When purchasing commercial real estate it is important to have everything done properly. Regardless of how skilled you think you are, it is possible that you lack knowledge in a certain aspect of the field. Here are some commercial real estate investing insights.
Be sure to negotiate on the fact of what you are, an owner-user, or an investor. Let people know what you want and make sure you are offering a realistic price.
Location is key in commercial real estate. For example, consider the surrounding area and local neighborhoods. Also, keep growth in mind. Since you will likely still own the property in ten years, you want it to be located in an area that is likewise still desirable in ten years.
Your investment might prove to be time-consuming in the beginning. Although the investment might be a tremendous opportunity, it will only be good if you take care of any repairs or perhaps do a bit of remodeling. You should never give up because it is time-consuming. The rewards you see will be much greater at a later time.
When choosing between two similar commercial properties, think on a larger scale. Finding the right bank to finance you might be hard, even if you are going for a smaller building. Think of it like purchasing in bulk; as you buy more, each individual unit costs less.
Take the neighborhood into account when purchasing commercial property. If you are buying the property in a more expensive neighborhood and if you are buying a retail property, your tenants will be higher-end retailers. These types of tenants are difficult to lease to and they drive a hard bargain, but are more stable tenants and lease for a longer period of time. If your goal is to attract tenants who sell products or services that appeal primarily to lower or middle-class consumers, look for commercial property in a more conservative neighborhood.
You might have to make improvements to the property before you can start leasing it. In some cases, all that is required are simple changes like redoing the landscaping or giving the walls a new coat of paint. In many cases, it may be necessary to move walls or rearrange a floor plan to suit your tenant’s business needs. Decide who will be paying for these, will it be part of your investment costs? will you pay for it and recover the expense over the term of the lease by prorating the cost and adding it to the rent or will you ask your tenant to pay for it?
Always include emergency maintenance on your list of need to know things. Find out from the seller who he/she contacts for emergency repairs, such as plumbing accidents. Keep their numbers updated, and know how long it takes them to arrive on average. Make an emergency plan once you have this information. If a flood, fire or break-in interrupts your tenant’s normal business day, you need to have a plan in place so that you can help your tenant re-open as soon as possible.
It would be a mistake to assume that you already know all there is to know about the commercial real estate field. Always seek out new information, and use the tips provided here to help you gain a much stronger market position. Make use of this pertinent information and profit from your endeavors.