Commercial Deals


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In real estate investment, commercial real estate offers you an amazing opportunity to generate an enormous amount of cash flow in a short amount of time. If you get the right property, your monthly mortgage and property bills will be taken care of and you will be left with very little out of pocket expense. Finding these great real estate deals require some legwork and research though.

Start by researching the potential in the local economy.  Look for information on incoming businesses and look for evidence of resources that other businesses may find attractive. If it looks promising, then investing in commercial property has the potential to generate you a lot of business and profit.

Once you like your target market area, begin looking for places that not only are reasonably priced but also will be desirable to clients. On commercial real estate investment properties that already exist, there is a master lease for the entire property, and there are individual leases with clients. During your research and due diligence, you will have the opportunity to review this information. You can compare these numbers as well as the vacancy numbers and rents with the ones in your area’s market. Look for commercial properties that have growth potential, especially for the rent.

Next, look at the average price of electricity and other utilities. Unlike most residential properties, commercial real estate investment properties tend to split the cost of maintenance and utilities amongst the clients. This fee is normally in addition to the agreed upon monthly rental rate. These fees are known as Common Area Maintenance fees or Load Factor fees. In most cases, these costs are averaged and set as a flat fee paid monthly, quarterly, or annually. In some major repairs, they are split and charged as a onetime fee in addition to the other fees.

Key things to look for:

Extra Land: Many properties have extra land that can be sold or built upon. Normally, it is just included in the sale. This is a nice treasure that makes the sale worth it.

Lease Changes: Upon review of the leases in your due diligence, you may discover that the rents, fees, and terms are not set up well. If you catch it before you buy, these can be adjusted afterwards to suit your needs. These changes can improve your monthly income by thousands.

Common Area Maintenance fees or Load Factor fees: Unbilled or under billed CAM or LF fees cost owners mega bucks. By reviewing these closely, you may find that not all of the monthly expenses like the water bill, sewer bill, and property tax hikes are being included. By adjusting the CAM or LF fees, you eliminate any out of pocket expense you are facing and increase the amount of profit you are looking at.

Commercial real estate investments can generate you a lot of profit if you approach it carefully and know what to look for. For more information on commercial and residential real estate investment, call or visit us at Homevestorsfranchise.com. We have a wide variety of real estate investment as well as real estate franchise opportunities. If you are looking to grow you real estate investment business, we have just what you need. Call or visit us today for more information.

 

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