Interested In Commercial Real Estate? Here’s What You Should Know
When it comes time for you to begin owning commercial real estate, you may wonder where to begin, as there are so many things to consider when owning this kind of property. The tips in this article can provide you with what you need to know to better care for your commercial property.
Be sure to request and examine financial statements and tax return information for at least the past two years of any commercial property you wish to purchase. Investigate expenses such as operating costs as well. Make sure you understand all of the information presented to you and if you do not understand it, have your real estate attorney go over the papers with you so you have a solid, working knowledge of the expense and return of the property.
Consider the resale potential of any commercial property before putting in an offer. Sometime in the future, you will want to sell the property you are about to purchase, so you need to consider any factors that could make this difficult such as nearby planned developments, noise pollution levels, crime statistics and the age of the building.
Buying commercial real estate properties does not have to be difficult. If you hire a knowledgeable real estate agent, you should be able to find a great property that has a great income potential. It is important to consider the condition and the location of the property before making a final decision on the purchase.
Suppose you have found a new building for your business and think you have checked everything out. You may want to do one more thing before you buy. Go to the city planning office and find out if changes in traffic patterns are planned that will affect this location. Otherwise, you may find your would-be customers rerouted elsewhere.
As you consider a commercial investment property for your portfolio, you should explore all possibilities by completing a detailed breakdown of whether the property is income producing or non-income producing. Income producing properties would include retail sites, hotels, or warehouses. Understand the different ways that these possible tenants could generate and sustain cash flow and return on your investment.
Have your own money to invest as well and do not expect it all to be covered by investors. You will usually have to make a down payment before you can even begin considering investors. Then include closing costs and other outside needs that must be handled and you will realize that there are going to be times when you have to pay for tasks and the investors money will not be an option.
When choosing a property, it is important to look at the locality’s tax rate. As the closing costs include a prorated property tax, it increases the funds you need to close the deal. The higher the tax rate the more money you need to close escrow and you will pay more taxes over the years.
As you have seen, owning commercial real estate has many things to take into consideration. There are so many things to do and check for, just to make sure you can keep your property. All it takes is some research and common sense to make sure that you take the best care of your commercial property purchase.