There are both positive and negative aspects of commercial real estate. You can make tons of money, but you can also suffer financial ruin. The trick is to choose wisely, know what property is marketable, and have the means to get the money for the transaction. Read on to find some ideas to help you make sound decisions when it comes to property purchases.
Pest control is a very important issue that you need to be aware of when renting or leasing. 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.
Location is the most important factor in choosing a commercial property to buy. Think over the community a property is located in. Also, keep growth in mind. 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.
You may find that you spend a large amount of time at first on your investment. Although the investment might be a tremendous opportunity, it will only be good if you take care of any repairs or perhaps do a bit of remodeling. However, don’t give up just because this will take time. The time you invest now will lead to greater rewards later.
Research your prospective brokers to see how experienced they are with the commercial market. Look for brokers who specialize in commercial real estate. Entering into an exclusive contract with that particular broker is a good idea.
Make sure that you know and understand what “NOI” (Net Operating Income) is. Make sure you are staying in the black to be successful.
Make sure you have sufficient utility to access on any commercial piece of real estate. Every business’ needs are different, but at a minimum, most businesses will need power, sewer and water services.
Take the neighborhood into account when purchasing commercial property. Affluent neighborhoods tend to have residents with larger budgets, making a commercial real estate property in such an area is a great choice. On the other hand, if you are going to offer a product or service more popular with working class individuals, a less affluent neighborhood might be a better choice.
Aim to avoid default before you sign a real estate lease. This decreases the chances that the tenant will default on the lease. You do not want this to happen to you.
Make sure that you explicitly welcome both local and non-local buyers when you sell a piece of commercial property. Don’t be mistaken by the thought that locals will be the only people interested in your sale. There are many private investors who will buy affordable priced property in any area.
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. This approach lowers the overall tension level and actually makes it easier to reach agreement on the details at the end.
As mentioned, commercial real estate isn’t a money tree. You will be successful if you invest money, time and efforts. Yet even with all of these things, you may not come out ahead.