The commercial real estate market can be a minefield, sporadic market movements can make it difficult for the would-be investor to make a smart decision around what type of commercial real estate to buy and where. Following the 2008 economic crisis prices crashed dramatically in this sector and have only shown strong signs of improvements in the last few years. There were many smart investors who used the crash in price to capitalize and as you can imagine this has lead to a knock on effect that has affected the stability of the market. Finding the best commercial real estate deal for you is not always easy so here are some tips to help you get the best deal.
Use a Broker
Many people have an unwillingness to pay for a broker despite the fact that in most cases this money will not come from the company’s pocket as they will take a percentage of commission, landlords budget around 5% commission for the listings agent which is split with the tenant broker when the lease is completed. You will save a lot of money in using commercial real estate brokers such as The Welfont Group as you cannot put a price on their market knowledge and their desire to get the best deal for all involved. Time is something else that you cannot put a value on and excellent brokerage companies like these can save you plenty of it, research, negotiations and dealing with offers are all things that the company can do for you, allow you time to focus on your business or investments.
Get the Insider Knowledge
Regardless of whether you decide to use a broker or not, it is vitally important that you have a strong understanding of how commercial real estate works, and how it differs from residential real estate. Commercial real estate is valued differently and income is based on square footage of the property, leases on commercial real estate are almost always far longer than residential property which gives you the opportunity for stronger cash flow. When buying into commercial real estate you are required to have a higher percentage deposit to do so, unlike residential property, lenders will look for a minimum 30% deposit before handing out any money. It is important that you understand these differences in order to find the best deal for you.
Look for Those Who Want to Sell
Searching for motivated sellers is one task that you must do in order to find a great deal, finding someone who is willing to sell below market value is what you should be aiming for. There are many factors that could force someone to sell cheap, closure of a business or requirements to pay debts are just a couple of reasons. The best way to find these people is by talking to as many people as you can, once you’ve found your location of choice you should make contacts, share connections and probe a little into people’s situations. You’ll be surprised at what you might find.