You can begin to learn how to go about selling and buying commercial real estate from the following collection of tips in this article. The tips that follow will help put any beginning real estate investor on the road to becoming a pro.
NOI, also known as Net Operating Income, is a crucial metric to understand in the world of commercial real estate dealings. In order to be successful, you will have to make sure that you never dip into the negative.
If you rent out your commercial properties, always remember to keep them occupied. You’re the one who has to pay to keep the building maintained, and if no one’s renting them, you’re wasting your money. If you have multiple vacant properties, figure out why this is, so you can understand why your tenants are leaving.
You should examine the surrounding neighborhood of any commercial real estate you may be interested in. If the property is located in a prosperous area, your business is more likely to succeed because your potential customer base is going to be wealthier. However, if your products or services correspond to a specific social category, make sure you find a property in an area that corresponds to your target audience.
If you want to sell a property, advertise it locally and on a wider level too. It is a mistake to think that only people in the immediate area will have an interest in your property. In fact, the interest level can expand far beyond the local scene as private investors expand their interest. These investors are searching for affordable property and may be interested in yours.
Smaller Issues
A letter of intent should be simple to begin with, covering only the larger issues. Once an agreement on those terms are made, you can begin addressing the smaller issues. You can make all your negotiations less tense, so you can agree on any of the smaller issues first.
If you are checking out more than one property, draw up a checklist to compare the features of the different properties. Take this list with you as a reference when visiting other properties, and use it when speaking with the property owners. You should not have any hangups about letting the owners know that you are still deciding on other properties. It may help get you a better deal.
Establish what you need before searching in commercial real estate. Write down the things you like about the property, important features are office numbers, how many conference rooms, restrooms, and how big it is.
Before you can start using the property you’ve purchased, you might need to make some improvements. The changes could be rather cosmetic. Sometimes it is as simple as painting a wall or moving some furniture. Sometimes, you may need to move a wall in order to create a better floor plan. Remind the landlord that these improvements are necessary, and use them to negotiate a lower deposit or reduced rent.
In commercial real estate, there are different kind of brokers. A full service broker works with both the tenants and the landlord. Some agents represent only the tenants. Your needs will be served better if you choose the right broker for your own personal needs. If you are looking for one who knows the issues that are relevant to tenants, then choose a broker who has the most experience dealing with tenants.
Dual Agency
Check all disclosures of the chosen real estate agent that you wish to work with. One thing you should specifically watch out for is dual agency. Dual agency means the real estate company is representing both the seller and the buyer in a property transaction. This means the real estate agency will work as the landlord and the tenant. If dual agency is the case, it should be out in the open and both the landlord and the tenant should be in agreement with the arrangement.
The above collection of tips should have given you enough information to feel confident about commercial real estate transactions. These hand-picked tips were chosen specifically because they represent the best strategies for completing commercial real estate transactions.