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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.

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.

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.

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.

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.

There are also specific laws and zoning regulations that govern the use of commercial property in city areas. This means that commercial property, or private or industrial property, cannot be erected anywhere, as they must adhere to zoning laws and city approval must be given for any new constructions.  Here is a brief overview of what commercial property really is.

Zoning Laws and Commercial Property

All cities and towns have specific zoning laws that differentiate between private, commercial and industrial property. These zones are clearly marked on city maps and define what type of building can be built on certain areas.

When buying a prospective commercial property make sure that it is zoned for commercial use. If it is not the city government might not allow you to carry on with your intended business plans

Cities use zoning laws to prevent conflict between homeowners and businesses. Commercial property will rarely be placed in the middle of a residential area. City planners use zoning laws to encourage commercial businesses to gather along busier main roads and downtown areas, in order to manage traffic flow in residential areas better.

Some areas in cities and towns are also designated as mixed use zones. This means that commercial property and residential property are zoned together. This mixed use zoning has proven to be very successful and popular with residents, with this type of property often fetching a very high price, due to its convenience and location. A perfect example of this would be a shopping mall with apartments above, or surrounding it.

Different Categories Of Commercial Property

Commercial property covers a wide range of commercial businesses, from medical centers to shopping malls and office buildings. Commercial property comes in four distinct categories: retail, office, industrial and multifamily.

Retail commercial property includes malls, medical centers, hotels, retail stores and shopping malls. Retail commercial property is the most well know and most lucrative for of commercial property, as they attract numerous customers and are seen as a valuable asset to any town or city

Office commercial property includes all sorts of office blocks and buildings and provides employment to numerous people. Office blocks are commonly found located very close to, or sometimes inside of, residential zoning areas. Because so many people work there it makes sense to place office buildings close to where people live. This cuts down on travelling time, as well as traffic congestion.

Industrial commercial property refers to light industrial buildings like, warehouses, distribution centers and garages. They are not the same as industrial property which refers to factories and manufacturing plants that are found on the outskirts of towns and cities.

The last commercial property category is that of multifamily housing. This simply refers to apartment blocks and buildings which are commonly found in city centers and on the outskirts of residential or suburban areas.

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

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Timing Is Everything

You need to sell your business at the right time and for the right reasons.  Most business owners buy a business with the sole intent to improve it and then sell it a few years down the line. You need to make sure that you are selling your business during a time when the economy is booming and you can get a good return on your initial investment. Do not wait until the economy hits a slump, as you will probably get less for your business than when you bought it.

Another common reason why business owners sell their business is because they fall ill or get too old to take care of this business. This is the worst time and reason to be selling your business. Prospective buyers will take advantage of your health and use it against you to get a lower price. If you are selling your business due to age or health you will probably also not have the energy to deal with long and tiresome deals and you will be more likely to sell your business at a greatly reduced price. Rather sell your business when you are healthy in order to get e better price. Or you could get someone else to handle the negotiation.

Be Honest And Clear About What An Why You Are Selling

Normally a business will come with lots of other assets, like restaurant or clothing stocks, equipment, client lists and trademarks. You need to carefully determine the worth of all these included assets into your selling price. Sometimes assets can be intangible things like client lists that have no clear value, and you might require the advice of a professional in order to quantify their value. Other things like equipment and stock will have clear set market prices that you need to factor into the selling price.

You will have to be clear and honest towards prospective buyers about why you are actually selling your business. It is no use lying about profits, as prospective buyers will scrutinize your financial statements carefully before buying your business.

The best way to make a quick sale is to be upfront and honest about the performance of your business, what it is worth and why you are selling it. Prospective buyers will do their own research and if they find out that you have been dishonest about anything regarding your company you might get into trouble or lose a potential sale.

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

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Owning your own commercial property can be lucrative dream or a devastating nightmare. So rather consider these top three things before you buy commercial property.

Commercial Property Can Be A Great Investment

Whether you are buying commercial property to house your own business or to rent it out to other businesses, commercial property can be a very lucrative investment.  If you are buying a big office building to house your own company you can make even more money by renting unused floors and office space to other companies. This will help you cover the monthly down payments needed on your commercial property.

Most people forget that there are various other property types to invest in besides residential property, and by owning commercial property you will not only boost the value of your own company, but you will also be able to turn a profit on your investment be renting it out to other companies.

Does The Building Offer Space For Future Growth

When buying commercial property you need to ask yourself if the building would be big enough to allow for the future growth of your business. This is especially important if you are just starting a new company, or if you own a small business.

When buying a commercial property you are making a long term investment in the future of your company, and you need to keep in mind where your company will be in the next few years. Owning your own business space means that you will not be able to relocate easily, and that if you want to relocate you will first need to sell your commercial property in order to get enough funds to move. Selling commercial property can take a very long time, and in the mean time your business will suffer the consequences.

So rather make sure you know where your business is headed and buy commercial property that will allow your business to grow and develop over the years.

You Will Be Responsible For The Entire Building

Another important factor to keep in mind when buying commercial property, is that you will be responsible for all of the maintenance and upkeep needed in and around the building.

This could end up being very costly, especially if you are renting part of the commercial property to another company. Everything that needs fixing will fall on your shoulders as the landlord, and if the building was not properly inspected and brought up to code before you moved in, you could have serious problems on your hands.

You could opt to employ a full time handyman to deal with all the complaints and maintenance, but this could end up being very expensive, especially if you are just starting your business.

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

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But, as with all business ventures, there are a few distinct pros and cons that you need to be aware of before taking the plunge.

Pros Of Buying A Franchise Business

The most obvious draw to buying a franchise is that you will be buying a respectable and well know company that already has a well established name amongst consumers. This means that you are virtually assured of drawing large numbers of people to your establishment.

Franchises also offer support and guidance to people buying their franchises. This is very appealing for people who are novices in the business industry and who have never owned their own business. Receiving help and guidance from professionals offers the buyer security and stability and support in the business environment. The buyer will also learn the time tested methods that the franchise company uses to ensure success and client satisfaction.

Furthermore your purchasing price of stock and equipment needed in the day to day running of your business will be offered to you at a greatly reduced cost. Because franchises buy all their products in bulk, they can offer them to the franchise holders at a greatly reduced cost. This also offers consistency and helps your profits soar.

Finding good, reliable employees is also made easier when owning a franchise. Because franchises have such a well established name, they will pull more attention from prospective employees than less well known companies.

Cons Of Buying A Franchise Business

When owning a franchise you will have less freedom to decide how things should work and what you really want to do. You will have to conform to the standards and procures that are put forth by the franchise.

You will also be required to make royalty payments to the franchise. This means that the company will be taking a part of your profits each month in return for their name and business support.  The cost of buying a brand name franchise is also out of reach of most people. Franchises are extremely expensive to buy, because of their name and all the advertising and support they offer.

Furthermore franchises do not always automatically succeed just because of their name and reputation.  The head office will not always be able to provide you with accurate market research for your specific area. They will also not always be able to provide you with solutions to problems, which means that you will have to rely on yourself to solve certain problems.

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

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