You probably have a better chance at making a profit in the commercial real estate market than in the residential real estate market. You may have to look a bit longer to find the right opportunity, however. Read on to find tips which will help you understand commercial real estate better, giving you the ability to make sound decisions in the future.
Whether buying or selling, negotiate. Make sure you have a voice and that you are offered a reasonable amount of money for the property.
Take photographs of the property. Make sure the picture shows the defects (such as spots on the carpet, holes on the wall or discoloration on the sink or bathtub).
You should know what kind of pest control services are available to you when renting or leasing. This is especially important when an area is known to have pest and rodent problems. Prior to signing a lease, ask your agent what the current pest control policies are.
When making decisions between one commercial property and another, think big. Getting the proper financing is going to the same hassle for a retail building with ten outlets as it would be for a retail property with twenty or even thirty units. Generally, this is similar to the principle of purchasing in bulk; if you purchase more units, you will end up getting a better price per unit.
You should be certain that your asking price is a fair offer for your piece of real estate. There are a number of variables that can affect the realistic value of your property.
Get the credentials of any person who will be doing an inspection on a property you are trying to buy. This is true when working with pest or insect removal, since many people who are non-accredited work in these fields. This helps avoid major post-sale problems.
Check out where the utility hook-ups are on any commercial property. You will need access to electricity, water, sewer and maybe gas in addition to any unique need that your business has.
If you are considering leasing a property to someone else, then cover all your bases to reduce the risk of a default. The less behaviors you have that constitute default, the less likely it is that you’ll have to deal with a tenant’s default. You do not want this to happen to you.
Always have an inspector look over your commercial property before you put it out on the market. Any problems or necessary repair identified by a professional inspector should be addressed and fixed as soon as possible.
A letter of intent should be simple to begin with, covering only the larger issues. Once an agreement on those terms are made, you can begin addressing the smaller issues. This will help to reduce some of the tension in initial negotiations and will also make gaining agreement on some of the smaller issues much easier.
There are real estate brokers who deal exclusively with commercial investments. For example, full service brokers will work with landlords and tenants, while other brokers only represent tenants. You may benefit significantly better from hiring the services of a broker working with tenants exclusively, as he has significantly more experience representing tenants successfully.
Prior to selecting a real estate broker, determine what kind of negotiating tactics they have. Know what sort of education and background they have. You also want to know they are ethical in their approach to finding the best deals. It is also completely appropriate to seek examples of their past efforts to strike real estate deals for other clients.
You need to understand that each property has for itself, a lifetime. Every property is eventually going to need maintenance and repairs, and you need to consider what potential properties are going to cost you over the duration of your use. You may have to update the wiring, or install a new roof, for example. All buildings degrade over time, but some building types are more prone to it than others. Craft a long-term plan for handling repairs and maintenance.
Now you should be aware of all the fundamentals involved with investing in commercial real estate. Don’t get into a rut, and always be ready to respond to the shifting sands of the commercial property markets. This way, you will be able to see opportunities that other people don’t.