Investing in commercial real estate takes a great deal of effort and time. Yet the rewards can be substantial, outweighing the risks easily. Use the guidelines in this article to help you begin your successful commercial real estate investment career.
Never be afraid to negotiate, no matter which side of the table you are on. Be certain your needs are met, your concerns are heard, and you champion a fair, honest price for the real estate.
Transactions for commercial property take more time, and are a lot more complex, than the process of buying a home. Yet the greater the risk and time, the greater the profit, so take this into consideration when you think about the type of investments you want to make in the future.
Research local prices similar properties have sold for before setting a price for your commercial real estate. Your property’s actual value is influenced by many factors.
Make sure you have the right access that has utilities on commercial properties. Every business has unique requirements, but for most, electric, water and sewer access will be required.
When you are looking at a commercial property, be sure to look at the neighborhood, too. In general, it’s better to locate a business in a richer area because rich customers obviously have more discretionary income. If the business you run caters to a lower-income demographic, buy in an area that fits your clientele best.
Advertise the commercial property to both locals and non-locals. 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.
Take a tour of any property that you are interested in. Consider going with a contractor when you are looking at places you want to buy. Put forth your initial proposals, then open the table for negotiations. Before making any sort of decision after a counter offer, evaluate it once and then evaluate it again.
It may be necessary to invest in some renovations before you can move into the space. Cosmetic changes like painting walls and rearranging furniture might be needed. Many times, changes include reconfiguring the floor plan by moving walls. Negotiate payment for these improvements ahead of time, and attempt to have the landlord pay at least part of the costs.
In a commercial loan, the borrower must order the appraisal. You’re not going to be allowed to use this later by the bank. Do the right thing and order it yourself.
Commercial properties can afford you some great tax breaks and benefits upon investing in them. Speak to a tax professional to ensure you understand how the depreciation and interest will influence your situation positively. “Phantom income” is a taxed income, but not income received as cash. You should know about this income before you make a investment.
As previously mentioned, purchasing commercial real estate can be very profitable. Implement the tips you’ve just learned to avoid potential traps, and have success purchasing commercial real estate.