Any newcomer to the commercial real estate market can benefit from a compilation of hints and tips on the most effective ways to purchase or sell commercial property. The following collection of tips can help the beginner become a pro in the commercial real estate market.
Before purchasing any property, you should investigate its area to determine the average income level, unemployment rate and whether or not that area is growing. Properties that are near major employment centers, such as medical centers or universities, often sell more quickly and at a higher price.
If you are renting or leasing, be sure to know about pest control arrangements. If the area that you are renting in is known for pest infestations, it is especially important for you to talk to your rental agency about their policies for pest control.
Research your prospective brokers to see how experienced they are with the commercial market. It is important that their experience fall in line with your buying and/or selling goals, so make sure to ask what their specialty is. With that broker, you also want to enter into exclusive agreements.
Make sure that you know and understand what “NOI” (Net Operating Income) is. In order to be successful, the resulting number must be positive.
When selling a piece of commercial property, it is wise to ensure that you ask a realistic price. Your property’s actual value is influenced by many factors.
Before you negotiate a commercial real estate lease, you should aim to decrease the things that could be considered an event of default as much as you possibly can. This will lessen the possibility of a lease default by your tenant. This is a bad thing, so do what you can to minimize the chance of it happening.
Prior to listing your property for sale, you should first hire a reputable, professional inspector to go over the place. If anything turns up during the inspection, you should immediately address the problem.
Advertise your property for sale locally and outside your region. Do not assume that only local investors will be interested. Some private investors will be interested in properties outside of their areas if the price is low.
You must know how to deal with an emergency, should it arise. Speak with the landlord about handling of emergency repairs just so you know who to call in that situation. Be sure to have emergency numbers on hand, and remember to check about a quoted response time for maintenance emergencies. Use the information provided by your landlord to help you prepare a plan for when normal business is disrupted by certain events.
Hopefully, this article has provided you with a good base of knowledge upon which to build your successful endeavor in the commercial real estate market. The tips here were collected with care, providing advice which is necessary for success in the field.
Regardless if you are a seasoned or newbie real estate investor, possessing the right mindset will be critical to your level of success. Wall Street Journal best-selling author Mr. Orrin Woodward published a book called “RESOLVED: 13 Resolutions for LIFE” which goes over this topic of developing mindset and personal excellence superbly well. It’s a must-read.