So, you feel now is the right time to get into buying and selling commercial real estate? You probably have a lot of inquiries on where to start and what to do, but do not worry, this article will help you. Listed below are some tips that will help you get started with your commercial real estate endeavors.
Another factor to be aware of when shopping for property to rent or lease is who pays for pest control. It is a good idea to consult your rental agent for information on pest control policies, especially if the area your property is located in is known for a high population of insects and rodents.
An essential fundamental of commercial property is location, location, location. You will want to focus on the actual neighborhood for starters. Cross-check similar areas to see how they are growing. The area you buy in needs to have potential over the next 5 to 10 years.
When you are picking a broker, make sure you know if they are experienced within the commercial real estate market. Be sure that they specialize in the area that you are buying or selling in. You should be sure to enter into an exclusive agreement with that broker.
Learn to understand the commercial real estate metric called Net Operating Income (NOI). You need to keep your numbers positive if you are going to be successful.
If you rent or lease the commercial properties you own, keep them occupied as much as possible. You are responsible for the expenses associated with keeping your unoccupied spaces updated and maintained. Consider why your property has driven away tenants and try to rectify the situation.
Both local and non-local advertising of your commercial real estate property will be beneficial to you. Do not assume that only local investors will be interested. Private investors will purchase properties outside of their area if the prices are low enough.
You might need to make improvements to your new space before you can use it. The changes don’t have to be extensive. You may just want to repaint or rearrange furniture. Sometimes, you may need to move a wall in order to create a better floor plan. Remind the landlord that these improvements are necessary, and use them to negotiate a lower deposit or reduced rent.
Know that there are many different kinds of brokers when it comes to commercial real estate. Some brokers or agents only work with tenants, while others will serve both tenants and landlords. It might be most beneficial for you to hire a broker who works exclusively with tenants. A broker with that focus will be more experienced in successful dealings with tenants.
If you are thinking about hiring any real estate professional, read over all their disclosures. Some agents work for a dual agency. This means the same agent will be representing the two parties. This means the broker represents you and the landlord during the transaction. If dual agency is the case, it should be out in the open and both the landlord and the tenant should be in agreement with the arrangement.
To initiate a commercial loan, the prospective borrower must first request an appraisal. Banks do not allow the appraisal to be used at a later time. Plan for this eventuality and arrange for the appraisal on your own.
Consider any tax deductions you might get from your 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. Knowledge of this aspect is important when you make an investment decision.
Choose a reputable business where they strive for exceptional customer service. If you don’t, you could pay more for some mistake that you could’ve avoided to begin with.
To ensure that you are doing business with the most suitable real estate broker, have them describe to you what a success or a failure is. Find out their criteria for deciding whether a result is good or not. You should feel comfortable with their explanation of the strategies and methods they use. Choose a broker who matches you in all of the answers they give, be it the same strategies or complementary ones.
Commercial Real Estate
Hopefully, you are now well prepared to achieve your goals in commercial real estate. If you felt confident before, you should feel even more so after reading this article. Armed with this new information, hopefully you are ready to go out and start a successful journey in the commercial real estate market.