Getting involved in commercial real estate can overwhelm and stress out beginners and veterans alike. Read this article to find out how you can approach a transaction efficiently, and stay in control of the situation with less stress.
If you are trying to choose between two good commercial properties, think big. Getting the financing you need is going to be complicated whether you choose a five-unit building or a fifty-unit building. This just reflects the general advantage of buying anything in bulk; when you buy a property with more units, you get a lower average price for each one.
As you comb through possible brokers, search for those who have extensive experience in commercial markets. 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. At that point, you might want to consider entering into an exclusive listing with that agent.
Learn to understand the commercial real estate metric called Net Operating Income (NOI). To be a success, you need to be able to stay on the positive number side.
If there is more then one property you are considering, acquire the house survey checklist for each one during your site tour. Do not proceed past initial proposal responses, unless you inform the property owners. Don’t be afraid to casually tell the owners that you are looking at other properties, too. Making them aware you have other options may get them to accept a lower offer.
Any new space you acquire might need some improvements prior to you occupying it. This might include superficial improvements such as repainting a wall or arranging the furniture more efficiently. However, you might have to remove or relocate some of your walls so that you can get the most out of your space. Be sure to negotiate prior to signing any contract who pays for any improvements; it may be the case that your landlord, if you have one, will contribute a portion of any costs.
There are real estate brokers who deal exclusively with commercial investments. For example, full service brokers will work with landlords and tenants, while other brokers only represent tenants. It might be more beneficial to hire a broker who works only with tenants, as he has more experience working with those searching for a property.
When searching for a real estate agent, keep their disclosures in mind so you know who they are working for. Determine if there is a possibility that he will be working as a dual agent. In this situation, the agent will represent the buyer and seller. In simpler terms, both the landlord and the tenant are simultaneously represented by the agency. Dual agency must be disclosed by both parties and they need to agree to it.
Searching for commercial real estate may be stressful and likely overwhelming for someone new to the process, but also the same is true for someone who is experienced. For that reason articles like this exist to make it a bit easier when thinking about buying commercial property.