Practical Commercial Property Advice

There is a lot of theoretical commercial property advice available for first timers in this exciting market. While it indeed is a great opportunity to get a chance to invest in commercial real estate, it has to be done after proper due diligence. Unless one keeps an eye out for the various pitfalls in this market, one is likely to end up making a distress sale and losing one's savings.

Tie up the Loan

Even before you start looking at real estate properties, you need to get your real estate loans fixed. For this, approach your banker with your proposal and discuss various repayment options. You can either choose a fixed monthly payment or a ballooning payment. In the fixed plan, you repay the interest and part of the principal, while in the balloon plan, you pay only the interest until the tenure of the loan. Then, you realize the cash by selling the property and repay the principal. Your choice of loan format will depend on your reading of the real estate market as well as the rentals you expect to collect in the meantime.

Check the Listings

Once you have an in-principle approval of the loan, you need to check out real estate listings. Go through the listings in a wide range of localities and compare prices and rentals. One practical commercial property advice, is to visit a shortlist of properties and see the surroundings and ambience for yourself. Ask questions about ease of telecommuting and parking. Find out if the property can easily be modified to accommodate some other business venture.

Estate Agent Qualifications

Now you are ready to talk to the real estate agents. When dealing with property it is best to have an agreement with qualified commercial agents. Agents who have accreditation or are otherwise qualified will offer a better quality of service. Ask them if they are willing to negotiate with the seller on your behalf. Some agents have tie-ups with banks and might be able to get the loan processed faster. Enquire if these services will be charged extra.

Commercial property agents will also be able to tell you how soon you can expect your property to be occupied and how much rental the property commands at present. Using these figures do your math and ensure that you can repay the loan with the rentals projected. This is vital as the rental market for commercial property too is at a low right now. You need to have some withstanding power to avoid a distress sale.

While many people urge you to jump into the commercial property bandwagon, sane commercial property advice is clear that you need to have sufficient funds to outlast the current economic downturn. If you have the staying power, you can easily multiply your initial investment. The current market is not favourable for those looking for quick returns on their investment. However, if you have a lump sum saved up besides having a regular income, this is a great area to invest in.