Investing your money in commercial property can be a profitable endeavor for a variety of reasons. You will have your own personal reasons and they should be based on the education you have. Take the time to educate yourself, and you will increase your potential profit. Expand on what you already know, or learn something new with the following tips.
Regardless of whether or not you are the seller or the buyer, negotiate! Ensure that your opinion is known, and wrangle for the best price you can get on the property.
As with other property purchases, pay attention to the three Ls: location, location, and location. Neighborhood is important, even when you are looking at commercial property. Compare its growth to similar areas. You’re not only thinking about the here and now; you want to look a decade down the line too. Pick an area with the potential for sustainable growth.
Learn to understand the commercial real estate metric called Net Operating Income (NOI). To succeed, have positive numbers.
When selling a property, you should make certain that whatever price you set is realistic. There are many things that can impact your value greatly.
When having your real estate inspected (as you should), always ask for the qualifications of the inspectors. 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 want to avoid a future liability that can come after the sale, if the inspection was not correct.
If you plan on renting out your commercial properties, find simply and solidly constructed buildings. 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 buildings also provide much easier maintenance for both the tenants and the owner, as they are less likely to require repairs.
If you are considering more than one property, be sure to obtain a checklist for the tour site. Take initial personal responses, but don’t go further without the property owner knowing. Don’t be afraid to casually tell the owners that you are looking at other properties, too. This may help you by creating a sense of urgency on the seller’s part.
Any new space you acquire might need some improvements prior to you occupying it. It could be as simple as a coat of paint or replacing some carpet. However, many people find they need to take out or add walls to make modifications to the basic floor plan. Negotiate payment for these improvements ahead of time, and attempt to have the landlord pay at least part of the costs.
It is essential to develop a list of emergency maintenance service providers. Make sure to consult your landlord about emergency repair responsibilities in your building or office. Know what the phone numbers are, and know what the response time is for them. In case a maintenance emergency should happen, you can use the information provided to lay out an emergency business and customer service plan to save your company’s reputation in case your business is interrupted.
Dual Agency
Ensure your legal and financial safety by thoroughly examining the disclosures of a potential real estate agent. Some agents work for a dual agency. When dual agency exists, the agency advocates for both parties in the transaction. In other words, the agent is representing both you and your landlord in the same transaction. If this is the case, and the agent is a dual agent, this should be known to both parties and agreed to by both parties.
In conclusion, commercial real estate investing is worthy of consideration for multiple reasons, and they all have their own subtleties and complexities. The tips and hints you’ve just been given can enhance your understanding of commercial real estate and help you make lucrative investments.