Commercial and industrial properties are always being listed on the market, but they are not highly advertised, like residential homes are. You need to know how to navigate the often complex market. Start by reading this article.
Location is key in commercial real estate. Consider the neighborhood of the property. Cross-check similar areas to see how they are growing. Since you will likely still own the property in ten years, you want it to be located in an area that is likewise still desirable in ten years.
Learn to understand the commercial real estate metric called Net Operating Income (NOI). In order to be successful, the resulting number must be positive.
Every prospective real estate purchase should include thorough onsite inspections; it is equally important to verify the inspectors’ credentials. There are more than a few people working in without certification in the pest removal and insect fields, so make especially certain to ask for proof of certification from them. You’ll have less problems after the sale, as such.
Commercial rental buildings should feature sturdy construction and simple details. These spaces are more likely to fill quickly with paying tenants who are drawn towards something that is well maintained. These buildings also provide much easier maintenance for both the tenants and the owner, as they are less likely to require repairs.
Make sure you’ll be able to access power, water and other utilities for your commercial property. You’ll need to have quick access to water, electricity, gas and the sewer.
Prior to negotiating with the lease of your commercial real estate, try to decrease anything that could be a default as you can. This will decrease the probability of the tenant defaulting on the lease. You do not want this to happen to you.
Advertise the commercial property to both locals and non-locals. Don’t be mistaken by the thought that locals will be the only people interested in your sale. Many investors will consider purchasing a property outside their own region if the price is right.
Make sure you know exactly what requirements you need to satisfy before you begin your search for commercial real estate. Write down what features are most important to you when you look a piece of property, like the square footage, the number of offices and conference rooms, and bathrooms.
Commercial real estate has many brokers to offer. For example, some brokers represent landlords as well as tenants, while others only work with tenants. Consider hiring a tenant-only broker as he’ll have the most experience in dealing with situations such as yours.
Dual Agency
If the agent you are thinking of hiring for your commercial real estate transaction gives you any disclosure forms, make sure you read them carefully. Remember that dual agency is also an option. In this sort of situation, the agency acts as both parts of the transaction. In simpler terms, both the landlord and the tenant are simultaneously represented by the agency. If there is a dual agency, everyone should be honest about it and find an agreement.
Find out more about tax benefits before you invest. Investors get both depreciation benefits and interest deductions. There is also “phantom income”, which is taxed by the government although not received by the investor as cash. Try to understand this before you invest.
Only work with companies that are sincerely interested in the success of their customers. Otherwise, it might cost you a lot of money in the future for something you could have easily avoided.
Know what to expect from your realtor by asking them questions about successes and failures. Your broker should be able to explain what standard they use to measure results. Look for online ratings or complaints. You and your broker need to agree on these ideas and how to make them work.
Ask your broker to explain the methods he uses to negotiate deals before hiring him. Inquire as to their training and experience. When choosing a real estate broker, make sure that they are ethical when doing business. Request to see examples of previous negotiations, both those that were unsuccessful and those that were successful.
When you are pursuing an investment in commercial real estate, finding the right type is only the start of the process. A little bit of education can help you to be better prepared.