When you want to invest in commercial real estate, you must know what the property does, what it can do for you, and what kind of owner you want to be. Everyone invests in commercial real estate for their own reasons, and you need to make your intentions clear every time you invest in a new building. Use the steps below to ensure that you can invest in quality real estate, get the results you want, and offer good service to your tenants.
What Does The Building Do?
When you look at Dayton Ohio commercial real estate, you need to know what the building does. You might invest in a warehouse that is rented by companies for storage. You might invest in a distribution center that is used by large companies that need to be close to the highway, or you might find an office building with dozens of offices to rent.
Some people do not want to invest in office buildings because tenants come and go all the time. Some investors might not want to deal with a warehouse because these facilities might be located in bad parts of town.
You might not have contacts that will help you rent the building, or you might not be interested in the purchase of the building. Invest in a building that does things that you can take an active interest in. You might buy a medical office building because you want the tenants to have a good space to offer medical care. You might invest in an office building because you want to offer affordable office space for startups, or you might invest in a warehouse because you know people in the logistics industry.
How Much Are You Buying?
You can invest in commercial real estate, but you need to decide how much of the facility you want to own. Some investors will buy properties outright, but others will buy a percentage of the property. You will get a percentage of the profits at the end of the year, but the building will provide you with consistent income.
If you buy the building outright, you are responsible for insurance, upkeep, and security. You may not want to take on all these responsibilities because you do not have the time. Moreover, you may not understand how to manage a commercial facility.
Who Will Manage The Building?
You can hire someone to manage the building for you because they have experience in property management. You might manage the building yourself because it will provide you with a full-time income, or you might hire a property management company to look after the property.
You need a security team or security service to watch the building. You need a maintenance crew that can take care of the building, and you need someone who will collect rent. In some cases, you might require any tenants to maintain the building, or you might require the tenant to appoint a manager for the facility.
How Much Money Will You Make Every Year?
Some people want to invest in commercial real estate because they want to make a full-time income from the building’s rent payments. You might want to invest in a commercial property because it provides you with a bit of extra cash every year, or you might invest in the building because you plan to improve it, sell it, and enjoy the profits of the sale.
Can You Improve The Building?
Some people buy commercial real estate because they want to improve or retrofit the space. You could turn an old factory into condos that will sell for high prices. You could buy an old distribution center that can be turned into a self-storage space. You might want to convert an old office building into something that is a bit more modern, or you could buy an old apartment building because you want to return it to its former glory.
If you can buy the building for a low price, you can pay to improve the space using a construction loan. When you sell the condos, rent the offices, or sell the building, you will recover your investment plus the profits.
What Is The Status Of The Building?
You need to get a complete inspection done on the building, and you must have a title search done. If there are any outstanding liens on the building, you need to figure out who holds them. If someone else has their name on the building other than the current owner, you need to figure out why. You cannot buy a building that belongs to someone else because they could sue you, win the building in the lawsuit, and you would lose all your money.
A building inspection will let you know the condition of the building. If the building has bad plumbing, the structure is unstable, or the roof is in poor condition, you need to pay for those repairs. If you are not willing to pay for the repairs, you should find another building.
What Are The Average Prices In The Area?
If you are thinking of buying commercial real estate, you need to know what the general area is like. If you buy a warehouse in the worst part of town, the property values could drop. You will not make a profit if you ever sell the building, and you might have a difficult time finding tenants.
You might find a property that is in a bad part of town, but the city might have started a revitalization project. If that is the case, you might get some incentives from the local government to buy the building. You can be part of a big project that will bring that part of town back to life, and your property might be featured in the city’s marketing campaign for the project.
How Will You Pay For The Building?
IF you can buy the building with cash, you should use cash. You can take out a loan that will be paid off when you collect rent from your tenants, or you might work with other investors who contribute a percentage of the price of the building. You will sign a joint contract stating how much you invested in the building, and that contract will be used to pay your dividends throughout the year.
If you look through the list above, you can plan to buy a commercial property that might change your life. You could earn a full-time income from the property, or you might improve the building before selling it. You can use the building as a way to make extra money, or you might buy a percentage of the building because this is your first investment. You can use your profits to invest in other buildings, or you could keep the building in your real estate portfolio because it generates profit every year.