You probably have a better chance at making a profit in the commercial real estate market than in the residential real estate market. Finding that diamond in the rough isn’t always easy, though. So, here are some tips to help you make sense of the variables involved so that you can make smart, commercial real estate deals.
Examine socioeconomic conditions in the neighborhood you’re thinking of purchasing commercial real estate in. Pay special attention to the unemployment rate, and the average income level in your property’s neighborhood. Homes that are located near schools, hospitals and other major employers are assigned a higher resale value.
If you are looking to lease or rent, the issue of pest control is a critical one to address. If you are renting in an area that is known to have a lot of rodents, pests, or bugs, then ask your agent what the policies on pest control are.
Take photographs of the property. In the “before” photos, especially, make sure that the pictures clearly show defects such as stains on the carpet, discolorations in the tub and sink, and holes in the walls.
As with other property purchases, pay attention to the three Ls: location, location, and location. You will want to focus on the actual neighborhood for starters. Also, consider local growth projections. The area you buy in needs to have potential over the next 5 to 10 years.
Once you have narrowed your choices down to two major contenders, you should expand your decision to include the big picture. Finding adequate financing on a piece of property takes time and patience. Think of it like purchasing in bulk; as you buy more, each individual unit costs less.
Even though you may be running a business and ultimately need to secure profits, it’s important that you don’t embellish prices in an attempt to get an extra dollar. There are a lot of factors that determine the value of the lot.
Pest control is something you should look into when renting or leasing a property. If you are renting a space that has known vermin problems, be sure to find out exactly who is responsible for pest control.
Make sure you have the right access that has utilities on commercial properties. Your business has its own utility needs, but you are most likely going to need water, sewer, electric and possibly even gas.
In the earliest stages of negotiating your lease, it is in your best interest to ensure that only a few conditions are capable of constituting acceptable means of default. This can decrease the chances of tenants defaulting on that lease. This is something you want to avoid.
After reading this article, you should be familiar with commercial real estate basics. Make sure you are flexible so that you can always be informed and know what to do in any type of situation. You will find yourself in a perfect spot, and have access to the best deals on the market.
There are many informational websites available that aim to provide new and seasoned real estate investors with the necessary information. You can’t be too informed about the subject, so try to always be seeking out new sources of knowledge.
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