Commercial real estate investing is quite a bit different than residential or other types of real estate purchases. The following tips will help you make a tidy profit from your commercial real estate endeavors.
There are many factors to consider as you view available properties. For example, you should take note of statistics regarding local employers, workforce availability and the accessibility of skilled labor. Your house will sell more quickly and at a higher value if it is near a university, hospital or any large employment center.
Purchasing commercial properties is more time-consuming and complex compared to the purchase of a home. Yet the greater the risk and time, the greater the profit, so take this into consideration when you think about the type of investments you want to make in the future.
If you are in a situation where you have to choose between two attractive commercial properties, remember that size matters. Getting the financing you need is going to be complicated whether you choose a five-unit building or a fifty-unit building. By choosing a larger piece of commercial property, you will be getting a better rate per unit, giving you the best potential for success.
When choosing a broker, ask about their experience specifically in the commercial real estate market. Make sure that their particular business focus includes what you are interested in. Once you find the broker you want to use, sign an exclusive agreement.
Find out more about net operating income. Having positive numbers is the only way to ensure success.
Inspections are necessary before buying any piece of real estate. When arranging an inspection, be sure to check both credentials and reputation before hiring an inspector. Those who work in pest removal should be inspected closely, as they are often not accredited. Reviewing credentials will help you prevent major issues after you make the purchase.
One of the most important things you should be aware of is emergency maintenance. One way to develop such a list is to ask current commercial investors who they use in the event of an emergency repair. Keep their numbers updated, and know how long it takes them to arrive on average. Protect your employees, customers, merchandise, and even your reputation by having a good emergency plan in place that will allow you to handle unexpected events without chaos.
Carefully peruse the disclosure statements issued by the real estate agency you intend to hire. Make sure you understand the potential for the existence of dual agency. In this case, the agent is two-faced: she is representing both parties to the transaction. This means the agency works for the tenant and the landlord at the same time. If there is a dual agency, everyone should be honest about it and find an agreement.
Before you invest in real estate, be certain that you understand the implications regarding your taxes. In addition to depreciation benefits, many investors enjoy tax deductions for interest expenses. Other investors deal largely with “phantom income” – income that is not paid in cash, yet is still taxed. You should be mindful of phantom income prior to investing.
Look for an agency that keeps your best interest in mind. If you don’t do this, you might get taken advantage of or wind up paying much more money over time.
You should consult with a tax expert prior to purchasing anything. They’ll be able to discuss the long-term cost of the building, and what the tax rate for owning the building will be. By taking your adviser’s advice, you may be able to find a location where the taxes are less.
Determine the negotiation methods of real estate brokers you are considering. Inquire into their specific credentials and training; do not be afraid to ask for references. When choosing a real estate broker, make sure that they are ethical when doing business. It is also completely appropriate to seek examples of their past efforts to strike real estate deals for other clients.
Buying a piece of commercial property presents many challenges. Hopefully after reading this article, you have learned everything you need to know about commercial real estate.