Real estate, especially commercial property, is always a good investment. The earning potential of commercial estates is higher than other kinds of businesses. Although the upfront cost of investment is higher, rental fees are passive income. This means that you are earning while doing literally nothing but maybe just checking your units from time to time.
But before you contact a Portland building commissioning company, you must make an in-depth study of your property’s location, market, and value. These things will help you make the proper decisions in terms of how much to invest in a building and the cost of maintenance that will be funneled into it when it starts operations.
Failing to Understand the Terms of the Loan
Unless you’re swimming in money (and even if you are), you’ll probably have to apply for a business loan. Be careful with using your property as your collateral. One wrong move can empower the banks to sweep in and claim your property. Look for a more considerate lending institution that will require little or no collateral. Maybe you can even apply for a character loan?
Whatever kind of loan you agreed to, the important thing to remember is to check the terms of the contract. Make sure that the terms are amenable to you and that you can comply with the agreement. Make it a point to consult your contract every time you are confused with something about your mortgage.
Incorrectly Assessing the Value of the Property
Your one dollar can buy bottled water in New York. It can buy a meal in Thailand or the Philippines. The value of your property is assessed the same way. The value of the commercial property isn’t the same in Queens as it is in Manhattan. There are many factors—location, local economy, construction, layout, vehicular traffic, etc.—that affect the price of a property. If you’re looking for a commercial property to buy, navigate these factors and purchase within or under the fair market price of the property.
Misunderstanding Gross and Net Income
The gross income is the value of money collected from all your tenants. The net income is the money that’s left after all the maintenance expenses and taxes have been deducted from the gross income. When you begin to plan for a commercial property business, it is important to take into consideration all the expenses that the property will incur during the course of rent. Failing to do so will create false hopes that you are profiting when you’re actually just spending all the tenant fees for the building’s maintenance.
Not Hiring a Competent Contractor
Hire a contractor with years of experience and positive reviews and recommendations to back him up. Although a competent price is important, look first for quality contractors before examining the breakdown of the fees. A reputable contractor will make sure that your building is made of durable materials. This will ensure the quality of your commercial building in years ahead and avoid expensive repairs and replacements.
Understandably, there is trepidation in investing in commercial real estate, but the rewards are fulfilling once you’ve gotten through the hurdles of loans and taxes. As long as you can set up a system that ensures the property’s profitability, you will reap the rewards in no time. Study all your options and seek professional help to address all your concerns.