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Tips for Negotiating in Commercial Real Estate

Tag: Commercial Property Purchase

Tips for Negotiating in Commercial Real Estate

October 26, 2023

Ready, Set, Negotiate

Negotiations are an essential part of every real estate transaction. The buyer is typically hoping for price and terms to favor their needs, while the seller may be pulling in the opposite direction. However, depending on how you navigate negotiations, a real estate transaction can be a win-win for both parties. 

Working with an experienced real estate broker who is well-versed in the best negotiating strategies will make the process painless for everyone involved. 

Tips for Negotiating in Commercial Real Estate

The following tips will help you negotiate a commercial real estate deal successfully. 

Budget Before

It is crucial to know your budget before you enter a conversation with a seller. If you haven’t set up solid parameters for your purchase, the seller may easily sway you as they suggest a specific price or terms. 

Business Mindset

A commercial real estate purchase is often an investment decision based on expected returns. Some people will try to pull at the heartstrings in negotiations, but remember that the numbers don’t lie. Use a business mindset and make your purchase solely on investment potential.

Communicate Well

Real estate transactions require strong communication. You will need to communicate well with your agent, and your agent will need to communicate with the seller and seller’s broker effectively. Communication is vital, especially when writing offers. 

Due Diligence

Much of purchasing commercial real estate revolves around doing your due diligence. You’ll need to analyze the rental history, have the building inspected, and review any documentation the seller has regarding the property. During this step, rely on your real estate agent to help you identify any red flags. 

Be Respectful

Negotiations should never be heated. Be sure to go into the process knowing that the seller is working for their best interest and you are working for yours. Respect must go both ways throughout a real estate transaction.  

Lean on Your Broker

Commercial real estate transactions are complex. Working with a highly qualified real estate broker and leaning on their expertise will help the process go as smoothly as possible. 

Please contact Steve Longenecker at WeBrokerCORealEstate or 720-600-9513 regarding any commercial real estate needs in Longmont, CO, and our neighboring communities.

We give out $250 gift cards for referrals that become our real estate clients.

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Top Strategies for Marketing Commercial Real Estate

October 13, 2023

Ready to Lease or Sell?

Whether you are getting ready to lease or sell a piece of commercial real estate, having a top-notch market strategy is essential. 

Online platforms mean that buyers and renters have access to massive amounts of real estate information in the palm of their hands. When you are in a position to lease or sell commercial space, you need to be sure your property stands out among the rest. 

Commercial Real Estate Marketing Strategies

The following commercial real estate marketing strategies will help you find the right buyer or tenant in no time.  

  • Know Your Audience: If you don’t know who you want to market to, it will be challenging to get the word out. Knowing your target demographic helps narrow your focus and lets your advertising connect more effectively.
  • Understand the Value Proposition: What do you and your property have to offer? It is vital to know your value proposition and how to present it to potential buyers or tenants. 
  • Showcase the Property: There are various ways to showcase a property, from professional photos and videos to 3D walkthroughs and even virtual reality tours. Determine the best way to showcase your property and get as many eyes on it as possible.
  • Use a Budget: Having a budget and sticking to it will ensure you stay within your means. Marketing is not all about who has the most significant budget but who is consistent and strategic.
  • Be Responsive: With rapidly available content everywhere and consumers looking for instant gratification, quickly responding to inquiries about your commercial space is paramount.

Talking with an experienced commercial real estate agent who is well-versed in the most up-to-date marketing strategies is highly beneficial. Please contact Steve Longenecker at WeBrokerCORealEstate or 720-600-9513 regarding any commercial real estate needs in Longmont, CO, and our neighboring communities.

We give out $250 gift cards for referrals that become our real estate clients.

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Best Practices for Commercial Property Maintenance

September 27, 2023

Managing Commercial Property

Acquiring commercial real estate is one piece of the puzzle; managing a property is another. Whether you hire a property manager or take on the responsibility yourself, it is an essential part of ownership. 

A property manager will help facilitate tenant relationships, negotiate leases, and preserve the building’s condition. Consistent property management maximizes your return on investment by increasing cash flow and boosting appreciation potential. 

Maintenance is Key

While there are many important aspects of property management, maintenance is key. A building that is well-cared for will not only be appealing to tenants looking for a new space to lease but also for future buyers if you end up needing to sell. 

Preventative Maintenance 

When people think of building maintenance, they often imagine a handyman fixing a broken light fixture or a plumber repairing a leaking pipe. Preventative maintenance, however, is even more essential. 

Preventative maintenance may include regularly scheduled plumbing, electrical, and HVAC inspections, checking roofs for leaks, and consistent cleaning to avoid general wear and tear.

Tenant Communication

In addition to preventative maintenance measures, having proper systems in place for tenant communication is critical. When issues arise, you want your tenant to understand what steps to take and how to efficiently communicate the situation to the property manager or owner. 

Quick Repairs

Once an issue is identified, the landlord or property manager should address repairs quickly. Strong relationships with contractors and vendors allow for speedy resolutions at fair prices. 

Overall, following best practices for commercial building maintenance is essential in preserving your real estate investment. Please contact Steve Longenecker at WeBrokerCORealEstate or 720-600-9513 regarding any commercial real estate needs in Longmont, CO, and our neighboring communities.

We give out $250 gift cards for referrals that become our real estate clients.

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What to Consider Before Investing in Office Buildings

September 13, 2023

Investing in Office Buildings

If you are pondering a commercial real estate investment, office buildings are likely on your radar. If you’re already invested in residential real estate and other types of commercial property, office buildings can be a unique way to diversify. They can provide cash flow opportunities, tax benefits, and long-term appreciation. 

When people think of office space, some immediately go to skyscrapers in downtown Denver. Office space, however, can be acquired on a much smaller scale and attract various tenants aside from corporate giants.

If it seems like office space would be a great addition to your portfolio, there are a few things you should consider before you take the leap.

What to Consider

Before investing in an office building, here is what you should consider:

  • Location: As with any piece of real estate, location is critical. Choose a site that will fit your potential renters and their businesses. 
  • Quality: Not all office spaces are created equal. Consider your budget and try to find the building with the highest quality structure, mechanical systems, and finishes. 
  • Size: The amount of property you are willing to manage and the type of tenant you hope to attract will dictate the building size you choose. 
  • Layout: Does the building provide an open concept or a walled office setup? Reconfiguring layouts can take significant time and money, so be sure the space is usable for your potential tenants. 
  • Tenants: The type of tenants you want will significantly impact the building you invest in. Every kind of tenant requires a different location, layout, and amenities. 
  • Leases: Whether there are existing leases or if you will be acquiring all new tenants, it’s essential to consider what types of leases you prefer. 

The Real Estate Cycle

As we all know, real estate is cyclical. Commercial buildings, including office space, are no different. A good investment stands the test of time and is versatile through all cycles. If you are considering investing in commercial office space, consult an experienced commercial real estate broker to be sure you make the right investment. 

Please contact Steve Longenecker at WeBrokerCORealEstate or 720-600-9513 regarding any commercial real estate needs in Longmont, CO, and our neighboring communities.

We give out $250 gift cards for referrals that become our real estate clients.

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What are Commercial REITs?

September 6, 2023

What is a REIT?

A REIT, or real estate investment trust, is an investment vehicle that is used as an alternative to purchasing a single piece of real estate. 

Purchasing a property takes large amounts of time, effort, and money. If buying real estate on your own feels out of reach, a REIT allows you to be a shareholder in a company that owns many pieces of real estate. This eliminates the need to search for and manage a property, and also greatly reduces the financial commitment. 

There are three major types of REITs, including equity, mortgage, and hybrid. Each offers unique benefits that are worth exploring if you are considering investing. 

How do Commercial REITs Work?

Commercial REITs are companies that own income producing commercial properties. These types of REITs typically own real estate such as apartment buildings, shopping centers, hotels, hospitals, and corporate offices. 

Most REITs focus on a specific type of property, however, some try to diversify their portfolio by owning several different subtypes of real estate. Diversification can help to reduce risk in the event that one sector of the real estate market performs poorly.

Overall, the company generates revenue by leasing its owned real estate to businesses in need. In turn, the REIT pays out a portion of its rental profits to the shareholders. 

Your Investment Strategy

Depending on your investment strategy and your financial situation, a REIT may or may not be the right option for you. Consulting a real estate expert is the best first step to determine how you’d like to set up your investment portfolio. 

Please contact Steve Longenecker at WeBrokerCORealEstate or 720-600-9513 regarding any commercial real estate needs in Longmont, CO, and our neighboring communities.

We give out $250 gift cards for referrals that become our real estate clients.

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Location, Location, Location: Does it Really Matter?

August 17, 2023

Everyone has heard the infamous real estate saying “location, location, location”. But how much does location really matter?

For many years, real estate professionals have touted location as the most essential aspect of any property. It seems to make sense that a home in a desirable neighborhood would be an ideal place to live. Additionally, buying a short-term rental in a resort town where people love to vacation is a savvy investment strategy. 

The question, therefore, is: What about commercial properties? Does location matter as much in commercial real estate?

Does Location Matter in Commercial Real Estate?

The short answer is yes. Location matters greatly in commercial real estate. The longer answer is that it heavily depends on the type of property.

For example, location is vital when considering potential property options for opening a restaurant, as the building and sign need to be visible to passersby. If your restaurant isn’t in a highly-visible location, you will miss out on many potential customers. 

On the other hand, you must consider location differently if you are considering purchasing commercial real estate to open a storage facility. Your building may not need to be exposed to quite as much foot and vehicle traffic, but you will need a location that provides easy access for your target demographic with storage needs. 

Additionally, to make a commercial real estate investment profitable, you may need to consider different locations based on price. Depending on the business and your goals, a prime location with a hefty price tag may make sense, or a smaller price tag with a better cash flow may be the best option. 

Working with a highly-qualified commercial real estate broker is the best way to find the property and location that is right for you. Please contact Steve Longenecker at WeBrokerCORealEstate or 720-600-9513 regarding any commercial real estate needs in Longmont, CO, and our neighboring communities.

We give out $250 gift cards for referrals that become our real estate clients.

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The Evolution of Commercial Retail Space

August 3, 2023

Will E-Commerce Be the Downfall of Commercial Retail Space?

Many people wonder if e-commerce giants like Amazon will be the downfall of commercial retail space. The short answer is no; commercial retail space simply must evolve with the new normal. As technology and societal patterns change, retail and real estate will follow suit. 

Buy Online and Pickup In Store

Is a buy-online-pickup-in-store (BOPIS) option the answer? It certainly is one that large retailers are paying attention to. Stores like Target and Walmart have found significant success in offering a BOPIS option. 

Not only does it give consumers the ease of purchasing an item online, but it also provides instant satisfaction in that they can have the product the same day. While Amazon offers some same-day delivery, it is only available for some of their inventory. Therefore, when shoppers can find what they are looking for in a local store and pick it up later that day, they will likely forgo the Amazon order. 

Change Its Purpose

If you own commercial retail estate space, you may need to consider changing its purpose. With such a substantial increase in online shopping, there is a greater demand for storage space to house inventory. Online shoppers want more color, material, and size options meaning retailers must have more products on hand. Physical store locations may succeed in serving as storage locations for increased inventory. 

Additionally, without the ability to see products in person or try on clothing items in-store, e-commerce can lead to more frequent returns. While consumers do love the ability to have packages shipped straight to their door, they don’t enjoy the hassle of repacking and bringing unwanted items to a UPS store to be returned. Brick-and-mortar retail spaces can serve as drop-off locations and even offer drive-through options for customers in a hurry. 

Finally, larger retail spaces and shopping malls could transform altogether into community gathering centers or even multi-family housing. 

Overall, commercial retail space isn’t going anywhere quite yet; it’s simply continuing to shift with our needs and desires. 

Please contact Steve Longenecker at WeBrokerCORealEstate or 720-600-9513 regarding any commercial real estate needs in Longmont, CO, and our neighboring communities.

We give out $250 gift cards for referrals that become our real estate clients.

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Understanding Owner Financing in Commercial Real Estate

July 11, 2023

In commercial real estate, buyers often select a type of financing offered by a commercial lender. There are a variety of traditional loan options, each with their own pros and cons. If looking for an alternative, however, buyers can consider using owner financing, also known as seller financing, to purchase commercial real estate. 

How Does Owner Financing Work?

With a traditional loan, a lender agrees to give a buyer a specified amount of money (based on their income and assets) to secure ownership of a property. The borrower then pays the lender directly according to their loan terms.

Owner financing, on the other hand, allows a seller to finance a property for a prospective buyer. Rather than going through a third party, the buyer and seller agree on an interest rate and payment schedule, and the buyer pays the seller directly. 

Pros & Cons of Owner Financing

As a buyer, there are several pros and cons to consider when using owner financing. 

Pros

  • A buyer is not required to qualify for a specific loan product offered by a commercial lender.
  • The buyer and seller can directly negotiate the loan’s interest rate, payment, and length.
  • The lack of commercial lender fees reduces the total closing costs. 
  • Not using a third party for financing allows for a faster closing. 

Cons

  • Not all sellers will offer owner financing.
  • The loan terms can be written in the seller’s favor (higher interest rate, larger monthly payment, etc.) because they are taking on more risk by carrying the loan.
  • The seller can dig into the buyer’s finances, including income, debt, and credit. 

An experienced real estate professional will help you determine the best type of financing for your situation. Please contact Steve Longenecker at WeBrokerCORealEstate or 720-600-9513 regarding any commercial real estate needs in Longmont, CO, and our neighboring communities.

We give out $250 gift cards for referrals that become our real estate clients.

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6 Benefits of Hiring a Commercial Real Estate Broker

June 20, 2023

The world of real estate can feel like the Wild West. There are many different ways to navigate the buying, selling, and leasing process, and some try to do it all on their own.

In commercial real estate, it is common for businesses and individuals to go unrepresented when looking to purchase or lease. Some consumers simply don’t understand the advantages of partnering with a commercial real estate broker. 

Working With a Commercial Real Estate Broker

Let’s dive into a few reasons why working with a commercial real estate broker is the right decision. 

  • Time: Allow your commercial real estate agent to do the heavy lifting! They will search for properties, set up showings, and prepare contracts on your behalf to save you time. 
  • Money: Hiring a broker does not always mean money directly out of your pocket. Often commissions are paid based on the lease amount or purchase price and are normally paid by the seller or leasing landlord. 
  • Negotiations: Negotiating a real estate transaction is a skill. Your agent knows the tactics to secure the best terms possible and save you money. 
  • Legal: Commercial real estate contracts are complicated and have legal consequences. Having an experienced professional to explain the nuances is key. 
  • Data: Your real estate agent has access to many search engines and market stats you will need to make a well-informed decision. 
  • Knowledge: A broker’s general knowledge of the industry, your local market, and real estate contracts will ensure you stay on the right path. 

Hiring a Professional You Trust

Hiring a professional that you trust, who will work in your best interest throughout the transaction, will make the process seamless. Please contact Steve Longenecker at WeBrokerCORealEstate or 720-600-9513 regarding any commercial real estate needs in Longmont, CO, and our neighboring communities.

We give out $250 gift cards for referrals that become our real estate clients.

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Deferring Taxes Using a 1031 Exchange

June 6, 2023

When you sell a piece of real estate, you may need to pay capital gains tax on the proceeds. Capital gains tax payments can be hefty in commercial real estate, where price tags are often significant. 

To avoid paying taxes immediately following a sale, some investors choose to use a 1031 Exchange. 

What is a 1031 Exchange?

A 1031 Exchange is a tool used to defer taxes. It doesn’t eliminate tax payments; it simply allows investors to pay capital gains tax at a later date. When using a 1031 Exchange, an investor can sell a piece of real estate and use the proceeds to purchase another property of like kind without paying taxes on the gain. 

Deferring taxes in this way allows funds to be reinvested in a new asset and continue to grow without a tax penalty for many years. The new property must be of greater or equal value, and the purchase must happen within a specific period to qualify. 

Regarding commercial real estate, your business could sell its current office space and purchase a new office (of greater or equal value and within the specified period) without paying taxes on the proceeds from the sale. Ultimately, it means keeping more money in your pocket to continue investing.

What’s Your Strategy?

The first step is determining your investment strategy. Your commercial real estate agent can help guide you based on their experience and the type of real estate you hope to invest in. Depending on your goals, a 1031 Exchange may not be the best option, but it’s a highly beneficial tool to implement in the right situation. 

Please contact Steve Longenecker at WeBrokerCORealEstate or 720-600-9513 regarding any commercial real estate needs in Longmont, CO, and our neighboring communities.

We give out $250 gift cards for referrals that become our real estate clients.

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