Purchasing commercial real estate can be much different than purchasing a home. Read on for a few suggestions and tips that could help you get a great deal.
Whether you’re buying or selling commercial real estate, make sure to negotiate. Ensure that your voice is heard, and that you are offering-or receiving-a price that is fair for both parties.
Examine socioeconomic conditions in the neighborhood you’re thinking of purchasing commercial real estate in. Pay special attention to the unemployment rate, and the average income level in your property’s neighborhood. Properties located near major employers, like hospitals, schools or distribution centers, are often more in demand at every price range.
Take some time to visit websites that are devoted to commercial real estate. These sites have lots of information for both new investors and seasoned professionals. You can never have too much knowledge.
Research your prospective brokers to see how experienced they are with the commercial market. Make sure you know that they actually specialize within the area you plan on selling and buying. Sign an exclusive agreement once you’ve found a broker you want to work with.
If you plan to rent out a commercial property, you should do all you can to make sure they stay occupied. If you have any open spaces, then you are losing money. If you notice that you have several vacant properties, try to find out why, and look at ways of enticing tenants back in.
Make sure that the commercial real estate you want to purchase is equipped with connections to all of the utilities you’ll need. The utilities you will need for your business go beyond electricity; you will also need water, sewer and gas, as well.
When you are negotiating to rent a commercial property, try to have the lease modified so there are few events that are considered to be defaulting on the lease. This will greatly lessen the likelihood that the tenant might default. This is something that you don’t want to happen under any circumstance.
The commercial space you want to rent may need some changes before you can move in. The space may be due for some regular maintenance, or it may need something as simple as a new coat of paint. However, many people find they need to take out or add walls to make modifications to the basic floor plan. Talk to your landlord about these improvements. Try to negotiate a deal where the landlord pays for some, if not all, of the cost of improving your space prior to moving in.
Dual Agency
Before hiring any real estate broker, read all of his disclosures. Understand the meaning of dual agency. Dual agency refers to a situation in which a real estate agent represents both the landlord and the tenant in a commercial transaction. In simpler terms, both the landlord and the tenant are simultaneously represented by the agency. You and the other party should both agree if dual agency is to be okay.
A borrower must be the one who orders an appraisal in a commercial real estate loan. The bank will not allow you to use it later. Plan for this eventuality and arrange for the appraisal on your own.
Find out more about tax benefits before you invest. Investors receive depreciation benefits as well as interest deductions. However, investors are sometimes taxed on income that they do not actually receive in the form of cash. This is known as “phantom income.” Learn about phantom income and taxes on commercial income before you invest in your first property.
Prior to making any purchase, be certain that you’re dealing with a corporation or firm that truly takes care of their clients. Otherwise, you may end up paying a lot in the long run for a mistake that could have easily been avoided.
Buying a piece of commercial property presents many challenges. Remember what you’ve learned here in this article, and you’ll be able to get a deal that is fair and suits your needs.