Commercial real estate is a booming industry, not only in the United States, but worldwide, and if you’re ready to get into this burgeoning business, you’re making a sound business decision. It’s important, however, to know how the industry works, what’s in it for you, and how to get the most bang for your real estate buck. Here are some of the most important things you can learn if you’re getting into commercial real estate.
- The commercial real estate industry relies on clients and agents. If you own commercial real estate, you’ll hire a commercial real estate agent who will do all of the more difficult work for you. They will lease your property and represent your interests so you can focus on more important matters, like counting the profits.
- Commercial real estate leasing is affordable. If your agent snags a tenant for your for a three to five year lease and you’re paying a 4% commission, you’re paying only a small fee for the services and profits you’ve received. Consider this. A 1,000 square foot office at $20.00 per square foot for five years will get you $100,000. And you’ll only have to pay $4,000 in commissions.
- When you hire a broker, you’ll sign a listing agreement that can provide you with multiple protections. While many people think that signing a listing agreement is a bad idea because it provides too many protections to the agent, you can negotiate your listing agreement to ensure that you get many protections, and that you spell out your expectations for your agent in writing.
- You’ll likely see much longer lease contracts with commercial real estate than with residential real estate. Your commercial tenants are likely to stay three years or longer, resulting in reliable income from your commercial real estate venture. Residential leases, on the other hand, typically last a year or less.
- Commercial real estate comes with incredible tax benefits. As a commercial real estate investor, you’ll be able to tax major tax deductions for depreciation, insurance, taxes, utilities, repairs, commissions, office deductions, your home office, business expenses, mileage, and qualified deductions for being a real estate professional. The list of deductions goes on and on when you’re a full time real estate investor, so as you amass more properties, you’ll see your list of benefits grow. It’s important to note that these deductions come before you take your standard deductions, making them all the more impressive when it comes to taking a bite out of the tax bill.
But what if I want to lease a commercial property for my own use?
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If you’re looking to lease a commercial property for your use for your own business, the process is very similar to that of a person leasing a commercial property. However, instead of hiring a leasing agent, you’ll hire a tenant representative that will work for your interests in finding a suitable space, and negotiating the terms of your lease.