Financial Performance in Investment Property

Analyse Financial Performance Part 1

When looking at a commercial property of any kind that you need to spend time in the financial aspects of the property before forming an opinion on the price you think you can get. The financial aspects of the property can have a big impact on the price and not the interests of buyers. The financial aspects of a building or property can affect active for many years and for this reason, must be analyzed and identified.

We have detailed some of the key aspects of financial participation in the purchase of goods or sales scenarios. While these are not the only areas of life and concern, are the most important in most circumstances.

We recommend that you create a list of these items for your review and inspection of the property is much better and professional process.

1- Bank Guarantees : An investment property includes leases and other documents that support the tenant occupancy . A process of regular rental and involve creating a sort of guarantee to be provided by the lessee to the lessor during the lease term. It is important that this guarantee strength and substance to reimburse the landlord in situations where failure of the tenant under the lease. At the time of sale of the property , the security documents must have some sort of ability to transfer or re-issued to the next buyer. This process is known as a collateral assignment . You should consult your own lawyer to identify the types of implied warranties and the ease with which this can be achieved at the time of sale.

2- The schedules of assets : The property contains many movable and immovable property . These are usually listed in the asset register . A well maintained commercial space will be an asset register for consideration . Obtaining registration of assets in the early stages of considering selling is productive because it tells in detail what sells and later became part of the due diligence process . 

3-  Tax and GST : Each country and location of the property has its own unique tax laws and requirements relating to the particular property and real estate investment. In the sales process , it is important to understand that these issues are properly addressed and updated . Sometimes you need to access the net benefits of the property in recent years been applied to tax returns and filing process. You can also request written confirmation from the owner of the property that all tax matters are ongoing.

4- Capital Expenditures : Key of assets that are replaced in a commercial property are generally considered capital expenditures and are detailed for tax purposes and depreciation for a period of time. Tax laws where states repayment terms that apply to different types of capital expenditure. For example , a team that is purchased for the control system of the building will depreciate much faster than the air handling unit , which was bought by the factory air conditioning . Records properly maintained property include a detailed record of expenditures and assets when the goods were acquired. Property buyers will be interested in this case is against depreciation cash flow in the coming years .

5- Independent Evaluation : Many owners get a regular assessment to support the financing of the property package. It is not uncommon that each year these assessments occur . Mainly carried out by a qualified and accredited expert . If you see this documentation and taken into account in the assessment of the property, it is convenient to consider the true independence of the evaluation has been done and its relevance to today's market . Some assessments for funding can not be on par with the current market conditions . Penalty may seek a truly independent assessment at the time of sale or preparation for sale. 

6- Income and income analysis : The property income is a reflection of leases and occupancy of these permits. It is essential to understand that the rent was collected pursuant to leases or licenses, and that all questions are current rental . Part of this process also involves checking the profile of rent review and lease maturity profile. A volatile property with a lease or leases that are about to expire is likely to affect the price or buyer interest . By examining the occupancy rate against tenants leases must examine the original documents and overlap that the leasing program and any discussion or information provided by the owner. 

7- Lease disputes : It is rare property that has no existing lease dispute has been affected by a conflict of previous lease . For this reason , it is useful to consider the grounds of challenge and resolution of the lease. If in doubt , ask for a copy of the correspondence and any subsequent agreement between the parties concerned . Disputes unresolved rental can jeopardize or delay the process of selling the property. 

8-  The issues of property tax : property tax on land has a direct impact on aspects of commercial real estate investment . In different places , recovery and payment of property taxes is affected only by local law . In some cases , property taxes may or may not be recovered from the tenants to the property. This will have an immediate impact on the income statement and the net income of the property, which affects the price . Consult your financial advisor for the owner of the building or the tax administration will achieve clarity in the tax incidence . Like most agents and brokers are not tax experts , others must involve tax professionals , as appropriate .

 9- Operating Expenses: Operating a commercial property involved in operating expenses due to operating costs. Most of the properties of different types in the same location have similar operating costs. However, if a property has excessive operating expenses , higher than the average in the region , the property is likely to be difficult to sell. Most property buyers include the average expenditure on buildings that are considered realistic for each property. This also indicates that real estate agents and brokers must be aware of the average costs and the process of analysis to be applied in this situation. Operating expenses are analyzed on the basis of $ ' s per m2 or $' s per m2 ( depending on your location, the monetary base, and country)

10- Leisure mortgaged : Most commercial mortgage real estate properties will have some sort of financial support. When there is a mortgage, you must understand how it is handled or unloaded in the sales process. The client should consult the mortgagee to clarify these questions for you. In a situation of distressed properties , the sale of the property may be required to achieve a given before clear title can be reached price.