SOURCE: Forbes

A high-yield way to get into commercial real estate can be through net-leases. A net-lease is when a building owner sells the building and then leases it back, typically for a long period of time. The building owners do this as a way to raise cash and yet keep their location and storefront. The new owner will likely have a well-protected stream of income for 20-30 years.

Another way to get into high-yield commercial real estate is through net-lease real estate investment trusts (REITs). These REITs own the actual building rather than the mortgage and do much better on returns than equity based REITs.

Even though most sale-leasebacks involve deals worth greater than $20 million there are still many opportunities for individuals. They can participate by piggybacking since REITs and other institutional net-lease buyers often sell off some of their properties individually. This allows them to turn a profit or balance holdings geographically. Currently, 60% of the 11,000 single-tenant retail outlets available are priced below $2 million.

One investor, Jack A. Diamond, became a net-lease holder for a Checkers drive-through hamburger outlet. He paid $387,000 for one of the Checkers stores that was being sold by Trustreet Properties. "I like the steady income stream and not having day-to-day responsibility" for managing the real estate, says Diamond, a retired building supply executive, who co-owns five other net-lease properties via an S corporation.

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SOURCE: The Washington Post

The lack of competition in the U.S. commercial real estate market is proving a prime time for foreign investors to make their move. The results of a first-quarter survey performed by the Association of Foreign Investors in Real Estate (AFIRE) have just been released. The findings show that their international investors rank the U.S. as the most attractive market in the world.

U.S. investors are finding it difficult to find money due to the credit crunch. This is playing a large part in the lack of competition that foreign buyers are seeing. Another important factor is that more conservative U.S. investors are waiting for prices to fall somewhat. Not only that, the inventory of upper echelon Class A commercial buildings is relatively small and all this combined is setting the stage for some record setting deals.

The interesting thing is that foreign investors aren't getting any real bargains. They are paying premium prices for premium properties. These properties typically have a solid base made up of long term, credit-worthy tenants. The great value here is having such a strong hedge against the volatile market that the U.S. is enduring at the moment. One of the things that does make for a bargain though is that the U.S. dollar is worth a lot less compared to many foreign currencies. With the real estate market down along with the dollar, it makes for a double discount on commercial property.

The time needed to familiarize foreign buyers with the commercial real estate market is another factor that is available now. Before, properties were moving so quickly that they didn't have time to really feel confident about placing their money in the fray. Now that a lot of the competition is holding back, they are able to move into the U.S. market with the ability to do their homework before investing.

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