Ownership of commercial property is exciting, but it also requires constant maintenance. Beginners may be at a loss as to how to begin and how to ensure they’ve covered all their bases. There’s certainly a lot you need to learn before you get involved in commercial real estate, but this article will familiarize you with the basics.
Some factors to consider before making a big investment into real estate are the expanding or contracting of nearby employers, local income levels, and the rate of unemployment. In addition, you want to keep in mind what else is close to the property. Any place that supplies a large number of jobs to the economy can raise the resale value of any property and make it much faster to sell if you decided to go that route. Big employers might consist of hospitals, factories, or universities.
Buying commercial real estate is much more complicated and time-consuming than buying a home. But, you should realize that the nature of such deals is critical to maximizing the profit potential of a prospective property.
Your investment might prove to be time-consuming in the beginning. Finding a good opportunity, going through the transaction and making any necessary repairs to the property takes time. However, don’t give up just because this will take time. The time you invest now will lead to greater rewards later.
When making decisions between one commercial property and another, think big. Regardless of whether the property you decide on has twenty units or fifty, the process of obtaining financing will be the same, and in both cases will require substantial effort. Think of it like purchasing in bulk; as you buy more, each individual unit costs less.
Choose simple, strongly constructed buildings if your plan is to purchase real estate for the sole purpose of renting or leasing it. Tenants will be attracted to these spots because they are maintained well. Because these properties are in great condition, the property owners and the occupants will have a simpler time with basic maintenance service.
With the commercial property, you need to make sure there is easy access to the utilities. The property must have access to electric, water, sewer and maybe gas for it to be a viable commercial real estate purchase.
Have a professional inspector look at your property before selling it. Repair any problems that the inspector finds immediately.
Make sure that the advertisements for your commercial real estate reach both local and non-local audiences. Most individuals make the error of thinking that only the people in their area are the ones interested in purchasing their property. Many investors will consider purchasing a property outside their own region if the price is right.
You might need to make improvements to your new space before you can use it. These may be simply applying new paint or a change in furnishings. The renovation project can get larger and could consist of knocking down, moving or building walls to make the floor plan usable. The contract you negotiate should clearly spell out whether you or your landlord will pay for these changes, or whether the cost will be shared and in what proportions.
Emergency Repairs
Make sure you know who does emergency maintenance work if you rent commercial property for your business. Talk to the building’s landlord about the person who currently handles emergency repairs. 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. In case a maintenance emergency should happen, you can use the information provided to lay out an emergency business and customer service plan to save your company’s reputation in case your business is interrupted.
Check any disclosures a potential real estate agent gives you carefully. There is a possibility of a condition called dual agency. When dual agency exists, the agency advocates for both parties in the transaction. In other words, the agency is working for both tenant and landlord simultaneously. You and the other party should both agree if dual agency is to be okay.
Be aware of the potential tax benefits of investing in commercial property. Not only are there interest deductions, but also depreciation benefits to be aware of. Other investors deal largely with “phantom income” – income that is not paid in cash, yet is still taxed. Before investing, become more familiar with this sort of income.
Real Estate
Ask your real estate broker how they define success and failure. Their answer can help you determine whether they are the best broker for you. Find out what criteria they use to determine their results. Be sure that you understand his techniques and approach. If you disagree with the real estate agent’s methods, continue looking for the right broker for you.
As outlined in the preceding paragraphs, successful investing in commercial real estate requires hard work, copious research and, truth be told, experience. It also takes perseverance in the face of adversity. If you continue to develop your business sense, and use the tips you just learned, you will own a great commercial property in no time.