It is true that commercial investment tends to be more profitable than residential property investment. Finding good opportunities isn’t easy. This article contains information to help you figure out what you need to know to make wise commercial real estate decisions.
Take some digital photos of your property. Take pictures of the damages, for instance spots and stains, holes or even discoloration on the bathtub.
If you are renting or leasing, pest control is important to look at. If you are renting in an area that is known to have a lot of rodents, pests, or bugs, then ask your agent what the policies on pest control are.
You might have to spend a lot of time on your investment at first. Good opportunities can be found if you look, and after you have made a purchase, the property may require repairs or remodeling. Don’t give up just because this is a lengthy process that gobbles up large portions of your time. Your patience will eventually be rewarded through profits.
Nit Apartment Complex
If you are trying to choose between two good commercial properties, think big. Obtaining adequate financing is a major undertaking, whether you opt for a ten-unit apartment complex or a twenty-unit apartment complex. Generally, this is the same situation as if you were buying something in bulk, the more you buy the cheaper the price of each unit.
Learn to understand the commercial real estate metric called Net Operating Income (NOI). To be successful, you must stay profitable.
If you are purchasing commercial real estate for rental purposes, look for structures that are uncomplicated and sturdily built. Because it is apparent that these types of structures have been kept in good condition, it greatly increases the chances that tenants will be quick to rent the space. This type of property will also make maintenance much easier on both you and your tenant.
It is important that each property offers unhindered access to utilities. The property must have access to electric, water, sewer and maybe gas for it to be a viable commercial real estate purchase.
Take the neighborhood into account when purchasing commercial property. If you purchase it in a more affluent neighborhood chances are your business will be more successful, because the pockets of your potential clientele are a bit deeper. 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.
When selling commercial property, advertise locally and outside of your region. Many people make the mistake of assuming that only local buyers will be interested in buying their property. There are a lot of private investors who like to buy properties that are not in their direct area if they are affordably priced.
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. The negotiations will go much better and be less stressful if you keep the small stuff out of the way and can focus on the larger issues first.
When you are looking at multiple properties, get a tour site checklist. Accept the proposal responses from the first round, but be sure to inform the property owners directly if you decide to go further in your inquiries. You may want to offhandedly let the owners know that theirs is only one of a few properties in which you are currently interested. It may help get you a better deal.
When obtaining a loan for commercial real estate, it is up to the borrower to directly request an appraisal. There is a good chance that the bank may not validate it otherwise. Cover yourself and your interests by ordering it yourself.
If commercial property is something you’re thinking about investing your time and money in, take the tax advantages under consideration. As with home mortgages, the interest paid on commercial real estate loans is tax-deductible, as is depreciation. However, sometimes an investor can receive taxed income that is not taken as cash, otherwise known as “phantom income”. You need to know this kind of income prior to investing.
Now you know the basics of commercial real estate investment. Don’t get into a rut, and always be ready to respond to the shifting sands of the commercial property markets. With this approach, you will be able to identify hidden opportunities, and make some very profitable deals.