Commercial Real Estate Acquisitions in 7 Easy Steps
Acquiring a location for your business is essential. Plenty of commercial real estate options are out there, including numerous ways to get funding to purchase this property. In order to get the best deal for your acquisition, there are a few steps to follow.
First, you need to brush up on your knowledge of real estate for commercial businesses. This information differs a lot from residential real estate, so even if you are knowledgeable about property for homes, you need to learn about what is involved with commercial properties.
The second thing you need to do is map out your plan of action. You need to figure out how much you have in your budget and how much space you need to continue business operations. Determining all this will allow you to know what properties to consider and which to discard.
The third step is developing a keen eye for detail. As you are browsing through commercial real estate, look at issues that would need to be corrected. Signs of damage that need to be corrected can be used as leverage to negotiate a lower price.
Fourthly, you need to familiarize yourself with basic metrics of the industry. These include the cash-on-cash formula, cap rate and net operating income. Know what all these terms mean so that you can understand what a real estate agent is saying.
The fifth step is to find sellers who are motivated to sell. You might find a great property, but if the owner has no reason to move, then you are going to have more difficulty negotiating a good price. If a property owner really needs to sell the space soon, you will be more likely to ask for a better deal.
The sixth step is to scout out good neighborhoods. The success of your business will depend on more than just the individual building you are operating in. It will also depend on the community and if there are other things nearby for consumers to do. Tour the neighborhood to see what it is like.
Lastly, you want to use every resource available to you to find the best property for what you need. You can browse for vacant buildings online, but you can also find great deals in the classifieds section of your local newspaper. You can also hire bird dogs to be on the hunt for the best properties in the city. Finding great commercial real estate takes some hard work, but if you are willing to put in the effort, you will reap the benefits in the end.