It takes time and hard work to make a go of commercial real estate. The rewards can outweigh its costs though. Take note of the following advice, written especially for those with an interest in commercial real estate.
Prior to making a large investment on a property, look at the local income, unemployment rates, and contraction of the local employers. Properties centrally located near universities and hospitals will have a consistently higher value, and it will sell more quickly.
You should expect your commercial real estate investment to require a significant time commitment. Good opportunities can be found if you look, and after you have made a purchase, the property may require repairs or remodeling. Don’t throw in the towel because the process is taking too long to complete. The time you invest now will lead to greater rewards later.
Learn to understand the commercial real estate metric called Net Operating Income (NOI). To be successful, you must stay profitable.
One of the biggest considerations in the process of attaining commercial property is to know the neighborhood of each and every prospective location. If you are looking in a high-rent neighborhood, you may have a better chance at success once you get going because of the potential of area residents to have money to spend. If your business is a bit more shady, like a rent-to-own store, payday loan outlet, or pawn shop, it’s better to locate in a poor neighborhood.
Try to carefully limit the situations that are specified as event of default criteria prior to executing a lease for commercial property. This will greatly lessen the likelihood that the tenant might default. This is in your best interest.
You might have to make improvements to your space before you can use it. In some cases, all that is required are simple changes like moving the furniture around or giving the walls a new coat of paint. Oftentimes, moving walls and other fixtures is required to redistribute the floorplan. Remind the landlord that these improvements are necessary, and use them to negotiate a lower deposit or reduced rent.
Different commercial brokers represent different parties. So-called “full service” brokers represent both tenants and landlords, while there are other brokers that work exclusively with tenants. You may benefit from using a broker who works exclusively with tenants, due to the singular focus.
When hiring a real estate agent, read the disclosures completely before signing a contract with a realtor. Watch for possible dual agency. With a dual agency, you have the real estate broker working on each side of the transaction. This means the broker represents you and the landlord during the transaction. If dual agency is the case, it should be out in the open and both the landlord and the tenant should be in agreement with the arrangement.
As the above article stated, purchasing commercial real estate can be extremely rewarding when it comes to making a profit. Follow this advice to succeed, and avoid traps with your commercial real estate.
Regardless if you are a real estate investor, having the correct mindset is most absolutely going to be crucial to your 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.