Investing in commercial real estate has the potential to earn you some big money. However, it is not for everyone, because of the large stakes and investments involved.
If you’re a buyer or if you’re a seller, it’s important that you negotiate. Make sure that you are heard and that you fight for a fair price for the property.
Another factor to be aware of when shopping for property to rent or lease is who pays for pest control. Especially when you rent in an area known to be infested by bugs or rodents, ask your rental agent about pest control policies.
Location is key in commercial real estate. You will want to focus on the actual neighborhood for starters. Look at the growth in similar areas. You want to know that the community will still be decent and growing a decade from now.
Educate yourself on the meaning of net operating income (NOI), a term associated with commercial real estate used for investment purposes. In order to be successful, you will have to make sure that you never dip into the negative.
When having your real estate inspected (as you should), always ask for the qualifications of the inspectors. This should be especially noted for those who work in pest removal since there are actually a number of non-licensed people who work in this area. Seeking out professionals with proper accreditation will be worth it in the long run.
If you’d like to rent out the properties you purchase, it’s best to buy a simple building with solid construction. 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. Maintenance is also easier, because these buildings require less repair.
When you are looking at a commercial property, be sure to look at the neighborhood, too. Buying property in an affluent neighborhood is likely to mean that any business which opens there will be successful thanks to having a clientele with a large disposable income. If your product or service tends to appeal primarily to lower or middle class consumers, look for commercial property in a more conservative neighborhood.
Prior to listing your commercial property for sale, have it checked out by an inspector with at least five years of experience. If they should discover even a single issue with the property, repair or resolve it immediately.
If you are viewing more than one property, you may wish to create a checklist for each site. Accept the proposal responses from the first round, but be sure to inform the property owners directly if you decide to go further in your inquiries. Don’t be shy about telling the owners that you are thinking about purchasing another property. The information may help you to negotiate more favorable terms on your deal.
Make sure you know who does emergency maintenance work if you rent commercial property for your business. Inquire with your landlord about who handles the emergency repairs in the space you rent. Know what the phone numbers are, and know what the response time is for them. Create an emergency plan using your landlord’s information so that you can protect customer service and your reputation in case of a disruption to your usual business.
Scrutinize any disclosures made by a real estate agent whom you intend to hire. Keep an eye out for dual agencies. In this case, the agent is two-faced: she is representing both parties to the transaction. In other words, the agency is working for both tenant and landlord simultaneously. If there is a dual agency, everyone should be honest about it and find an agreement.
It’s up to the borrower, that’s you, to order an appraisal for a commercial loan. The bank won’t let you make use of it later. Order the appraisal yourself to avoid a headache.
Prior to committing to working with a real estate broker, you should first determine how they prefer to conduct business. Much like you would interview a prospective employee, question their experience and training. You also want to know they are ethical in their approach to finding the best deals. Ask to see examples of past successful and unsuccessful negotiations.
Make sure you know what kind of environment your property is located. Should a problem with environmental waste ever occur, it is your obligation to properly clean your building and property. Is the area that the property is in prone to flooding? reconsider your options before making a final decision. Certain agencies are available in most areas that will provide substantial information regarding the local environment, its conditions, weather patterns, and any concerns you should have as a real estate owner.
Commercial real estate is immensely profitable for some. Approach this activity as an investment of your money, but also of your time and hard work. Keep the tips you just read in mind to help you make money via your investments.