Commercial real estate investing is quite a bit different than residential or other types of real estate purchases. The following advice will help you get the best deal on your property.
Use a digital camera to document the conditions. Ensure that the photos document any problems, including mold, damaged walls, or chipped fixtures.
Try practicing patience and remain calm, if you are considering purchasing any commercial real estate. You should never rush into a possible investment. You might regret it if that property is not right for you. It could take up to a year for the right investment to materialize in your market.
If you are hesitating between different properties, buy the larger of the two. Regardless of whether the property you decide on has twenty units or fifty, the process of obtaining financing will be the same, and in both cases will require substantial effort. In effect, this is similar to an economy of scale, or also like purchasing more of an item to save money.
As you comb through possible brokers, search for those who have extensive experience in commercial markets. Don’t use a broker who doesn’t specialize in the type of real estate investment you’re interested in. Make sure you find an exclusive agreement that works for you and your broker.
You should learn how to calculate the (NOI) Net Operating Income of your commercial property. Having positive numbers is the only way to ensure success.
Be certain the commercial property you are considering has good utilities access. The property must have access to electric, water, sewer and maybe gas for it to be a viable commercial real estate purchase.
When you are negotiating to rent a commercial property, try to have the lease modified so there are few events that are considered to be defaulting on the lease. That will cut down on the likelihood that the tenant defaults on a lease. You do not want this to happen to you.
If you are writing a letter of intent, take it easy. Go for agreements on the bigger problems at first, then get to the smaller issues later in the negotiations. This way, negotiations will be smoother, and agreements on the small issues are more likely to be reached.
Make sure you know exactly what requirements you need to satisfy before you begin your search for commercial real estate. Make a list of the property features most important for you, such as square footage, number of offices, conference rooms, and restrooms.
Check all disclosures of the chosen real estate agent that you wish to work with. Look for any disclosures regarding dual agency. With a dual agency, you have the real estate broker working on each side of the transaction. This means the agency works for the tenant and the landlord at the same time. You and the other party should both agree if dual agency is to be okay.
See to it that you’re dealing with companies that care about their customers before you engage them in a commercial purchase. Failing to do so could result in subtle changes or unneeded payments slipping by and costing you a fortune in wasted money.
Doing so means that you can confirm that all terms match up with the rent roll, as well as the pro forma. Failing to review the terms might cause you to encounter a term not encompassed by the rent roll, thus resulting in changes to the pro forma.
Keep your center of attention on one investment property at a time. Whether your investment choice is retail, land or rental buildings, choose one arena of investment to focus on exclusively for now. Each kind of investment will requires a full time commitment. Developing your expertise in one arena is far more profitable then knowing just a bit about many.
There are ways to save on repair costs associated with property cleanup. You are the one that is responsible for clean up if you own part of the property. Any needed environmental cleanup can significantly cost a lot of money. Consult an environmental assessment company to get a clear idea of what problems must be addressed. They cost a bit, but they can save you a lot.
Use social networking and a newsletter to share your commercial real estate information. Keep your investors in the know so you can use them again on future deals.
Think bigger when you are investing in commercial properties. If you are considering purchasing a building with 5 apartments, understand that you could manage one with 50 apartments just as easily. You’ll have to take out the same loan regardless of the number of units in the building, so buying a bigger building makes good financial sense. The larger the building, the less the cost per unit. For example, if you have to take out a $50,000 loan, you’re paying $5,000 per unit if there are only 10 units in the building. If there are 100 units in the building, however, you’ll only pay $500 per unit.
Commercial Real Estate
As this article demonstrates, finding good opportunities in commercial real estate is dependent on many things. Be sure to follow the advice of this article to get your best deal in commercial real estate, and continue on a successful path.