Commercial Real Estate: Important Considerations Before Buying Or Selling

By Jill Wilson

For those looking for a way to make large profits in a relatively short amount of time, commercial real estate is great opportunity. Yet, not everyone can do it, there is much to gain and much to lose with every investment.

Scrutinize any disclosures made by a real estate agent whom you intend to hire. Remember that dual agency is also an option. In this situation, the agent will represent the buyer and seller. In simpler terms, both the landlord and the tenant are simultaneously represented by the agency. Whenever dual agency is part of a transaction, it must be disclosed to both parties of the transaction. Both sides must also agree to the dual agency.

When obtaining financial for commercial real estate ventures, you need to have your personal and business financial statements available. Not having your own financial statements in order will make a poor impression on the bank, possibly making them turn down your loan application.

Start drafting letters of intent by focusing on the more central issues. Once you have agreement on those, broaden the negotiations to include any smaller issues that remain. This will make the negotiations faster and less tense, and it will also cause the lesser issues to be completed easier.

Considering your potential rent is important when it comes to preparing a lease. Don’t talk to potential tenants until you have figured out your rental fee structure. This way, you’ll be better able to project the profit you will likely make by renting to a tenant for a year.

Keep your commercial property occupied to pay the bills between tenants. Vacancies cost you money, because you have to pay for maintenance and upkeep without drawing income from them. You need to ask yourself why properties are not getting rented and fix any issues you discover.

Speak to a tax adviser prior to buying a property. They’ll be able to discuss the long-term cost of the building, and what the tax rate for owning the building will be. By adopting the adviser’s counsel and expanding your search, you can find an area for expansion and building that will not endanger your current tax liability.

Finding just the right commercial real estate property is the first half of the endeavor. Dealing with commercial property takes knowledge and action; therefore, it is very important to learn all you can prior to seeking out your property.

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