Working with commercial real estate is a difficult chore, and this collection of tips will give you ideas on how to get started. This article is filled with useful tips designed for beginners who need to learn the basics of real estate transactions.
Use a digital camera to take pictures. Make certain your photos highlight specific defects such as carpet spots, wall holes and bathroom discolorations.
Location is key in commercial 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. Make sure that the area will still be nice and growing in several years.
Commercial transactions are significantly more time-consuming, complex and involved than the home-buying process. Understand, however, that this additional time and effort often translates into higher returns.
Net Operating Income, or NOI, is one of the most important metrics used in commercial real estate. You must understand what it means, and how it’s used. To be successful, you must stay profitable.
If you want to rent your commercial property, well built solid buildings are your best bet. 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 that any property you’re considering purchasing has access to all the utilities you’ll need. Every business requires certain utilities, most commonly things like water, sewage and electricity.
Prior to listing your commercial property for sale, have it checked out by an inspector with at least five years of experience. This way you can make sure it is prepared in advance of a sale, and if any problems arise during the inspection you can take care of it on the front end.
Make sure that the advertisements for your commercial real estate reach both local and non-local audiences. Many people think that investors who don’t live in their city will have no interest in their property, but this is untrue. In many cases, a private investor will be interested in a property even if it’s not in their area, so long as its price is a good one.
You may have to make some repairs or improvements to your property before you can move in. The space may be due for some regular maintenance, or it may need something as simple as a new coat of paint. Oftentimes, moving walls and other fixtures is required to redistribute the floorplan. Decide in advice who will be responsible for these things and try to get landlords or previous owners to pay for some of it.
Read the fine print about your real estate agent. One thing you should specifically watch out for is dual agency. In this situation, the agent will represent the buyer and seller. Dual agency occurs when the landlord and the tenant hire the same agent. You and the other party should both agree if dual agency is to be okay.
Consider all of the tax benefits when planning on commercial property investment. Depreciation benefits and interest reductions are given to investors in commercial real estate. Phantom income also exists: this type of income does not cover cash benefits but is taxed. You need to be aware of this type of income before investing.
Look for an agency that keeps your best interest in mind. Otherwise, you could be in for additional money later on due to their mistakes which could have been avoided in the first place.
Before purchasing commercial real estate, consider the area in which it is located. It is your responsibility to ensure that your property is free from environmental waste or safety hazards. Are you considering a purchase of property in an area that is prone to flooding? Reconsider the wisdom of that plan. There are many resources that can give you local weather patterns, flood patterns and insurance risk ratings, which can all tell you about the area you are thinking about buying in.
Hopefully the information contained in this article will help you to build a foundation of knowledge off which you can grow to profitable heights. By following these specially selected tips, you can practice your skills at buying and selling commercial real estate and become a real pro.