You can make large amounts of profit which can leave you wealthy for years to come when it comes to commercial real estate. But, you must realize that due to the stakes of commercial real estate, this business is not suited for everyone.
Whether you want to rent or lease, you will have to deal with pest control. This is especially important if the region is known for certain types of pest infestations. If this is the case, ask specifically what the landlord will do with regard to pest control.
You should expect your commercial real estate investment to require a significant time commitment. First you have to hunt down a good deal, and then, after your purchase, you may be required to complete some repair work or remodeling. However, don’t give up just because this will take time. It will pay off in the long run.
Learn to understand the commercial real estate metric called Net Operating Income (NOI). As long as you get positive numbers, you will be successful.
If you intend on putting your commercial property on the rental market, find a simple, but solidly constructed building. Tenants will be interested by buildings that look well-cared for. Investing in good buildings will save you money on repairs later.
Always rent out all the available space in your commercial rental properties. Empty commercial properties mean a building that you are having to maintain without any income being received. If you have multiple unoccupied properties, try to determine the reasons why, and rectify the problems that are keeping tenants from renting the spaces.
If you are writing a letter of intent, take it easy. Go for agreements on the bigger problems at first, then get to the smaller issues later in the negotiations. By focusing on the big stuff first, you will have more pleasant negotiations, and you will be better able to manage small matters in the end.
It’s likely that the property you buy will need some repairs and work before you move in. The changes could be rather cosmetic. Sometimes it is as simple as painting a wall or moving some furniture. The renovation project can get larger and could consist of knocking down, moving or building walls to make the floor plan usable. Decide in advice who will be responsible for these things and try to get landlords or previous owners to pay for some of it.
You must know how to deal with an emergency, should it arise. Make sure to consult your landlord about emergency repair responsibilities in your building or office. Know what the phone numbers are, and know what the response time is for them. Take advantage of this information to devise a contingency plan in order to prevent and respond to customer complaints resulting from maintenance issues.
Real Estate
Read the fine print about your real estate agent. Never neglect the fact that you may be dealing with a “dual agency.” Dual agency is when a real estate agency is responsible for the representation of both parties involved in a transaction. This will mean that the agency will work with the landlord and tenant simultaneously. Dual agency should be disclosed and both parties should agree to it.
It’s up to the borrower, that’s you, to order an appraisal for a commercial loan. There is a good chance that the bank may not validate it otherwise. Ensure it gets done, and gain peace of mind in the process, by ordering it yourself.
Speak to a tax adviser prior to buying a property. You will find out how much this property will end up costing you and what percentage of your income will be taxed. If you don’t want to pay high income taxes, your adviser can suggest some areas of the country to focus on where the tax rates are lower.
Ask your real estate broker how they define success and failure. Their answer can help you determine whether they are the best broker for you. You need to know how they actually measure their results. Look for online ratings or complaints. If your own views differ greatly from a potential broker, you two may be incompatible for a business relationship.
Commercial Real Estate
There is a considerable amount of money to be made in commercial real estate. You need to not only front a substantial down payment, but have the time and patience to see your investment through to the end, as well. To ensure that you are successful in the commercial real estate market, make sure that you use some of the tips and idea presented above.