Purchasing commercial real estate requires new strategies and a different knowledge base compared to buying residential properties. Read on for some tips and suggestions that will help you come out ahead.
Pest Control
Pest control is a very important issue that you need to be aware of when renting or leasing. If you are renting a space that has known vermin problems, be sure to find out exactly who is responsible for pest control.
Commercial transactions are significantly more time-consuming, complex and involved than the home-buying process. Know that the duration and intensity is essential to getting a higher return on the investment you made.
In the beginning, a great deal of time might be required to spend on your investment. It will take time to find an opportunity that is profitable, and afterwards, you may have to wait for repairs and remodeling before you can start monetizing your investment. Do not become discouraged due to the time-consuming nature of this process. The rewards will show themselves later.
When starting out in commercial real estate, it is important you understand the measurement labeled Net Operating Income, or NOI for short. Success is about staying in the green.
If inspections are part of the deal on your real estate, be sure to check all the credentials of the hired inspectors. Pay particular attention to credentials when it comes to pest inspections, since it is not uncommon to encounter people working in pest removal without a license. This will avoid bigger problems in the post-sale.
Make sure you have sufficient utility to access on any commercial piece of real estate. Your business has utility needs of its own, but you will also need water, electric, sewer and maybe even gas.
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. You, of course, would not desire this to occur.
Your new space may need improvements before you can occupy it. The changes could be rather cosmetic. Sometimes it is as simple as painting a wall or moving some furniture. In many cases, it may be necessary to move walls or rearrange a floor plan. Negotiate in advance who pays for these improvements or try to get the landlord to pay for at least a portion of the costs.
Dual Agent
Before paying any agent, check his or her disclosures; these can tell you a great deal about the agent’s character and ability. Determine if there is a possibility that he will be working as a dual agent. In this case, the real estate agency represents both sides of the transaction. In simpler terms, both the landlord and the tenant are simultaneously represented by the agency. If this is the case, and the agent is a dual agent, this should be known to both parties and agreed to by both parties.
As shown in this article, there are many different factors involved in purchasing commercial real estate properties. In order to get the best possible deal, be sure to follow this article’s advice.