The Buying Commercial Properties Cheat Sheet

Before you decide to start buying commercial real estate, it's a good idea to have a grasp of real-estate terminology as applied to commercial property. The information below provides you with some terms which 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 expect before he actually visits the property. By way of example, Class A commercial real estate could be of modern build, less than thirty years old, probably five floors or maybe more in a central location close to all amenities and transport links. This really 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 by having an existing tenant, usually blue chip, with a guarantee of a long lease with regular rent reviews inbuilt. These properties mean that one can start obtaining a return on your investment from Day 1 rather than having to locate tenants once purchased.

Vacant Property - By purchasing empty property, you may maximise the rental income rather than be in a previous lease, however the down side is that you may need to find the tenant in the event the property has been bought. Prospective tenants can be shown the property through the purchase commercial real estate process as well as sign a letter of intent to rent, but you shouldn't sign them to a lease until you own the property.

The third type 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 large retail space that you then break up into smaller units and rent out to smaller specialised fashion or antique businesses.

Real-estate Appraisers - They are essential people when you are buying a property because they will set the valuation for the sale and therefore for your mortgage. Wherever possible, you should try and meet them on the site in order that you may point out the bad things, in case you are buying, or all of the good points, in case you are selling.

As you may anticipate, you will find hundreds of terms used both in residential and commercial real-estate investment and also you will come across a lot of new ones as your property investment profession continues. I have tried to give several here that may help and I hope the information is useful.