Owning commercial real estate has huge profit potential and might lead you to wealth. Yet, not everyone can do it, there is much to gain and much to lose with every investment.
Hazardous Waste
Look into any potential environmental problems before you buy. Hazardous waste materials emitted from property can be a real headache for property owners, so identify the problems before they start with a thorough inspection. Regardless of whether the previous owner did what she was supposed to do, once you buy the property you’re responsible for following hazardous waste and other environmental regulations. You may have to make expensive repairs to resolve an environmental problem.
While searching through different properties, make a checklist of each tour you went on. Collect responses from everyone that offers one, but inform the property owners before you do anything else. Make sure that the owners are aware that you have other options available. Letting this fact slip may even result in your getting a more lucrative deal.
Size is highly important when you are searching for space for your growing business. Look into properties that will allow your business to grow, otherwise you will be purchasing a new space in a couple of years.
If commercial property is something you’re thinking about investing your time and money in, take the tax advantages under consideration. Depreciation benefits and interest reductions are given to investors in commercial real estate. Investors often get ‘phantom income’ this is income that does not have tax attached. You need to know this kind of income prior to investing.
Look for the opportunity to buy something big. It doesn’t take a lot more work than a smaller location, and it turns a greater profit over time.
Square Footage
Let people know the exact amount of square footage available. A commercial property’s square footage can be measured two different ways. The first way is usable square footage which is the amount of square footage that can be used for business purposes. The other is total square feet which includes all square footage including square footage that cannot be currently used. Make sure you know both totals so you can have a smoother process.
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. Unfortunately, this practice has become vanishingly rare, which makes you at higher risk to suffer losses due to inflation.
If you are under a lease for commercial real estate, be wary of standard lease forms. The largest real estate companies are known to fill their lease documentation with wordy clauses including hidden requirements. Avoid involuntarily signing away your rights by reading any such lease forms slowly and thoroughly.
Whether buying or selling, negotiate. Make certain that your voice is heard, and do what it takes to find a fair property price.
Keep your commercial property occupied to pay the bills between tenants. Having unoccupied spaces mean that you have to pay for their upkeep. If you have more than one property without someone in it, think about why that is, and fix any problems that might be occurring.
Before making a commitment, you should request tours of any potential properties. You should consider asking an experienced professional to come with you and examine the properties you have an interest in. Put forth your initial proposals, then open the table for negotiations. Consider counteroffers carefully prior to responding.
Pay attention to the environment your property is in. Environmental waste, from a previous owner, could become your responsibility to clean up. Perhaps you are looking at property located in a flood plain. Think again! Try contacting local environmental agencies that can give you important information regarding the area you’re thinking about buying a property in.
Consider using the principals of feng shui in the interior design of your commercial investment properties. Two of the basic insights of this approach, removing clutter and emphasizing open space, are sound design principles that make a property more attractive.
Commercial real estate can indeed be a huge source of profits. Not only do you have to come up with a large amount of money to use as a down payment, but you also have to put time and energy into researching each investment opportunity. Follow these tips to help you succeed.