There is a lot more profits in commercial real estate than residential. However, finding profitable opportunities can be somewhat time consuming and difficult. With the tips here, you can understand what it takes to make some smarter real estate decisions and deals.
Take some digital photos of your property. Be sure that you have any and all defects present on the pictures you take (things like holes, discoloration, or spots).
If you are selecting a broker, ascertain the amount of experience they have had within the commercial real estate market. Look for someone who knows the area you are interested in. Most brokers will require you to have an agreement to work exclusively with them.
Educate yourself about the measurements of NOI: Net Operating Income. In order to be successful, the resulting number must be positive.
Research local prices similar properties have sold for before setting a price for your commercial real estate. Your property’s actual value is influenced by many factors.
Ask for the credentials of any professional you’re planning to hire as an inspector, and ensure they are experienced in commercial real estate. Pay particular attention to credentials when it comes to pest inspections, since it is not uncommon to encounter people working in pest removal without a license. You want to avoid a future liability that can come after the sale, if the inspection was not correct.
If you desire to rent out commercial real estate, then you need to find solidly yet simply constructed buildings. Rental spaces that appear sturdy and well-maintained tend to attract tenants more quickly. Such buildings also usually need fewer repairs, which is an advantage for the tenants, as well as the landlord.
When renting out your own commercial properties, keep in mind that is always best to have them occupied. If you’ve got open spaces, then the person will end up paying for maintenance and upkeep. If you have more than one property without someone in it, think about why that is, and fix any problems that might be occurring.
Prior to negotiating with the lease of your commercial real estate, try to decrease anything that could be a default as you can. This can decrease the chances of tenants defaulting on that lease. You don’t need this to happen.
Take tours of properties with purchase potential. It may be a good idea to take a professional contractor with you when you check out properties you are interested in purchasing. Open negotiations after making your offer. Don’t decide on anything without careful consideration.
It may be necessary to invest in some renovations before you can move into the space. These changes could simply be cosmetic ones as simple as a new coat of paint or moving the furniture around. Many times, changes include reconfiguring the floor plan by moving walls. Negotiate payment for these improvements ahead of time, and attempt to have the landlord pay at least part of the costs.
Dual Agency
Always go through the disclosures of an agent before hiring him or her. Watch for possible dual agency. Your real estate agency will represent each side of the transaction. When dual agency happens the Realtor on behalf of both parties. You and the other party should both agree if dual agency is to be okay.
Consult your tax adviser before buying your first commercial property. A tax expert can advise you on how much the property costs and what amount of your real estate income will be taxable. Try to find a location that does not have high taxes, you can consult with an adviser for more information.
Now you have the basic tools of real estate investment. 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. By doing this, you can catch opportunities that others miss, capitalizing on the profitability of your business.