Tuesday, January 17, 2012

Commercial Real Estate: Important Considerations Before Buying Or Selling

As a matter of fact, commercial real estate offers more profit potential than even residential properties represent. Finding good opportunities can be difficult. Here is some advice to assist you in making better informed decisions regarding commercial property investments.

Assess your broker by discussing what they see as a successful transaction or, on the other hand, a failed one. Inquire about the metrics they use to quantify results. Understand exactly how they do business with their clients, and which strategies and methods they employ. You should only employ a real estate agent if you are okay with their business practices.

Before buying a commercial property, research its net operating income to make sure you don't lose money. To be successful, you must stay profitable.

Make sure to negotiate whether you're the seller or buyer. It is important that your concerns and opinions are heard and recognized by the other parties; you must always put forth the effort to ensure fair pricing for the commercial property.

If you are hesitating between different properties, buy the larger of the two. It's just as difficult to obtain adequate financing for a 10 unit apartment complex as it is for a 20 unit building. This works in the same way as buying bulk items from Costco. You buy large numbers of items to pay less per item.

When drawing up a letter of intent, try to solicit agreement on big issues first and leave smaller issues for later rounds of negotiations. By coming to agreement on the larger issues, it will make the negotiations go much easier.

This is necessary to enable you to confirm that the terms fit with the rent roll, as well as the pro forma. Without analyzing the key terms, you run the risk of finding a term that wasn't considered within the rent roll, and this could cause changes to the pro forma.

If you are signing a commercial real estate lease, be hesitant if you are asked to sign a standard lease form. Larger real estate firms are known to slide additional requirements and covenants into their leasing documents, which might prove hard to find due to document length. Only by going through the document with care can you prevent the potential pains and aches that you can get from standard commercial lease paperwork.

After reading this article, you should be familiar with commercial real estate basics. Remain flexible and balanced when you are navigating the commercial market for real estate. This will put you in a position where you can capitalize on amazing opportunities which others miss, and end up making a deal which brings you great profits.

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