Owning a piece of commercial real estate offers excitement, but it does so at the cost of time and money needed to deal with it. Many property owners are unsure about where to begin ensuring that their properties are adequately maintained. There’s certainly a lot you need to learn before you get involved in commercial real estate, but this article will familiarize you with the basics.
Use a digital camera to document the conditions. Be sure the photos capture any defects that exist in the unit, such as holes in the wall, and damaged or dirty carpets.
Always remain calm and patient when dealing with the commercial real estate market. Don’t jump into any investment without doing your research. You might regret it if you are not satisfied with your real estate goals. It could take up to a year for the right investment to materialize in your market.
Figure pest control into your rented or leased commercial real estate property costs. In some areas, in particular in areas with known populations of pests, this is a very important concern.
Location, location, location is important to consider. Find out more about the neighborhood. You will also want to calculate growth expectations by comparing similar neighborhoods. What you are seeing now in terms of commercial potential might be very different a few years from now.
If you are trying to choose between two good commercial properties, think big. Getting the proper financing is going to the same hassle for a retail building with ten outlets as it would be for a retail property with twenty or even thirty units. You may have a better price, figured per unit, on the larger apartment complex than on the smaller one.
It is important that each property offers unhindered access to utilities. Your business is sure to have unique utility requirements, but services typically required by most include sewage, water, power, telecommunications and maybe even natural gas.
When buying commercial property, think about the socioeconomic status of the neighborhood around the building. If you purchase it in a more affluent neighborhood chances are your business will be more successful, because the pockets of your potential clientele are a bit deeper. If the business you run caters to a lower-income demographic, buy in an area that fits your clientele best.
When you write your letters of intent, start off by dealing with the larger issues, then move on to the smaller ones later. By focusing on the big stuff first, you will have more pleasant negotiations, and you will be better able to manage small matters in the end.
Always include emergency maintenance on your list of need to know things. Get a list of emergency maintenance contacts from your landlord. You should not only commit emergency numbers to memory and post them in a conspicuous location, but you should also know how long it takes various workers to get to your office in an emergency. Use any information you can get from your landlord so contingencies are ready for the times your normal business operations are interrupted so you can safeguard your customer service and your reputation.
Regarding commercial loans, it is the borrower’s responsibility to obtain an appraisal. Banks do not allow the appraisal to be used at a later time. Be properly prepared by ordering the appraisal directly.
In the beginning phases of your career as an investor, limit yourself to working with a single type of investment. Pick out just one type of property to begin with and then give it all you’ve got. It is advisable to try to do a good job at one type of investment as opposed to being average on a lot of different types.
Consider any tax benefits you’ll receive through a commercial real estate investment. Depreciation benefits and interest reductions are given to investors in commercial real estate. “Phantom income” is when an income is taxed but never received as cash, by the investors. You should be mindful of phantom income prior to investing.
As is evident by this article, any good investment in commercial real estate requires solid research and a lot of hard work. Perseverance is another important attribute for anyone interested in this market. If you follow these tips, you should soon become the owner of a property.