Commercial property insurance is a highly technical area and needs to be grasped by freehold owners, landlords and tenants and occupiers alike.
For freehold owners, it is just a question of making sure that the right risks are covered. These include the usual commercial risks but also third party liability. If the premises are in inner city area terrorism insurance should also be included. You need to get the advice of a surveyor or valuer to ensure that the reinstatement value is accurate.
For leasehold properties, both landlord and tenants need to get their heads around a whole host of issues and this is what this article focuses on. The insurance provisions in a typical lease are found about two-thirds of the way through the lease just after the Landlord's covenants. Most leases would oblige the Landlord to insurance the premises recouping the cost of the premiums from the tenant or tenants in a multi-let building.
The Landlord wants to insure because it means the landlord can ensure that his investment is protected. It is too risky to allow the tenant to ensure and then find out later that the tenant has either not been insuring or has insured for less than the reinstatement value.
The Landlord covenants to insure the building in the full reinstatement value against the usual commercial risks. Reinstatement value is usually determined by annual insurance valuations. It is important that the Landlord uses a surveyor for this because if the insurance proceeds are insufficient to reinstate the building or premises, most leases oblige the landlord to make any shortfall out of the landlord's own monies.
The insured risks would normally include loss or damage by fire, explosion, flood, tempest, storm, lightning, impact from aircraft and vehicles, bursting of tanks. If you are a tenant you should also get subsidence landslip and heave added to the insured risks. These risks are usually covered for most commercial policies but leases for some reason do not include these risks as standard in the definition of "insured risks".
The landlord will also insure against loss of rent. The period varies from 2 to 3 years and is supposed to cover the time it would take to fully reinstate the building in the event of total destruction or damage. The insurance provisions will also include a provision providing that in the event of damage or destruction to the building such that the building cannot be occupied or used by the tenant, then the rent is suspended (but not usually the service charge) for the loss of rent insurance period. The ideal for a tenant here would be that the rent would be suspended until the building is reinstated such that it is fit for occupation and use by the tenant.
The lease should contain an obligation on the landlord to lay out all insurance monies received in reinstating the building. You would not want the landlord pocketing the money and terminating the lease. There are often provisos to this reinstatement obligation stating that if the landlord is unable to reinstate for whatever reason then either party can terminate the lease. This is usually after a lengthy period of time say 2 to 3 years although a tenant would probably want this right of termination to kick in as soon as becomes apparent that the landlord cannot reinstate the building.
The tenant's repairing obligation in relation to the premises would normally state that damage by insured risks are excepted from the tenant's obligation so if the premises is damaged by an insured risk then the tenant is relieved of the obligation to repair the premises. However, this wording is usually qualified to state that if the building was damaged or destroyed due to the tenant's fault then this does not apply and the tenant would then be obliged to reinstate out of its own monies. This could be catastrophic for a tenant who would not be able to claim on any insurance policy of its own because the tenant would not usually double insure the building it is occupying. Some tenant's solicitors try to amend this so that the tenant is only liable to repair the uninsured damage to the extent that the damage was the fault of the tenant so that if the landlord is partially responsible, the landlord will bear a proportion of the liability and so some of the insurance proceeds will be available.
What happens if the lease is terminated because it is not possible to reinstate the building (say the landlord could not obtain planning permission)? Who gets the insurance proceeds? Most leases would provide that the landlord gets to keep all of the insurance proceeds but it would be fairer if the insurance proceeds are divided up in accordance with the value of the landlord and tenant's interest in the building. Whilst more fair to the tenant, I pity the valuer/surveyor who has to value that without any guidelines. Does the tenant have an interest in a lease under which it pays a full open market rental? Surely, this is classified as a liability rather than an asset?
Another question which a tenant should focus on is if the rent is suspended whilst the building is destroyed or damaged what about where the tenant has just paid 3 months in advance. Should the landlord be allowed to sit on what could be a substantial sum of money whilst everyone waits for the building to be reinstated? A small amendment to the lease can provide that in the event of the rent being suspended after damage or destruction, then any monies paid in advance by the landlord should be refunded. The obligation to pay rent in advance will kick in again once the rent suspension is ended.
Most leases provide that the landlord should insure the building with reputable insurers. In these rocky times with great giants like AIG teetering on the brink of collapse what constitutes a reputable insurer is not so straightforward an issue as it used to be.
Saturday, December 10, 2011
Commercial Agents - 3 Tips for Leasing Commercial Property
When working as a commercial real estate agent, you will come across the opportunity to do leasing in addition to the normal sales activity in the local property market. Commercial office, industrial property, and retail property, all offer leasing opportunities for your agency listing diversity and future commissions.
Knowledge of market rentals, incentives, lease documentation, and tenant needs will help you with the process of putting a lease together on a vacant property.
The Main Factors in Leasing
When considering the listing of a commercial property for leasing, there are three main considerations or tips that can be incorporated into the listing and leasing process. They are as follows:
1. Make sure you understand your target market of tenants and what they looking for. In each and every location there will be tenancies looking towards change and relocation. From time to time tenants are also looking to upgrade their premises or adjust their occupancy costs and commitments. This is a fresh and new opportunity for the leasing of new premises. Property agents should spend time in connecting with all the local businesses to identify their property needs, the expiration of their leases, and any tenant requirements for expansion or change of occupied area. You should expect that other specialized leasing agents in the local area will also be speaking to tenants in your managed properties on a similar basis. It is therefore critical to implement a tenant retention plan to retain your tenants and minimise vacancy situations.
2. Comprehensively market the vacant property into the local business community. When it comes to the leasing of commercial office space, history has proven that most tenants come from the existing local business community. Those businesses are simply seeking to improve their standards of tenancy occupation, or adjust their business commitment to rental and other occupancy costs. They know the local area but they need to change property. On this basis, the marketing of vacant space should occur through both the traditional and non-traditional marketing processes into the local businesses. Firstly, the property should be listed on the Internet plus suitable signage placed at the front of the property or the tenancy. Secondly, the complete details of the property should be itemised in an information brochure to be circulated through the neighbouring properties and local businesses. The process here can be greatly aided by a follow-up telephone call. Even though an existing business may not be seeking to relocate currently, they will usually advise you of their existing lease termination date. Capturing this information into your database will greatly assist future marketing processes.
3. Identify the competition properties that have an impact on your marketing promotions. These properties may have been on the market for some time; they may even be considering a rental adjustment to lower levels to attract more enquiry. These properties will have a direct impact on the levels of rental and the marketing strategies that you adopt for your subject property. In this case the landlord should be suitably briefed so they understand the impact that these properties could have on your vacant area. Logic says that a competitive rental should be offered in your property to offset the pressures of other competition properties.
These three simple tips have significant impact on the success or failure of the leasing campaign relative to the vacancy. Set your leasing targets so you can proceed through the campaign with clarity and focus. Adjust your rental should enquiry not be generated within the first few weeks of the campaign.
Knowledge of market rentals, incentives, lease documentation, and tenant needs will help you with the process of putting a lease together on a vacant property.
The Main Factors in Leasing
When considering the listing of a commercial property for leasing, there are three main considerations or tips that can be incorporated into the listing and leasing process. They are as follows:
1. Make sure you understand your target market of tenants and what they looking for. In each and every location there will be tenancies looking towards change and relocation. From time to time tenants are also looking to upgrade their premises or adjust their occupancy costs and commitments. This is a fresh and new opportunity for the leasing of new premises. Property agents should spend time in connecting with all the local businesses to identify their property needs, the expiration of their leases, and any tenant requirements for expansion or change of occupied area. You should expect that other specialized leasing agents in the local area will also be speaking to tenants in your managed properties on a similar basis. It is therefore critical to implement a tenant retention plan to retain your tenants and minimise vacancy situations.
2. Comprehensively market the vacant property into the local business community. When it comes to the leasing of commercial office space, history has proven that most tenants come from the existing local business community. Those businesses are simply seeking to improve their standards of tenancy occupation, or adjust their business commitment to rental and other occupancy costs. They know the local area but they need to change property. On this basis, the marketing of vacant space should occur through both the traditional and non-traditional marketing processes into the local businesses. Firstly, the property should be listed on the Internet plus suitable signage placed at the front of the property or the tenancy. Secondly, the complete details of the property should be itemised in an information brochure to be circulated through the neighbouring properties and local businesses. The process here can be greatly aided by a follow-up telephone call. Even though an existing business may not be seeking to relocate currently, they will usually advise you of their existing lease termination date. Capturing this information into your database will greatly assist future marketing processes.
3. Identify the competition properties that have an impact on your marketing promotions. These properties may have been on the market for some time; they may even be considering a rental adjustment to lower levels to attract more enquiry. These properties will have a direct impact on the levels of rental and the marketing strategies that you adopt for your subject property. In this case the landlord should be suitably briefed so they understand the impact that these properties could have on your vacant area. Logic says that a competitive rental should be offered in your property to offset the pressures of other competition properties.
These three simple tips have significant impact on the success or failure of the leasing campaign relative to the vacancy. Set your leasing targets so you can proceed through the campaign with clarity and focus. Adjust your rental should enquiry not be generated within the first few weeks of the campaign.
Commercial Property Agents - Top 10 Tips for Your Sales Pitch and Listing Presentations
Let's face a fact here that is just so common for agents working in commercial real estate. Almost every listing opportunity with office, industrial, or retail property, will involve a detailed sales pitch or presentation with the individual property owner or corporation board that owns the property. Commonly they are experienced people that know commercial real estate, and they have likely asked 3 or 4 agents to all pitch for the listing. Competition for the business will be fierce.
The pitch or presentation will normally take no more than 30 minutes and it will be your only chance to close on the listing. To successfully compete with and against other real estate agents, it pays to set some rules so you can control the situation as best possible.
Confidence is the key to a great listing presentation. The way you get that confidence is to know your market trends, the property precinct, the deals, prices, time on market, the supply and demand factors, and the best way to market each individual property to its target audience.
Here are some tips for a great presentation or sales pitch for the commercial property listing:
1. Understand the listing and selling (or renting) needs of the client from their perspective. What is driving their actions today and how can you best serve that need? What is the ideal outcome for them and how long should that take to achieve?
2. Talk about and tell your story, but ask questions of the client about their understandings and needs. The whole presentation should be connecting and not a one way conversation.
3. Look the part from the start. Your physical presentation will impact your pitch from the outset. Any distractions or diversions on your clothing or in your appearance will not help you in any way. The client will assess you visually before they listen to what you have to say.
4. Never give out or send any proposal material to the client beforehand. Wait until the presentation actually starts. Your brochures and marketing material or proposal should be explained in 'real time' to avoid any misunderstandings and to encourage agreement.
5. Use lots of visually based concepts and ideas that are relative to the property listing. Pictures and graphs are great for the purpose.
6. Get plenty of pictures of the subject property and automatically run a 'slide show' on your computer or laptop screen. The pictures help your dialogue and conversation.
7. Get small agreements from the client as you proceed. Small step agreements move the discussion ahead and help you with the final agreement.
8. Show comparisons and trends of the market with photos and chart the outcomes in time and monetary terms.
9. Deal with the clients questions as they arise. If you put off a question, the client will suspect that you have some problem or issue. Expect them to test you on many concepts and ideas.
10. Have 3 or 4 relevant stories from the market to tell the client as part of the presentation. Stories are the most powerful tool you can use in a sales pitch or presentation. It has been proven that the client really listens and remembers.
These simple tips have helped so many people over the years. Take command of your presentation; it's the only time you can convert the business that you need.
The pitch or presentation will normally take no more than 30 minutes and it will be your only chance to close on the listing. To successfully compete with and against other real estate agents, it pays to set some rules so you can control the situation as best possible.
Confidence is the key to a great listing presentation. The way you get that confidence is to know your market trends, the property precinct, the deals, prices, time on market, the supply and demand factors, and the best way to market each individual property to its target audience.
Here are some tips for a great presentation or sales pitch for the commercial property listing:
1. Understand the listing and selling (or renting) needs of the client from their perspective. What is driving their actions today and how can you best serve that need? What is the ideal outcome for them and how long should that take to achieve?
2. Talk about and tell your story, but ask questions of the client about their understandings and needs. The whole presentation should be connecting and not a one way conversation.
3. Look the part from the start. Your physical presentation will impact your pitch from the outset. Any distractions or diversions on your clothing or in your appearance will not help you in any way. The client will assess you visually before they listen to what you have to say.
4. Never give out or send any proposal material to the client beforehand. Wait until the presentation actually starts. Your brochures and marketing material or proposal should be explained in 'real time' to avoid any misunderstandings and to encourage agreement.
5. Use lots of visually based concepts and ideas that are relative to the property listing. Pictures and graphs are great for the purpose.
6. Get plenty of pictures of the subject property and automatically run a 'slide show' on your computer or laptop screen. The pictures help your dialogue and conversation.
7. Get small agreements from the client as you proceed. Small step agreements move the discussion ahead and help you with the final agreement.
8. Show comparisons and trends of the market with photos and chart the outcomes in time and monetary terms.
9. Deal with the clients questions as they arise. If you put off a question, the client will suspect that you have some problem or issue. Expect them to test you on many concepts and ideas.
10. Have 3 or 4 relevant stories from the market to tell the client as part of the presentation. Stories are the most powerful tool you can use in a sales pitch or presentation. It has been proven that the client really listens and remembers.
These simple tips have helped so many people over the years. Take command of your presentation; it's the only time you can convert the business that you need.
Woodridge Office Space
Overview
Having once held a prestigious spot on Money Magazine's 100 Best Places to Live list, Woodridge continues to please residents, business owners and employees. This Chicago suburb has over 30,000 individuals living within its boundaries and is a great place to live, work and visit.
About the Residents
Woodridge is a medium-sized city with a median household income of $52,842. Residents within the city often live and work there as well due to the employment opportunities and family atmosphere of the city.
Business Atmosphere
Many business owners who set up shop in this village favor the business atmosphere which this locale provides. It is close to the city, with easy access via many main interstates, while being far enough away to maintain that small-town feel. Public transportation is available for those who wish to keep the car in the garage but still enable themselves to get around town. Clients have easy ways to get to the various businesses quickly and easily.
Other Businesses
There are many businesses throughout this village, both large and small. Some of the big names in the Woodridge area include the Morey Corporation, Wilton Brands, Inc. and Pabst Brewing Company. Whether your business is a public corporation or a privately-owned company, this village can accommodate you if you are eager to buy or lease commercial office space there.
Things to Do
Whether you live or work here, you are bound to find something entertaining and/or enlightening to do. The Woodridge Park District is a popular option for outdoor lovers while those who like to stay inside for fun can engage in activities such as catching a movie or heading out of town to see the Morton Arboretum located in a neighboring community. Golfing is also a popular pastime in the area for those who like to get outside for a golf game every once in a while.
Dining and Shopping Options
With an area the size of Woodridge, it would simply make sense that there would be plenty of dining and shopping options in town. Variety is a key component in this area and whether you are eager to dine at a restaurant with pasta, steak or other type of cuisine on the menu, you will certainly find it in this village. Shopping options are also wide and varied. For those who appreciate larger, one-stop shopping stores, Kohl's and J.C. Penney await you. If you are interested in smaller boutique-style shops, this town has these types of shops as well.
Having once held a prestigious spot on Money Magazine's 100 Best Places to Live list, Woodridge continues to please residents, business owners and employees. This Chicago suburb has over 30,000 individuals living within its boundaries and is a great place to live, work and visit.
About the Residents
Woodridge is a medium-sized city with a median household income of $52,842. Residents within the city often live and work there as well due to the employment opportunities and family atmosphere of the city.
Business Atmosphere
Many business owners who set up shop in this village favor the business atmosphere which this locale provides. It is close to the city, with easy access via many main interstates, while being far enough away to maintain that small-town feel. Public transportation is available for those who wish to keep the car in the garage but still enable themselves to get around town. Clients have easy ways to get to the various businesses quickly and easily.
Other Businesses
There are many businesses throughout this village, both large and small. Some of the big names in the Woodridge area include the Morey Corporation, Wilton Brands, Inc. and Pabst Brewing Company. Whether your business is a public corporation or a privately-owned company, this village can accommodate you if you are eager to buy or lease commercial office space there.
Things to Do
Whether you live or work here, you are bound to find something entertaining and/or enlightening to do. The Woodridge Park District is a popular option for outdoor lovers while those who like to stay inside for fun can engage in activities such as catching a movie or heading out of town to see the Morton Arboretum located in a neighboring community. Golfing is also a popular pastime in the area for those who like to get outside for a golf game every once in a while.
Dining and Shopping Options
With an area the size of Woodridge, it would simply make sense that there would be plenty of dining and shopping options in town. Variety is a key component in this area and whether you are eager to dine at a restaurant with pasta, steak or other type of cuisine on the menu, you will certainly find it in this village. Shopping options are also wide and varied. For those who appreciate larger, one-stop shopping stores, Kohl's and J.C. Penney await you. If you are interested in smaller boutique-style shops, this town has these types of shops as well.
Establishing More Key Client Relationships in Commercial Real Estate Sales and Leasing
When it comes to selling and leasing commercial real estate, the quality of the client relationship is really the make or break to the long term results you achieve. The most successful real estate agents in this market are those that have established a solid database of qualified contacts with whom they maintain significant and relevant contact.
In many cases some real estate agents will only have 5 to 10 key clients. In business terms this is relatively low unless you are selling and leasing some of the largest property in the local market; that being very large commercial office buildings, industrial parks, and retail shopping centres.
You should be running and connecting with at least 25 well qualified high end prospects or clients constantly in your pipeline. In addition to that, you should have another 25 prospects that can advance into this elite group.
Creating this essential core of higher end prospects for your business is a constant an ongoing strategy. We have said that there are or should be at least 50 prospects in this upper level of your business pipeline. In addition to that you should have at least another 300 suspects to work with and convert to prospects. All of this takes personal contact strategy and implementation. This is not something that you can pass to your sales manager or office principal. It's a personal thing requiring commitment and consistency.
To establish a solid client relationships the following business model is useful:
1. Identify the key properties in your local area and seek out the property ownership detail in each respect. Contact will need to be made with those people.
2. Review the history of all local and major property transactions over the last five years and create a list of relevant property investors. They will be the sellers or buyers of property in each case. These are people that you will need to personally contact and meet with. It is likely that they will act again one day. It will take you some time to build trust and connection with these people, but do not give up.
3. Create a list of essential target relationships to be established and nurtured from key people and businesses in the region of your property activity.
4. Cold call prospecting should feature as part of your business model. Each and every working day at least 50 calls should be made. 50% of those calls should be to new people that you have not spoken to before.
5. Establishing face to face meetings where ever possible with qualified contacts.
6. Some clients or prospects will be repeat purchasers. Understanding their needs will be part of the ongoing contact process.
7. Maintain contact with the local business community constantly an regularly. The larger businesses in your local area may own or rent property. Either way they are sources of market intelligence and listing opportunity for sales or leasing.
8. Some local businesses will have essential property criteria as part of their business model. Identify these needs and capture them in a database.
9. Have a number of contact tools and processes which make your repeat approaches to your clients and prospects relevant and informational. You can use newsletters, flyers, brochures, success letters, market trends and information briefings, presentation nights, and having regular 'one on one' coffee meetings with your prospects.
10. Professional people associated with the property industry are also good sources of sales and leasing leads. The people you should maintain contact with here are typically solicitors, property lawyers, engineers, quantity surveyors, property valuer, accountants, and bankers or financiers.
In many cases some real estate agents will only have 5 to 10 key clients. In business terms this is relatively low unless you are selling and leasing some of the largest property in the local market; that being very large commercial office buildings, industrial parks, and retail shopping centres.
You should be running and connecting with at least 25 well qualified high end prospects or clients constantly in your pipeline. In addition to that, you should have another 25 prospects that can advance into this elite group.
Creating this essential core of higher end prospects for your business is a constant an ongoing strategy. We have said that there are or should be at least 50 prospects in this upper level of your business pipeline. In addition to that you should have at least another 300 suspects to work with and convert to prospects. All of this takes personal contact strategy and implementation. This is not something that you can pass to your sales manager or office principal. It's a personal thing requiring commitment and consistency.
To establish a solid client relationships the following business model is useful:
1. Identify the key properties in your local area and seek out the property ownership detail in each respect. Contact will need to be made with those people.
2. Review the history of all local and major property transactions over the last five years and create a list of relevant property investors. They will be the sellers or buyers of property in each case. These are people that you will need to personally contact and meet with. It is likely that they will act again one day. It will take you some time to build trust and connection with these people, but do not give up.
3. Create a list of essential target relationships to be established and nurtured from key people and businesses in the region of your property activity.
4. Cold call prospecting should feature as part of your business model. Each and every working day at least 50 calls should be made. 50% of those calls should be to new people that you have not spoken to before.
5. Establishing face to face meetings where ever possible with qualified contacts.
6. Some clients or prospects will be repeat purchasers. Understanding their needs will be part of the ongoing contact process.
7. Maintain contact with the local business community constantly an regularly. The larger businesses in your local area may own or rent property. Either way they are sources of market intelligence and listing opportunity for sales or leasing.
8. Some local businesses will have essential property criteria as part of their business model. Identify these needs and capture them in a database.
9. Have a number of contact tools and processes which make your repeat approaches to your clients and prospects relevant and informational. You can use newsletters, flyers, brochures, success letters, market trends and information briefings, presentation nights, and having regular 'one on one' coffee meetings with your prospects.
10. Professional people associated with the property industry are also good sources of sales and leasing leads. The people you should maintain contact with here are typically solicitors, property lawyers, engineers, quantity surveyors, property valuer, accountants, and bankers or financiers.
The Impact of the Recession on Commercial Real Estate
The recent recession that has hit the United States had adversely affected the values of commercial real estate. This has made for a challenging situation for realtors who have been trying to move commercial property. There is a bright spot in the future, as The National Association of Realtors has put a positive spin on next year, saying that there looks to be some improvement in the situation.
Commercial rest estate has a natural habit of falling behind the rest of the economy during tough times. The troubled economic times during the past two years has caused a negative impact on sales and rental of units throughout the country. It is looking, at least in the near future, to cause continued lower occupancy rates in various properties that have been hard to advertise and move.
The upside may come from an increase in consumer spending and their confidence in the economy. With more consumers out spending, more entrepreneurs will be likely to open business doors and get into the retail market. This should translate into more rental properties being leased and increased income for property owners. This may be due to more families moving from homes to apartments.
Another vital area that may help the slumping commercial property market is bank activity. Banks are becoming more open to extending commercial credit to business owners in 2011, which will be a vital part of recovery in this area. The situation is also helped by the Federal Reserve's Asset-Backed Loan Facility. This helps to support lenders to give longer terms those who already have commercial loans. With the extensions, many business owners can stay in business and keep renting valuable commercial property.
Those who have office space for lease have suffered drops in rental space over the last three years. This encompassed not only space that is currently for lease, but also newer office space that is being constructed. For example, the industry saw vacancy rates in 2009 that went from 16.3 percent up to 17.6 percent.
Another commercial real estate area that has seen challenging times is in apartment and residential rental properties. There has been a bright spot here, though. The vacancy rate has actually dropped from 7.4 percent and may get down to around the 6.1 percent mark as we close out 2011.
Commercial rest estate has a natural habit of falling behind the rest of the economy during tough times. The troubled economic times during the past two years has caused a negative impact on sales and rental of units throughout the country. It is looking, at least in the near future, to cause continued lower occupancy rates in various properties that have been hard to advertise and move.
The upside may come from an increase in consumer spending and their confidence in the economy. With more consumers out spending, more entrepreneurs will be likely to open business doors and get into the retail market. This should translate into more rental properties being leased and increased income for property owners. This may be due to more families moving from homes to apartments.
Another vital area that may help the slumping commercial property market is bank activity. Banks are becoming more open to extending commercial credit to business owners in 2011, which will be a vital part of recovery in this area. The situation is also helped by the Federal Reserve's Asset-Backed Loan Facility. This helps to support lenders to give longer terms those who already have commercial loans. With the extensions, many business owners can stay in business and keep renting valuable commercial property.
Those who have office space for lease have suffered drops in rental space over the last three years. This encompassed not only space that is currently for lease, but also newer office space that is being constructed. For example, the industry saw vacancy rates in 2009 that went from 16.3 percent up to 17.6 percent.
Another commercial real estate area that has seen challenging times is in apartment and residential rental properties. There has been a bright spot here, though. The vacancy rate has actually dropped from 7.4 percent and may get down to around the 6.1 percent mark as we close out 2011.
Friday, December 9, 2011
5 Tips For Investing in Commercial Real Estate
Regardless of the state of the economy, investing in real estate remains a strong asset in your portfolio. So long as individuals and companies need property for their specific endeavors, you have an advantage. That said, if you are interested in putting money into commercial property, you'll know it's not something that should be done spontaneously. You'll need to look at potential locations and purposes, and even consult with an attorney with regards to lease agreements. The more you know about real estate law, the better off you'll be in the long run.
It's not uncommon for real estate investors to start with buying homes. If you buy in desirable neighborhoods, you'll never experience a shortage of interested families and individuals looking for a place to live. As you grow your portfolio, however, commercial property can provide years of steady income. Here are a few tips to consider as you prepare to search for possible investments.
1) Don't rush to buy property. There is a great temptation to jump on the first thing you see because the price is right, or the location is ideal. If the property needs repair you may easily dismiss the notion as something you can write off. Take your time in your search, however. You don't want to contract a building only to learn later that it requires more work than you can afford.
2) Consider a variety of commercial options. You may be inclined to look at apartments for the demand in living space, but don't rule out other types of property. Warehouses, office buildings, and storefronts also have the potential to bring in quality tenants.
3) Forge relationships with other investors. Some desirable properties may be out of your reach financially, but it doesn't mean you must write off buying them and move on to more affordable prospects. You may find other investors wish to connect and buy in with you on specific properties. Feel out the possibilities.
4) Be prepared to spend money. The property will cost you, yes, but you may be responsible for other fees associated with keeping the building up to code. Before you invest, know exactly what your budget is and what you can expect to pay.
5) Make sure you have good financing. Don't be caught short when it's time to make your payments. Make sure you have all the necessary financials in order when you buy.
Commercial property investment can help establish a steady income for you. Be sure to know everything you can find on the property you want, and take the necessary steps toward ownership.
It's not uncommon for real estate investors to start with buying homes. If you buy in desirable neighborhoods, you'll never experience a shortage of interested families and individuals looking for a place to live. As you grow your portfolio, however, commercial property can provide years of steady income. Here are a few tips to consider as you prepare to search for possible investments.
1) Don't rush to buy property. There is a great temptation to jump on the first thing you see because the price is right, or the location is ideal. If the property needs repair you may easily dismiss the notion as something you can write off. Take your time in your search, however. You don't want to contract a building only to learn later that it requires more work than you can afford.
2) Consider a variety of commercial options. You may be inclined to look at apartments for the demand in living space, but don't rule out other types of property. Warehouses, office buildings, and storefronts also have the potential to bring in quality tenants.
3) Forge relationships with other investors. Some desirable properties may be out of your reach financially, but it doesn't mean you must write off buying them and move on to more affordable prospects. You may find other investors wish to connect and buy in with you on specific properties. Feel out the possibilities.
4) Be prepared to spend money. The property will cost you, yes, but you may be responsible for other fees associated with keeping the building up to code. Before you invest, know exactly what your budget is and what you can expect to pay.
5) Make sure you have good financing. Don't be caught short when it's time to make your payments. Make sure you have all the necessary financials in order when you buy.
Commercial property investment can help establish a steady income for you. Be sure to know everything you can find on the property you want, and take the necessary steps toward ownership.
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