Buying real estate for commercial purposes can be a very different game from buying a home. Read the following paragraphs for a few insights that you can use to do better.
Another factor to be aware of when shopping for property to rent or lease is who pays for pest control. Look over your rental or lease agreement, and know if you are covered, especially if you live in an area with known infestations.
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. Market conditions can vary greatly; therefore, an appraisal may not be the best indicator of true market value.
Be careful to choose commercial properties that are solidly and simply constructed if you plan to use them as rental properties. A well-built building will attract tenants quickly because tenants want a property that is solid. Not are the buildings more sturdy, there will be less maintenance issues for the owner and the tenant.
If you want to sell a property, advertise it locally and on a wider level too. Many people only think locals will buy their property, and that’s a mistake. Some private investors will be interested in properties outside of their areas if the price is low.
When you are constructing a letter of intent, make sure that you keep it concise by focusing on larger issues first. Save the smaller issues for future negotiations. This approach lowers the overall tension level and actually makes it easier to reach agreement on the details at the end.
You might need to make improvements to your new space before you can use it. The changes don’t have to be extensive. You may just want to repaint or rearrange furniture. You may even need to tear a wall down to make the floor plan fit your needs. When negotiating, you should discuss who will pay for the improvements you’ll have to make, and should see if the current owner will cover some of your costs.
You should always know how to get in touch with emergency maintenance. Ask in advance who will be handling any emergencies that arise. Keep the phone numbers in a convenient place, and know how long it will take them to respond if needed. Utilize the information given by your landlord to develop a plan for emergencies. This will help you ensure your reputation or customer service is not tarnished while your business is disrupted.
It’s up to the borrower, that’s you, to order an appraisal for a commercial loan. The bank won’t let you make use of it later. So, to ensure that things are done properly, order the document yourself.
As a new investor you should focus on one area of investment only. Pick a property type you desire to initially start with and focus on it with your undivided attention. It’s good to find a niche and do very, very well at it rather than flitting from one investment type to another without much success.
Be aware of the potential tax benefits of investing in commercial property. Investors receive depreciation benefits as well as interest deductions. One side effect of investing is that sometimes investors receive income that can’t be spent, because it’s in an unspendable form, yet is taxed as income. Find out if you will be getting this kind of income before you invest.
You should consult with a tax expert prior to purchasing anything. They’ll be able to estimate how much tax you’ll pay for the property you wish to buy, as well as how much income tax you’ll pay on your returns. By taking your adviser’s advice, you may be able to find a location where the taxes are less.
There are obviously countless things to think about when looking to purchase commercial real estate. Use the ideas in this article to inform you as to how to approach your next commercial real estate purchase.