Saves Time.

Most business owners are so busy running their companies, that they either don’t have the time and/or should not be spending their time looking for the perfect location.  A good broker will carefully interview you to help you determine wants, versus needs, and a realistic budget.  The broker will then survey the market to narrow down properties that best fit your wants, needs, image, and budget.  They will gather information on relevant properties and will organize a well-planned tour of the best options.  They will negotiate the best terms and conditions for you so that you can focus on running your business.

Saves Money. 

When investing in or leasing commercial real estate there is no substitute for market knowledge and experience. For example, let’s say you look at two comparable office properties.  Property A is $36/foot and property B is $33/foot.  You decide to go with Property B because it seems like a good deal.  How do you know $33 a foot is a good deal?  What if you found out another tenant with similar credit, similar tenant improvements,  and the same term just signed a lease in the building for $30 a foot and they got 6 months of free rent?  On a 5,000 square foot lease, that price difference would mean that you are paying $15,000 per year more for every year of the lease and you also missed out on $7,500 in free rent in year 1.  A knowledgeable broker will know what other recent deals have been done in the building and will use that market knowledge to your advantage when negotiating with the landlord.

Best Terms and Conditions. 

A typical business owner may only buy one commercial real estate property during the life of their business.  If leasing they may only be in the market once every five to seven years.  In contrast, commercial real estate brokers are out in the market every day.  They know what comparable properties are going for.  They know what concessions are being offered.  They also know which properties and owners to avoid.  Brokers review purchase and sale agreements and leases every day.  While they are not lawyers, experienced brokers can point out terms that are particularly onerous or outside of market norms.

What should you look for in a commercial real estate broker?  Here are few tips.

Experience – There is no substitute for experience.  Hiring someone with ten years or more of experience is preferable.

Knowledge of the Asset Class.  Hire a commercial real estate broker that specializes in the type of property you are buying selling or leasing.  For example, don’t hire a shopping center broker to help you with an office lease.

Knowledge of the Area.  Hire a broker who regularly completes transactions in the location where you are looking.

What Should you Expect to Pay for Commercial Real Estate Broker’s Services?

Buyers and tenants typically pay nothing for their broker’s services.  A buyer’s broker is paid by the seller at closing.  The landlord’s broker pays tenant broker fees.  Why not take advantage of this incredible free service?

At Mobiliti CRE we focus 100% on representing tenants with office relocations, expansions, contractions, and subleases throughout Tampa Bay and the entire West Coast of Florida.  We also assist businesses that are looking to purchase office, medical office, industrial, and retail space.  Reach out to us for assistance with all of your Tampa Bay commercial real estate needs at (813)-300-2227 or email us at pam@mobiliticre.com

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More Tenant Related Information

• Tampa Bay Commercial Office Market Snapshot
• How to Maximize Tenant Renewals
• 11 Tips for a Successful Real Estate Tour
• Tips for Renegotiating Rent Due to COVID-19
• Is a Sublease Right For You?
• How to Spot Rental Scam Listings
• How to Prepare for an Office Move
• Cost Saving Strategies to Reduce Rental Expenses
• How is my office building growing when there’s been no construction?
• Determining How Much Office Space You Need

The post How to Avoid Commercial Real Estate Pitfalls appeared first on Mobiliti CRE.

Anyone who has invested in the stock market (especially during the first dot.com bust) knows that the value of money invested in stocks can not only decrease but can lose all of its value.  Stocks represent an ownership interest in a publicly-traded company. They are not tangible, physical assets and serve no utility other than as a store of value and a liquid security instrument.  Real estate on the other hand, is a tangible asset that has inherent value. You can physically modify a property to improve its value or change the tenants to improve your return on investment.  If something happens to a structure on the property insurance will cover rebuilding the structure and the land still has value.

For some investors, that is more reassuring than buying shares in companies that may not survive. Many small business owners who purchase the building in which they operate discover that when they go to sell the business, the real estate is worth substantially more than the business.  It is worth mentioning that real estate does have risks that stocks and bonds do not.  A vacant property can end up costing an investor a lot of money in expenses with no return while the property is vacant.  Also, real estate is a fairly illiquid asset. That makes real estate an investment that is best for those who are in for the long term rather than those who may need their money on short notice.

Leverage

Not only is commercial real estate likely to appreciate over time, but most owners carry mortgages on their property. This allows them to leverage the money they have to invest while also building equity in the property.

Take for example an investor who purchases a property with a 20% down payment and a mortgage for the other 80%.  The property only has to appreciate 20% in value for the money initially invested to have a return of 100%.  That leverage does come with additional risk.  If the owner can’t make mortgage payments, the owner could lose the property through foreclosure.  It is critical not to over leverage and to ensure that there is enough cash flow from rents to service the monthly mortgage payments.

It Can Be Used as A Hedge Against Inflation

Another advantage of commercial real estate is that it can offset the long-term impact of inflation. Rents can be raised in order to offset inflation.  With stocks and bonds, inflation can cause returns to diminish.

While getting a loan on an investment property can be challenging in the current environment, crowdfunding provides an avenue for even the smallest investor to invest in commercial real estate.  Crowdfunding is a method for raising money for businesses and an easier way to access such ventures for investors. It utilizes the Internet and social media outlets to reach an audience of potential investors.  The idea behind crowdfunding is that many people are willing to invest a small amount, and when they do, large sums of money can be raised quite quickly.

For those looking to purchase commercial real estate in which to operate their own business, loans are still readily available.  Through the SBA’s 504 program owner occupiers can finance up to 90% of their purchase at attractive rates.

Here at Mobiliti CRE we assist both small and large investors as well as owner occupiers with commercial real estate purchases.  Do not hesitate to reach out to us at 813-300-2227 or via email at pam@mobiliticre.com

More Tenant Related Information

• Tampa Bay Commercial Office Market Snapshot
• How to Maximize Tenant Renewals
• Tips for Renegotiating Rent Due to COVID-19
• How Does a Foreclosure Impact Tenants?
• Cost Saving Strategies to Reduce Rental Expenses

The post 3 Reasons Why Commercial Real Estate Is a Good Investment appeared first on Mobiliti CRE.