If you are new to the whole commercial real estate scene, then this collection of tips can provide you with a valuable introduction to several common concepts. The following collection of tips can help the beginner become a pro in the commercial real estate market.
Use a digital camera to take pictures. Be sure that you have any and all defects present on the pictures you take (things like holes, discoloration, or spots).
When purchasing any type of commercial property, pay close attention to the location of the real estate. Consider how the neighborhood will affect business. Also review the expected growth of other similar communities. This is important, as you don’t want to be in a current growth area only to have the neighborhood stagnate in a few years.
Commercial property dealings are exponentially more complicated and time intensive than buying a residential home is. But, you should realize that the nature of such deals is critical to maximizing the profit potential of a prospective property.
Make sure that the broker you decide to work with has experience in the commercial market. Look for brokers who specialize in the type of commercial property that you’re purchasing or selling. Also, consider entering into an agreement that will be exclusive between you and that broker.
Make sure that you know and understand what “NOI” (Net Operating Income) is. Success is about staying in the green.
When selling a property, you should make certain that whatever price you set is realistic. Many different factors can influence the real worth of your property.
You deal should naturally include inspections, and you should also evaluate the credentials of the inspectors. This is especially true of people who work with insect or pest removal, as there are many non-accredited people working in these fields. Reviewing credentials will help you prevent major issues after you make the purchase.
Be careful to choose commercial properties that are solidly and simply constructed if you plan to use them as rental properties. You will be able to attract tenants for these properties more quickly due to the fact that they will know the building is well maintained. Investing in good buildings will save you money on repairs later.
Be certain the commercial property you are considering has good utilities access. You’ll need to have quick access to water, electricity, gas and the sewer.
When you are negotiating to rent a commercial property, try to have the lease modified so there are few events that are considered to be defaulting on the lease. This will lessen the possibility of a lease default by your tenant. This type of situation is considered very undesirable.
Go on some tours of places you might want to buy. 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. Make preliminary proposals to break the ice and open negotiations. Don’t decide on anything without careful consideration.
When you’re shopping multiple properties, prepare a checklist to make the task easier. Get the responses from the first round of proposals, but make sure the property owners are aware of this before proceeding. Do not be shy about mentioning that you’re also looking at other properties that day. This may help you by creating a sense of urgency on the seller’s part.
Know your needs before you even start looking for a commercial real estate. Features like square footage or restrooms should be predetermined to make the process easier.
There are differences between brokers in the commercial real estate field. There are agents who only represent tenants and there are full-service brokers who work with both tenants and landlords. If you hire a broker that only deals with tenants you may be better off, they are more experienced.
You should have a better idea of what you need to start with after reading this article. This gathering was carefully cobbled up with you in mind and will help get you on the way towards developing the skills necessary to buy and sell commercial real estate.