Twelve Things You Must Know About Buying Commercial Properties
Before you decide to start buying commercial real estate investor real-estate, it is advisable to have a grasp of real estate terminology as applied to commercial property. The information below provides you with some terms that are used and some have a brief explanation for the purpose of being successful.
Class - This usually applies to office property and gives the buyer and indication of what he may anticipate before he actually visits the property. By way of example, Class A commercial real-estate would be of modern build, less than 30 years old, probably five floors or even more in a central location close to all amenities and transport links. This is the sort of property that many organisations are prepared to rent at good rates so an ideal choice for the professional commercial real-estate investor.
Pre-Let Property - As the name implies, they are properties sold with an existing tenant, usually blue chip, with an assurance of a long lease with regular rent reviews inbuilt. These properties mean you could start receiving a return from Day 1 rather than having to locate tenants once purchased.
Vacant Property - By purchasing empty property, you can maximise the rental income rather than be in a previous lease, but the down side is the fact that you'll need to find the tenant once the property has been bought. Prospective tenants can be shown the property during the purchase process as well as sign a letter of intent to rent, but you must not sign them to a lease until you own the property.
The third sort of property that one can purchase can best be summed up as REFURBISHMENT PROPERTY in which you buy a property and then do either major or minor works on the property to meet the needs of your prospective tenants. One example would be a sizable retail space that you then break up into smaller units and rent out to smaller specialised fashion or antique businesses.
Real estate Appraisers - These are essential people whenever you are buying a property as they will set the valuation for the sale and as a consequence for your mortgage. Wherever possible, you should try and meet them on the site to ensure that you can point out the bad things, in the event that you are buying, or all the good points, if you're selling.
As you may expect, you will discover hundreds of terms used both in residential and commercial real estate investment and you will come across plenty of new ones as your property investment career continues. I have tried to give several here which may help and I hope the information is useful.
