How to Find, Analyze and Buy California Investment Real Estate

by Leon Katz

I would suggest that the first and most important thing to do when planning to buy a commercial investment property is that you find a qualified, experienced and knowledgeable commercial investment real estate agent or broker.  The second suggestion that I would make for the international or foreign investor would be for them to work with an agent or broker who is experienced with foreign buyers and investments.  

Most people already know that one of the best and safest places in the world to invest has been the United States and in fact the State of California.  Safety, security, rights of property owners, financing terms as well as historical return on investment are the main reasons for this.    Working with someone who you can trust, with the right experience and who knows your particular goals for your investment will help you to make the right decisions about what to buy or invest in.

I would suggest that you consider looking for and working with a Certified International Property Specialist (CIPS) who is familiar with the area that you want to invest in.   A CIPS specialist is specifically trained through the National Association of Realtors (NAR) as a specialty group to work with and understand the needs of international buyers and sellers.  There are only about 2,000 such members trained for this out of 1.3 million members.

In the United States, more than 97% of all real estate transactions are handled by licensed and trained agents and brokers.    By State law, all people who are paid a commission for handling a real estate transaction must be trained and pass a test in order to obtain a license.  The main reason for this is to protect the interests of the buyers and sellers because licensed agents are supposed to know the laws and regulations that protect the parties involved in a purchase and disclose all pertinent facts.

One of the easiest ways to find a licensed realtor is to go online to www.realtor.org/international.  There, you can easily find a licensed real estate agent in the area that you are interested in.  I would suggest that you also search for an agent or broker who has a CIPS designation after his name who may also be familiar with your country or origin.  That way, the agent is already aware of some of the customs, practices and laws in your country as well as the country and area that you wish to invest in.

The next step would be for you to find the investment that you are interested in.  If you are working with a qualified agent or broker who is also a CIPS and who understands your goals and plans, that should be no problem.   If you want to find investment property on your own, that is pretty simple to do in this new world of technology and the internet.

There are many internet sights to look at.  For instance, you could look at www.cbire.com and go to the search properties section.  From there, you would choose the type of investment you are interested in (Office Buildings, Retail Centers, Shopping Centers or Residential/Multi-Family) and put in the price range and areas that your are interested in and see a list of available properties.   For most sights, you could even click on a link and send an email to the agent and ask for more information or income and expense data for a particular property. 

Other sights you could look at would include www.ccimnet.com, www.loopnet.com and www.cbre.com.  If that is not enough you may even want to do a Google or Yahoo search and put in something like “Apartment Buildings for Sale California” or “Retail Shopping Center in Los Angeles for Sale”.  The problem with doing this is that you get too many things to look at and it could get quite confusing and laborious to find what you are looking for.

The good news is that by looking at the websites above, you will be able to find an agent or broker who you can begin to work with on these sites and who will be looking to help you find what you are looking for.

Hopefully you already found an agent or broker that you trust to work with before getting too serious about any particular property.  The problem with finding properties online without an agent or broker to represent you is that you may not be familiar with the market, the pricing, income or areas that you are searching in.   You could waste a lot of time or make the wrong decisions without that knowledge.

Then, when you or your agent has found the properties that may be a fit for what you are trying to accomplish, it is time to analyze and do the hard work.  Going through the process of “due diligence” is detailed and tedious.  Buying a property with a handshake is not the way it is done.  Everything must be verified and reviewed.  Some of the many items to verify that your representative should assist with would be: 

Verify Title and Ownership                     

Income and Expenses

Market Value of Property

Financing available/Terms

Area/Crime

History of Property

Physical Condition of property                   

Schools and development in area

Zoning laws and regulations                      

Escrow and transfer of title to new owner     

Title Insurance  

Management of Property and/or development

            Of course, rates of return, investment forecasts and the plan to sell the property in the future are also important to discuss with your advisor.   Although there are many differences in how real estate transactions are handled around the world, transactions in the United States tend to be rated as very desirable and secure as rated by world investment advisories.  Many of the laws in place and the services such as escrow and title insurance are all there to protect people.

I would suggest that anybody interested  in learning more about USA transactions could do so on the internet.  We posted a few articles, definitions and information on our website that could be viewed for more information.  Go to www.cbire.com and click on the tab called “Free Reports” to get information about real estate transactions.   Also, your agent should be able to email you worksheets that can be used to help you evaluate any particular property.  Just let him know that you want to review the information and would like a checklist to use for analysis.  What we always tell out clients is that “to buy real estate is easy; but to do it the right way, takes a little work”.

Sincerely,

Leon Katz, CIPS, CRB, TRC

President