Finding The Right Commercial Real Estate For Lease That Meets Your Business Needs

Deciding where to set up your business office is just as important as the business itself. The old real estate adage, “Location, location location” doesn’t just apply to residential properties. A business’ commercial real estate location has the ability to make or break a business. So how can you choose the best commercial real estate for lease that meets your needs?

Assess Your Needs

It all begins with an honest assessment of your building needs. Consider your business. Do you host client meetings at the office? If so, you’ll want to find a conveniently located office building location. Be sure to check the amenities offered at the location. Is there ample parking space or is it within easy access of public transit? How do the entryway, grounds and public areas look? Remember, although you don’t own this office building, it does have an impact on your image and how clients see you. You want it to represent you and your business values. A legal firm will require a much different facility than an artist’s studio, for example.

If you don’t see your customers very often and handle most of your work via phone or the internet, you’ll be less concerned about the physical space and more concerned about the building’s technological capabilities. Find out if the building has the infrastructure in place to meet your needs or if it can be added. You’ll also want to find out if these features are included in the rental price or if you need to pay for them separately on your own.

Do you send or receive a lot of packages? You may need a building with a loading dock and plenty of storage space. You might even prefer to rent out a stand-alone building instead of one that has shared space with other tenants.

Understanding The Terms Associated With Commercial Real Estate For Lease

Leasing is not as cut and dry as signing a one-page document that states how much you’ll be paying in rent each month. There are actually several different types of agreements and you may find that one type suits you better than another. Here are a few of the more common terms you’ll see when you look at commercial real estate for lease and the major points you need to understand about them:

Percentage Lease. Often used in retail situations. Rent is usually a base rate plus a percentage of your sales.

Net Leases. Can be found in any commercial situation. There are three different types: Net, Double Net and Triple Net. Tenant pays rent plus some or all of the taxes, insurance and maintenance costs in a Net Lease. In a Double Net, the tenant pays rent, plus taxes and insurance. In a Triple Net, tenant pays rent, taxes, insurance and maintenance costs.

Full Serviced. Generally used in office agreements. Can be found in industrial or retail commercial real estate for lease as well. The landlord pays all or most of the usual operating costs. These costs are then passed on to the tenant in the form of a “Load Factor.”

Understanding the terms used in commercial real estate for lease can be overwhelming for some people. If this sounds like you, have your attorney review the document prior to signing and make sure you understand all of your rights and responsibilities upfront.

Finally, remember that your business location plays an important role in how well your business can function and support or serve your clients. Make sure the location meets your needs before signing any rental agreement.

Commercial Real Estate For Business Owners

With interest rates now at historically low levels and the United States economy growing at a strong pace, many business owners have been considering the purchase of commercial real estate for their business locations. The benefits and drawbacks to commercial real estate ownership vary from business owner to business owner but potential buyers should educate themselves about the obvious and sometimes hidden benefits to the ownership of a commercial property. Below are some of the major benefits to ownership as opposed to leasing a commercial space.

Tax Deductions

For many business owners one of the primary benefits of commercial real estate ownership are the tax deductions that can be taken on the interest portion of the monthly commercial loan payment. These deductions can be substantial and each business owner should consult a qualified tax specialist about their unique situation.

Equity Appreciation

On average, commercial real estate properties will appreciate about two to three percent above inflation over the long term. This equity appreciation can result in significant financial gains over a period of decades.

A Retirement Fund

Many small business owners will not receive a pension when they decide to retire. The equity appreciation on commercial property can be significant. An owner can decide either to sell their property at retirement, cashing in on equity appreciation or lease it to another business for a continuous retirement income stream. In fact, in many situations, a business owner may be able to lease out an unused portion of his property, such as a spare office, before retirement for additional income.

Added Value To Business

As opposed to residential loans, many commercial loans are assumable. This makes the business and real estate much easier for a buyer to acquire and enhances the value of the business tremendously.

No Taxes To Pay On Your Rent

When a business leases their real estate they must pay sales tax on the rent paid to the landlord. When you own the real estate there is no tax to pay on the rent. The savings can be significant.

Easy Access To Financing

Great fixed rate loans for terms up to 30 years are now available for owner occupied commercial properties. In fact, in some instances, with strong financials, a business owner may qualify for loan financing up to 100% of the purchase price for his commercial real estate. Business owners should consult an experienced commercial mortgage adviser before making an offer on a commercial property.

In addition to the easily tangible benefits outlined above the business owner who purchases a property to house his business location will be able to have the satisfaction that only comes with ownership and he won’t be making his landlord rich.

Tips When Buying Real Estate for Commercial Purposes

A commercial property can be a very good investment since it would let you earn money twice as much compared to the money that you can make when you buy a residential property. Therefore, if you want to know whether you are making a wise decision or not, here is a couple of real estate buying tips if you want to purchase a commercial property.

• Check out some real estate buyers guide magazines so you can see the right commercial property that would fit your needs. It is important that the property has a Land Information Memorandum. This can be usually acquired from the local state or council where the property is located. With this, you will know how much the assessed value is and if there are any potential as well.

• One of the most advisable real estate buying tips for commercial properties is that you ask for a low down payment while getting a long term loan at the same time. In this way you can still maintain the capital that you have to spend for you investment.

• Ask for the help of a commercial agent. His knowledge and expertise would help you compare all the sales, potential for growth, area demographics, and so many others before you establish your investment or develop the area.

• Analyse why you should buy the commercial real estate property. See to it that you buy it because you have the right reasons. Think whether you would gain more profit if you would rent it or you can earn more if you would buy it instead.

• If you are already decided to buy the commercial property, make sure that you buy a bigger area than what you are thinking right now. A bigger space gives more rooms for expansion and improvement.

• Those who are in short of cash may want to consider getting a partner or asking a business owner so that you can have someone to share the down payment with. It would be better if you would consider a family or a friend to be your business partner so you will know how he handles investments. Put everything in black and white especially your agreements.

The success of your commercial estate property will depend from all the little decisions that you make prior to the development of the property. Just follow these real estate buying tips and you’ll be on your way to a thriving investment.