An investment in commercial property can be made for many reasons. However, all of those motivations should be your choice based on your existing knowledge. When it comes to commercial real estate, the more knowledge you have, the larger amount of money you will make. Below, you’ll find some great tips to help you start your commercial real estate career, or to add to your already wide breadth of knowledge.
Before you make a large investment in real estate, take a look at local income levels, unemployment rates and the expansion or contraction of local employers. If the building is near certain specific buildings, including hospitals, universities, or large companies, you might be able to sell it faster and for more money.
If you are in a situation where you have to choose between two attractive commercial properties, remember that size matters. Finding the right bank to finance you might be hard, even if you are going for a smaller building. Generally, it’s like buying in bulk. As the number of units purchased goes up, the cost per until will go down.
Real estate deals must include inspections, so check the credentials of the inspector. A lot of people have no accreditation, especially in pest control services. This can prevent larger problems from occurring after the sale.
If you rent or lease the commercial properties you own, keep them occupied as much as possible. If you have any open spaces, then you are losing money. If you have many open properties, then you need to reevaluate why that is the case, and try to remedy any outstanding problems which have caused your tenants to leave.
Take a tour of a property you might purchase. When looking at a property that you are thinking of purchasing, it’s a good idea to have a licensed contractor accompany you. Once that is done, you can submit your proposal and begin negotiations. Judge the counteroffers prior to making a decision either way.
Establish your goals and needs before you start looking at properties. You should write a list of which features are most important to you. For example, do you need a specific number of restrooms, a specific amount of square footage, or a conference room?
Plan on doing some improvements to your new commercial space before you can inhabit it. The changes could be rather cosmetic. Sometimes it is as simple as painting a wall or moving some furniture. In many cases, the changes include moving walls to rearrange the floorplan. Negotiate these changes ahead of time with the landlord. He may be willing to share these costs needed in order for you to move in.
Emergency repairs should be a high priority on your list. Speak with the landlord about handling of emergency repairs just so you know who to call in that situation. Always keep this important contact information at hand, including average turnaround times. Utilize the information given by your landlord to develop a plan for emergencies. This will help you ensure your reputation or customer service is not tarnished while your business is disrupted.
Scrutinize any disclosures made by a real estate agent whom you intend to hire. There is a possibility of a condition called dual agency. This means the same agent will be representing the two parties. 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.
When you begin to invest, it is wise to only have one investment in mind at a time. Decide on one property type and educate yourself about the best way to handle it. By concentrating solely on one type of investment, you can do your best instead of just being average.
If you want to invest in a piece of commercial real estate, think about the kind of tax breaks and benefits you might receive. Investors receive depreciation benefits as well as interest deductions. “Phantom income” is a taxed income, but not income received as cash. Find out if you will be getting this kind of income before you invest.
Before you purchase a property, talk to a tax advisor. They’ll be able to estimate how much tax you’ll pay for the property you wish to buy, as well as how much income tax you’ll pay on your returns. Work with them so that you can find a lower tax area.
Commercial Real Estate
As previously mentioned, you may want to invest in the commercial real estate market for a variety of reasons. However, no matter what your reason may be, you need to be knowledgeable about the subject. The tips and hints you’ve just been given can enhance your understanding of commercial real estate and help you make lucrative investments.