You can turn a great profit by putting your money into commercial real estate, but you must be patient and an avid learner. The advice in this article has helped many first-time investors like yourself turn a profit in the tough commercial real estate market.
Take digital pictures of the place. Make sure your pictures clearly show any damage or defects, including carpet stains, holes in the walls or discoloration of plumbing and counter tops.
Commercial Real Estate
Compared with buying a home, purchasing commercial real estate requires more time, money and paperwork. The fact is that commercial real estate brings in a higher return, therefore the process must be more intense.
Your investment might prove to be time-consuming in the beginning. You will have to hunt for a good opportunity, and once you have bought property, you might have to do some repairs or remodel it. Do not become discouraged due to the time-consuming nature of this process. Stick with it and you’ll be rewarded.
When selecting a broker, find out the amount of experience they have with the commercial market. For better results they should specialize in the specific area that you want to buy or sell in. Make sure your agreement to work with that broker is exclusive.
Make sure that you know and understand what “NOI” (Net Operating Income) is. To maximize your success, keep your numbers in the positive values.
Always check the credentials of the inspectors you hire. This is even more important for those who deal in pest removal, as many of them work without accreditation. You want to avoid a future liability that can come after the sale, if the inspection was not correct.
Make sure you’ll be able to access power, water and other utilities for your commercial property. Every business requires certain utilities, most commonly things like water, sewage and electricity.
Be sure you position yourself well when it comes to negotiating any lease for commercial real estate, you want to do things like decrease what could be considered as a default event. So a tenant can’t default on a lease they sign with you in this type of situation. This is something that you don’t want to happen under any circumstance.
You need to know the details of emergency maintenance procedures. Find out from your landlord who to contact for emergency repairs, such as plumbing accidents. Be sure to have emergency numbers on hand, and remember to check about a quoted response time for maintenance emergencies. Ask your landlord about emergency procedures to design the best plan possible to face any emergency.
In commercial real estate, there are different kind of brokers. There are agents who only represent tenants and there are full-service brokers who work with both tenants and landlords. You reap better benefits if you hire an experienced tenant broker because the broker will ensure that you receive the best deal possible.
When searching for a real estate agent, keep their disclosures in mind so you know who they are working for. One thing you should specifically watch out for is dual agency. In a dual agency the Realtor represents both parties of the transaction. In other words, the agent is representing both you and your landlord in the same transaction. Dual agency is something that should always get disclosure, and both parties involved should be in agreement with it.
Always ask how a broker negotiates, before hiring him or her. Ask them what specific training, expertise and professional experience they might have. You also want to check into the methods they use and make sure they are ethical when doing business. Ask them to tell you about their past work, including their successes and mistakes.
Use this article as a springboard for smarter real estate investments. If you want to share in the rewards of a successful investment in commercial property, be sure to make good use of what you have learned from this article.