Purchasing real estate related to commercial purposes is a lot different from purchasing a home. Read on for a few suggestions and tips that could help you get a great deal.
Research your prospective brokers to see how experienced they are with the commercial market. Make sure they are specializing in the desired area that you’re selling or buying in. Once you find the broker you want to use, sign an exclusive agreement.
If you are investing in commercial real estate, be aware that dramatic inflation over time can have a negative impact on your results. In the past, most leases had various built-in clauses that had their price adjusted to the CPI, which protected those who signed from inflation. This protection is rarely available today, so signers are more less protected to losses due to inflation.
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.
You can make all your negotiations less tense, so you can agree on any of the smaller issues first.
Be extra careful when inquiring about a commercial property’s square footage. Commercial real estate properties can be measured by usable square feet, which is where the business would actually take place, or total square footage, which usually involves the walls and uninhabitable spaces. If you know both of these values, things will be easier for you.
Commercial rental buildings should feature sturdy construction and simple details. Because it is apparent that these types of structures have been kept in good condition, it greatly increases the chances that tenants will be quick to rent the space. Tenants will also have to deal with maintenance issues less often, which means they have more time go about their business.
As a new investor you should focus on one area of investment only. Select one type of property that appeals to you, and devote your undivided attention to it. You want to be an ace investor in one property type rather than just OK at many different types.
Location, location, location is important to consider. Think about the type of neighborhood the property is in. Also look into growth of similar areas. The ideal location is situated in an area that can sustain economic growth for many years to come.
If you want to invest in a piece of commercial real estate, think about the kind of tax breaks and benefits you might receive. Investors get both depreciation benefits and interest deductions. Other investors deal largely with “phantom income” – income that is not paid in cash, yet is still taxed. Prior to investing in commercial real estate, you should familiarize yourself with this form of income.
As you can see, there are a lot of things to consider when shopping for commercial real estate. 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.