Commercial real estate investments require careful study, research, and patience to become highly profitable. Anyone can become a savvy real estate investor as long as they’re willing to dedicate their time to reading advice, such as is contained in this article, and applying it when purchasing commercial property.
Consider the economy in the area you’d like to buy real estate in before investing there. Properties located near major employers, like hospitals, schools or distribution centers, are often more in demand at every price range.
Location is just as important with commercial real estate as it is with residential properties. Take the neighborhood of the property into consideration. Look at the growth in similar areas. If you make an investment in real estate, it is in your best interest to ensure that your property is in an area that will still be growing in five to ten years.
Initially, your investment will take up a great deal of your time. Finding a good opportunity, going through the transaction and making any necessary repairs to the property takes time. Do not become discouraged due to the time-consuming nature of this process. You will reap the rewards of all your hard work.
When you are picking between commercial properties, think big! Getting adequate financing is very important in undertaking an investment that pertains to a ten or twenty unit apartment complex. Also, purchasing more units is like buying in bulk. The more you buy, the cheaper each unit will be.
Keep your rental commercial properties occupied. Having unoccupied spaces mean that you have to pay for their upkeep. If you have many open properties, then you need to reevaluate why that is the case, and try to remedy any outstanding problems which have caused your tenants to leave.
Make sure that any property you’re considering purchasing has access to all the utilities you’ll need. You’ll need to have quick access to water, electricity, gas and the sewer.
Smaller Issues
Start drafting letters of intent by focusing on the more central issues. Once you have agreement on those, broaden the negotiations to include any smaller issues that remain. This will help to reduce some of the tension in initial negotiations and will also make gaining agreement on some of the smaller issues much easier.
If you are investigating multiple properties, make sure that you take a site checklist with you. Be sure to take the initial proposal responses, but do not proceed without making the property owners aware of what is going on. Don’t fear telling the owners that you might be interested in other properties. This may provide you with more room for negotiation.
Real Estate
When hiring a real estate agent, read the disclosures completely before signing a contract with a realtor. Understand the meaning of dual agency. Your real estate agency will represent each side of the transaction. In effect, while you are paying the agency, they also work for the opposite side; if you are a prospective tenant, for example, the dual agency represents the landlord, as well. When it comes to dual agencies, both parties should actually agree to it and it should be disclosed.
Consult with your tax adviser prior to purchasing any property. A tax expert can advise you on how much the property costs and what amount of your real estate income will be taxable. If you don’t want to pay high income taxes, your adviser can suggest some areas of the country to focus on where the tax rates are lower.
Research any real estate brokers you are considering working with, and ask questions to determine whether their visions align with yours. Ask how they have measured their results in the past, and have them give you examples. It is important to understand their strategies and philosophies behind real estate. Employ a broker only if his philosophies and approach are similar to yours.
By using the advice from this article, you have begun the process of becoming knowledgeable in the commercial real estate market. By applying the ideas presented in the preceding paragraphs, you can also reap the rewards to those who take the time to educate themselves about commercial property investment.