Buying real estate for commercial purposes can be a very different game from buying a home. Read this article for timely tips and advice to help drive you to success.
Regardless of whether you are buying or selling, you should negotiate. Make sure you have a voice and that you are offered a reasonable amount of money for the property.
Find out more about net operating income. Having positive numbers is the only way to ensure success.
When renting out your own commercial properties, keep in mind that is always best to have them occupied. Vacancies cost you money, because you have to pay for maintenance and upkeep without drawing income from them. If you have multiple properties open, figure out why, and try to correct the issue that could be causing a loss of tenants.
Commercial Real Estate
Make sure that the commercial real estate you want to purchase is equipped with connections to all of the utilities you’ll need. The property must have access to electric, water, sewer and maybe gas for it to be a viable commercial real estate purchase.
You need to think over the community any commercial property is in before you commit to it. Affluent neighborhoods tend to have residents with larger budgets, making a commercial real estate property in such an area is a great choice. If the products and services you offer are more middle class or less affluent, then purchase in an area where there are more buyers suited to your business.
Before you negotiate a commercial real estate lease, you should aim to decrease the things that could be considered an event of default as much as you possibly can. If you are able to successfully do this, you’ll find that your probability of having the tenant within the building defaulting will be low. This type of situation is considered very undesirable.
A letter of intent should be simple to begin with, covering only the larger issues. Once an agreement on those terms are made, you can begin addressing the smaller issues. By coming to agreement on the larger issues, it will make the negotiations go much easier.
If you are investigating multiple properties, make sure that you take a site checklist with you. Do not proceed past initial proposal responses, unless you inform the property owners. Don’t be shy about telling the owners that you are thinking about purchasing another property. Making them aware you have other options may get them to accept a lower offer.
Before you can start using the property you’ve purchased, you might need to make some improvements. It may simply be cosmetic issues that need addressing, such as a fresh coat of paint or some furniture rearrangement. In many cases, the changes include moving walls to rearrange the floorplan. Negotiate in advance who pays for these improvements or try to get the landlord to pay for at least a portion of the costs.
There are a variety of types of real estate brokers who deal in commercial properties. Full service brokers work with both landlords and tenants and there are agents representing tenants only. You may be helped much more with a broker who just works with the tenant, as that person most likely has more experience in handling tenants successfully.
Consider the good tax benefits if you are thinking about purchasing commercial properties for investment purposes. In addition to depreciation benefits, investors can receive interest deductions. Investors often get ‘phantom income’ this is income that does not have tax attached. Before you begin investing, you should be knowledgeable about this particular category of income.
Look at any environmental impacts or prior EPA issues with the property. You will have to clean up environmental wastes from your building. Is the property you’re looking into in an area that’s prone to floods? You may want to reconsider your choice. You can speak to environmental assessment places to get information about that area you want to buy in.
You have to ensure that the terms on rent roll and pro forma match up. If you don’t do this verification, you won’t notice any term not considered by the rent roll, and the pro forma could be changed.
You should establish your presence online before entering the market. Completing a profile on LinkedIn is an excellent starting point, or you might start a blog. Learn more about search engine optimization to get more visits to your sites. Ideally, people who want to learn more about you on the Internet should be able to quickly find you by doing a simple search using one of the search engines.
There are obviously countless things to think about when looking to purchase commercial real estate. Keep this advice in mind so that you may get better deals when searching for the location of your business.