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All real estate market participants, whether homeowners or investors, look at their purchases as an investment. Whether they feel it is the home of their dreams or a place that will generate a good rental income, property owners want to be able to sell it for more than they paid for. Preferably, for a lot more. It is next to impossible to be wrong in times of price appreciation, as markets all over North America have shown these past few years. During market expansions, buyers typically exhibit the ‘King Midas Syndrome’: like the famous mythological king, in fact, they all display that miraculous ability of being able to turn anything they touch into gold.

When markets hit a snag, however, property purchasers will have to be more selective about what they choose to buy. One segment of the real estate industry which is often overlooked by investors and yet is possibly the most lucrative, involves the purchase and sale of small free-standing professional office buildings. In the industry, we refer to it as ‘Blue Chip Real Estate’. The definition is borrowed from the Stock Market, since Blue Chip Real Estate is the general description of interests in land that are well established, with stable earnings and no extensive liabilities - just like Blue Chip Stocks.

Small professional office buildings are typically leased to established professionals business entities such as proprietorships, partnerships, incorporated firms or any combination of the above, as well as to top tenants such as banks. They are valued by investors seeking safety and stability, though prices are usually high. Typically, Blue Chip real estate holdings are perceived to offer reliable returns, high yield and low risk. Additionally, most of them are strategically located adjacent to residential neighbourhoods, yet in commercially-zoned strips.

Small professional office buildings are sought after by a variety of professionals, especially in the medical industry, for the amenities they offer, which enhance their practice and professional images. For instance, many of these buildings are built with ancillary storage or utility space that can be used for a variety of reasons, provide rooftop or basement HVAC systems, or even nicely appointed consultation rooms in which clients and audiences will be more relaxed and potentially more receptive to presenters.

What makes small professional office buildings so particularly prized by investors is the fact that there is a shortage of them. As they offer more and better facilities, construction is typically more expensive than normal. The plus side of things is that market values of free-standing professional office buildings never fall, because there are not that many and they are always in high demand - specifically because tenants almost never leave.

In addition to generate highly reliable rental income, landlords usually take advantage of other important benefits, all of which are paid for by tenants.

Property Taxes and Utilities

Property taxes are typically higher than the norm but, as in all commercial tenancies, they are apportioned to and paid for by the individual tenants. Care must be exercised to be accurate in the measurements of common areas and passageways, so that a proper apportionment of property taxes can be made among tenants. In some instances, landlords are entitled to estimate the taxes payable for the subsequent calendar year, and to require tenants to pay the estimate in advance, provided that when the actual amount of taxes is known, tenants shall be invoiced by the Landlord.

Operating Costs

Operating Costs refer to the total of all expenses, costs and outlays of every nature incurred in the maintenance, repair, operation, insuring and management of the building all calculated in accordance with generally accepted accounting principles. Operating Costs include cleaning and janitorial, all utilities in the interior and exterior of the building, security, window cleaning, insurance required to be carried by the Landlord, repairs and replacements to the building, heating, cooling, ventilation and air conditioning if provided, outdoor maintenance including landscaping and snow removal, replacement of light bulbs and fixtures, telephone and other utilities, service contracts with independent contractors, supplies, legal or management fees and disbursements, federal sales tax on rent or similar taxes such as the Goods and Services Tax (in Canada), and all other expenses paid or payable in connection with the operation of the Premises and maintenance of the building.

Insurance

In addition to be responsible for payment of the pro-rata share of the landlord’s insurance, tenants must carry their own comprehensive general public liability insurance (including bodily injury, death and property damage) on an occurrence basis, with respect to the business carried out in or from the premises and the tenant’s use and occupancy thereof. Such insurance must contain a waiver by the insurer of subrogation against the landlord or shall include the landlord as a named insured, and shall protect the landlord in respect of claims by the tenants.

Furthermore, the tenant must carry insurance in respect of fire and other such perils covering the tenant’s trade fixtures, furniture and the equipment, all leasehold improvements of the tenant and plate glass, and which insurance shall contain a waiver by the insurer of subrogation against the landlord or shall include the landlord as a named insured, and shall provide that any proceeds recoverable in the event of loss to leasehold improvements shall be payable to the landlord.

Leasehold Improvements

Unless stipulated otherwise, tenants bear all costs of alterations and improvements to the premises, and any and all such alterations and improvements, once completed, will become property of the landlord. Whereas free rent or free leasehold improvements are frequent in the leasing of average commercial, retail or industrial space, when it comes to small professional office buildings any such incentives or inducements to lease are unheard of.

The average size of this type of holdings is in the 10,000 to 15,000 square foot range, two or three stories in elevation and private, gated parking. As practically all expenses are paid for by tenants, capitalization rates are typically very high. The capitalization rate is the return an investor requires for investing in a property, so as to receive the annual flow of net operating income. Small free-standing professional office building have price tags ranging from CAD $1.5 million to CAD $2.5 million depending on the area, and cap rates as high as 20 percent per annum. Real property annual appreciation has been a steady 8 to 10 percent per annum over the past ten years. This means that a property that sells today for CAD $2 million would have sold for approximately CAD $750,000 in 1996.

Luigi Frascati

Luigi Frascati is a Real Estate Agent based in Vancouver, British Columbia. He holds a Bachelor Degree in Economics and maintains a weblog entitled the Real Estate Chronicle at http://wwwrealestatechronicle.blogspot.com where you can find the full collection of his articles. Luigi is associated with the Sutton Group, the largest real estate organization in Canada, and is based with Sutton-Centre Realty in Burnaby, BC.

Luigi is very proud to be an EzineArticles Platinum Expert Author. Your rating at the footer of this Article is very much appreciated. Thank you.

[tags]blue,chip,office,buildings,professional,real,estate,holdings,medical,investments[/tags]

The home buying process can be exciting and overwhelming at the same time. After all, it’s one of the biggest financial decisions you’ll ever make. So before you begin looking for a home, make sure you have a plan in place.

Here are some more tips to help you get the most out of your house hunting experience.

Take pictures of the home, inside and out.

When shopping for a home, bring your digital camera along. Or borrow one from a friend. Take pictures of all the houses you visit, and then group the pictures by house address for easy viewing later. This will help you remember the details of each house afterward. Then you can more easily decide which houses you’d like to follow-up on or revisit.

Bring a friend of family member along.

Buying a home can stir up a lot of different emotions, and that’s perfectly normal. But emotion can sometimes overpower logic — not something you want when making a financial decision.

You can counter this by bringing a friend or family member along on your house hunt. By bringing someone who’s not so emotionally attached to the process, you’ll have an objective ally to help you identify the pros and cons of each house.

This person can also help you recall details about a house after each visit. And chances are, they’ll be able to point out aspects of a home you might not have noticed otherwise.

Compare the house to your budget.

Ever heard the expression “house poor”? This is what happens when people take on more of a mortgage than they can comfortably afford. Ask yourself this question. If you have to work longer hours and scrimp and save just to afford a house, is it really worth it?

While house hunting, you’ll inevitably come across one or two houses that really knock your socks off, but would also knock a hole in your budget. But you have to keep your finances in mind, no matter how gorgeous a house might be.

Consider the commute.

Here’s another area where it pays to be objective. If you find a house you like, and it’s within your price range, the next thing to consider is the location. Is the house near or far from work? Does it have access to the highways you need? How long will your commute be each day?

It’s easy to fall in love with a house and dismiss the drive time. But if you commute every day, drive time matters! Try driving to or from the house during rush hour to get a realistic picture of what you’ll face every day.

Avoid spur-of-the-moment decisions.

Buying a home will probably be the biggest financial decision of your life. So it requires careful consideration. Know what you’re looking for and how much you can afford. Remember to be objective. Then get out there and hunt!

* Copyright 2006, Brandon Cornett. You may republish this article in its entirety, provided you leave the byline, author’s note and website hyperlink intact.

About the Author

Brandon Cornett is the editor of HomeBuyingInstitute.com, one of the Internet’s largest and most respected libraries of home buying information — more than 100 expert articles in 12 different home buying categories! Put this knowledge to use by visiting http://www.HomeBuyingInstitute.com

[tags]home buying, real estate, buying a home, house hunting[/tags]

If you’ve ever been to Coronado, California you have a pretty good idea of what paradise looks like. Real estate experts always talk about “location, location, location” as the most important factor in determining the value of a property. Well, it’s the absolute truth — and it’s tough to find a better location than Coronado!

Here are 5 reasons why Coronado real estate may be the world’s best:

1. Perfect weather — Coronado, located just off the Southern California coast, enjoys the type of weather most people daydream about: warm sun, cool ocean breezes, just a few fluffy clouds, low-humidity, very infrequent rain, and a temperature that stays in the upper-60’s to low-70’s range all year long. As is the case in most cities on the Pacific coast, early mornings in Coronado can be chilly — but, once the fog burns off, you won’t want to go back inside until the sun goes down!

2. Beautiful beaches — Coronado’s beaches are consistently rated among the world’s best by travel guides, magazines, and television shows. In fact, the Travel Channel recently ranked Coronado’s beaches in the top-10 in the US, and number 1 in Southern California… which is saying A LOT when you consider the number of world-class beaches located between LA and San Diego. It’s no wonder that Coronado’s beach-front real estate is among the world’s most valuable!

3. Convenient Location — Coronado is located right next to one of the most vibrant and colorful cities in the world: San Diego. Often called an “island,” Coronado is actually a peninsula connected to the mainland by a strip of land called the Silver Strand. Physically, Coronado is only about a mile from downtown San Diego, giving its residents easy access to a huge variety of shopping, dining, entertainment, universities, professional sports, and all the other great benefits a major city provides. For even more fun and shopping, Baja Mexico is just a 15-minute drive to the south.

4. Small Town Atmosphere — Despite it’s close proximity to San Diego, Coronado has a truly unique and inviting “small town” atmosphere all its own. When you leave the city and cross the bridge to Coronado you really feel as though you’ve stepped into another world. You see wide tree-lined streets, elegant Victorian homes, charming Spanish-style cottages, beautifully manicured lawns, quaint, locally-owned shops and boutiques, clean air, nice, cheerful people… and many other things you won’t find much of in the city! It’s this safe, friendly atmosphere that is the real draw for many people looking for prized Coronado real estate.

5. True Romance — San Diego’s “enchanted island,” as Coronado is often called, is among the world’s most romantic locations. Whether its a picnic on the beach, a Sunday afternoon concert in the park, or an intimate dinner in the famous Hotel del Coronado, Coronado offers residents and visitors alike the perfect romantic getaway. There’s a reason why Coronado has been chosen as the number one wedding destination in America: you won’t find a more magical place in such an exquisite setting anywhere in the world!

As you can see, Coronado definitely deserves its world-class reputation. It’s a truly special place that provides the perfect setting in which to live the “good life.” Buying Coronado real estate is a can’t-go-wrong investment anyone with the means and wherewithal should consider making!

Jamie Clark is a writer and co-editor for Coronado-Real-Estate-Guide.com. To learn more about beautiful Coronado, California real estate be sure to visit: http://www.coronado-real-estate-guide.com

[tags]coronado, california, real estate, investments[/tags]