There are a multitude of reasons why commercial real estate might be a good investment choice for you. However, you need to decide whether an investment is right for you. Take the time to educate yourself, and you will increase your potential profit. These tips make a great starting point that can help you learn more about commercial real estate.
If you have two commercial properties on your short list, you should buy the larger one, if at all possible. Whether it be a twenty or ten unit apartment complex, you want to get adequate financing to back you up. You may have a better price, figured per unit, on the larger apartment complex than on the smaller one.
You should learn how to calculate the (NOI) Net Operating Income of your commercial property. To be successful, you must stay profitable.
It is always best to be aware of how your asking price is in relation to the market price. Market conditions can vary greatly; therefore, an appraisal may not be the best indicator of true market value.
Before you talk about a lease in commercial real estate, make sure to lower anything that might be thought of as events of default, wherever possible. That will cut down on the likelihood that the tenant defaults on a lease. This type of situation is considered very undesirable.
When you are writing up the letters of intent, keep it simple by going for agreement on the larger issues first and let the smaller issues wait for a later time in the negotiations. This will diffuse tension during negotiations and will facilitate compromise on the minor issues.
Before you move into your new space, it may need to be improved. The improvements can just affect surface appearance like painting the walls or moving furniture around. Other changes may be more significant, such as moving walls or installing new doors. Negotiate these changes ahead of time with the landlord. He may be willing to share these costs needed in order for you to move in.
There isn’t just one type of broker for commercial real estate. Some brokers or agents only work with tenants, while others will serve both tenants and landlords. It might be most beneficial for you to hire a broker who works exclusively with tenants. A broker with that focus will be more experienced in successful dealings with tenants.
Check any disclosures a potential real estate agent gives you carefully. Dual agency is a possibility that you need to be aware of. When dual agency exists, the agency advocates for both parties in the transaction. In effect, while you are paying the agency, they also work for the opposite side; if you are a prospective tenant, for example, the dual agency represents the landlord, as well. If there is a dual agency, everyone should be honest about it and find an agreement.
As has already been stated, there are various reasons for considering a commercial real estate investment, some of which require an education on the subject. Use the tips provided in this article and you will have the knowledge you need to begin your real estate endeavors.