You need to have your ducks in a row before investing in commercial real estate. No matter how much you think you know on this subject, it is possible that you are missing something small, or that you were unaware of. Here are a few great ideas to help you in your commercial real estate ventures.
In order to learn more about the commercial real estate market, find a website that caters to investors of different skill levels. Having a great base of knowledge will give you the tools to complete every part of the buying process with confidence, leading to solid decision making.
If you are renting or leasing, be sure to know about pest control arrangements. This is especially important when an area is known to have pest and rodent problems. Prior to signing a lease, ask your agent what the current pest control policies are.
Location is the most important factor in choosing a commercial property to buy. Find out more about the neighborhood. Cross-check similar areas to see how they are growing. Since you will likely still own the property in ten years, you want it to be located in an area that is likewise still desirable in ten years.
When choosing between two similar commercial properties, think large scale. Financing may be no more difficult for the large apartment building than the small one. In effect, this is similar to an economy of scale, or also like purchasing more of an item to save money.
At first, you may be required to spend a significant amount of time on a commercial investment. First you will need to find a property that you think is worth purchasing, and you may have to remodel or repair it. Don’t throw in the towel due to the massive hours needed. The rewards will show themselves later.
As you comb through possible brokers, search for those who have extensive experience in commercial markets. Look for brokers who specialize in the type of commercial property that you’re purchasing or selling. You need to get into a type of exclusive agreement with your broker.
When you are choosing real estate brokers, you should find out the brokers’ experience level in commercial real estate. Look for someone who knows the area you are interested in. 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. In order to succeed, you should focus on keeping your figures in the positive.
When having your real estate inspected (as you should), always ask for the qualifications of the inspectors. This is true when working with pest or insect removal, since many people who are non-accredited work in these fields. This will avoid bigger problems in the post-sale.
If you have the intention of offering your commercial real estate for rent, look for buildings that are simple and solid in construction. A well-built building will attract tenants quickly because tenants want a property that is solid. Maintenance is also easier, because these buildings require less repair.
If you’d like to rent out the properties you purchase, it’s best to buy a simple building with solid construction. Tenants will be interested by buildings that look well-cared for. This sort of building is virtually maintenance-free, so there will be fewer headaches for owners and tenants.
Lower the risk of default by eliminating as many things that can be labeled “event of default” as you can prior to negotiating a commercial property lease. This will decrease the probability of the tenant defaulting on the lease. This is one thing you don’t want to happen.
Of course, it is never wise to assume you have enough information about any important financial matter, and this includes commercial real estate dealings. Maintain a standing assumption that you have room for further education, and apply the advice from this article to build yourself better market positions. Apply these ideas with wisdom, and you shall profit.
Be sure to have your property inspected by a licensed inspector prior to placing it up for sale. Have any issue that the inspector finds repaired right away.