Colli Real Estate

The successful financial strategies for the purchase of commercial real estate

If you're tired of paying rent for your space current business, or have considered buying commercial real estate and investments in capital over the long term, there are several important factors that could maximize opportunities and minimize financial risks.

First, do your homework and learn more about the various costs involved. Unlike real estate residential, commercial fees and have additional costs, which are not immediately obvious. So make sure to have an overview before you buy. the potential costs of ownership include (without limitation):

• Property taxes – Underwriters use the actual tax numbers rather than determining an estimate for residential properties.

• Insurance – The needs of the insurer will often be different (and more) in what is now the owner and usually in books. Purchasers must comply with the requirements, the insurance company.

• Operating expenses – Costs vary depending on your configuration. If are taking the jobs of contracts gardening and building maintenance, you may be charged a flat rate of tenant management simple. If all sub-contracted to society and the building has several tenants, the fees may be based on a percentage of square feet (RSF) or usable square feet (USF) for each tenant.

• Reservations Rooms – This is money set aside for replacing things like coating floor, HVAC and other systems that have a limited time, predictable. In many transactions, replacement reserves are set to have an assessment of the state property (PCA) performed by a qualified technician. The reserve requirement will be determined by the Engineer estimates the remaining life of major systems.

• Tenant Improvement and Leasing Commission (Tilcara) – Expenditure improve property to attract new tenants to new or vacated space which may include new improvements or renovations. This charge applies to offices, commercial and industrial.

These expenditures do not include the current rates, such as maintenance and administrative costs. All costs must be included in the cash flow and provide cost determined by examining property.

A Once you know what your spending your payment, it is time to evaluate your financing. Where is your money? The options include other investors, business partners, equity, loans for investment or property, and bank loans.

Many buyers an immediate shift the last option. However, it is not uncommon for banks to reduce business owners even if they have a great credit and positive cash flow. The reasons are:

• The size of the loan – the amount of the loan application does not exceed the limit that the bank may lend to all borrowers.

• The borrower can not prove income – in a high percentage of cases of tax returns, and financial statements of small businesses owners are not compatible with the amount of the loan. Most owners of small businesses do not show entry, but show a loss to avoid taxes. This results in an automatic reduction of most banks.

• Portfolio Management – An application for primary loan may be denied the quality because the bank must maintain its balanced portfolio. Regulators keep an eye on the types of properties, a bank holds in its portfolio. If the portfolio contains too much of a particular type of goods, the bank can not be allowed to lend on this property.

• Type of goods is outside their specialty – Many banks specialize in a particular type loans (such as non-owner occupied commercial property lending). If a borrower applies for funding for a type of property is not their specialty (eg, owner occupied commercial property lending) loan application will be refused.

With a good rating credit and at least 10% to 20% deposit, you should be able to obtain funds. Bank to verify your company can be the starting point because they have a history with them. To find more choices and competitive rates, taking into account commercial brokerage firms, specializing in correspondence Business purchasers of real estate with commercial lenders.

Finally, you need to know your business and reduce risk as much as possible. For example, a multi-tenant building is almost always a better risk than a single-tenant option, since it is unlikely that all tenants the same time. In addition, several previous tenants with long leases to get a loan, a sale easier than trying to run the bank funding for a vacant building, one tenant who is not currently producing income. Know the risks and take steps to mitigate can make the difference between a continuous load and obtain financial information of significant financial benefits.

About the Author

Kimberlyn Williams is president and owner of KRT Commercial Brokerage Loans & Leasing (www.krtcb.com), a financial service firm specializing in mortgage loans and equipment leasing for commercial industries.

Genet Property Group Inc Commercial Real Estate Management Leasing Warehouse Office

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