Commercial Property: 10 things not to do
Commercial Property: 10 things not to do
2) Don’t purchase a property based on what it looks like or the general market opinion of the property. Focus on the numbers and get impartial advice (such as a LIM), if these don’t stack up then don not buy.
3) Don’t over extend yourself. Keep your risk manageable.
4) Don’t become greedy and apply unreasonable pressure on your tenant(s). Owners who try to increase the rent to unreasonable levels or interfere with the tenants livelihood dramatically increase the likelihood of their tenant leaving for greener pastures and severely compromising their investment. As commercial properties draw a lot of their value from the leases in place (length of lease, amount $ per year, quality of tenant) you are playing russian roulette if you apply too much pressure on your tenant and inevitably you run the risk that you may lose them. My advice is to be firm but fair and think long term.
5) Don’t purchase the property and then walk away. You should regularly drive past and/or inspect the property. Keeping tabs on your investment is a must.
6) Don’t unreasonably refuse to sell your property. Treat commercial property as an investment and not a showpiece, if an offer is too good to refuse then don’t refuse! Too often owners are caught up in the emotional aspect of owning property and miss out on amazing offers only to regret passing over that offer at a later date. Commercial property investment is all about the returns.
7) Don’t abandon the property after purchase. Pride of ownership is one of the best ways to build and maintain value. Properties that are looked after, upgraded and maintained properly deliver this in spades. If an owner is proud of the property and looks after it, this is immediately evident to prospective purchasers and creates desire.
8) Don’t be inflexible and/or ignorant. You may perceive the value of a property to 20% higher than the current market rate, it is important that you listen to the market feedback and determine whether or not you wish to sell the property.
9) Don’t decide to sell the property on a whim. Determine your motivation and then act accordingly. If your motivation to sell is due to interest rates reaching crippling levels or another investment opportunity becoming available then act accordingly based on the circumstances. If you are just waiting for an amazing offer to fall into your lap then be prepared for the long haul.
10) Don’t dismiss methods of sale or lease. There are a number of ways to sell / lease a property and each method has various strengths and weaknesses, it is about determining which method best suits your property and what you want to achieve. For example number of people object to auctioning their property based on false presumptions and without actually understanding how an auction works. An auction with a reserve is actually a method of sale that is completely geared in the vendor’s favour. By forcing purchasers to compete against one another in the same room ensures top dollar for your property if the auction campaign is conducted properly. Bayley’s and their Total Property Auction campaigns are one of the best exponents of securing the best market price available for their vendor’s.
Commercial Property 10 things not to do - To learn more about this author, visit Benjamin Jones's Website.
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1) Don’t rush your decision. If you are uncertain about anything seek impartial advice to reassure yourself. It is better to lose an opportunity but live to fight another day than be stuck with a bad property.
2) Don’t purchase a property based on what it looks like or the general market opinion of the property. Focus on the numbers and get impartial advice (such as a LIM), if these don’t stack up then don not buy.
3) Don’t over extend yourself. Keep your risk manageable.
4) Don’t become greedy and apply unreasonable pressure on your tenant(s). Owners who try to increase the rent to unreasonable levels or interfere with the tenants livelihood dramatically increase the likelihood of their tenant leaving for greener pastures and severely compromising their investment. As commercial properties draw a lot of their value from the leases in place (length of lease, amount $ per year, quality of tenant) you are playing russian roulette if you apply too much pressure on your tenant and inevitably you run the risk that you may lose them. My advice is to be firm but fair and think long term.
5) Don’t purchase the property and then walk away. You should regularly drive past and/or inspect the property. Keeping tabs on your investment is a must.
6) Don’t unreasonably refuse to sell your property. Treat commercial property as an investment and not a showpiece, if an offer is too good to refuse then don’t refuse! Too often owners are caught up in the emotional aspect of owning property and miss out on amazing offers only to regret passing over that offer at a later date. Commercial property investment is all about the returns.
7) Don’t abandon the property after purchase. Pride of ownership is one of the best ways to build and maintain value. Properties that are looked after, upgraded and maintained properly deliver this in spades. If an owner is proud of the property and looks after it, this is immediately evident to prospective purchasers and creates desire.
8) Don’t be inflexible and/or ignorant. You may perceive the value of a property to 20% higher than the current market rate, it is important that you listen to the market feedback and determine whether or not you wish to sell the property.
9) Don’t decide to sell the property on a whim. Determine your motivation and then act accordingly. If your motivation to sell is due to interest rates reaching crippling levels or another investment opportunity becoming available then act accordingly based on the circumstances. If you are just waiting for an amazing offer to fall into your lap then be prepared for the long haul.
10) Don’t dismiss methods of sale or lease. There are a number of ways to sell / lease a property and each method has various strengths and weaknesses, it is about determining which method best suits your property and what you want to achieve. For example number of people object to auctioning their property based on false presumptions and without actually understanding how an auction works. An auction with a reserve is actually a method of sale that is completely geared in the vendor’s favour. By forcing purchasers to compete against one another in the same room ensures top dollar for your property if the auction campaign is conducted properly. Bayley’s and their Total Property Auction campaigns are one of the best exponents of securing the best market price available for their vendor’s.
Commercial Property 10 things not to do - To learn more about this author, visit Benjamin Jones's Website.
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