You probably have a better chance at making a profit in the commercial real estate market than in the residential real estate market. It can be a little harder to find the good opportunities, though. Therefore, the following tips will make it easier for you to get good deals in commercial real estate.
Take digital pictures of the place. 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.
Practice calm and patience when you are looking into the real estate market. You should never rush into a possible investment. You’ll regret it quickly if your lack of research results in a property without much re-sale value. It could take as long as a year to find the right investment in your market.
An essential fundamental of commercial property is location, location, location. Pay attention to the property’s surrounding area. The neighborhood’s demographics, including socioeconomic status and age of residents, influence the success of your investment. Look at the growth in similar areas. You need to be sure that in five to ten years later, the area will still be growing.
When choosing between two similar commercial properties, think large scale. Finding adequate financing on a piece of property takes time and patience. In effect, this is similar to an economy of scale, or also like purchasing more of an item to save money.
For a commercial property you plan to rent out, make sure it is a solid construction with a simple design. Tenants are more likely to move in when they know the property is well taken care of. Such buildings also usually need fewer repairs, which is an advantage for the tenants, as well as the landlord.
Know what your specific needs are prior to starting your commercial real estate hunt. Write down what features are most important to you when you look a piece of property, like the square footage, the number of offices and conference rooms, and bathrooms.
Plan on doing some improvements to your new commercial space before you can inhabit it. The improvements can just affect surface appearance like painting the walls or moving furniture around. Sometimes a new business will need to alter the floor space by moving interior walls. Talk to your landlord about these improvements. Try to negotiate a deal where the landlord pays for some, if not all, of the cost of improving your space prior to moving in.
Emergency Repairs
Emergency maintenance should always be on your need to know list. Speak with the landlord about handling of emergency repairs just so you know who to call in that situation. Have a list of phone numbers to call if you need emergency repairs, and know how much time it usually takes for repairmen to arrive. Work with your landlord to create a contingency plan in the event that an unforeseen disaster occurs; this will allow you to avoid customer service or public relations nightmares.
Read the disclosures when you’re ready to hire a real estate agent. Look for any disclosures regarding dual agency. In a dual agency the Realtor represents both parties of the transaction. When dual agency happens the Realtor on behalf of both parties. Whenever dual agency is part of a transaction, it must be disclosed to both parties of the transaction. Both sides must also agree to the dual agency.
If you are new to commercial real estate investing, it would be wise to focus on just one building at a time. Pick one type of property, at first, and pay close attention to it. If you try to divide your attention very much, you will not excel in any area.
With what you learned, you should now know some good basics when it comes to investing in commercial real estate. However, you can’t succeed if you stick rigidly to the rules outlined above. Be open to changing market conditions and think quickly to make the best investment decisions for yourself. This will help you find the good opportunities, and make the most out of your time, efforts and investments.