There are a number of motivations that can drive you toward commercial real estate investment. Make sure, however, that your decision is based on sound reasoning and a solid understanding of the market. Your level of expertise will have a direct effect on the amount of money you’re able to get as a return on your commercial real estate investment. The advice and tips shown below will be a good foundation for you as you begin to learn more about commercial real estate, or give you more information to build on your current level of understanding.
Whether buying or selling, negotiate. Ensure that your opinion is known, and wrangle for the best price you can get on the property.
Examine socioeconomic conditions in the neighborhood you’re thinking of purchasing commercial real estate in. Pay special attention to the unemployment rate, and the average income level in your property’s neighborhood. If you’re house is close to a university, hospital, or large employment center, they sell quick and at increased values.
Take plenty of pictures of the building. Include all the defects in the photo, such as carpet stains, or holes in the walls.
When dealing with commercial properties location is everything. Find out more about the neighborhood. Also review the expected growth of other similar communities. This research will help you figure out how the neighborhood you’re considering buying commercial property in is likely to grow and change over the next several years. If you aren’t comfortable with the potential growth rate or the atmosphere of the neighborhood, purchase property elsewhere.
Ask any potential broker about what experience they have had with commercial property before choosing someone to represent your interests. Look for brokers who specialize in the type of commercial property that you’re purchasing or selling. Most brokers will require you to have an agreement to work exclusively with them.
Educate yourself about the measurements of NOI: Net Operating Income. In order to be successful, the resulting number must be positive.
List your real estate at a realistic price. The value of your property is determined by an entire series of different factors.
The neighborhood where the property is located is very important. In general, it’s better to locate a business in a richer area because rich customers obviously have more discretionary income. If your product or service tends to appeal primarily to lower or middle class consumers, look for commercial property in a more conservative neighborhood.
Try to carefully limit the situations that are specified as event of default criteria prior to executing a lease for commercial property. That will cut down on the likelihood that the tenant defaults on a lease. This type of situation is considered very undesirable.
If you put the commercial property up for sale, have it inspected. If they find anything wrong with the property, you should have it fixed immediately.
If you are considering more than one property, be sure to obtain a checklist for the tour site. Be sure to take the initial proposal responses, but do not proceed without making the property owners aware of what is going on. It will likely be to your advantage to informally mention that you are looking at more than one property. You might walk away with more money in your pocket.
Know that there are many different kinds of brokers when it comes to commercial real estate. Some agents will represent only the tenant while a full service broker will represent both parties. If you are a tenant, you may be much better off by using a broker who only works with tenants as they have a lot more experience with successful tenant representation.
In conclusion, commercial real estate investing is worthy of consideration for multiple reasons, and they all have their own subtleties and complexities. Apply the advice from the preceding paragraphs towards your commercial property dealings and you can be well on the path to maximized profits and rewards.