Commercial real estate ownership can bring huge profits and has the ability to grow your wealth. However, it is not for everyone, because of the large stakes and investments involved.
Before purchasing any property, you should investigate its area to determine the average income level, unemployment rate and whether or not that area is growing. For example, buying a home near a large employment center, such as a university or hospital, will lead to a higher value and faster sale down the road.
Take digital pictures of the place. In the “before” photos, especially, make sure that the pictures clearly show defects such as stains on the carpet, discolorations in the tub and sink, and holes in the walls.
Pest Control
Bugs and rodents are always looking to ruin your property, so factor pest control into your business strategy when renting commercial property. This is important in less desirable locations where rodents and/or bugs are an issue. Have your rental agent inform you of any associated policies for pest control.
The location of your commercial property is key to its value and its potential suitability for what you have in mind. What type of neighborhood is the property in? Compare the growth of the property’s neighborhood to similar neighborhoods around the country. Do not buy a property that is located in a neighborhood likely to take a wrong turn in the next five years.
Make sure you’ll be able to access power, water and other utilities for your commercial property. Your business has utility needs of its own, but you will also need water, electric, sewer and maybe even gas.
The area in which the property is located is important. You want to try to purchase commercial property in a neighborhood that is affluent so that you know your clientele are a little bit more well off and can spend more. If the business you run caters to a lower-income demographic, buy in an area that fits your clientele best.
If you are considering leasing a property to someone else, then cover all your bases to reduce the risk of a default. Decreasing these will prevent tenants from performing a default on the lease after your negotiations. This is one thing you don’t want to happen.
Conduct tours of potential properties. It’s a good idea to hire a building contractor to come with you and do on-the-spot inspections of properties you are considering. Start the negotiations, and make the necessary preliminary proposals. Closely review any counteroffers you receive prior to making a final decision. Remember the decision is an important one, so take your time.
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 will make the negotiations faster and less tense, and it will also cause the lesser issues to be completed easier.
Commercial real estate can indeed be a huge source of profits. You need to not only front a substantial down payment, but have the time and patience to see your investment through to the end, as well. This articles discusses ways to increase your chances of success.