Are your ready to buy your first commercial property? While it may seem that you have too many questions and not enough answers to really get started, take a deep breath and check out these pointers designed to get you on the right track. Below are a collection of tips and ideas that should help you to begin a commercial real estate market venture.
The Net Operating Income, or NOI, is one metric you need to master for success in commercial real estate. To be successful, you must stay profitable.
Learn to set realistic prices by observing the market. A wide variety of factors exist that influence how valuable your lot actually is.
If you intend on putting your commercial property on the rental market, find a simple, but solidly constructed building. You will be able to attract tenants for these properties more quickly due to the fact that they will know the building is well maintained. These properties are also more cost effective for you and your tenants due to the fact that they only require minimal upkeep and repairs.
Always rent out all the available space in your commercial rental properties. If no one is paying you rent, you’ll be the one footing the bills. Consider why your property has driven away tenants and try to rectify the situation.
Be sure to have your property inspected by a licensed inspector prior to placing it up for sale. Repair any problems that the inspector finds immediately.
Advertising your property to parties locally and abroad is important to ensure you get the best price possible. Many people make the mistake of assuming that only local buyers will be interested in buying their property. In many cases, a private investor will be interested in a property even if it’s not in their area, so long as its price is a good one.
Take tours of the properties that are potential purchases. Look into having a professional contractor accompany you as you take a look at the properties you’ve been thinking about purchasing. Start negotiations by making a preliminary proposal. Evaluate and reevaluate the counteroffers before making any kind of decision one way or another.
Property Owners
When you are comparing different properties, get tour site checklists. Certainly take down initial proposal responses, but don’t get into anything further without informing the property owners. Don’t hesitate to tell a property owner that you’re considering other properties as well. Most property owners won’t be upset or angry; they expect you to be looking at more than one property. This may ensure that you get a much more viable deal.
You will need to know what you are looking for in a commercial property prior to beginning your search. Make a list of the property features most important for you, such as square footage, number of offices, conference rooms, and restrooms.
There isn’t just one type of broker for commercial real estate. Some brokers or agents only work with tenants, while others will serve both tenants and landlords. You may be helped much more with a broker who just works with the tenant, as that person most likely has more experience in handling tenants successfully.
When you begin to invest, it is wise to only have one investment in mind at a time. Select the type of property upon which you wish to focus, and pay close attention to your dealings. It’s good to find a niche and do very, very well at it rather than flitting from one investment type to another without much success.
Consider any tax benefits you’ll receive through a commercial real estate investment. Investors may receive interest rate deductions as well as depreciation benefits. Other investors deal largely with “phantom income” – income that is not paid in cash, yet is still taxed. Try to understand this before you invest.
You should now be ready to purchase your first commercial property. If you felt prepared before, you surely must feel like a pro by now! The tips you have read in this article will help you become a successful investor in commercial real estate.