Commercial real estate isn’t a career to be taken lightly. Anyone can become a savvy real estate investor as long as they’re willing to dedicate their time to reading advice, such as is contained in this article, and applying it when purchasing commercial property.
The location of the property is the most important factor to consider when investing in commercial real estate. Pay attention to the property’s surrounding neighborhood. Look at the growth of areas that are similar. You need to be reasonably certain that the area will still be decent and growing 10 years from now.
Do not hire a broker without finding out more about their past experience within commercial property. Look for brokers who specialize in the type of commercial property that you’re purchasing or selling. Then if they meet the criteria you are looking for, you can agree to work with that broker exclusively.
Learn to understand the commercial real estate metric called Net Operating Income (NOI). In order to be successful and stay profitable, watch this number closely, and take steps to make certain it does not fall into the negatives.
Try to keep your commercial property rentals at full occupancy. Having unoccupied spaces mean that you have to pay for their upkeep. If you discover that you have multiple properties that are unoccupied, you should attempt to ascertain the underlying reason. Further action may be required on your part to avoid scaring off potential tenants.
Always make sure that utilities can be accessed from the commercial property you are looking into. Your particular business might need additional services, such as cable, but at the minimum there should probably be sewer, water, phone, electric and gas.
You need to think over the community any commercial property is in before you commit to it. Purchasing in an affluent area may help your business to be more successful, since the potential clients may have deeper pockets. However, if your products or services correspond to a specific social category, make sure you find a property in an area that corresponds to your target audience.
Prior to selling commercial property, have it inspected first by a professional. If they find anything wrong with the property, you should have it fixed immediately.
In writing letters of intent, focus on major issues to begin with. Many smaller issues will fall in line on their own with this approach. If not, you can work them out later. The initial negotiations will be less tense and the smaller issues will seem less important later.
If you are hunting among multiple properties, make a checklist for touring sites. Take this list with you as a reference when visiting other properties, and use it when speaking with the property owners. You may want to offhandedly let the owners know that theirs is only one of a few properties in which you are currently interested. This may help you by creating a sense of urgency on the seller’s part.
You may have to make some repairs or improvements to your property before you can move in. Cosmetic changes like painting walls and rearranging furniture might be needed. In many cases, it may be necessary to move walls or rearrange a floor plan. Get an agreement ahead of time about who will be financially responsible for these improvements, or at least try to have the landlord responsible for part of the cost.
Know how to get emergency maintenance performed on a property at a moment’s notice. Get a list of emergency maintenance contacts from your landlord. Be sure to have emergency numbers on hand, and remember to check about a quoted response time for maintenance emergencies. Use the information from your landlord to prepare an emergency plan to protect your reputation and customer service for the times when your normal business flow is disrupted.
If you follow the advice you have learned in this article, you will be well on your way to a great start. Anyone who knows how to buy and sell commercial real estate can earn a handsome profit. If you experiment with the tips you just read about, you can start making money through real estate investments.