If you recently invested in a commercial real estate property, you understand the property can create a significant return. Taking the right steps now ensures you will get the most future income from your commercial property. Several factors contribute to your potential income, let’s take a look at some unique ways to optimize your commercial property’s revenue.
Potential Income Factors
Every commercial property is unique, and so is your management style. Here are some of the contributing factors to your commercial property’s future passive income:
- Great Tenants- Typically, commercial tenants are businesses and are responsible for some or all their own maintenance. If your tenant does not have a maintenance team, hire a contractor to perform the work. Good tenants stay at a well-maintained property and appreciate when they are treated well and feel heard by their landlords. Long-standing tenants ensure you have a constant flow of income.
- Price Evaluations- When evaluating commercial real estate, there are specific measurements compared to evaluating the price of residential properties.
- Increased Appreciation Rates- Making improvements to the property increases the appreciation rate of the building. This also happens when new additions are being made to the neighborhood because it attracts more customers.
- Flexible Lease Agreements- Commercial real estate doesn’t have many laws controlling commercial leases. This is the opposite when looking at residential properties.
Optimizing Commercial Property’s Income
By taking a few steps, you get the most income out of your commercial real estate. Your real estate’s passive income can improve when taking these steps:
- Understand the market- The location of your commercial property is vital to its potential success. Different areas may vary when evaluating tax rates, environmental issues, and its lot size. Also consider the number of potential renters the area offers your commercial property.
- Organize your finances- Investing in commercial real estate is a big financial venture. Before banks help finance your commercial property, they want your finances to be in good standing. Shop around to different banks and see if they have better interest rates or offer different types of financing than others.
- Visit an accountant- Before you invest in the property or take out a loan, consult an experienced accountant. The accountant determines if you can afford to invest in the commercial property. They will help you establish a budget and understand the affordability of the property like taxes and transition financing.
- Plan your layout and ask questions- Understanding the layout of your property helps increase its operational efficiency. If you are unsure of the best layout for the property, hire a professional to help determine the best course of action. Before starting your venture into commercial real estate, know what your end goal is. Ask yourself questions about what your goals are and what you want out of the commercial property. If anything is unclear – do not be afraid to get help from an expert if you are confused about any part of the process!
If you need help managing your commercial properties, STRATAFOLIO is here to help. Schedule a 1:1 demo today!