Commercial real estate is an entirely different ball game than residential property. The following advice will help you get the best deal on your property.
Take some digital photos of your property. Take pictures of the damages, for instance spots and stains, holes or even discoloration on the bathtub.
In the beginning, you may find it necessary to spend a great deal of time handling your investment. First you will need to find a property that you think is worth purchasing, and you may have to remodel or repair it. Do not cut corners on this process, just because it might take up a lot of time. Stick with it and you’ll be rewarded.
Educate yourself about the measurements of NOI: Net Operating Income. To be a success, you need to be able to stay on the positive number side.
Be careful to choose commercial properties that are solidly and simply constructed if you plan to use them as rental properties. These properties are generally top sellers because prospective tenants can see how well-built and maintained they are. This type of building also has the advantage of requiring less maintenance, an attractive feature for tenants and owners alike.
Be certain the commercial property you are considering has good utilities access. Your business may have unique utility needs, but at the very least, you probably require hookups for electric, sewer, water and most likely, gas.
Take the neighborhood into account when purchasing commercial property. In general, it’s better to locate a business in a richer area because rich customers obviously have more discretionary income. If your business services will do better in a poor neighborhood, buy property there!
When selling commercial property, advertise locally and outside of your region. Do not assume that only local investors will be interested. In many cases, a private investor will be interested in a property even if it’s not in their area, so long as its price is a good one.
If you are taking out a commercial loan, you must pay for the appraisal yourself. Banks do not allow the appraisal to be used at a later time. Spare yourself further hassle by initiating the request yourself.
In the beginning phases of your career as an investor, limit yourself to working with a single type of investment. Pick out a single property type that you would enjoy starting with and only pay attention to it. It’s better to be very good at one particular type of real estate than to be okay at a lot of different types.
Commercial Real Estate
If you want to spend some money on commercial real estate, consider tax breaks you may get. For example, commercial real estate investments garner you deductions for interest on top of your benefits for depreciation. “Phantom income” is a taxed income, but not income received as cash. You should know about this income before you make a investment.
Be sure to realize all properties have a lifetime. Every property is eventually going to need maintenance and repairs, and you need to consider what potential properties are going to cost you over the duration of your use. For example, the property may require an entirely new electrical system, a new roof or a new central heating unit. Any building has phases like this, although some do so more frequently than others. Estimate the cost of repairs over the years, and plan for them.
Now you have learned the basics of commercial real estate investment and a few helpful tips. Remember what you have learned in the preceding article, and you will be able to get a good deal on a piece of real estate that meets your needs.