There can be pros and cons to investing in commercial real estate. Although you can make a lot from it, it is also possible to lose money a lot of money, also. The trick is to choose wisely, know what property is marketable, and have the means to get the money for the transaction. This article will help you get the most from your real estate investment.
Use your digital camera to take pictures of the property. 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.
There are many things to consider when determining the best option between two commercial properties. When choosing between the two, 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. However, buying several units will cause the price of an individual unit to decrease.
Educate yourself about the measurements of NOI: Net Operating Income. In order to be successful, you will have to make sure that you never dip into the negative.
If you are purchasing commercial real estate for rental purposes, look for structures that are uncomplicated and sturdily built. These are the most likely to quickly invite tenants into the space, because they know it is well-cared for. In addition, these properties are low maintenance because they don’t frequently need repairs, a benefit to the owners, as well as the tenants.
If you are involved in renting commercial properties, try your best to keep them filled. When you have an open space, you have to shell out the money to keep it looking great and running well. If you have multiple unoccupied properties, try to determine the reasons why, and rectify the problems that are keeping tenants from renting the spaces.
Confirm that basic utility services are already situated at the commercial property. Every business has unique requirements, but for most, electric, water and sewer access will be required.
Make sure you know exactly what requirements you need to satisfy before you begin your search for commercial real estate. Make a list of the property features most important for you, such as square footage, number of offices, conference rooms, and restrooms.
It may be necessary to invest in some renovations before you can move into the space. The space may be due for some regular maintenance, or it may need something as simple as a new coat of paint. Normally, however, it may be something a little more involved like walls being moved. Who is going to pay for such improvements is something you should seek to negotiate in advance of the actual signing or formal purchase.
Emergency Maintenance
Emergency maintenance should always be on your need to know list. Ask your landlord who is in charge emergency maintenance requests for the building. You should not only commit emergency numbers to memory and post them in a conspicuous location, but you should also know how long it takes various workers to get to your office in an emergency. 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.
Real estate brokers for commercial properties have different areas of expertise. Some brokers represent tenants only, while full service brokers will work with landlords and tenants. 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.
As was mentioned earlier in this article, commercial real estate is not a free source of money. For a chance at success, you’ll have a large, initial down payment, plus significant time and effort. But, even when everything seems to come together nicely, profit can be elusive.