Numerous individuals have achieved success with commercial real estate ventures. Unfortunately, there are no short cuts in this type of investing. It takes diligent research, experience, and elbow grease to succeed in this arena. Read this article for tips on how to deal successfully in commercial real estate.
When you’re writing letters of intent, try to keep it brief by agreeing with the bigger issues initially and let the lesser issues be resolved at a later time. You can make all your negotiations less tense, so you can agree on any of the smaller issues first.
Commercial loans require a higher down payment than your typical residential loan. Look for lenders who have the best rates and keep your personal credit and your business line of credit in good standing for the best chances of qualifying for a loan. Also, make sure to keep your ear open for the best investments.
If you are considering investing in commercial real estate, make sure you are aware that you could possibly pay very high rates of inflation during the course of the next couple years. Just a few years ago, most contracts protected you from inflation by locking you in at a certain interest rate. However, most leases today don’t contain mandatory adjustment clauses, so if there’s mass inflation, you may lose money.
There are many tax benefits available for commercial investors. Investors receive depreciation benefits as well as interest deductions. Investors often get ‘phantom income’ this is income that does not have tax attached. You should be mindful of phantom income prior to investing.
Before you present an offer for commercial property, be sure to have your funding source in place. Ask friends or investors you know to give you a list of the lenders they prefer. Research prospective lenders before purchasing property, and find one that you can work well with. By doing your homework ahead of time you can increase the chances you are approved for the loan.
When you are looking to buy or sell commercial property, don’t forget to leverage your network of contacts. For example, many commercial properties that are sold are unlisted, so having many people in your own network can help you know more and get inside scoops on some great deals.
With the right approach, handled the right way, your success in commercial property can be easy. Remember the suggestions from this article and apply them to your business. Continue to educate yourself about the industry, and learn about ways to improve. If you want to succeed in the commercial real estate market, you need to get experience, as well as knowledge.