Being the owner of a commercial property has the potential of being a really rewarding and exciting venture, however, it does take a lot of work to get the most out of it. You might wonder what to do first! It can be hard to make sure you know everything about commercial property, but the more you know, the better, and this article is a good place to start.
Before purchasing any property, you should investigate its area to determine the average income level, unemployment rate and whether or not that area is growing. If you’re house is close to a university, hospital, or large employment center, they sell quick and at increased values.
Take photographs of the property. Your pictures should portray any damage or defect in the property. Common things you should look for include any cracks or holes in walls, and damages to the carpeting.
Location is a very important part of commercial real estate. When investing in a property, consider what type of neighborhood it is located in. You also want to look for a neighborhood that is solid and growing. Do not buy a property that is located in a neighborhood likely to take a wrong turn in the next five years.
You may find that you spend a large amount of time at first on your investment. You will have to hunt for a good opportunity, and once you have bought property, you might have to do some repairs or remodel it. Don’t give up, this process will take time and you just need to be patient. Your rewards are down the road, and they are worth it.
Learn to understand the commercial real estate metric called Net Operating Income (NOI). As long as you get positive numbers, you will be successful.
The area in which the property is located is important. Buying property in an affluent neighborhood is likely to mean that any business which opens there will be successful thanks to having a clientele with a large disposable income. On the other hand, if you are going to offer a product or service more popular with working class individuals, a less affluent neighborhood might be a better choice.
If you are checking out more than one property, draw up a checklist to compare the features of the different properties. Be sure to take the initial proposal responses, but do not proceed without making the property owners aware of what is going on. There is nothing wrong with hinting that you have other properties in mind. You might score a more reasonable deal that way.
Make sure you try to read any disclosures for your agent. One thing you should specifically watch out for is dual agency. In this situation, the agent will represent the buyer and seller. Dual agency occurs when the landlord and the tenant hire the same agent. Dual agencies require full disclosure and must be agreed upon by both parties.
As you can see, you do need to do your homework if you want to buy a commercial property, you need to put in some effort, and also hard work! You need to stay diligent at buying commercial real estate. By using the advice given to you, you will be happy with your commercial real estate purchase.