There typically is far more profit to be made in buying commercial real estate than there is in home purchases. It can be a little harder to find the good opportunities, though. Here is some advice to assist you in making better informed decisions regarding commercial property investments.
Before you jump into a commercial real estate deal, you want to get a lay of the land first. This means considering and examining the general income levels in the area, how high or low unemployment rates are, and looking at the hiring practices of employers within the vicinity of where you intend to invest. If you’re looking at a property that’s close to things like a university, employment centers, or a hospital, they’re likely to sell fast, and at a high value.
Take some digital photos of your property. Take pictures of the damages, for instance spots and stains, holes or even discoloration on the bathtub.
Calm and patience are both sound practices when you are searching for commercial property. Don’t enter into any investment opportunity without doing the proper amount of research. Going too fast could result in a loss that you could have seen coming had you stopped, researched, analyzed, evaluated, and cross-checked the potential with your desired goals. Some investors have to wait for a year or so before they find the right opportunity.
Your investment may require substantial amounts of your individual time and attention in the beginning. It can take a little time to find a property worth purchasing, and you also may have to make necessary repairs. Don’t abandon your investments because they are eating into your personal time. Your efforts will be rewarded.
When choosing a broker, ask about their experience specifically in the commercial real estate market. Make sure you know that they actually specialize within the area you plan on selling and buying. You need to get into a type of exclusive agreement with your broker.
Do your best to have your properties occupied at all times. If you have any empty property, then you are responsible for its upkeep and maintenance. If you have multiple properties available, you need to figure out what the reason is behind this, and address anything that is causing tenants to look elsewhere.
You should put an ad out for your commercial real estate when it is on sale, do it locally and out of town. Many people target their advertising to local buyers only, thinking that those buyers are their market. Private investors will purchase properties outside of their area if the prices are low enough.
When you are writing up the letters of intent, keep it simple by going for agreement on the larger issues first and let the smaller issues wait for a later time in the negotiations. 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.
If you are investigating multiple properties, make sure that you take a site checklist with you. Certainly take down initial proposal responses, but don’t get into anything further without informing the property owners. You may want to offhandedly let the owners know that theirs is only one of a few properties in which you are currently interested. Making them aware you have other options may get them to accept a lower offer.
Assess what you need before you look for commercial properties. Draw up a list of specific attributes your office space must have, including size, number of meeting rooms, and available bathrooms.
Commercial real estate agents specialize in working with different types of clients. Agents that work with tenants and landlords both are called full service brokers. There are also agents that only represent tenants. You may be helped much more with a broker who just works with the tenant, as that person most likely has more experience in handling tenants successfully.
Ensure your legal and financial safety by thoroughly examining the disclosures of a potential real estate agent. Never neglect the fact that you may be dealing with a “dual agency.” With a dual agency, you have the real estate broker working on each side of the transaction. The real estate agency will represent both the seller and the buyer. If this is the case, and the agent is a dual agent, this should be known to both parties and agreed to by both parties.
Now you should be aware of all the fundamentals involved with investing in commercial real estate. Exercise flexibility and quick thinking while you use the market. With this approach, you will be able to identify hidden opportunities, and make some very profitable deals.