Romie Babraa : Archived blog posts for : 2023

7 Steps: How to Find a Good Commercial Property?

Posted on March 25, 2023 by Romie Babraa

Basically, finding a commercial property requires research, planning, and a clear understanding of your business needs. Here are some steps you can take to find a commercial property:

1. Determine your business needs: Before you start your search for a commercial property, you need to determine what type of space you require. Consider factors such as the size of the property, location, parking, accessibility, and zoning regulations.

2. Research the market: Once you have a clear idea of your business needs, research the local commercial real estate market. You can browse online listings, work with a real estate agent, or search through commercial property databases.

3. Set a budget: Determine how much you can afford to spend on rent or purchase of a commercial property. This will help you narrow down your search to properties that fit within your budget.

4. Tour properties: Schedule tours of properties that fit your needs and budget. Take note of the condition of the property, its location, and any other relevant details.

5. Evaluate the property: Evaluate each property based on your business needs, budget, and other factors. Consider the potential for growth and whether the property meets your long-term business goals.

6. Negotiate the lease or purchase agreement: Once you have identified a suitable property, negotiate the lease or purchase agreement. Work with a lawyer or real estate agent to ensure that the terms of the agreement are favorable to you.

7. Close the deal: After you have negotiated the terms of the lease or purchase agreement, finalize the deal and take possession of the property.

Remember that finding a commercial property can take time and effort. Be patient and don't rush into a decision. Take the time to evaluate each property carefully to ensure that it meets your business needs and is a good investment for your company. And who can really help with this process is a good commercial broker.

But now the question arises - how do you find a great commercial broker?

Well, finding a good commercial broker to help you with your commercial property needs requires some research and due diligence on your part. Here are some steps to help you find a good commercial broker:

1. Research: Start by doing some research to identify potential commercial brokers in your area. You can use online search engines, industry associations, or professional networks to find brokers who specialize in commercial real estate.

2. Check credentials: Once you have identified potential brokers, check their credentials. Look for brokers who are licensed, experienced, and have a good track record of closing deals. You can also check their online reviews and ratings to see what other clients have to say about their services.

3. Interview potential brokers: Contact the brokers you have shortlisted and schedule a meeting or phone call to interview them. Ask about their experience, their knowledge of the local market, their marketing strategy, and their commission rates.

4. Check references: Ask for references from the brokers you are considering. Contact the references and ask about their experience working with the broker and whether they would recommend them.

5. Evaluate communication skills: A good commercial broker should be an effective communicator. Evaluate how responsive and attentive the brokers are when you contact them, and how well they explain complex concepts related to commercial real estate.

6. Choose the right fit: Finally, choose a broker who you feel comfortable working with and who understands your specific needs and goals. A good commercial broker should be able to provide you with personalized advice and guidance throughout the entire process.

Disclaimer: The author is a commercial real estate broker in Greater Vancouver. All the discussion points are solely based on the author's own opinion and experience.

What happens when banks starts failing?

Posted on March 17, 2023 by Romie Babraa

So many questions have been arising after looking at recent failings at SVB (Sillicon Valley Bank) and other lenders. Are we sitting at a tipping point and will there be a repeat of 2008/9 financial crises?

Let's see what we should be doing if and when a bank starts failing.

Well, it can have some serious consequences for both the bank's customers and the wider economy. Here are some of the potential outcomes:

Bankruptcy: If a bank fails to meet its financial obligations, it may be declared bankrupt. This means that it will be unable to pay its debts and will be forced to shut down.
Run on the bank: A bank failure can cause panic among its customers, who may rush to withdraw their deposits. This can lead to a "run on the bank" and make it more likely that the bank will fail.
Bailouts: Governments may step in to prevent a bank from failing, by providing financial assistance or bailing out the bank. This can be controversial, as it can be seen as rewarding bad behavior and putting taxpayer money at risk.
Contagion: If one bank fails, it can lead to a loss of confidence in the banking system as a whole. This can lead to a chain reaction of failures, as customers withdraw their deposits from other banks out of fear that they too will fail.
Economic impact: A banking crisis can have a significant impact on the wider economy. If banks are unable to lend money, it can lead to a credit crunch, making it difficult for businesses to get the financing they need to grow. This can lead to a recession or even a depression.

And is there a domino effect when banks starts failing?

Yes, there can be a domino effect when one bank starts failing. This is because banks are interconnected and rely on each other for liquidity and funding. When one bank fails, it can lead to a loss of confidence in the banking system as a whole, and customers may rush to withdraw their deposits from other banks.

This can create a liquidity crisis for other banks, making it difficult for them to meet their financial obligations. Banks may also become more cautious about lending to each other, which can further exacerbate the situation. This can lead to a credit crunch, making it difficult for businesses and consumers to access the financing they need.

In extreme cases, a banking crisis can lead to a wider economic downturn or even a recession. This is because banks play a crucial role in the economy by providing financing and credit to businesses and individuals. If banks are unable to do this, it can have a ripple effect throughout the economy.

But what to do in such sitation, as a customer, if your bank fails or about to?

If your bank is experiencing financial difficulties, it's important to take some steps to protect your money and assets. Here are some things you can do:

Don't panic: The first thing to do is to stay calm and don't panic. While a bank failure can be unsettling, it doesn't necessarily mean that you will lose all your money.
Check your deposit insurance: In many countries, banks are required to have deposit insurance to protect their customers' deposits. Check whether your deposits are covered by deposit insurance and what the coverage limits are. This will give you an idea of how much of your deposits are protected in case of a bank failure.
Keep your deposits below the coverage limit: If your deposits exceed the coverage limit, consider moving some of your money to another bank to keep it below the limit. This will ensure that all of your deposits are protected in case of a bank failure.
Monitor your accounts: Keep an eye on your accounts and monitor any changes in the bank's financial situation. If you notice any irregularities or signs of trouble, consider moving your money to another bank.
Have a backup plan: Consider having a backup plan in case your bank fails. This could include opening accounts at other banks, keeping some cash on hand, or having access to other sources of credit.
Seek professional advice: If you are concerned about your bank's financial situation, seek professional advice from a financial advisor or lawyer. They can help you understand your rights and options in case of a bank failur

Hope this helps and keep our nerves calm but it doesn't happen, as once we are in it, we can loose our sleep and mind.

What are REITs and how are they different in Canada & US?

Posted on March 11, 2023 by Romie Babraa

First of all, let's understand what are REITs. REITs, or Real Estate Investment Trusts, are companies that own, operate, or finance income-producing real estate properties. They are similar to mutual funds, but instead of owning stocks or bonds, REITs own and manage real estate properties such as apartments, office buildings, shopping centers, and warehouses.

REITs are required by law to distribute at least 90% of their taxable income to shareholders in the form of dividends, which makes them a popular investment choice for income-seeking investors. In addition, REITs can provide diversification benefits for investors looking to add real estate exposure to their portfolios without directly owning physical properties.

REITs can be publicly traded on stock exchanges, privately held, or non-traded. Publicly traded REITs can offer investors the ability to buy and sell shares on stock exchanges, providing liquidity to their investment. Private REITs are not traded on public exchanges, and are typically only available to accredited investors. Non-traded REITs are not traded on public exchanges, but they are registered with the Securities and Exchange Commission and are subject to regulation.

Secondly, let's understand the major difference between Canadian REITs and US REITS. While the basic concept of a REIT is similar in Canada and the USA, there are some differences between Canadian and American REITs.

One difference is in the tax treatment. In Canada, REITs are generally not subject to corporate income tax, provided that they meet certain conditions, such as distributing a minimum of 90% of their taxable income to unitholders. In the USA, REITs are also exempt from paying federal income tax, as long as they distribute at least 90% of their taxable income to shareholders.

Another difference is in the regulatory environment. In Canada, REITs are regulated by the provincial securities commissions, while in the USA, they are regulated by the Securities and Exchange Commission (SEC).

In terms of structure, Canadian REITs often have a more concentrated portfolio, with a smaller number of properties. In contrast, American REITs tend to have a more diversified portfolio, with a larger number of properties in different regions and sectors.

Finally, Canadian REITs tend to have a higher proportion of their assets in the residential sector, while American REITs tend to have a higher proportion in the commercial and office sectors.

Overall, while there are some differences between Canadian and American REITs, the basic concept and benefits of investing in REITs are similar in both countries.

This material contains the current opinions of the author and such opinions are subject to change without notice. This material is distributed for informational purposes only. Forecasts, estimates, and certain information contained herein are based upon proprietary research and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. This investment is intended for tax residents of Canada who are accredited investors. Residency restrictions apply. Please read the relevant documentation for additional details and important disclosure information, including terms of redemption and limited liquidity. All investments contain risk and may gain or lose value.

Interest Rates Impact on Industrial Real Estate Market in Lower Mainland

Posted on March 6, 2023 by Romie Babraa

The industrial asset class in Lower Mainland is one of the most dynamic and rapidly changing segments of the commercial real estate market. In recent years, this sector has been subject to a range of market forces, including economic growth, technological change, and changes in interest rates. In this article, we will explore the impact of interest rates on the industrial asset class in Vancouver or Lower Mainland.

First, it is important to understand how interest rates affect the real estate market. Interest rates are set by the central bank and determine the cost of borrowing money. When interest rates are low, it is easier for businesses and individuals to borrow money, which can stimulate economic growth and increase demand for real estate. Conversely, when interest rates are high, borrowing becomes more expensive, which can reduce demand for real estate.

In the case of the industrial asset class in Vancouver, interest rates have a direct impact on the cost of financing new developments and acquiring existing properties. When interest rates are low, developers and investors can access cheaper capital, which can increase the supply of new industrial properties and drive up demand for existing assets. This can result in rising property values and higher rents.

Conversely, when interest rates are high, the cost of financing new developments and acquiring existing properties increases. This can result in a slowdown in development activity and a reduction in demand for industrial assets. This can lead to lower property values and rents.

Another factor to consider is the impact of interest rates on the broader economy. When interest rates are low, it can stimulate economic growth and increase demand for goods and services. This can result in increased demand for industrial space as businesses expand and require more space to operate. Conversely, when interest rates are high, it can slow down economic growth and reduce demand for goods and services. This can result in reduced demand for industrial space as businesses contract and require less space.

In Vancouver, the impact of interest rates on the industrial asset class is further complicated by other factors such as the availability of land and the cost of construction. Vancouver is one of the most expensive cities in Canada in terms of real estate, and the cost of acquiring and developing industrial properties can be prohibitively high.

In conclusion, interest rates have a significant impact on the industrial asset class in Vancouver. Low interest rates can stimulate demand for industrial space and drive up property values and rents, while high interest rates can have the opposite effect. However, the impact of interest rates on the industrial asset class is influenced by a range of other factors, including the broader economy, the availability of land, and the cost of construction. As a result, investors and developers in Vancouver's industrial real estate market must carefully consider the impact of interest rates alongside these other factors when making investment decisions.