10 Feb
Commercial real estate has the potential to be a lucrative investment. It is important to know the risks, rewards and responsibilities that come along with commercial real estate. In this article, you will learn how to lease commercial property and what steps to take in order to manage your property successfully.
Buying Commercial Property
Buying commercial property can sound like a daunting task, especially when you are not sure where to start. There are many factors to consider in order to make sure that you choose the property that is right for you. There are seven steps that are commonly followed when buying commercial property.
1. Recognize your motivation – The first step is understanding what your motivation is for buying commercial property. Knowing your purpose and goal will help steer you in the direction of what property is best.
2. Look at different property types – There are several types of commercial properties, such as apartment buildings, office buildings, industrial buildings, retail/malls, warehouses, and more. Do thorough research on each type to get a feel of what you are most interested in.
3. Secure your financing – It is ideal that you secure your financing before you find the property you want to buy. Once you weigh your financing options and secure the money, you will know what price range you’re going to be looking for and will make the process easier.
4. Build the right team – Buying commercial property may become too big of a task to handle on your own. Consider hiring some of the following: real estate investors, a commercial realtor, a commercial real estate attorney, and even an accountant. Building a strong team will help you buy and lease your commercial property in an efficient way and ensure that you are taking all the right steps along the way.
5. Find a potential property in your market – Now that you have done all the prep work, it is finally time to look for a potential property. A commercial real estate agent can help you find properties in your area that meet the criteria that you’ve been looking for.
6. Do research – Now that you have a specific property in mind, it is time to really dive into the history of the property and do all the necessary research to make sure this is the one you want to buy. It’s important to ask or research more about some of the following questions:
- In the past, what has the property been used for?
- What is the property tax?
- Can you request a change in zoning?
- How much income does the property make annually?
- Does the building need significant repairs now or in the near future?
- Is the property in a good location and area?
7. Make an offer and close the deal – Once you have done the research, weighed your options, and decided on a property, it is time to make an offer and close the deal. A commercial real estate agent can help you write the offer, and it is recommended to have an attorney look over it as well. There are many factors that go into closing a deal that have more legal and written details, such as contingency clauses and escrow. Learn more about the full closing process from Property Metrics.
Managing Commercial Property
Now that you have closed the deal, it is time to learn how to lease your commercial property and manage everything that comes along with owning your new property. Below are a couple things to consider when it comes to property management.
Leases
Knowing how to lease commercial property is more complicated than residential property because of the variety of lease types that are available. There are different types of leases when it comes to commercial management, and these leases can look different for everyone. Three types of leases are the most prevalent when it comes to commercial property: full/gross service leases, net leases, and modified gross leases. Learn more about these types of leases and many more from Squarefoot. It is necessary that you make sure each tenant understand the guidelines of their lease.
Maintenance
One of the most important ways you can make sure your property is successful is keeping it well maintained. If your property looks like it is falling apart, it will deter potential tenants. Take care of any small maintenance issues before they become a big problem later on. Not only does it help save you from future stress, but it can also save you money. One easy way to manage your building easily is to have a building automation system. A building automation system (BAS) is a centralized system within a building that provides automated controls over different internal systems. Learn more about building automation systems and how they can help you.
It is also important that you regularly have your building inspected and that all safety regulations are met. Keep track of all the reports and paperwork that come along with inspections so that you can go back and assess what needs to be taken care of.
Communication
It is crucial to have open communication with your tenants. Keep them updated on the status of their maintenance requests and important dates. By building a strong connection with your tenants, you are more likely to meet their needs and help them feel more comfortable in their space.
If your tenants are struggling due to COVID-19, read more about ways you can get your tenants financial help during this time.
Invest in a Property Management Platform
The best way to manage your property is with a property management platform. Property management platforms help ensure that you are able to stay on top of all of the above. With Particle Space’s Property Management platform, you can use property management capabilities like signing leases and tracking maintenance requests, as well as building management capabilities like monitoring floor temperatures and smoke detectors.
Marketing Commercial Property
In order to continue your success, it is important to develop a solid marketing strategy to ensure that you are able to continue generating leads and reach potential tenants.
1. Create a website – When creating a website, keep in mind that it should be professional and easy to navigate. Your website should be your property portfolio, so make sure that your website has all the information a potential tenant or buyer would want to know. Don’t forget to include contact information and links to your social media sites.
2. Post on social media sites – Social media sites have become a popular way for anyone to share their property listings. Sites like Facebook, LinkedIn, and Instagram are all great ways to share your property and interact with people who are interested. This way, you are able to connect with more people outside of your circle. You can create your own listings for social media and advertise property vacancies for free using Particle Space’s free platform.
3. Post on online listing websites – Online listing websites and platforms, like Zillow and Realtor.com, allow you to easily share your property on the Internet. According to the National Association of Realtors, 52% of buyers found the home they purchased from the Internet.
4. Use your team or firm’s marketing materials – If you are working with a firm, you should use any of the marketing materials they provide for you, such as signs and flyers. Typically, they will give you paper flyers to hand out or signs to let potential tenants and buyers know that your property is available.
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