The profitability of commercial real estate may exceed even your highest expectations. Entering the world of commercial real estate, however, can demand a hefty investment on your part.
When purchasing any type of commercial property, pay close attention to the location of the real estate. Think about the type of neighborhood the property is in. You also want to look for a neighborhood that is solid and growing. By calculating growth in similar areas, you will be able to ascertain whether the piece of property you are looking at is going to continue growing.
When making decisions between one commercial property and another, think big. Finding the right bank to finance you might be hard, even if you are going for a smaller building. This just reflects the general advantage of buying anything in bulk; when you buy a property with more units, you get a lower average price for each one.
You should learn how to calculate the (NOI) Net Operating Income of your commercial property. Success is about staying in the green.
You should be certain that your asking price is a fair offer for your piece of real estate. Many different factors can influence the real worth of your property.
Always ask to see the credentials of any inspectors you hire for your real estate deal. Always check the credentials of workers in insect and pest control as many of them aren’t licensed. This will avoid bigger problems in the post-sale.
Be careful to choose commercial properties that are solidly and simply constructed if you plan to use them as rental properties. Tenants are more likely to move in when they know the property is well taken care of. Maintenance is also easier, because these buildings require less repair.
Make sure the property you are interested in has access to utilities. Water and sewer access will be needed in addition to electricity. You may want the option to use natural gas, as well.
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. So a tenant can’t default on a lease they sign with you in this type of situation. This is in your best interest.
Keep the smaller issuer for later on in your negotiations and the larger ones first, when you write a letter of intent. Doing it this way will allow the negotiations to be less intense and get them to agree faster.
Contact Information
It’s critical to have emergency maintenance contact information very accessible. Find out from your landlord who to contact for emergency repairs, such as plumbing accidents. Always keep this important contact information at hand, including average turnaround times. Use any information you can get from your landlord so contingencies are ready for the times your normal business operations are interrupted so you can safeguard your customer service and your reputation.
You could earn a lot of money with commercial real estate. Not only do you have to come up with a large amount of money to use as a down payment, but you also have to put time and energy into researching each investment opportunity. Follow these tips to help you succeed.