Successful Commercial Property Ownership

Top 10 Secrets of Successful Commercial Property Ownership!

1) What is your type?

There are many different types of commercial properties that you can buy, including:
- Office
-  retail space
- Funds or warehouse
-  restaurant
- commercial condo
-  Strip Mall

The first step is to clearly define what type of property you want to buy and how much you want to use. The following information will help you maximize your investment dollars to get the best deal possible when purchasing real estate.

2 ) Build equity Through its investment

Equity is money
Building equity is the main, if not the ultimate reason for buying instead of renting a commercial property . Let's face it . This is money in the bank. In fact, it's better than money in the bank because you can get the same kind of return on your money when you're sitting on the bench rather than when you build equity. On the other hand , if you choose the right financing for the purchase of commercial real estate, you can not only build equity through ownership , but you can also use their savings capital to grow your business , hire additional employees, or even buy an extra slot when the time comes .
Having beats rent because you can sell your investment once exceeded the space or sell the business . While commercial real estate in your area has not been appreciated (which is unlikely ), you can recoup your investment by renting space once you move and sell when the time comes .
If you are thinking more in your building , you can buy something that exceeds your current needs , and rent additional space until needed for expansion. This will give you a steady income that can be used to help pay your mortgage or invest in your business .

3)Do your research

The more you can learn about the properties and options , mortgages, financing , zoning and remodeling , will be in the best position to make informed decisions about the acquisition of a commercial property.
However, you do not need to know everything. This is where the development of a strong team of competent professionals in their fields of expertise can be your most important step . Build a team of advisors - people you can trust to guide you in the right direction is critical to your success .
Understanding the current market conditions
Keep your eyes open for news articles relating to the procurement of commercial real estate. Is " hot " right now ? It is a buyer or a seller's market ? What types of interest rates are available?
The Internet is a great place to start . Perform a Google search for " commercial real estate market ," for example , will give you the results that include news and resources for national trends , analysis and market research .
In addition , many real estate agents, lenders and lawyers across the country offer free articles and timely information on their websites that highlight trends in commercial real estate in the country today . Again , make sure to listen to both sides of the story .
Click Expert Resources
National market research companies can give accurate information about the area where he is preparing to locate your business . You can also find information on demographic characteristics, including average age , household income , the disintegration of ethnic groups , and most of the censuses available from the U.S. Census Bureau .
Also contact commercial lenders or realtors additional resources. Seeking help, it is usually best to talk to a lender or experienced in the country and up to date information from a minor operation that can not have recent data for your real estate agent. If the lender / realtor failed demographic updated since 1996 , you basically wasted. In addition, a lender or real estate agent who specializes in the type of property you are looking for is more likely to have specific information you need , you can save time on research.
Study, the current vacancy rate
Research that the unemployment rate has been over the past year in the area that interests you. If it appears that there are high levels of vacancies , try to find out why. Is it a bad neighborhood ? Talk to store owners in the immediate area and how long they do business there. Ask them if they have any concerns that you as a potential owner should know about the area.
Realtors Commercial Research
It is important to look for commercial real estate agents who specialize in the kind of space you need. Grill on the property that you plan to select the procurement process around so that you know what to expect . Ask how long the process usually takes surprises. Check their references and history (more on the search for a commercial real estate agent in No. 5) .
Browse experienced commercial lenders
Choosing a lender and program funding is as important as the choice of the property. Again, know all the funding process and its various characteristics . Do not assume that because you have had a relationship with your bank for years that the use of funds is the best option .
Banks do not always offer the lowest rates for commercial loans , and have a change sometimes much longer than non-bank lenders . Some banks require to transfer their accounts to qualify for a loan. Be aware of the provisions for a bank for a business loan.

4) Plan your plan

As a business owner, you understand the importance of carefully planning every move. Buying a property requires less preparation . Before you start looking for a building , sit down with your finances and determine how much of a mortgage you can afford to take .
Create a budget
In calculating your budget to buy a property, do not let taxes, insurance premiums , and repair and maintenance and the cost of customizing the space to meet your needs. Failing to create a budget for these expenses often overlooked quickly put you in the hole with your new property. If you need help creating this budget , ask your realtor or commercial lender for advice .
Room to grow
To determine the amount of mortgage you can afford , consider your income and expenses. Your mortgage and property expenses which should leave enough space to run your business without breaking your normal expenses.
Sometimes it is necessary to accept a reduction in benefits to gain the kind of space you need to grow. Think of it this way: the purchase of a larger space will allow your company to stretch their wings, which will result in greater benefits in the future. It is a risk that must sometimes be willing to take if you want to develop. Remember, if you buy more space than your company needs immediately, you can acquire tenants who provide rental income can significantly offset your monthly mortgage obligation.
Planning Ahead
It is almost always a good idea to buy a little more space than they actually need . You can rent additional space until you need it . If this is your plan , draw how you earn an income to help subsidize your mortgage. However, do not forget that you can have periods of the space is occupied , it does not rely on the income to cover your mortgage every time. Make sure you can pay the mortgage on their own .
Having an exit strategy
So, how to stop it ? Hopefully with big dollar signs . After all, that's why you invest, is not it ? To collect the time of investment . Therefore , you must have an exit strategy .
You can choose to keep your commercial property to retire, real estate is an asset that can provide a steady stream of passive income : a strategy for lucrative retirement.

5) Calculate your savings and profit potential

Reduce monthly payments
Consider the purchase of commercial real estate as savings for your business. Real estate costs are the third largest business expense , behind payroll and taxes. Repayment of borrowings long means your monthly payment could end up being less than what you would pay rent because the owners tend to require more of your monthly loan payment . In other words , owning your own commercial property can actually be more affordable, based on current market conditions.
Ask your lender to provide an analysis of the current market in your area and you can see which scenario is best for you (rent or purchase ) . The lender should be able to explain the options in detail with examples of monthly rental costs compared to monthly payments and the benefits of each .
Analyze the rental value
When you find a property that peaks your interest, check the status of current tenants ( if it is a multi-tenant property) in terms of the amount of rent they pay. Check if the current market rents are undervalued , which is less than what you can get on the market today. Your real estate agent or lender should be able to help you determine how much you can pay for rent and determine the amount of profit you can make each month.
tax Benefits
There are many tax advantages to owning a commercial building. In most cases, you can deduct a portion of the value of the property at tax time , and the improvements it has made ​​to the damping , which can save more money on your taxes. The purchase of the property in your business or company name is also a better tax strategy under your own name.

6) Consider your schedule

If the reason you are looking for a commercial property because his contract ends , think twice before jumping into a decision you might regret . Finding the right space , obtaining financing and go through the process of obtaining a commercial building can take months . If you do not have that kind of time , you may need to rent month to month now.
Take your time
While you may be eager to move into a space, take your time. The purchase of any type of property is an important decision, and buying commercial real estate is even more important for the development and growth of your business. Selecting a property in the wrong area , or an area that can help you grow your business and even harder to fail , so plan carefully .
If the real estate agent or lender provides an estimate of three months from start to close , the plan for more time - just in case . Note that there are many people involved in the process of purchasing a property, the seller , real estate agent, lender , appraiser , surveyor, paperwork approvers , secretaries , and more, and this process can often take a little longer .

 7 ) Location , location, location

One of the most important factors to consider commercial real estate is location. If the property is located on a busy corner that is hard to find, your business can not do well (in fact, this is probably the reason why the property is for sale) . If you want a kennel and the property you are considering is in a residential area , not only will your business disturb residents, zoning can prevent operate there .
Foot Traffic
For a retail business , look for areas with high foot traffic that will give you exposure and increase walk- ins you need to succeed.
If you are looking for an industrial or manufacturing setting , then you can stay out of the spotlight now and buy something in a warehouse district . These areas are usually cheaper than the stores.
easy to reach
Make sure your site is easily accessible by road. Look to see if the site is in a difficult crossroads . Is there work in progress that seems not to end in the short term ? Also, what is the building once the potential is over?
Discover competition
If you want to open a restaurant in a neighborhood that has several bars , you may want to try somewhere else with less competition . However, a healthy population of restaurants usually means a healthy population of clients.
Know Your Customer
Study the demographics of the area you are interested If you want to move your sports shop to a new location , you probably want an area with a high percentage of young and active adults. An urban area with lots of foot traffic could be better for this type of retail store in a suburban retirement community .

8) Choosing a care provider

There are several types of lenders available to help you with your commercial real estate financing . But please note that not all are created equal. Do your homework when looking for a lender that fits your specific needs.
It is important to find a company that can provide broad access to capital, to understand their priorities, we offer the best price for your loan and complete the process in a timely manner .
Types of lenders
There are three basic categories of lenders : lenders, direct lenders and indirect hybrid . Direct lenders lend their own funds. Some examples of credit institutions direct lenders include commercial real estate , banks and private lenders . Indirect lenders place funds on behalf of others, and include mortgage brokers and mortgage bankers and financial intermediaries . Hybrid Lenders pay both its own funds and loans for the account of others , and include some investment banks, investment advisors and credit companies.
Banks generally widespread in services, and offer a wide range of products. While this may sound good , think for a moment . Would you rather have a lender who knows a few financing options, or much about three or four products designed specifically for you?
Credit institutions are more specific in nature and are experts in the products they offer . Banks are more traditional in their financing products , while banks are more entrepreneurial and creative.
Banks often require financial relations come under its aegis , including deposits , location , while non-bank lenders only work with a real estate loan.
The U.S. Small Business Administration (SBA ) is an excellent resource for small businesses looking to expand your business or buy property for commercial use. The SBA offers tools that can help you plan your next move and loan programs for a variety of commercial purposes. The SBA itself does not grant loans, but works through banks and non-bank lenders who offer loan programs for small businesses that meet their needs .
From the beginning
It is important to choose your lender early in the process so that you can maximize leverage and achieve a lower cost of funds. Your lender will require a way to determine their eligibility for funding and to find out what kind of deal you can negotiate.
You will need to provide your income tax and expenditure , balance and personal financial statements of all future owners of the property. If you have not already written , you must create the profiles of the management team , including information on education and employment history and relevant experience for your business. Other necessary documents include an assessment of the property, contract of sale, and plans to use the property. The provision of these documents on time can help simplify the process. Again, your real estate agent and lender to help you through the process .

9) Know your financing options

While in the phase of "shopping" for a store to buy, you should start researching your financing options. There are many types of financing options available on the market , so it is important that you find one that best suits your needs . It is also very important to know how you are qualified to borrow. This will help you and your real estate agent to find the type of property for you quickly.
Regardless of the type of loan that you end up being the negotiation of the loan is based on the same basic elements: the intended use of the property, the expected return on plan assets or activities conducted therein , geography, type and size of the property , the perception of risk for the lender and market conditions . There is no charge for any commercial funding. The type that you receive is based on your particular situation.
If interest rates are low , ensuring a low fixed rate means you pay less interest on the entire mortgage . A variable interest rate , which is considered by some as more risky , can give you a lower amount for a period ( before the increase ) , allowing you to use the money saved for other investments .
When weighing your financing options, do not forget that some debt is good. Do not assume that you should take the loan obligation of higher down payment so that you can "pay off your debt faster . "He put more money means that you have less resources to invest in your business.
Term loans
Based on the amount of money you need to borrow , there are several financing options available . An option is a long-term loan . Term loans can be used for a variety of reasons, including financing permanent working capital , new equipment , refinancing , expansion, acquisitions and , of course , buildings.
There are loans specially designed for real estate and commercial equipment . Banks normally lend up to 80 % of the value of the property to be financed, and the loans must be repaid within 15 to 20 years. If you are able to find the remaining 20 % of the cost of the property ( and have no better place to invest money ) , there is an option to consider.
Up Up and Away
Beware of balloon payments. By paying a very low monthly amount initially sounds good, you often end up spending more money to refinance your commercial mortgage loan as lenders reset or interest rate and review your company during the term of the loan .
line of credit
If you want a more flexible loan, you may have the option of a credit line that can provide liquidity as necessary, up to a ceiling . Credit lines almost always have a variable interest rate , and have interest only payments for the first one to three years .
Private equity / joint ventures
Equity financing involves joint ventures with investors who have the capital . Usually , the investor will receive a percentage of the profits of their business in exchange for the capital you need to buy the property or shares of the company if it is public.
Some investors take a backseat to their executive decisions , while others will want a say in the running of your business . Joint ventures are not for everyone , so consider these factors when considering a .
SBA Loan Program 7 (a )
The SBA has a variety of products that are ideal for small business financing . The SBA loan is the most widely used loan program 7 ( a). The loan is granted by banks or non-bank credit.
To be eligible for a (a ) loans in July, your business must be for profit , and can not buy property for investment purposes. There are many other guidelines to qualify for a (a ) loans in July. The maximum amount a company can borrow a loan of 7 (a ) is 2 million. In addition, 7 (a ) SBA loans have variable interest rates tied to the prime rate . This type of structure of interest rates can make you vulnerable to fluctuations / quarterly monthly interest rates can have a significant impact on your monthly mortgage payment .
Now you can see why it is so important to find a commercial lender that can help to digest all this information and take the time to explain your options .

10) Funding for Best Kept Secret

One of the main reasons small businesses choose to rent rather than buy their own commercial real estate is the perception that they can not afford the down payment. Many of them are not aware that SBA loans are available to eligible applicants and can provide up to 90 percent loan financing costs .
In fact, the 504 loan program was designed to help small businesses in the construction or purchase of properties , while encouraging business growth in the local economy.
Only 10% of low
While in some parts of the country , using the 504 loan program is widespread, there are other areas such as the Rocky Mountains , where the program does not receive the attention it deserves . If you are unable to remove a large part of the cost of the loan, the 504 is worth looking at : requires only 10% - and no closing costs in addition to the 10% drop ! ( Please note that there are some basic criteria that must be to qualify for the program 10 % down . Good work with the lender that you can do your best to help them qualify for this benefit. )
The other 90 % of the funding comes from two places : up to 50 % of total costs (land, building, renovating and indirect costs ) are paid by a senior pledge of a private lender , and up to 40% comes from a junior lien from a certified development company (this part is backed by a 100 percent SBA- guaranteed bonds).
Small payments
As most banks and loan programs require a minimum of 20-30 % of the cost of the property, and do not fold in indirect costs and cancellation fees , 504 loans are a great way to get the best of all : paying only 10% down to hold more capital and are able to make small payments over the term of your mortgage loan.
Because it has two separate loans with the 504 , you get a mixing rate that is below market . The first loan is fixed or variable, is equal to or slightly higher than conventional financing. The second mortgage loan ( 40% ) is significantly lower than market interest rates , and fixed for the term of the loan . Have a lower interest rate allows your company to maintain more capital.