Commercial real estate investment has an enticing reward potential, however, a considerable amount of homework is required on the part of any would-be investor. A number of newcomers to commercial real estate investing have successfully learned the ropes and turned a tidy profit. The purpose of this article is to educate you about some of those basics so you too can experience success.
Regardless of whether you are buying or selling the property, it is in your best interest to negotiate. You should make sure that they hear you and you get the fairest price for your property.
There are many informational websites available that aim to provide new and seasoned real estate investors with the necessary information. It is always best to work with as much information as possible, so take the time to absorb everything you can when working with commercial real estate.
Net Operating Income, the commercial metric for real estate, needs to be understood. To succeed, have positive numbers.
Do your best to have your properties occupied at all times. If you’ve got open spaces, then the person will end up paying for maintenance and upkeep. Consider why your property has driven away tenants and try to rectify the situation.
Confirm that basic utility services are already situated at the commercial property. Your business may have unique utility needs, but at the very least, you probably require hookups for electric, sewer, water and most likely, gas.
You should examine the surrounding neighborhood of any commercial real estate you may be interested in. If you are buying the property in a more expensive neighborhood your business will most likely be a lot more successful, people there have more to spend. However, if you’re offering services that less wealthy people may be more interested in, you probably want to purchase property in a less wealthy area.
You should advertise your commercial property as being for sale to people locally and those who are not local. Many sellers mistakenly presume that their property will appeal only to local buyers. There are a lot of private investors who like to buy properties that are not in their direct area if they are affordably priced.
Do a walk-through and close evaluation of each property you are considering. You should consider asking an experienced professional to come with you and examine the properties you have an interest in. Begin negotiating and the process of offers and counter offers. Judge the counteroffers prior to making a decision either way.
Keep letters of intent simple by tackling large issues before sweating the small stuff. This will make the negotiations faster and less tense, and it will also cause the lesser issues to be completed easier.
Emergency maintenance should always be on your need to know list. Inquire with your landlord about who handles the emergency repairs in the space you rent. Always keep this important contact information at hand, including average turnaround times. Your landlord should be able to provide you a list of emergency contacts so that you can map out a safe and well organized emergency plan, in case an emergency happens during normal business hours.
Check all disclosures of the chosen real estate agent that you wish to work with. Remember that dual agency is also an option. In this case, the real estate agency represents both sides of the transaction. In other words, the agency represents the landlord and the tenant simultaneously. It should be disclosed if there’s a dual agency, along with an agreement by both parties.
If you are new to investing, focus on one investment type at a time. Begin by selecting which type of commercial buildings you would most like to purchase and then devote all of your time to those types of properties. You can be more successful when you’re good at one type as opposed to just average at different types.
Research the company and find out if they care about their customers’ best interests before you commit to working with them. Failing to do so could result in subtle changes or unneeded payments slipping by and costing you a fortune in wasted money.
If you take the time to read through and start applying the advice that you have read, you will start off on the right foot with real estate investing. Follow the advice you’ve read here to reap the greatest rewards by taking advantage of deals others won’t even know how to find!