A commercial real estate venture is a very different proposition than buying a house. Read this article for timely tips and advice to help drive you to success.
Use a digital camera to take pictures. In the “before” photos, especially, make sure that the pictures clearly show defects such as stains on the carpet, discolorations in the tub and sink, and holes in the walls.
Before you sign a lease, find out about pest control. Talk about pest control with your agent if the area is known for rodents and bugs.
For those who have an interest in real estate, reference websites that offer information to a investors of all experience levels. Learning is an ongoing process, and you can never know enough.
There are many things to consider when determining the best option between two commercial properties. When choosing between the two, think big! Acquiring enough money to finance a 10 or 20 unit apartment complex can be huge undertaking. Just think about it as the more you buy the lower you are paying per unit, so you save more in the end.
Make sure that you know and understand what “NOI” (Net Operating Income) is. In order to succeed, you should focus on keeping your figures in the positive.
Ensure that the amount of money you want for your commercial property makes sense, given local market conditions. Market conditions can vary greatly; therefore, an appraisal may not be the best indicator of true market value.
You deal should naturally include inspections, and you should also evaluate the credentials of the inspectors. This is true when working with pest or insect removal, since many people who are non-accredited work in these fields. This will avoid bigger problems in the post-sale.
If you rent or lease the commercial properties you own, keep them occupied as much as possible. You are legally responsible for the maintenance and upkeep of unoccupied spaces. Figure out why you have spaces that are consistently open. In some cases, you might need to do some problem-solving so that tenants will want to rent these spaces.
Check a commercial property for access to electricity and other utilities; make sure there is good access. Your particular business might need additional services, such as cable, but at the minimum there should probably be sewer, water, phone, electric and gas.
If you are taking out a commercial loan, you must pay for the appraisal yourself. The bank won’t permit your use of it at a later date. Order your appraisal yourself to ensure that you will be eligible for commercial loans.
Consider any tax benefits you’ll receive through a commercial real estate investment. As with home mortgages, the interest paid on commercial real estate loans is tax-deductible, as is depreciation. “Phantom income” is a taxed income, but not income received as cash. You have to keep all of this in mind before you start to invest in real estate.
Prior to making any purchase, consult with your tax adviser. The tax lawyer will help you find out how much it will cost you and how much you will be taxed. The adviser can also assist you in finding areas with comparatively lower tax rates.
When you are considering a broker, ask them what their visions of success and failure entail. You need to know how they will measure results. You should feel comfortable with their explanation of the strategies and methods they use. Then you can be sure you choose a broker who views things the same way you do.
Ask your broker to explain the methods he uses to negotiate deals before hiring him. Inquire into their specific credentials and training; do not be afraid to ask for references. You also want to know they are ethical in their approach to finding the best deals. Ask for a portfolio, featuring both sales that were closed and sales that fell through.
Commercial Real Estate
By now, you realize that there are many things that need due consideration if you’re going on a commercial real estate shopping spree. Be sure to follow the advice of this article to get your best deal in commercial real estate, and continue on a successful path.