You must be meticulous when making commercial real estate transactions. No matter how well you think you understand the field, there may be a few things that are you missing or may be able to understand better. Here are a few great ideas to help you in your commercial real estate ventures.
Prior to investing massive sums of money in a property, take a hard look at community income averages, as well as employment rates, and how much hiring and firing nearby businesses are doing. A home that is in a great area, like next to good schools and parks, and has jobs available, will have a higher value than surrounding properties.
Take plenty of pictures of the building. Be sure that the pictures show any current problems with or damage to the home.
When entering the commercial real estate market, patience is perhaps your best ally. Do not rush into investments, or make decisions impulsively. The property you buy in a hurry might not deliver what you need to reach your goals, leaving you to regret the purchase afterward. It could take you twelve months or longer to get the deal that fits you perfectly.
When you are picking between commercial properties, think big! Acquiring enough money to finance a 10 or 20 unit apartment complex can be huge undertaking. By choosing a larger piece of commercial property, you will be getting a better rate per unit, giving you the best potential for success.
Learn about Net Operating Income, or NOI, a metric in commercial real estate. Success means that your income outweighs your operating costs.
If you’d like to rent out the properties you purchase, it’s best to buy a simple building with solid construction. These types of buildings attract tenants more quickly than other buildings, as prospective tenants know that the building is less likely to have maintenance issues. This type of building also has the advantage of requiring less maintenance, an attractive feature for tenants and owners alike.
Lower the risk of default by eliminating as many things that can be labeled “event of default” as you can prior to negotiating a commercial property lease. If you cover all the applicable issues, then you make it far less likely that potential tenants will default on their lease. You do not want this to happen to you.
Have property professionally inspected before you decide to put it up for sale. If the inspections turn up any problems, remediate them before listing the property for sale.
Prior to searching for a real estate property to invest in, figure out exactly what you would want in an ideal commercial property. List the qualities that concern you most in a property (e.g. restroom facilities, conference facilities, number of units available, square footage, etc.)
You should always know who takes care of emergency repairs. Speak with your landlord, and ask who is in charge of emergency repair work at your home or office. Always keep this important contact information at hand, including average turnaround times. Utilize the information given by your landlord to develop a plan for emergencies. This will help you ensure your reputation or customer service is not tarnished while your business is disrupted.
In commercial real estate, there are different kind of brokers. Some agents represent tenants only, while brokers work alongside tenants and landlords alike. Consider hiring a tenant-only broker as he’ll have the most experience in dealing with situations such as yours.
Don’t assume you’re an expert on commercial property. Remember that you can always learn new things. You will get better if you look for more resources and apply what you learn. Put what you’ve learned to use, and make some money.