Industrial and commercial properties constantly come to market, but don’t get the highlighted attention or preferential treatment that residential homes do. Use what you learn from this article in order to understand what you should be doing as you need to learn about the market and how to properly navigate it.
Ensure that you have reviewed your contracts before negotiating leases so that you minimize the chances of default. This will decrease the probability of the tenant defaulting on the lease. You, of course, would not desire this to occur.
You should examine the surrounding neighborhood of any commercial real estate you may be interested in. 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. Or, if you are offering a service particularly attractive to the less wealthy, you should purchase in a less well-to-do area.
Pest control is an important issue to look at when you rent or lease. This is important in less desirable locations where rodents and/or bugs are an issue. Have your rental agent inform you of any associated policies for pest control.
Think carefully about how many units you want to be responsible for. Some real estate investment experts discourage new investors from purchasing rental properties with very few units in them because they can often be more difficult to manage than larger buildings. Try to research your situation, and make the best decision for yourself.
Compile a number of people to partner with financially. These can be professional lenders, friends and family. This will allow you to ascertain cash flow. Be sure your contracts are flexible with a clause that allows payments with fixed interest and/or payments consisting of a set percentage of the property’s income.
If you are looking to get financing for your real estate goals be sure to have your business and personal financial statements on hand for review. Without them, lenders can’t know how well you manage your finances, making it less likely that you will get the funds you need.
Find the right financing company first. Loans for commercial properties are not the same as home loans. In some instances, commercial lenders are the better choice. Commercial loans will require a bigger down payment, but if the deal doesn’t go as planned, you’ll be able to avoid personal liability. Also, banks are often more relaxed and will allow you to borrow the down payment from a partner or a friend.
Get your commercial property inspected before you try to sell it. If they find anything wrong with the property, you should have it fixed immediately.
There is much more time and work involved in purchasing a commercial property rather than a residential property. Understand, however, that the intensity and duration of the process is necessary to achieve the higher return on your investment.