Commercial real estate transactions have many unique characteristics. Read on for a few suggestions and tips that could help you get a great deal.
During the commercial loan process, the person who is the borrower will need to order the appraisal. It is not unusual for the bank financing your investment to refuse to accept any other appraisal. Plan for this eventuality and arrange for the appraisal on your own.
Before you can start using the property you’ve purchased, you might need to make some improvements. This may be simple changes such as painting or rearranging furniture. However, in other cases, reconfiguration of the walls will be required. When negotiating, you should discuss who will pay for the improvements you’ll have to make, and should see if the current owner will cover some of your costs.
If you are trying to choose between two desirable commercial purchases, the larger one may be the better choice. Obtaining adequate financing is a major undertaking, whether you opt for a ten-unit apartment complex or a twenty-unit apartment complex. The concept here is the same as any other situation where you are purchasing multiple things. The more you purchase, the less you will pay for each unit.
This is important because you want to ensure that the terms line up with the pro forma and the rent roll. If you choose not to review these key terms, there may be a term that got overlooked by the rent roll, that can lead to a modification in the standard documentation.
Find a trustworthy real estate firm by asking about how they make their profit. Honest brokers will be open about this, so you can tell if your interests will be at odds. It’s obvious that real estate agents stand to benefit by selling property to you, so it becomes important that you deal with only an honest broker.
Buying a piece of commercial property presents many challenges. Use the ideas in this article to inform you as to how to approach your next commercial real estate purchase.
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