Commercial real estate is a double edged sword. You can make tons of money, but you can also suffer financial ruin. Try to choose wisely when considering purchasing a property, and thinking about how to fund it. Read this article to learn more about this complex decision making process.
Before you jump into a commercial real estate deal, you want to get a lay of the land first. This means considering and examining the general income levels in the area, how high or low unemployment rates are, and looking at the hiring practices of employers within the vicinity of where you intend to invest. 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.
Your investment might prove to be time-consuming in the beginning. Good opportunities can be found if you look, and after you have made a purchase, the property may require repairs or remodeling. Do not give up because this process takes too much of your time. Stick with it and you’ll be rewarded.
If you are hesitating between different properties, buy the larger of the two. Finding adequate financing on a piece of property takes time and patience. Generally, it’s like buying in bulk. As the number of units purchased goes up, the cost per until will go down.
Research local prices similar properties have sold for before setting a price for your commercial real estate. There are a number of variables that can affect the realistic value of your property.
If you rent commercial property, do what you can to keep occupancy high. If you have units that are unoccupied, you will not only lose money due to lack of rent, but also the upkeep of the space. If you’re struggling to keep your properties rented, you should consider why that is, and try and fix anything that might be scaring away prospective tenants.
Make sure you’ll be able to access power, water and other utilities for your commercial property. Every business has unique requirements, but for most, electric, water and sewer access will be required.
Get your commercial property inspected before you try to sell it. If the inspector finds any problems, you should attend to them promptly.
Take a tour of properties you are considering. Think about taking a contractor that’s a professional with you while you check out different properties. Start the negotiations, and make the necessary preliminary proposals. Consider counteroffers carefully prior to responding.
Write an easy-to-understand letter of intent, focusing on the biggest issues. You can worry about the little things later on. Doing it this way will allow the negotiations to be less intense and get them to agree faster.
Before you begin your search for the perfect commercial property, have a clear picture of your needs. Write down the things you like about the property, important features are office numbers, how many conference rooms, restrooms, and how big it is.
Identify any necessary improvements before you sign on a new space. This might include superficial improvements such as repainting a wall or arranging the furniture more efficiently. However, you might have to remove or relocate some of your walls so that you can get the most out of your space. Talk to your landlord about these improvements. Try to negotiate a deal where the landlord pays for some, if not all, of the cost of improving your space prior to moving in.
Before paying any agent, check his or her disclosures; these can tell you a great deal about the agent’s character and ability. Never neglect the fact that you may be dealing with a “dual agency.” In this situation, the agent will represent the buyer and seller. In simpler terms, both the landlord and the tenant are simultaneously represented by the agency. Whenever dual agency is part of a transaction, it must be disclosed to both parties of the transaction. Both sides must also agree to the dual agency.
When you are diving into commercial real estate, you want a broker firm that maintains honesty. A good question to ask potential firms is how most of its money is made. This should be a topic that can be openly discussed and should allow you to learn if there are shared interests between you and them. Once you understand how the broker profits from the transaction, you can choose one whose profit centers align with your business goals.
Before you attempt to become active in the market, you must first establish an online presence. Make a website for yourself and make a LinkedIn profile. Look into search engine optimization so that your website will rank higher in internet searches. This will help people find your site more easily.
Make sure you consider any possible environmental problems. One huge concern is when the property you currently own has problems with hazardous waste materials. Once you own the property, any problems, hazardous waste related or otherwise, are yours to deal with.
Think big when you think about commercial real estate investments. If you want to get a building that has five units, you need to know that’s it’s no different to manage than 50. You must get commercial financing for any commercial venture, whether 5 units or 50 or more. The more units you finance, the less cost per unit!
You need to understand that investing in smaller complexes means more hassle, and some experts recommend avoiding these properties to avoid the hassle. Instead, you should look for complexes that have more than 10 units. Of course, every property is different, so you should rely more on your research to make the appropriate decision.
You will have to invest a lot of time and work into your commercial real estate efforts; you will not get profits for nothing. Instead, it requires a great deal of perseverance, dedication and access to financial resources. Even after all that, it’s still possible to lose financially.