As a matter of fact, commercial real estate offers more profit potential than even residential properties represent. Finding that diamond in the rough isn’t always easy, though. With the tips here, you can understand what it takes to make some smarter real estate decisions and deals.
If you’re a buyer or if you’re a seller, it’s important that you negotiate. Protect your interests by standing up for yourself regardless of who is on the other side of the table. Negotiate a fair price rather than accepting one that is too high or too low.
Before purchasing any property, you should investigate its area to determine the average income level, unemployment rate and whether or not that area is growing. Properties that are near major employment centers, such as medical centers or universities, often sell more quickly and at a higher price.
When you’re trying to decide which broker you should work with, take their experience in commercial real estate into account. Make sure they are specializing in the desired area that you’re selling or buying in. Entering into an exclusive contract with that particular broker is a good idea.
The neighborhood where the property is located is very important. If you are buying the property in a more expensive neighborhood your business will most likely be a lot more successful, people there have more to spend. Or, if you are offering a service particularly attractive to the less wealthy, you should purchase in a less well-to-do area.
Eliminate as many definitions of default (i.e., actions that constitute default) as possible before beginning to negotiate a lease with a new tenant. This will decrease the probability of the tenant defaulting on the lease. You definitely don’t want this to occur.
Take a tour of any property that you are interested in. Think also about having a professional contractor tag along aside you when you look over these properties. Make the preliminary proposals, and open the negotiating table. Judge the counteroffers prior to making a decision either way.
If there is more then one property you are considering, acquire the house survey checklist for each one during your site tour. Make sure to advise the property owners when you want to take the next step past the first proposal responses. Consider allowing it to slip out that you are also looking at other properties. It may help get you a better deal.
Put a high priority on emergency maintenance needs. Get a list of emergency maintenance contacts from your landlord. Know the phone numbers, and be aware of their response time. Utilize the information given by your landlord to develop a plan for emergencies. This will help you ensure your reputation or customer service is not tarnished while your business is disrupted.
There are a variety of types of real estate brokers who deal in commercial properties. Full service brokers work with both landlords and tenants and there are agents representing tenants only. If you are a tenant, you may be much better off by using a broker who only works with tenants as they have a lot more experience with successful tenant representation.
The borrower needs to order an appraisal for a commercial loan. The bank won’t let you use one not ordered by you. Cover your bases and order the appraisal yourself.
If commercial property is something you’re thinking about investing your time and money in, take the tax advantages under consideration. Investors may receive interest rate deductions as well as depreciation benefits. There is also “phantom income”, which is taxed by the government although not received by the investor as cash. Before investing, become more familiar with this sort of income.
Before you purchase a property, talk to a tax advisor. A good tax adviser can let you know what percentage of the income will be taxable, and exactly how much the building will cost you. Work together with your tax adviser to locate an area that have low taxes.
With what you learned, you should now know some good basics when it comes to investing in commercial real estate. Remain flexible and alert as you peruse commercial real estate opportunities. If you do this, you can be in a good position to get the most profit.