While many real estate investors focus their attention on residential real estate, they often overlook the advantages of getting involved with commercial real estate development. While it’s true that people are always going to need a place to live, it’s important to remember that entrepreneurs and small business owners are always going to need a place to set up shop. Savvy investors understand there’s money to be made in commercial real estate.
Once you decide to get involved with commercial real estate, you’ll want to find the best properties which suit your plans. When you’re renting out commercial space, decide if you want to go with office spaces, storage units, retail shops, or parking garages.
When you’re looking at different properties, consider the “big picture.” If the area you want to build in is up-and-coming, you might be able to land the property when it is still relatively inexpensive. Keep in mind that commercial real estate can appreciate the same way as residential real estate. In some cases, depending on commercial growth in the area, it might even grow at a more rapid rate. This means the property that you bought last year might have seen a significant rise in value this year.
After you pick the property you’re interested in, you’ll contact the leasing agent. In many cases, the agent will work with you to get you certain “perks,” which can include a set number of months that are rent-free. While this might seem like a great deal, it’s important to consider the incremental costs within a lease – where a certain percentage increase is built into the contract. Remember that negotiation is possible, and you might be able to trade off the free rent in exchange for lower price increases throughout the life of the lease.
You might need to secure financing in order to get the real estate you desire. If so, make sure you’ve got a solid business plan drawn up. Do as much in-depth research as possible to ensure you’ve covered as many contingencies as possible. The better prepared you are when going in for financing, the greater the likelihood of having a successful outcome.
Finding the right contractor is another vital key to saving money. You will probably want to get as many different bids as possible. Do not always go with the lowest bid, however. After all bids are in, research the background of every possible candidate. Just because a contractor tells you that the work will be done at a certain price and completed at a certain time does not mean that’s how it will play out. Choose the contractor that can deliver both a reasonable price and who has a solid reputation for completion of the projects.
If you’re looking for a source of additional income for your commercial property, remember that you not only own the interior of the property. You also own the exterior – and the outside of your property can be used for various advertising venues.
A great way to save money with your real estate is to invest in the property as a company, instead of as an individual. The corporate tax rates tend to be lower than the tax rates for individuals. By doing a little bit of research into the difference in tax rates, you might find yourself saving money down the road.
Commercial real estate offers you a great investment opportunity, providing you do your homework. The right property, developed the right way, can become a very valuable piece of real estate down the road, offering you the opportunity to make back your investment many times over the initial cost.