Purchasing commercial real estate is vastly different from purchasing a residential property. This article provides valuable advice and tips that can help you make the best and most profitable decisions.
Take digital photographs of the unit. In the “before” photos, especially, make sure that the pictures clearly show defects such as stains on the carpet, discolorations in the tub and sink, and holes in the walls.
Whether you want to rent or lease, you will have to deal with pest control. It is even more important to look into the building’s pest control policies if you are looking to rent or lease in a region where building pests are common.
A good starting point for people looking to purchase real estate is to go online and scour the treasure trove of beneficial information that can help new investors, as well as seasoned professionals. Excessive knowledge isn’t a problem you have to worry about, so it always proves smart to learn all you can.
Learn to set realistic prices by observing the market. There are a variety of different factors that go into determining a property’s value.
It is important that each property offers unhindered access to utilities. Your business may have unique utility needs, but at the very least, you probably require hookups for electric, sewer, water and most likely, gas.
You have to think seriously about the neighborhood where a piece of commercial real estate is located. Purchasing in an affluent area may help your business to be more successful, since the potential clients may have deeper pockets. You might want to buy a property in a less affluent neighborhood if you are selling products or services that less affluent people would find attractive.
Advertise the commercial property to both locals and non-locals. There are a lot of people who make the big mistake who think that only local people want to purchase their property. Many private investors find it appealing to purchase properties that are affordably priced outside of their direct area.
Thoroughly tour every potential property. When looking at a property that you are thinking of purchasing, it’s a good idea to have a licensed contractor accompany you. Make preliminary proposals to break the ice and open negotiations. Consider counteroffers carefully prior to responding.
Keep your focus on the largest issues when writing your letters of intent. Keep it simple and save the smaller issues for later in the negations. The initial negotiations will be less tense and the smaller issues will seem less important later.
Plan on doing some improvements to your new commercial space before you can inhabit it. For example, you might neat to repaint or purchase new furniture. Some of these improvements may require the removal or addition of walls to create the appropriate floor plan. Remind the landlord that these improvements are necessary, and use them to negotiate a lower deposit or reduced rent.
The borrower needs to order an appraisal for a commercial loan. You’re not going to be allowed to use this later by the bank. Cover yourself and your interests by ordering it yourself.
Be sure to realize all properties have a lifetime. You will have to pay for repairs and maintenance for your property; make sure you have a good idea of how much you will have to spend. The property might be in need of new roofing, or utility upgrades like wiring. Although every building needs maintenance and updating at some point, some need repairs and upgrades more often. Make certain you are prepared to deal with these issues long range.
There are a lot of ways to save money on repair costs when it comes to property cleanup. You are the one that is responsible for clean up if you own part of the property. Environmental cleanup and waste disposal can rack up a massive and costly bill. Consider contacting an environmental assessment company to provide you with an environmental report. These reports may initially cost quite a bit; however, they can protect your investment in the long run.
It is advisable to go bigger when investing money pertaining to commercial real estate. If you were considering purchasing a five-unit building, recognize that managing fifty units is no more difficult than five. Both require commercial financing, and a larger building will cost less to finance per unit.
As you can now see, there are many things that you need to consider, when buying commercial real estate. Make sure to keep the advice from this article in mind to ensure that you get a fair deal that fits what you need out of the building that will house your business.