So, after much deliberation, you have decided that you want to enter the commercial real estate market? This article will answer a ton of the questions you likely have. This article contains helpful advice that will start you on your way in seeking your commercial property.
Before you buy or sell a commercial property, find out several key economic indicators for the region, including trends in unemployment and income, as well as major employers in the region. Homes that are located near schools, hospitals and other major employers are assigned a higher resale value.
When dealing with commercial properties location is everything. You will want to consider many things, including the neighborhood that the property is located in. Don’t forget to check out similar areas as well, in order to see how other neighborhoods are growing economically. You want to know that the community will still be decent and growing a decade from now.
It is a far lengthier, and more complicated, process to purchase a commercial property than a residential one. You need to understand, you have to be diligent in order to get a profit.
Think larger when you’re thinking about two commercial properties that are viable. 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. This just reflects the general advantage of buying anything in bulk; when you buy a property with more units, you get a lower average price for each one.
Make sure that the broker you decide to work with has experience in the commercial market. Don’t use a broker who doesn’t specialize in the type of real estate investment you’re interested in. Also, consider entering into an agreement that will be exclusive between you and that broker.
Educate yourself about the measurements of NOI: Net Operating Income. In order to succeed, you should focus on keeping your figures in the positive.
Do your best to have your properties occupied at all times. Maintenance and upkeep costs for commercial property can be substantial and rental income is essential for paying those costs. Consider why your property has driven away tenants and try to rectify the situation.
Make sure that any property you’re considering purchasing has access to all the utilities you’ll need. Your business is sure to have unique utility requirements, but services typically required by most include sewage, water, power, telecommunications and maybe even natural gas.
Take the neighborhood into account when purchasing commercial property. For example, if you’re offering high-priced goods or services, you might want to purchase property in wealthier areas where people are likely to be able to afford to buy from you. If the products and services you offer are more middle class or less affluent, then purchase in an area where there are more buyers suited to your business.
You may have to make some repairs or improvements to your property before you can move in. It may simply be cosmetic issues that need addressing, such as a fresh coat of paint or some furniture rearrangement. Oftentimes, moving walls and other fixtures is required to redistribute the floorplan. Negotiate payment for these improvements ahead of time, and attempt to have the landlord pay at least part of the costs.
Commercial Real Estate
Now, that you’ve read this article, you should feel much better equipped to enter the commercial real estate market. If you were previously prepared, you are probably an expert by now. With luck, the advice in this article will point you in some new directions that lead you to commercial real estate success.