More and more business owners and individuals alike are taking the step to invest in commercial property because of the obvious benefits it affords. Commercial property acts as a stable income generator and works to diversify risk of the owner. At the same time it is a good way to expand your assets as well.

The BSM Group: Experts in infrastructure construction, bulk housing development and building construction projects.

However, there are instances when owning commercial property offers more drawbacks than benefits. This is the time when owners tend to sell but it is important to remember that as with purchasing of the property, there are many factors to consider before making the decision to sell.

Factors Encouraging Sale

The rule of thumb where sale of commercial property is concerned is that once the costs to run it becomes more than the income it generates, you should sell. It is not that simple however because there are few other things to consider:

Location and demographics – where your property is located and what type of people surround it
Tenants – what is the caliber of tenants you have renting space in your property
Competitors – are there similar properties in your area with competitive rates or services
Market trends – is the dip in cash flow due to market related reasons

Sometimes it is as simple as getting rid of old tenants for new ones to kick start the income generating potential of your commercial property. Many owners give up before even taking this first step. Taking a look at competitors can also be an advantage because you can make adjustments to your business strategy in order to give you that extra edge.

If the factors are external however, like in relation to market trends or demographics then it is probably best that you make the decision to sell. Remember that this decision must be made only after your situation has been thoroughly analyzed.

Selling Commercial Property

Take time to find the right real estate agent to handle your sale. You need to compare at least three or four different companies to ensure you are making the right choice. Consider things like how long they have been in the business of commercial property, how long it usually takes them to sell a property and whether they currently have clients who are looking to buy into commercial property.

If you have a serious buyer then there is no reason to sell the property privately. This will save you a lot of money in real estate costs and it will also save you time.

Deciding to go the route of a private sale is a big responsibility. You will need to spend time investigating what the market is like and what commercial properties are currently being sold for in that area or areas close to you.

Take initiative and establish an advertising strategy. You can use local papers, radio, flyers and of course word of mouth to get the word out that you are selling your commercial property. The bigger the variety of media you use to advertise, the more success you will have in reaching a greater amount of potential buyers.

Selling commercial property requires in depth knowledge of the market, the legislation around sale of commercial property as well as what buyers of commercial property are looking for. Therefore it can be understood why this venture cannot be undertaken on an individual level and that it is best to seek assistance from professionals.

The BSM Group: Experts in infrastructure construction, bulk housing development and building construction projects.

Although commercial property can sometimes serve as a good investment in terms of generating a supplementary income, often owners struggle to obtain the rent and lease costs owed to them and their properties end up costing more in terms of maintenance than they actually bring in. This is how you know it’s the right time to move on and sell.

Steps To A Successful Sale

Get all the information pertaining to your commercial property together in a place that is convenient. You will need to access information like lists of renters, location and demographics later in the selling stage.

Take time to find the right real estate agent to handle your sale. You need to compare at least three or four different companies to ensure you are making the right choice. Consider things like how long they have been in the business of commercial property, how long it usually takes them to sell a property and whether they currently have clients who are looking to buy into commercial property.

If you have a serious buyer then there is no reason to sell the property privately. This will save you a lot of money in real estate costs and it will also save you time.

Deciding to go the route of a private sale is a big responsibility. You will need to spend time investigating what the market is like and what commercial properties are currently being sold for in that area or areas close to you.

Take initiative and establish an advertising strategy. You can use local papers, radio, flyers and of course word of mouth to get the word out that you are selling your property. The bigger the variety of media you use to advertise, the more success you will have in reaching a greater amount of potential buyers.

Finding A Real Estate Agent

Meet with as many different estate agents as you can in order to make a comparison between services and expertise. There are a few important things to look out for:
Previous experience with commercial property
Turnover time for sales to be completed
Success rate
Current clients who are in the market to buy what you are selling

After going through the checklist, you can then refine your choices by looking at value added services that they might offer. Compare rates as you are quoted, always keeping in mind that cheaper rates don’t necessarily mean you will be better off. A few rands saved could be the difference between excellent and average service.

The relationship between you and your agent must begin with trust. This is why it is important to personally meet the people you are hoping to do business with. A rapport can easily be found or floundered in such situations and you will be able to tell more quickly whether that is the right place for you to entrust the sale of your commercial property.

Commercial property is so named because their main purpose is to generate an income, either through investment or rental costs. Buying commercial property is a big step for anyone and there are many benefits if done correctly. It is best to make a purchase of this nature with the help of professionals in the industry so that you can be sure you are getting the best deal for your money.

The BSM Group: Experts in infrastructure construction, bulk housing development and building construction projects.

It is important to investigate all your options to purchasing commercial property before making any final decisions. A great deal of money can be saved by looking at commercial property that is on an auction list, for instance. This way you can get property that often sells for way below the market value. Private sellers are another way to save money because there will be no added costs of realtors and this tends to lower the price even if by a fraction.

Different types of commercial property include:
Office buildings
Apartment buildings
Industrial property
Hotels
Shopping centers

What To Look For In An Estate Agent

Do some research to find out whether they have experience in handling commercial property and what their success rate is. Also ask about the turnover time it takes between selling and buying and how many current clients they have who are in the process of selling their commercial property.

If they can give you a list of clients who are selling at that time, then you can be assured that you won’t have to wait too long before making your purchase. This is obviously dependent on the fact that you are interested in buying the commercial property for sale but it does reflect well on the agency in question.

The people you deal with must reflect in depth knowledge of the property market with regard to pricing trends, locations, demographics and the like. Good knowledge of the business along with the proper expertise will ensure a stress-free process.

Be sure to ask about added services they will provide like consulting, property management advice and financial assistance. The agent who is willing to go the extra mile to streamline the process of your purchase is most likely to the best person for the job.

Benefits Of Owning Commercial Property

The biggest benefit to owning commercial property is the tax deductions one experiences. Expenses like repairs, maintenance, and interest on loans all reduces the taxes on income. This works well for businesses as well as individuals.

Another benefit that is quite as significant as the aforementioned is the fact that commercial property generates an income. This means that the owner will experience steady income through rentals and leases made by renters and tenants using the property.

Owning commercial property helps diversify risk. This basically means that if you own an apartment building of ten apartments and one of your tenants leave, you will only be losing a tenth of your income. If you were renting out a single-family home and that family left, you will lose your entire income.

Business owners and individuals alike look to investing in property as a way to reduce tax deductions and also to increase their assets. The trend lately however, seems to be moving away from investing in residential property and more so toward investing in commercial property.

The BSM Group: Experts in infrastructure construction, bulk housing development and building construction projects.

Commercial property refers to office buildings, hotels, apartment buildings, shopping centers and the like – basically anything that serves to generate some sort of income for the owner. This is why commercial property is becoming more and more popular as a type of investment.

Why Commercial Property Is The Better Option

Commercial property is valued differently by banks than residential property. The value commercial property gets is directly related to the amount of income generating potential it has. This is not the case with residential properties.

You can diversify your risk by investing in commercial property. If you own an apartment building with ten apartments and one of your tenants leaves, you will only be losing a tenth of your income. If however, you own a single-family home and that family decides to leave you will be losing your entire income that the property generated.

The cash flow of commercial property is higher than with residential property. One building can house several paying tenants, which means that the owner of that building will have a greater cash flow than the owner of a single-family residential property.

The leases bonded to commercial property are generally longer than those granted to residential real estate. Leases can be for five or even ten years, which gives the owner a much more stable income than short-term leases provide.

Where To Start

The first thing you need to do is establish a working investment strategy. It is not advisable to use investment in commercial property as a get rich quick scheme because chances are that you will be disappointed. Look at ways to optimally grow your wealth and work from there.

Decide what kind of commercial property you are interested in owning. You can choose between office buildings, apartment buildings, shopping centers and even warehouses. Your choice should reflect your strengths; you do not want to own a property that you are not able to manage properly.

Start looking around in your area or areas that you are interested in investing and watch for any opportunities that may arise. Keep in mind that the location of your property and the demographics of the area will directly influence the kind of income you can expect it to generate.

Once you have found a commercial property you would like to invest in, it is best to seek assistance from a professional in the field to take you further in the process. Work with someone who has in depth knowledge about the market, values of properties in that area, infrastructure and property management.

You will also need to speak to your accountant to help you get the best financing for the deal. It is often required that you have about 25% of the asking price before any institution will grant you a loan for the remaining amount. If you can offer that or more, you are more likely to achieve better terms for your investment in commercial property.

Many business owners and individuals alike are realizing the benefits to investing in commercial property. The trend used to be that those looking to expand their assets would acquire residential property but since commercial property has proven time and again to be a better return on investment, this trend has quickly changed.

The BSM Group: Experts in infrastructure construction, bulk housing development and building construction projects.

Commercial property refers to office buildings, hotels, shopping centers, apartment buildings, warehouses and basically any property that will work to generate some kind of income for the owner. This income comes from the investment itself as well as from rent paid by tenants. Thus it can be seen how income generation is the biggest advantage to owning commercial property.

Other Benefits

Commercial property diversifies risk in a way that residential property does not. For instance, if you own an office building and rent it out to four different businesses, if one of the businesses decides to move premises you will only be losing a quarter of your monthly income from that property. In the scenario of a single-family residential property, losing your tenants will result in you losing your entire income from that property.

The leases for commercial property are generally longer than those that come with some residential properties. This means that as an owner, you will experience a stable income over a longer period with your commercial property.

One of the main reasons business owners look to investing in commercial property is for the tax deductions. Expenses on things like repairs, general maintenance and interest on loans all work to reduce the taxes on income.

The valuation of commercial property is directly proportional to the income generating potential it has. The bigger the apartment building, the more tenants you will house and the higher your income will be. This means that automatically the value of your property will rise to match that.

Making The Decision To Purchase

Buying a commercial property is not something that should be entered into lightly. Take the necessary time and consideration to ensure that you do not fall prey to “bargains” or “one time only” schemes. Commercial property is not a way to get rich quick, it is an investment that needs to be entered into correctly and nurtured in order to have it pay off in the long run.

Your first order of business should be to consult with a professional in the field. Find a real estate agent who boasts in depth knowledge of the industry and its standards. They must be able to assist you with information about commercial property, the market values and trends as well as financing options. Be sure to investigate whether they have experience working with commercial property, what their success rate is and whether they currently have clients who are looking to sell.

Many financial institutions will generally consider a 75% loan so make sure you have at least 25% of the amount required to purchase your commercial property. This will speed up the process and reduce some of the hassles surrounding financing.