Real estate investors make the best decisions when they have access to accurate information. If you have questions about investing in commercial real estate, the following list will help.
How to find out who owns a property?
Real estate investors can use a few strategies to find out who owns a property. For example, the county property assessor often has information about real estate ownership. However, you might discover that a corporation owns the property. In that case, you need to rely on the Secretary of State’s office to learn the names of the people who control the organization. Unfortunately, they don’t always have the latest info.
ProspectNow makes it easy to find out who owns a property. The commercial real estate database lets you search:
- 40 million apartment and commercial properties
- 30 million businesses and companies—including contact information
- 15 million LLCs and corporations
What property types have the best cash flow?
Your specific real estate market will influence which property types have the best cash flow. Typically, commercial real estate investors can expect robust cash flow from rental properties—especially multi-family rentals that provide several sources of revenue. Of course, immediate cash flow from residential rental properties depends on the rentals’ quality. If a building needs updates, it will take longer to generate income.
Office space for lease also has a good cash flow. Offices leases took a bit of a dip during 2020, but their values are expected to recover quickly.
Is it better to flip or rent?
Whether you flip or rent depends on your financial goal and preferred level of involvement. Commercial real estate investors that flip houses are often attracted to:
- Making significant profits within a short period
- Moving from project to project quickly
- Improving buildings as a way of building communities
Flipping, however, means that you are likely to pay higher taxes on your profits. Changes in the commercial real estate market also influence your success. If companies aren’t buying, you don’t make money.
Renting often appeals to investors who want:
- Long-term, passive income
- Cash flow that can start immediately after purchasing a property
- Tax benefits—usually as deductions for improving the property
- Appreciation over time
Then again, renting could mean that you need to hire a management company, which cuts into your profits. Unexpected vacancies and property damage can also make your investments difficult to manage.
How do I find investment properties?
A membership database gives you the easiest way to find investment properties. ProspectNow’s extensive database gives the details you need, such as a building’s size, features, zoning and construction date.
You can also find investment properties by building community connections and doing a lot of footwork. When you hear about a property for sale, you can make an offer.
How do I value commercial real estate?
Commercial real estate investors need to determine property values and cap rates before making offers. A popular method involves comparing the property to similar commercial real estate in the area. If a property has sold, you can assume that the other property has approximately the same value.
You can also determine the value of property by getting quotes from construction companies. Take the quotes and subtract depreciation to get the property’s value.
Commercial real estate investors must focus on potential revenues, so it often makes sense for them to set property values by subtracting the financial cost of operating the property from the amount of money earned leasing offices, retail stores, etc.
How to find off-market properties?
Off-market properties do not get included on multiple listing services (MLS). If the properties are available for sale, the current owners are not advertising them publicly. Often, the owners don’t know whether they want to sell their properties. The decision may depend on their financial success over the next few months.
ProspectNow’s predictive analytics can help you identify off-market properties by reviewing public documents and making educated predictions about the owner’s future behavior. Finding off-market properties can benefit you by helping you get the real estate for less money. It also helps the current owner by getting them out of financial trouble.
Are liens on property public record?
Yes, property liens are a matter of public record. You can usually find them by contacting the local county clerk, county recorder, or property assessor’s office. The department that handles liens will vary by area.
Join ProspectNow to take advantage of predictive analytics. Predictive analytics uses information from public records to determine which properties will likely go on the market within the next few months or a year.
Is an apartment commercial or residential?
Apartments fall into both categories depending on the person’s perspective. As a commercial real estate investor, apartments count as commercial properties because you use them to generate revenues. A multi-family apartment building is more obviously a commercial development because the local municipality knows that the owner plans to use it to make money.
Tax codes further the case for categorizing apartments as commercial properties because you can deduct the money you invest in the real estate from the revenue you earn.
What are the types of commercial real estate leases?
There are three major types of commercial real estate leases.
With a gross lease—also known as a full-service lease—the tenant’s rent covers all expenses associated with the property. The owner pays for things like taxes, utilities, and repairs. Companies choose gross leases because they do not want to deal with a property’s day-to-day operations. In exchange, they usually pay higher prices.
A net lease divides responsibilities between the owner and the tenant. There are four types of net leases:
- Single net leases: the tenant pays rent, utilities, and a portion of the property tax while the owner covers other building expenses, such as upgrades and repairs.
- Double net leases: the owner pays for common areas of the building, but the tenant covers expenses within the spaces they lease. The tenant may also need to pay for utilities, trash collection, etc.
- Triple net leases: the tenant pays for most of the property’s expenses but retains the right to review the owners operating budget and make changes.
- Absolute triple net leases: the tenant assumes all responsibilities for the building.
What are the different classes of office buildings?
There are three classes of office buildings:
Class A office buildings are usually recent developments that offer the latest features, including new elevators, security systems, and IT infrastructure. Commercial real estate investors charge the highest prices for Class A office buildings.
Class B office buildings fall just short of Class A properties. They often look nice but have slightly outdated features.
Class C is the lowest category of office buildings. It’s a budget option for companies that want to save as much money as possible on their office space. As such, owners can expect to charge lower prices.
ProspectNow makes it easier to find the information commercial real estate investors need to make profitable decisions. Request a demo to help you decide whether ProspectNow is the right tool for you.