dated and in need of light renovations. They are usually between 10 and 20 years old and typically located in good, but not great markets.
Class B properties have average finishes that may be slightly dated. For example, a Class B multifamily property may have tile floors, laminate counters, carpet in the bedrooms. and a slightly outdated fitness center.
Buildings in Class C are older vintage, dated, and in need of moderate to significant repairs. They are between 20 and 30 years old and are typically located in less desirable areas that are far from major highways, shopping districts, employment centers, and public transportation.
Class C properties have dated finishes that likely need to be replaced because they are either obsolete or non-functioning. They are in fair condition and likely require repairs or upgrades to mechanical systems like roofs, parking lots, HVAC, or plumbing. Buildings in Class C have lower rents than Class B and typically within reach for small companies and hourly workers.
What is a turnkey build out?
Landlord will build a space for a tenant to a specified plan
What is the average length of a deal in commercial real estate from the moment of introduction to closing?
4-6 months.
When should you always cold call?
In the mornings, 9:00-12:00 AM.
What is rentable square footage?
The total space that can be occupied in a building plus shared space (lobbies, hallways, restrooms, etc.)
How long is a commercial HVAC typically good for?
Typically 20 years
What is second generation space?
A term typically applied to office space that has had a prior tenant and so has some improvements that are reusable by a subsequent tenant,such as some walls,doors, ceiling treatments, and light fixtures. Contrast with first-generation space, which has never been customized for a tenant and consists of wide-open space with support columns, concrete flooring, and the concrete bottom of the floor above.
What are operating expenses?
Financial category that includes repairs and maintenance, utilities and cleaning expenses
What is the first thing you do when you get to a meeting and meet the LL?
Thank them for having you/for their time.
What is the difference between a Full Service Lease, a Modified Gross Lease & a Triple Net lease?
Triple Net = Tenants pay all pass throughs separately/on-top of the base NNN rent
Modified Gross = Pass throughs are shared between landlord and tenant (Slightly higher "base" rents than typically seen with NNN)
Full Service = All pass throughs are paid for by the Landlord, therefore the base rent is the total expense that is paid by the tenant for their space. Full Service rents are significantly higher than the base of a NNN lease rent in a similar building.
What are balloon loans in Real estate?
A balloon mortgage is a real estate loan that has an initial period of low or no monthly payments, at the end of which the borrower is required to pay off the full balance in a lump sum. The monthly payments, if any, may be interest only, and the interest rate offered is often relatively low.
What is a 1031 exchange?
What are non-operating expenses?
Financial category that includes management fees, insurance and General and administrative expenses
What are hard costs in construction of commercial real estate? How do these compare to soft costs?
Hard costs - Referred to as the “brick and mortar costs” - costs of the physical construction of a space
Soft Costs - Examples include costs for architectural and engineers
What is Rent Abatement exactly? Why do landlords agree to it?
Rent abatement is "free rent" for a month or a few months depending on the length of the lease. It extends the lease by the amount of free months. It benefits landlords in bettering the numbers on their T-12 for potential future buyers.
What is eminent domain?
Eminent domain refers to the process by which the government may seize private property with proper compensation, but without the owner's consent.
How long is an ALTA survey valid for?
10 years
What are capital improvements?
Financial category that includes leasing commissions, tenant improvements and really big projects like roof replacements or lobby renovations
What is the name of BellStreets Podcast?
Chatting on BellStreet
What is the difference between a Sublessee and Sublessor?
In a sublease, there is the landlord/ lessor, the tenant/ sublessor (the party who leased the property from the landlord but is now subleasing the property to a third party), and the sublessee.
What is adverse possession? When can somebody claim it in your state of operation?
- Under Georgia law, a person may be eligible to start an adverse possession claim if they have been living on the property for 20 years — or seven years with Color of Title.
- Colorado statutes define this statutory period as being 18 years, or 7 years if the adverse possessor, under a good faith claim and color of title, was paying taxes on the possessed real property.
What is done during the Environmental Phase I? How about Phase II? Why are these important?
A Phase I Environmental Site Assessment (ESA) or Phase I ESA, is short for a study conducted on a property to evaluate the likelihood of environmental contamination.
The Phase II ESA, also referred to as a “subsurface investigation” or more commonly “site investigation,” typically consists of collecting a series of soil, soil gas, which includes sampling for vapor intrusion, and groundwater samples and sending the samples to a laboratory to determine if dry cleaning operations have impacted the property negatively through environmental contamination.
It helps a purchaser determine potential liability.