Owning commercial property can be an exciting endeavor, but it does require a lot of effort to take care of. Things like where to begin and how to maintain it can be the first of many questions you might think of when thinking about commercial real estate. Trying to figure out everything you need to know about owning commercial property can be difficult, but this article can get you started into acquiring and owning a commercial property.
Never be afraid to negotiate, no matter which side of the table you are on. Make sure that you are heard and that you fight for a fair price for the property.
If you are trying to choose between two good commercial properties, think big. Regardless of which way you choose, coming up with the capital is a common factor, so often times it will be be worth digging a little bit deeper to get the larger property in order to maximize your long-term profits. 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.
The Net Operating Income, or NOI, is one metric you need to master for success in commercial real estate. To be a success, you need to be able to stay on the positive number side.
Be careful to choose commercial properties that are solidly and simply constructed if you plan to use them as rental properties. Tenants are more likely to move in when they know the property is well taken care of. Because these properties are in great condition, the property owners and the occupants will have a simpler time with basic maintenance service.
Try to carefully limit the situations that are specified as event of default criteria prior to executing a lease for commercial property. So a tenant can’t default on a lease they sign with you in this type of situation. Once a default happens, you’ll be in big trouble!
If you are thinking of selling a commercial property, your experience will be much smoother if you utilize the services of a professional and have it properly inspected. Repair any problems that the inspector finds immediately.
When writing up a letter of intent, make sure to keep your offer simple and straightforward, focusing on the bigger issues at first and then figuring out those pesky, little details later. This will make the negotiations faster and less tense, and it will also cause the lesser issues to be completed easier.
Make sure you know exactly what requirements you need to satisfy before you begin your search for commercial real estate. Write down what features are most important to you when you look a piece of property, like the square footage, the number of offices and conference rooms, and bathrooms.
You may have to make some repairs or improvements to your property before you can move in. For example, you might neat to repaint or purchase new furniture. In many cases, the changes include moving walls to rearrange the floorplan. When negotiating, you should discuss who will pay for the improvements you’ll have to make, and should see if the current owner will cover some of your costs.
You should always know how to get in touch with emergency maintenance. Speak with the landlord about handling of emergency repairs just so you know who to call in that situation. Learn the phone numbers and response times. Your landlord should be able to provide you a list of emergency contacts so that you can map out a safe and well organized emergency plan, in case an emergency happens during normal business hours.
Different commercial brokers represent different parties. For example, full-service brokers represent both the landlord and tenants. There are also tenant brokers that work exclusively for the 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.
Make sure you know what kind of environment your property is located. Since the responsibility lies at your feet, if there is any environmental waste that needs to be cleaned up, you will be the one who has to do it. Is the area around your property prone to flooding? reconsider your options before making a final decision. There are many resources that can give you local weather patterns, flood patterns and insurance risk ratings, which can all tell you about the area you are thinking about buying in.
As previously discussed, successfully purchasing and managing commercial properties takes knowledge, hard work and time. No matter what, you have to continue working. If you truly want that most desirable location, keep the pointers from this article in mind, and never give up your search.